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 811-05984
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THE NEW IRELAND FUND, INC.
-------------------------------------------------
(Exact name of registrant as specified in charter)
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
GREENWICH, CT 06830
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(Address of principal executive offices) (Zip code)
PFPC Inc.
99 High Street, 27th Floor
BOSTON, MA 02110
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(Name and address of agent for service)
registrant's telephone number, including area code: (203) 869-0111
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Date of fiscal year end: OCTOBER 31
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Date of reporting period: APRIL 30, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[GRAPHIC OMITTED]
HOME PHOTO
THE
NEW IRELAND
FUND
SEMI-ANNUAL REPORT
APRIL 30, 2005
COVER PHOTOGRAPH -- ADARE, CO. LIMERICK
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
Dear Shareholder,
INTRODUCTION
Although there was a marginal decrease in the Fund's Net Asset Value ("NAV") in
the most recent quarter, performance for the first six months of the fiscal year
was very satisfactory with NAV increasing by 15.38%, to $23.93 per share.
Since quarter end, we have seen a significant strengthening of the US dollar
and, should this trend continue, there definitely would be a negative impact on
the Fund. However, as may be seen from the comments below, the Irish economy
continues to perform strongly and we are hopeful that this will help to offset
the impact of any increase in the value of the dollar.
During the quarter, Mr. Denis Curran resigned as a director of the Fund. We are
sorry to see him go, as he served the Fund with distinction for the past five
years. The Board recently appointed Mr. Brendan Donohoe, President of the Fund's
Investment Advisor, to replace Mr. Curran as Director and President of the Fund.
PERFORMANCE
For the quarter ended April 30 2005, NAV decreased 0.3% to $23.93 as compared to
a 10% decrease in the Irish stock market, in US dollar terms. Excluding Bank of
Ireland, which the fund is precluded from investing in, the Irish market
declined by 10.9% in dollar terms. As already mentioned, NAV increased by 15.38%
over the past six months, which also compares favourably with the 5.19% increase
in the Irish stock market in dollar terms. The Equity Market Review section
below gives a more detailed analysis of the performance of key stocks in the
Fund.
We continue to implement the Share repurchase program, with 54,850 shares being
repurchased and retired, since the beginning of the fiscal year, at a cost of
$1,185,179. These repurchases represent a reduction of 1.17% of the shares
outstanding at October 31, 2004 and they have resulted in a positive impact on
the Fund's NAV of 4 cents per share.
ECONOMIC REVIEW
Last year the Irish economy had its best year since 2000 with GNP increasing by
5.5%. Prospects for the Irish economy remain positive. The Central Bank is
forecasting GNP growth of 5.25% for 2005 (5.5% GDP growth), and expects growth
to continue, in 2006, at a broadly similar rate. Notwithstanding the strong
fundamentals in the Irish economy, the key risks to economic forecasts lie in
the oil price and exchange rate uncertainty. The global economy has been in
generally good shape, but some recent indicators have been patchy showing the
inevitable strains of the impact of higher oil and commodity prices as well as a
cooling in the pace of global growth last year.
1
Consumer sentiment weakened in April to 97.3 compared to a reading of 104.2 in
March, but the corresponding figure for April 2004 was 90.8. While the April
sentiment reading points to a more hesitant consumer, it is still consistent
with a healthy trend in household spending. The main message of the data is that
the mood of consumers is one of cautious optimism. With the global economy
hitting a soft patch and with consumer sentiment also falling in the US, and the
UK, it is not surprising that Irish consumers were a little less optimistic.
The strength of the domestic economy remains apparent in the labor market
figures. In February to April the numbers claiming unemployment benefit fell
1.1%. The downward trend in the Live Register that commenced in July 2003 is
still intact. The unemployment rate stood at 4.2% at the end of April - close to
full employment.
Tax receipts were 2.5% above the governments target in the first quarter of the
calendar year. The main contributor was VAT, which is ahead of target due to
strong housing sales and consumer expenditure. In Q1, retail sales rose 6.1%
year on year - the best annual volume growth in any quarter for five years. On
the corporate side, tax was marginally ahead of the government target.
The sharp rise in oil prices in early April sent the Consumer Price Index
higher. The CPI jumped 0.5%, month on month, taking the annual rate to 2.2%.
Energy prices spiked 5.3%, in April, compared with March. Transport prices,
which are influenced by higher fuel costs rose 1.2%. Elsewhere, pricing pressure
is hard to find, in fact in a range of services, prices fell. Overall inflation
would be much lower were it not for elevated oil prices.
The pace of credit growth in March slowed for the first time since August 2004,
with the year -on-year increase falling back to an underlying rate of 25.4%, up
from 26.9% in February. In a continuation of a trend evident in recent months,
non-mortgage credit once again accounted for most of the monthly increase in
private sector credit, with non-financial corporations driving demand.
EQUITY MARKET REVIEW
The Irish stock market ("ISEQ") declined by 9.1% in Euro terms over the quarter.
The collapse of Elan had a dramatic impact on the index. Excluding its 79% fall,
the ISEQ was down 1.7% which compares more favourably to its peers:
QUARTER ENDED
APRIL 30, 2005
--------------
LOCAL
CURRENCY U.S. $
-------- ------
Irish Equities (ISEQ) -9.1% -10.0%
S&P 500 -2.1% -2.1%
NASDAQ -6.8% -6.8%
UK Equities (FTSE 100) -1.0% +0.3%
Japanese Equities -3.3% -4.3%
2
QUARTER ENDED
APRIL 30, 2005
--------------
LOCAL
CURRENCY U.S. $
-------- ------
Euroland Equities Eurostoxx -1.7% -3.0%
German Equities (DAX) -1.7% -2.9%
French Equities (CAC) -0.1% -1.3%
Dutch Equities (AEX) -3.4% -4.6%
Full year results were a focal point this quarter but the biggest news in the
Irish market was the withdrawal of ELAN's key multiple sclerosis drug, Tysabri,
at the end of February. The suspension followed one confirmed fatality and one
suspected case of a very rare central nervous system disorder. No causal link
had been established, but Elan and Biogen Idec suspended supply and clinical
trials of the product pending fuller investigation of the facts. Most of Elan's
valuation is tied up with the prospects for Tysabri. The fund is not exposed to
Elan.
ALLIED IRISH BANKS full year results were strong, with solid performance across
all geographies. EPS grew 13% off the 118 cents base. The dividend was increased
10% to 59.4 cents. Net interest income and total operating income increased 11%
over the year versus a 7% rise in costs. Asset quality trends were positive with
non-performing loans of 1.2% compared to 1.4% last year. Loan growth was higher
in every geographic area compared to 2003. Management believes that the 2004
level of growth is sustainable, going forward, because it is broadly based.
Allied announced the appointment of Eugene Sheehy as chief executive designate
to succeed Michael Buckley on his retirement. Sheehy is currently chairman and
CEO of the Mid Atlantic Division, M&T bank.
Full year results, from PADDY POWER, were in line with their trading statement
of the previous month. Profit before tax was [EURO]32.1 million, up 57.5%. The
key drivers were favourable sporting results in the first half and the growth of
the online channel. Analyst upgrades of earnings were driven by the performance
of the group's online casino. The company announced that Patrick Kennedy,
currently CFO at Greencore, would become CEO designate of Paddy Power, in the
Fall.
MCINERNEY HOLDINGS reported excellent full year results on the 24th of February.
Pre tax profits rose 43%, EPS rose 46% to 106.43 cents and the dividend was
increased by 65%. 1,101 private homes were completed in Ireland, up 14% year on
year, and McInerney say that the division is well positioned to take advantage
of continuing demand in their target market of first time buyers. In the UK,
there were 500 private home completions, up 12% year on year. With 1,900
controlled plots, management believes that the UK division is well placed to see
progressive growth going forward.
RYANAIR HOLDINGS announced a major new aircraft order with Boeing. The new deal
runs from 2008 to 2012 and is made up of firm orders for 70 aircraft and options
for a further 70. This will allow Ryanair to maintain its planned double-
3
digit growth during the latter years of the decade and is a clear signal of the
growth opportunity that Ryanair sees in the market.
CRH'S full year results were in line with their trading statement. Pre tax
profits rose 18% to [EURO]1,017 million or 23%, on a constant currency basis.
EPS on a pre-goodwill basis increased 20% to 161.7 cents. The dividend was
increased 17% inline with management's guidance for a progressive dividend
policy over the next few years. Underlying sales growth was very strong, up 7%
in 2004 a significant improvement on 2003's 1% underlying growth rate. The
balance sheet is very strong and interest cover on an EBITDA basis stands at
over 13 times. The outlook statement was cautiously upbeat - but management is
typically cautious in their guidance.
KERRY GROUP reported a 10% rise in EPS for 2004, or 13%, on a constant currency
basis. Free cash flow generation was at a high of 59% of EBITDA, above the 51%
average of the past five years. Kerry spent [EURO]712 million on acquisitions
last year but, given the strong cash generation, its balance sheet remains
strong with EBITDA to interest cover of 9 times, so further growth through
acquisitions can easily be funded.
Full year results from FYFFES were ahead of the market consensus as it benefited
from very strong banana prices, in the second half of 2004, and the weak dollar.
EPS grew 32% to 19.77 cents.
KINGSPAN GROUP produced a stellar set of full year results with sales up 22%.
The EBITBA margin improved from 10.1% to 10.7% proving the company's ability to
pass on higher raw material prices. Basic EPS rose 36% and pre-goodwill EPS rose
31% to 47 cents. Year-end net debt was [EURO]107.6 million, a gearing level of
36%, while interest cover stood at over 16x. The dividend was increased 33% to
9.6 cents and is 5 times covered. Management noted that the macro environment in
which Kingspan operates has continued to improve through the second half of 2004
and into the opening quarter of 2005. Kingspan recently announced the
acquisition of Century Homes for a net consideration of [EURO]91mn. Century is
Irelands leading manufacturer of timber frame houses and has operations in the
UK. The acquisition is expected to be earnings enhancing at the outset and will
improve Kingspan's capability to become the leading player in the off-site low
energy home construction market in the UK and Ireland.
Full year numbers for INDEPENDENT NEWS AND MEDIA were solid. Sales from
continuing operations were up 14% to [EURO]1,557 million. Advertising revenue
from continuing operations was particularly strong. Profit before exceptionals
rose 33% to [EURO]205 million. Due to a higher tax charge, EPS growth was
limited to 12% at14.1cents. Interest cover improved from 2.8x to 3.6x. According
to the group, trading in 2005 has continued the same positive trend, with all
operations showing strong revenue and profit growth. Profits are also benefiting
from cost savings due to the restructuring program, which is expected to be
implemented, fully, during 2005 and 2006.
4
IONA TECHNOLOGIES Q1 results were in line with expectations. Overall revenues
declined 3%. Product revenues were up 8% year on year while service revenues
were down 12%. Operating expenses were down 1% to $13.4 million. Peter Zotto,
President and COO, will take over as CEO from Chris Horn, who is moving, from
his role as CEO, to Vice-Chairman with a focus on strategy.
CURRENT OUTLOOK
The Irish economy continues to perform well, with GDP growth of 5% to 5.5%
forecast for 2005 and 2006, which is very attractive compared to the sub 2%
growth rate in the Eurozone economy, as a whole. So far as the external
environment is concerned, the world economy, generally, has been in good shape
in recent times. Last year saw the highest growth rate for the OECD economies
for many years - about 3.5%. This year, growth in the major economies is likely
to be somewhat lower. IMF estimates of world trade volumes, although slowing
from last year's very strong pace, indicate a benign external environment, which
is important for an open economy such as Ireland.
Stock market valuations remain supportive. The ISEQ is trading on 11.5 times
2006 earnings, and the dividend yield for the Irish market based on 2005
earnings is 2.6%, as compared to a yield of 3.4% on Eurozone 10 year government
bonds.
Sincerely,
/S/PETER HOOPER
Peter Hooper
Chairman
June 17, 2005
5
INVESTMENT SUMMARY
TOTAL RETURN (%)
----------------
MARKET VALUE NET ASSET VALUE (A)
------------ -------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL(B) CUMULATIVE ANNUAL(B)
---------- --------- ---------- ---------
Six Months 15.00 15.00 15.44 15.44
One Year 41.53 41.53 34.95 34.95
Three Year 97.75 25.49 84.94 22.72
Five Year 88.20 13.47 46.84 7.98
Ten Year 261.21 13.69 206.57 11.84
PER SHARE INFORMATION AND RETURNS
---------------------------------
SIX
MONTHS
ENDED
APRIL 30,
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
--------------------------------------------------------------------------------------------------------
Net Asset
Value ($) 13.61 16.90 19.99 21.36 19.75 20.06 13.28 11.04 16.29 20.74 23.93
Income
Dividends ($) (0.11) (0.14) (0.22) (0.07) -- (0.13) (0.01) (0.03) -- (0.089) (0.030)
Capital Gains
Other
Distributions ($) -- (0.13) (0.36) (0.70) (1.14) (1.60) (2.65) (0.69) -- -- --
Total
Return (%) (a) 25.72 26.65 22.46 11.68 (2.79) 13.27 (23.76) (12.07) 47.55 28.14 15.44(b)
NOTES
-----
(a) Total investment returns reflect changes in net asset value per share during
each period and assume that dividends and capital gains distributions, if
any, were reinvested. These percentages are not an indication of the
performance of a shareholder's investment in the Fund based on market price.
(b) Periods less than one year are not annualized.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
6
PORTFOLIO BY MARKET SECTOR AS OF APRIL 30, 2005
(PERCENTAGE OF NET ASSETS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Construction and Building Materials ... 25.12%
Financial ............................. 20.89%
Food and Beverages .................... 14.32%
Leisure and Hotels .................... 7.69%
Health Care Services .................. 6.65%
Business Services ..................... 4.91%
Transportation ........................ 4.27%
Food and Agriculture .................. 3.82%
Diversified Financial Services ........ 3.74%
Other Assets .......................... 8.59%
TOP 10 HOLDINGS BY ISSUER AS OF APRIL 30, 2005
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
Allied Irish Banks PLC Financial 16.67%
CRH PLC Construction and Building Materials 12.33%
Kerry Group PLC, Series A Food and Beverages 11.21%
Kingspan Group PLC Construction and Building Materials 6.71%
DCC PLC Business Services 4.91%
United Drug PLC Health Care Services 4.50%
Jury's Doyle Hotel Group PLC Leisure and Hotels 4.49%
Grafton GRP PLC-UTS Construction and Building Materials 4.29%
Ryanair Holdings PLC Transportation 4.27%
FBD Holdings PLC Financial 4.22%
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2005 Shares (Note A)
-----------------------------------------------------------------------------------
COMMON STOCKS (97.80%)
COMMON STOCKS OF IRISH COMPANIES (97.80%)
BUSINESS SERVICES (4.91%)
DCC PLC 243,763 $ 5,444,086
------------
COMPUTER SOFTWARE AND SERVICES (0.46%)
IONA Technologies PLC-ADR* 169,300 506,207
------------
CONSTRUCTION AND BUILDING MATERIALS (25.12%)
CRH PLC 549,873 13,664,830
Grafton Group PLC-UTS 417,114 4,754,738
Kingspan Group PLC 663,458 7,434,371
McInerney Holdings PLC 196,675 2,000,721
------------
27,854,660
------------
DIVERSIFIED FINANCIAL SERVICES (3.74%)
Irish Life & Permanent PLC 248,182 4,149,074
------------
FINANCIAL (20.89%)
Allied Irish Banks PLC 908,761 18,477,420
FBD Holdings PLC 161,742 4,677,157
------------
23,154,577
------------
FOOD AND AGRICULTURE (3.82%)
IAWS Group PLC 293,851 4,229,735
------------
FOOD AND BEVERAGES (14.32%)
Fyffes PLC 640,733 1,794,931
Greencore Group PLC 401,256 1,657,611
Kerry Group PLC, Series A 511,857 12,422,746
------------
15,875,288
------------
HEALTH CARE SERVICES (6.65%)
ICON PLC-Sponsored ADR* 71,646 2,381,198
United Drug PLC 1,129,687 4,987,643
------------
7,368,841
------------
LEISURE AND HOTELS (7.69%)
Jury's Doyle Hotel Group PLC 314,982 4,981,188
Paddy Power PLC 202,495 3,542,132
------------
8,523,320
------------
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2005 Shares (Note A)
-----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PUBLISHING AND NEWS (2.92%)
Independent News & Media PLC 1,023,832 $ 3,238,217
------------
REAL ESTATE DEVELOPMENT (0.58%)
Irish Estates PLC*,+ 500,000 645,477
------------
TECHNOLOGY (1.55%)
Horizon Technology Group PLC* 1,321,900 1,723,579
------------
TELECOMMUNICATIONS (0.88%)
Eircom Group PLC-144Aa 400,000 970,798
------------
TRANSPORTATION (4.27%)
Ryanair Holdings PLC* 650,000 4,732,641
------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $47,558,888) 108,416,500
------------
TOTAL INVESTMENT COMPANIES BEFORE FOREIGN
CURRENCY ON DEPOSIT
(Cost $47,558,888) $108,416,500
------------
9
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
April 30, 2005 Value (Note A)
-----------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.95%)
British Pounds Sterling (pound) 767 $ 1,465
Euro (euro) 816,757 1,054,397
------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $1,055,864)** 1,055,862
------------
TOTAL INVESTMENTS (98.75%)
(Cost $48,614,752) 109,472,362
OTHER ASSETS AND LIABILITIES (1.25%) 1,391,207
------------
NET ASSETS (100.00%)
$110,863,569
============
-----------------------------------------------------------------------------
a Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933, as amended.
* Non-income producing security.
** Foreign currency held on deposit at the Bank of Ireland.
+ Security is fair valued and market value is determined in accordance
with procedures established by the Board of Trustees.
ADR -American Depository Receipt traded in U.S. dollars.
UTS -Units
10
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
April 30, 2005
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $47,558,888)
See accompanying schedule U.S.$108,416,500
Cash 894,990
Foreign currency (Cost $1,055,864) 1,055,862
Receivable for investment securities sold 189,874
Dividends receivable 646,873
------------
Total Assets 111,204,099
------------
LIABILITIES:
Payable for Fund shares redeemed 82,594
Investment advisory fee payable (Note B) 68,101
Accrued legal fees payable 53,196
Printing fees payable 47,683
Accrued audit fees payable 27,082
Administration fee payable (Note B) 18,376
Custodian fees payable (JP Morgan Chase & Co.) (Note B) 14,880
Directors' fees and expenses (Note C) 11,833
Transfer agent fees payable 6,566
Accrued expenses and other payables 10,219
------------
Total Liabilities 340,530
------------
NET ASSETS U.S.$110,863,569
============
AT APRIL 30, 2005 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares;
Issued and Outstanding 4,633,678 Shares U.S.$ 46,337
Additional Paid-in Capital 49,251,998
Undistributed Net Investment Income 500,409
Accumulated Net Realized Gain 209,444
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 60,855,381
------------
TOTAL NET ASSETS U.S.$110,863,569
============
NET ASSET VALUE PER SHARE
(Applicable to 4,633,678 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $110,863,569 / 4,633,678) U.S.$ 23.93
============
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended
April 30, 2005
(unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of withholding taxes of U.S. $115,404) U.S.$ 1,283,571
Interest 15,600
------------
TOTAL INVESTMENT INCOME 1,299,171
------------
EXPENSES
Investment advisory fee (Note B) $ 421,208
Administration fee (Note B) 88,999
Directors' fees and expenses (Note C) 75,398
Legal fees 63,154
Printing fees 29,843
Custodian fees (Note B) 27,966
Other 86,128
------------
TOTAL EXPENSES 792,696
------------
NET INVESTMENT INCOME U.S.$ 506,475
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE D)
Realized gain on:
Securities transactions 2,876,293
Foreign currency transactions 102,145
------------
Net realized gain on investments during the period 2,978,438
------------
Net change in unrealized appreciation/(depreciation) of:
Securities 11,526,569
Foreign currency and net other assets (75,346)
------------
Net unrealized appreciation of investments
during the period 11,451,223
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 14,429,661
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S.$ 14,936,136
============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended
April 30, 2005 Year Ended
(unaudited) October 31, 2004
----------------------------------------------------------------------------------------
Net investment income/(loss) U.S.$ 506,475 U.S.$ (294)
Net realized gain on investments 2,978,438 4,062,384
Net unrealized appreciation of
investments, foreign currency holdings and
net other assets 11,451,223 17,123,885
------------ -----------
Net increase in net assets resulting from
operations 14,936,136 21,185,975
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (140,656) (424,025)
------------ -----------
Net increase in net assets 14,795,480 20,761,950
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Value of 54,850 and 86,200 shares
repurchased, respectively (Note F) (1,185,179) (1,298,640)
------------ -----------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (1,185,179) (1,298,640)
------------ -----------
NET ASSETS
Beginning of period 97,253,268 77,789,958
------------ -----------
End of period (Including undistributed
net investment income of $500,409
and $134,590 respectively) U.S.$110,863,569 U.S.$97,253,268
============ ===========
See Notes to Financial Statements.
13
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
--------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 2005 ------------------------------------------------------
(unaudited) 2004 2003 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Period U.S.$20.74 $16.29 $11.04 $13.28 $20.06 $19.75
------ ------ ------ ------ ------ ------
Net Investment Income/(Loss) 0.11 (0.00)# 0.07 (0.08) (0.02) 0.15
Net Realized and Unrealized
Gain/(Loss) on Investments 3.07 4.49 5.08 (1.50) 3.65 1.59
------ ------ ------ ------ ------ ------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 3.18 4.49 5.15 (1.58) (3.67) 1.74
------ ------ ------ ------ ------ ------
Distributions to Shareholders from:
Net Investment Income (0.03) (0.09) -- (0.03) (0.01) (0.13)
Net Realized Gains -- -- -- (0.69) (2.65) (1.60)
------ ------ ------ ------ ------ ------
Total from Distributions (0.03) (0.09) -- (0.72) (2.66) (1.73)
------ ------ ------ ------ ------ ------
Anti-Dilutive/(Dilutive) Impact
of Capital Share Transactions 0.04 0.05 0.10 0.06++ (0.45)+ 0.30
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period U.S.$23.93 $ 20.74 $ 16.29 $ 11.04 $ 13.28 $ 20.06
====== ======= ======= ======= ======= =======
Share Price, End of Period U.S.$21.20 $ 18.46 $ 13.81 $ 8.67 $ 11.02 $ 15.19
====== ======= ======= ======= ======= =======
Total Investment Return (a) 15.44%(c) 28.14% 47.55% (12.07)% (23.76)% 13.27%
====== ======= ======= ======= ======= =======
Total Investment Return (b) 15.00%(c) 34.47% 59.28% (16.05)% (12.73)% 3.43%
====== ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000's) U.S.$110,864 $97,253 $77,790 $54,856 $68,223 $95,075
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 0.91%+++ (0.00)%o 0.54% (0.64)% (0.16)% 0.70%
Ratio of Operating Expenses
to Average Net Assets 1.43%+++ 1.80% 1.78% 2.10% 1.80% 1.42%
Portfolio Turnover Rate 4% 5% 10% 13% 35% 34%
(a) Based on share net asset value and reinvestment of distributions at the
price obtained under the Dividend Reinvestment and Cash Purchase Plan.
(b) Based on share market price and reinvestment of distributions at the price
obtained under the Dividend Reinvestment and Cash Purchase Plan.
(c) Return is based on the six months ended April 30, 2005. Periods less than
one year are not annualized.
+ Amount represents $0.08 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.53) per share impact for the new
shares issued as Capital Gain Stock Distribution.
++ Amount represents $0.16 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.10) per share impact for the new
shares issued as Capital Gain Stock Distribution.
+++ Annualized
# Amount represents less than $0.01 per share.
o Amount represents less than 0.01%.
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. (the "Fund") (formerly The Irish Investment
Fund, Inc.) was incorporated under the laws of the State of Maryland on December
14, 1989 and is registered as a non-diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended. The
investment strategy of the Fund, as revised in March 2001, involved a bias
toward high growth Irish companies including listed and unlisted firms, drawn
from the technology, telecommunications and health care sectors. More recently,
due to the broadly based decline in the technology and telecommunications
sectors, this strategy has been amended but the bias continues toward Ireland's
growth companies.
A. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: Securities listed on a stock exchange for which market
quotations are readily available are valued at the closing prices on the date of
valuation, or if no such closing prices are available, at the last bid price
quoted on such day. If there are no such quotations available for the date of
valuation, the last available closing price will be used. The value of
securities and other assets for which no market quotations are readily
available, or whose values have been materially affected by events occurring
before the funds' pricing time but after the close of the securities' primary
markets, are valued by methods deemed by the Board of Directors to represent
fair value. At April 30, 2005 the Fund held 0.58% of its net assets in
securities valued in good faith with an aggregate cost of $669,299 and fair
value of $645,477. Short-term securities that mature in 60 days or less are
valued at amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO STOCKHOLDERS: Distributions are determined
on a tax basis and may differ from net investment income and realized capital
gains for financial reporting purposes. Differences may be permanent or
temporary. Permanent differences are reclassified among capital accounts in the
financial statements to reflect their tax character. Temporary differences
differences arise when certain items of income, expense, gain or loss are
recognized in different periods for financial statement and tax purposes; these
differences will reverse at some time in the future. Differences in
classification may also result from the treatment of short-term gain ordinary
income for tax purposes.
U.S. FEDERAL INCOME TAXES: It is the Fund's intention to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and distribute all of its taxable income
within the prescribed time. It is also the intention of the Fund to make
distributions in sufficient amounts to avoid Fund excise tax. Accordingly, no
provision for U.S. Federal income taxes is required.
CURRENCY TRANSLATION: The books and records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
spot rate of such currencies against U.S. dollars by obtaining from FT-IDC each
day the current 4:00pm London time spot rate and future rate (the future rates
are quoted
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
in 30-day increments) on foreign currency contracts. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date
on investment securities transactions, foreign currency transactions and
the difference between the amounts of interest and dividends recorded on the
books of the Fund and the amount actually received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in
realized gains and losses on security transactions.
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts for non-trading purposes in order to protect investment
securities and related receivables and payables against future changes in
foreign currency exchange rates. Fluctuations in the value of such contracts are
recorded as unrealized gains or losses; realized gains or losses include net
gains or losses on contracts which have terminated by settlements or by entering
into offsetting commitments. Risks associated with such contracts include
movement in the value of the foreign currency relative to the U.S. dollar and
the ability of the counterparty to perform. There were no such contracts open in
the Fund as of April 30, 2005.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Dividend income is recorded on the
ex-dividend date except that certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend date. Non-cash
dividends, if any, are recorded at the fair market value of the securities
received. Interest income is recorded on the accrual basis.
B. MANAGEMENT SERVICES:
The Fund has entered into an investment advisory agreement (the "Investment
Advisory Agreement") with Bank of Ireland Asset Management (U.S.) Limited ("Bank
of Ireland Asset Management"), an indirect wholly-owned subsidiary of The
Governor and Company of the Bank of Ireland ("Bank of Ireland"). Under the
Investment Advisory Agreement, the Fund pays a monthly fee at an annualized rate
equal to 0.75% of the value of the average weekly net assets of the Fund up to
the first $100 million and 0.50% of the value of the average weekly net assets
of the Fund on amounts in excess of $100 million. In addition, Bank of Ireland
Asset Management provides investor services to existing and potential
shareholders.
The Fund has entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. The Fund pays PFPC Inc. an annual fee payable
monthly. During the six months ended April 30, 2005, the Fund incurred expenses
of U.S $88,999 in administration fees to PFPC Inc.
The Fund has entered into an agreement with JP Morgan Chase & Co. to serve
as custodian of the Fund's assets. During the six months ended, April 30, 2005
the Fund incurred expenses for JP Morgan Chase & Co. of U.S. $20,418. Bank of
Ireland served as the Fund's custodian of the Fund's assets held in Ireland
until December 7, 2004. During that period the Fund incurred expenses of U.S.
$7,548 in custodian fees to Bank of Ireland.
For the six months ended, April 30, 2005, the Fund incurred total brokerage
commissions of U.S. $20,458, of which U.S. $3,947 was paid to Davy Stockbrokers,
an affiliate of Bank of Ireland Asset Management.
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
C. DIRECTORS FEES:
The Fund currently pays each Director who is not a managing director,
officer or employee of Bank of Ireland Asset Management or any affiliate
thereof, an annual retainer of U.S. $11,500, plus U.S. $1,000 for each meeting
of the Board of Directors or Committee of the Board attended in person or via
telephone and any stockholder meeting attended in person not held on the same
day as a meeting of the Board. The Fund pays the Chairman of the Board of
Directors of the Fund an additional U.S. $32,500. Also, the Fund pays the
Chairman of the Audit Committee an additional U.S. $1,000 for each meeting of
the Audit Committee attended. Each Director is reimbursed for travel and certain
out-of-pocket expenses.
D. PURCHASES AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the six
months ended, April 30, 2005 excluding U.S. government and short-term
investments, aggregated U.S. $6,403,268 and U.S. $4,515,241, respectively.
At April 30, 2005, aggregate gross unrealized appreciation for all
securities (excluding foreign currency on deposit) in which there was an excess
value over tax cost was U.S. $63,190,790 and aggregate gross unrealized
depreciation for all securities (excluding foreign currency on deposit) in which
there was an excess of tax cost over value was U.S. $2,333,178. Also, on this
date, the tax cost of securities for Federal Income Tax purposes is $47,558,888.
At April 30, 2005, there were no permanent tax and book differences in
gross unrealized appreciation/depreciation of securities or the cost basis
of securities.
E. COMMON STOCK:
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On April 30, 2005 Bank of Ireland held
11,548 shares representing 0.25% of the Fund's total issued shares.
On April 30, 2005, Bank of Ireland Asset Management controlled 341,672
shares, representing 7.37% of the Funds outstanding shares. The Wachovia
Corporation held 563,200 shares, as stated in a 13F-HR filed with the Securities
and Exchange Commission on May 3, 2005, representing 12.15% of the Funds
outstanding shares.
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the six months ended, April 30, 2005, the Fund repurchased 54,850
(1.17% of the shares outstanding at October 31, 2004 year end) of its shares for
a total cost of $1,185,179, at an average discount of 12.77% of net asset value.
For the year ended, October 31, 2004, the Fund repurchased 86,200 (1.81% of
the shares outstanding at October 31, 2003 year end) of its shares for a total
cost of $1,298,640, at an average discount of 15.13% of net asset value.
G. MARKET CONCENTRATION:
Because the Fund concentrates its investments in securities issued by
corporations in Ireland, its portfolio may be subject to special risks and
considerations typically not associated with investing in a broader range of
domestic securities. In addition, the Fund is more susceptible to factors
adversely affecting the
17
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Irish economy than a comparable fund not concentrated in these issuers to the
same extent.
H. PORTFOLIO INFORMATION
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Fund's Form N-Q is available (1) by calling
1-800-468-6475; (2) on the Fund's website located at
HTTP://WWW.NEWIRELANDFUND.COM; (3) on the SEC's website at HTTP://WWW.SEC.GOV;
or (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 1-800-SEC-0330.
I. PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities held by the Fund
is available, without charge and upon request, by calling 1-800-468-6475. This
information is also available from the EDGAR database or the SEC's website at
HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is
available at HTTP://WWW.SEC.GOV.
J. ADVISORY AGREEMENT
(In this disclosure, the term "Fund" refers to The New Ireland Fund, Inc.,
the term "Adviser" refers to Bank of Ireland Asset Management (U.S.) Limited and
the term "Administrator" refers to PFPC).
The directors unanimously approved the continuance of the Investment
Advisory Agreement (the "Advisory Agreement") between the Fund and the Adviser
in respect of the Fund at a meeting held on March 8, 2005.
In preparation for the meeting, the directors had requested and evaluated
various materials from the Advisor and the Administrator, including performance
and expense information for other investment companies with analogous objectives
(i.e., single-country closed-end funds) derived from data compiled by an
independent third party provider ("15c Provider"). Prior to voting, the
directors reviewed the proposed continuance of the Advisory Agreement with
management and with experienced counsel to the Fund and received a memorandum
from such counsel discussing the legal standards for their consideration of the
proposed continuances. The directors who were not "interested persons" of the
Fund or the Adviser also discussed the proposed continuances in a private
session with counsel at which no representatives of the Adviser were present. In
reaching their determinations relating to continuance of the Advisory Agreement
in respect of the Fund, the directors considered all factors they believed
relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with analogous investment objectives and to the Irish Stock
Exchange index;
2. the nature, extent and quality of investment and other services rendered by
the Adviser;
3. payments received by the Adviser from all sources in respect of the Fund;
4. the costs borne by, and profitability of, the Adviser and its affiliates
in providing services to the Fund;
18
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
5. comparative fee and expense data for the Fund and other investment companies
with analogous investment objectives;
6. the extent to which economies of scale would be realized as the Fund grows
and whether fee levels reflect these economies of scale for the benefit
of investors;
7. fall-out benefits which the Adviser and its affiliates receive from their
relationships to the Fund;
8. the professional experience and qualifications of the Fund's portfolio
management team and other senior personnel of the Adviser; and
9. the terms of the Advisory Agreement.
The directors also considered the nature and quality of the services
provided by the Adviser to the Fund, based on their experience as directors of
the Fund, their confidence in the Adviser's integrity and competence gained from
that experience and the Adviser's responsiveness to concerns raised by them in
the past and to personnel changes in the Adviser's portfolio managers. The
directors also considered the lowering of the management fees by the Adviser in
1998 on assets in excess of $100 million.
The directors determined that the overall arrangements between the Fund and
the Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, the expenses incurred and such other matters as
the directors considered relevant in the exercise of their reasonable judgment.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISER
The Adviser manages the investment of the assets of the Fund, including
making purchases and sales of portfolio securities consistent with the Fund's
investment objective and policies. Although the Fund retains a separate third
party administrator, the Adviser also provides the Fund with certain other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and with certain executive personnel necessary for
its operations. The Adviser pays all of the compensation of the director and the
officers of the Fund who are employees of the Adviser.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided had expanded over time as a result of regulatory and other
developments. The directors noted that, for example, the Adviser is responsible
for maintaining and monitoring its own compliance program and coordinates
certain activities with the Fund's Chief Compliance Officer, and these
compliance programs have recently been refined and enhanced in light of new
regulatory requirements. The directors considered the quality of the investment
research capabilities of the Adviser and the other resources they have dedicated
to performing services for the Fund. The quality of other services, including
the Adviser's assistance in the coordination of the activities of some of the
Fund's other service providers, also were considered. The directors also
considered the Adviser's response to recent regulatory compliance issues
affecting it and the Fund. The directors concluded that, overall, they were
satisfied with the nature, extent and quality of services provided (and expected
to be provided) to the Fund under the Advisory Agreement.
COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISER
At the request of the directors, the Adviser provided information
concerning the profitability to the Adviser of the Advisory Agreement. The
directors reviewed
19
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
with the Adviser assumptions and methods of allocation used by the Adviser in
preparing this Fund-specific profitability data. The Adviser stated its belief
that the methods of allocation used were reasonable, but it noted that there
are limitations inherent in allocating costs to multiple individual advisory
products served by an organization such as the Adviser where each of the
advisory products draws on, and benefits from, the research and other resources
of the organization.
The directors recognized that it is difficult to make comparisons of
profitability from investment advisory contracts. This is because comparative
information is not generally publicly available and is affected by numerous
factors, including the structure of the particular adviser, the type of clients
it advises, its business mix, and numerous assumptions regarding allocations and
the adviser's capital structure and cost of capital. In considering
profitability information, the directors considered the effect of fall-out
benefits on the Adviser's expenses. The directors recognized that the Adviser
should, in the abstract, be entitled to earn a reasonable level of profits for
the services it provides, to the Fund. Based on their review, they concluded
they were satisfied that the Adviser's level of profitability, from its
relationship with the Fund, was not excessive.
FALL-OUT BENEFITS
The Advisor advised the directors that no portfolio transactions were
allocated pursuant to arrangements whereby the Adviser receives brokerage and
research services from brokers that execute the Fund's purchases and sales of
securities. As a result, none of the Adviser's research or other expenses were
offset by the use of the Fund's commissions.
The directors also considered that a broker-dealer affiliate of the Adviser
receives brokerage commissions from the Fund for execution services only.
The directors recognized that the impact on the Adviser's broker-dealer
affiliate's profitability would be negligible if it did not receive the
brokerage commissions described above. The directors noted that the Adviser
derives reputational and other benefits from its association with the Fund.
INVESTMENT RESULTS
The directors considered the investment results of the Fund as compared to
investment companies with analogous investment objectives. This was determined
based on the information provided by the 15c Provider and by reviewing the Irish
Stock Exchange index ("ISEQ"). The ISEQ was reviewed, both including and
excluding the common shares, of the Adviser's parent company, which represents
approximately 16% of the capitalization weighted ISEQ index, and which the Fund
is not permitted to purchase. In addition to the information received by the
directors for the meeting, the directors receive detailed performance
information for the Fund at each regular Board meeting during the year.
At the meeting, the directors also reviewed information, showing the
performance of the Fund. This compared the Fund to certain funds in its 15c
Provider category (i.e., Western European single-country closed-end funds)
over annualized rolling one-, three-, five- and ten-year periods ended at
January 31, 2005. They also compared the Fund to a securities index over
one-year and annualized rolling three-year periods, and for the most recent
interim period. The comparative information showed that the performance of the
Fund compared favorably to such funds and was at or above that of the securities
index. The directors also noted that the Fund's diversification criteria limited
its investment
20
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
flexibility compared to many advisory accounts advised by the Adviser. Based
upon their review, the directors concluded that the Fund's relative investment
performance over time had been satisfactory.
EXPENSE RATIO
The directors also considered the total expense ratio of the Fund in
comparison to the fees and expenses of funds within the relevant 15c Provider
category (referred to herein as the Fund's "peer group") and viewed such
comparison to be favorable to the Fund.
ADVISORY FEE
The directors were advised that the Fund is the Adviser's only U.S. client,
managed exclusively, in Irish equity securities and subject to its
diversification restraints and inability to purchase the common shares of the
Adviser's parent company. Other institutional accounts, which included Irish
equities, generally had much broader mandates with fee structures differing
substantially from the Fund and, recognizing its current level of assets, such
institutional fees appeared somewhat but not significantly lower.
The Adviser reviewed with the directors the major differences in the scope
of services, it provides to institutional clients and to the Fund. For example,
despite not being required, under the Advisory Agreement, the Adviser provides,
among other things, employees who serve as officers of the Fund (which officers
provide required certifications, with the attendant costs and exposure to
liability). The Adviser also assists in coordinating the provision of services
to the Fund by certain nonaffiliated service providers. In looking at fee
comparisons, the directors took these aspects into consideration.
The Fund's peer group consisted of 41 portfolios in the relevant 15c
Provider category. The information showed that the Fund's effective advisory fee
rate of .72% (based on net assets at January 31, 2005) was well within the range
of advisory fees paid by the portfolios in the group, and was somewhat below the
average and the median for the group.
The directors recognized the limitations on the usefulness of these
comparisons, given the nature, extent and quality of the services provided by
the advisers of other portfolios. Similar limitations are inherent in comparing
services etc. being provided by the Advisor to its other clients.
The directors noted that the Adviser's fee has a substantial decrement
(from .75% to .50% of average net assets) at a relatively low level of total net
assets ($100 million), which level of assets, although recently above this
figure, has rarely been exceeded in the past.
The directors took into account that, although the Adviser may realize
economies of scale in managing the Fund, as its assets increase, there are
substantial restraints on the growth of Fund assets. These are: (a) a public
offering may only reasonably be made in rights offerings, or when the market
price of the Fund's shares exceeds the net asset value per share; and (b)
stockholders either take dividends or distributions in cash or they reinvest
them in secondary market purchases of Fund shares, neither of which serves to
increase Fund assets.
After considering the information, the directors concluded that they
believed that the Fund's advisory fee was reasonable, with the breakpoint set at
a relatively low level of assets. They also concluded that the absolute dollar
fees paid to the
21
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Adviser were modest, by any standard, in light of the commitment required
to advise the Fund, and that they were satisfied with the nature and quality
of the services provided.
In addition, the directors recognized that many industry observers have
noted that the level of services required and risks involved in managing
registered investment companies are significantly different from those for
pension and institutional accounts and that market fees vary accordingly.
Although for investment advisers (such as the Adviser), who are not also
administrators of closed-end funds, this may be true to a lesser extent than for
more full-service fund managers. However, the directors noted that institutional
client accounts are more portable than registered investment companies that
require Board and stockholder approval, prior to changing investment advisers.
22
ADDITIONAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund will distribute to stockholders, at least annually, substantially
all of its net income from dividends and interest payments and expects to
distribute substantially all its net realized capital gains annually. Pursuant
to the Dividend Reinvestment and Cash Purchase Plan approved by the Fund's Board
of Directors (the "Plan"), each stockholder will be deemed to have elected,
unless American Stock Transfer & Trust Company (the "Plan Agent") is instructed
otherwise by the stockholder in writing, to have all distributions automatically
reinvested by the Plan Agent in Fund shares pursuant to the Plan. Distributions
with respect to Fund shares registered in the name of a broker-dealer or other
nominee (i.e., in "street name") will be reinvested by the broker or nominee in
additional Fund shares under the Plan, unless the service is not provided by the
broker or nominee or the stockholder elects to receive distributions in cash.
Investors who own Fund shares registered in street name may not be able to
transfer those shares to another broker-dealer and continue to participate in
the Plan. These stockholders should consult their broker-dealer for details.
Stockholders who do not participate in the Plan will receive all distributions
in cash paid by check in U.S. dollars mailed directly to the stockholder by
American Stock Transfer & Trust Company, as paying agent. Stockholders who do
not wish to have distributions automatically reinvested should notify the Fund,
in care of the Plan Agent for The New Ireland Fund, Inc.
The Plan Agent will serve as agent for the stockholders in administering
the Plan. If the Directors of the Fund declare an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
stockholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive common stock to be issued by the Fund.
If the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
net asset value or, if the net asset value is less than 95% of the market price
on the valuation date, then at 95% of the market price. The valuation date will
be the dividend or distribution payment date or, if that date is not a trading
day on the New York Stock Exchange, Inc. ("New York Stock Exchange"), the next
preceding trading day. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan will be deemed to have elected to
receive shares of stock from the Fund, valued at market price on the valuation
date. If the Fund should declare a dividend or capital gains distribution
payable only in cash, the Plan Agent as agent for the participants, will buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere,
with the cash in respect of such dividend or distribution, for the participants'
account on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, annually, in any amount from U.S. $100 to U.S. $3,000, for
investment in the Fund's common stock. The Plan Agent will use all funds
received from participants (as well as any dividends and capital gain
distributions received in cash) to purchase Fund shares in the open market on or
about January 15 of each year. Any voluntary cash payments received more than
thirty days prior to such date will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations and to allow ample time
23
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
for receipt and processing by the Plan Agent, it is suggested that the
participants send in voluntary cash payments to be received by the Plan Agent
approximately ten days before January 15. A participant may withdraw a voluntary
cash payment by written notice, if the notice is received by the Plan Agent not
less than forty-eight hours before such payment is to be invested.
The Plan Agent maintains all stockholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by stockholders for personal and U.S. Federal tax records. Shares in the
account of each Plan participant will be held by the Plan Agent in
non-certificated form in the name of the participant, and each stockholder's
proxy will include those shares purchased pursuant to the Plan.
In the case of stockholders such as banks, brokers or nominees who hold
shares for beneficial owners, the Plan Agent will administer the Plan on the
basis of the number of shares certified from time to time by the stockholder as
representing the total amount registered in the stockholder's name and held for
the account of beneficial owners who are participating in the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions. The Plan Agent's fee for the handling of the reinvestment
of dividends and distributions will be paid by the Fund. However, each
participant's account will be charged a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions. A participant
will also pay brokerage commissions incurred in purchases from voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock of individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. Federal income tax which may be payable on such
dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any voluntary cash payment made and any dividend or distribution paid
subsequent to notice of the change sent to all stockholders at least ninety days
before the record date for such dividend or distribution. The Plan also may be
amended or terminated by the Plan Agent with at least ninety days written notice
to all stockholders. All correspondence concerning the Plan should be directed
to the Plan Agent for The New Ireland Fund, Inc. in care of American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York, 10005, telephone
number (718) 921-8283.
24
--------------------------------------------------------------------------------
THE NEW IRELAND FUND, INC.
DIRECTORS AND OFFICERS
Peter J. Hooper - CHAIRMAN OF THE BOARD
James J. Boyle - DIRECTOR
Brendan Donohoe - PRESIDENT AND DIRECTOR
Denis P. Kelleher - DIRECTOR
George G. Moore - DIRECTOR
James M. Walton - DIRECTOR
Lelia Long - TREASURER
Hugh Carter - ASSISTANT TREASURER
Thomas Calabria - SECRETARY
Debra M. Brown - CHIEF COMPLIANCE OFFICER
PRINCIPAL INVESTMENT ADVISOR
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
Greenwich, Connecticut 06830
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
CUSTODIANS
JP Morgan Chase & Co.
North America Investment Services
3 Metro Tech - 7th Floor
Brooklyn, New York 11245
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
INDEPENDENT PUBLIC REGISTERED ACCOUNTING FIRM
Grant Thornton LLP
60 Broad Street
New York, NY 10004
CORRESPONDENCE
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The New Ireland Fund, Inc.
c/o PFPC Inc.
99 High Street
27th Floor
Boston, Massachusetts 02110
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
WEBSITE ADDRESS:
www.newirelandfund.com
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IR-SAR 04/05
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
(D) MAXIMUM NUMBER
(OR APPROXIMATE
DOLLAR VALUE) OF
(C) TOTAL NUMBER OF SHARES SHARES (OR UNITS)
(A) TOTAL NUMBER (B) AVERAGE (OR UNITS) PURCHASED AS PART THAT MAY YET BE
OF SHARES (OR PRICE PAID PER OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE
PERIOD UNITS) PURCHASED SHARE (OR UNIT) OR PROGRAMS PLANS OR PROGRAMS
-------------------------------------------------------------------------------------------------------------------------
Month #1 0 0 0 468,852
(November 1, 2004
to November 30,
2004)
-------------------------------------------------------------------------------------------------------------------------
Month #2 0 0 0 468,852
(December 1, 2004
to December 31,
2004)
-------------------------------------------------------------------------------------------------------------------------
Month #3 0 0 0 468,852
(January 1, 2005
to January 31,
2005)
-------------------------------------------------------------------------------------------------------------------------
Month #4 0 0 0 468,852
(February 1, 2005
to February 28,
2005)
-------------------------------------------------------------------------------------------------------------------------
Month #5 17,350 21.88 17,350 451,502
(March 1, 2005 to
March 31, 2005)
-------------------------------------------------------------------------------------------------------------------------
Month #6 39,350 21.51 39,350 412,152
(April 1, 2005 to
April 30, 2005)
-------------------------------------------------------------------------------------------------------------------------
Total 56,700** 21.62 56,700** 412,152
-------------------------------------------------------------------------------------------------------------------------
**Please note the total figure is different from the figure in the Financials by
1,850 shares. This was a trade that was done on April 14, 2005 which was omitted
in error when the Financials were prepared. The Financials will be corrected for
the Year End report.
a. The date each plan or program was announced: February 2000
b. The dollar amount (or share or unit amount) approved: 10% of shares
outstanding at the previous fiscal year end.
c. The expiration date (if any) of each plan or program: None
d. Each plan or program that has expired during the
period covered by the table: None
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases: None
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 302 of the Sarbanes-Oxley Act of 2002 are
attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are
attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) THE NEW IRELAND FUND, INC.
By (Signature and Title)* /S/ BRENDAN DONOHOE
-------------------------------------------------------
Brendan Donohoe, President
(principal executive officer)
Date JUNE 21, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ BRENDAN DONOHOE
-------------------------------------------------------
Brendan Donohoe, President
(principal executive officer)
Date JUNE 21, 2005
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By (Signature and Title)* /S/ LELIA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JUNE 21, 2005
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* Print the name and title of each signing officer under his or her signature.