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: OCTOBER 31, 2005
----------------------
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, 100 F Street, NE,
Washington DC 20549. 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]
NEW IRELAND FUND LOGO ART
[GRAPHIC OMITTED]
CASTLE ART
ANNUAL REPORT
OCTOBER 31, 2005
COVER PHOTOGRAPH -- LISMORE CASTLE, CO. WATERFORD
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
Dear Shareholder,
INTRODUCTION
As may be seen in the Economic Review section below, forecasts for growth
in the Irish economy have been reduced somewhat in recent months. However, the
economy continues to perform well, with GNP growth expected to be in the 4.5% to
5.0% range, which continues to place Ireland at the forefront of the Western
European economies.
Over the past 12 months, the Fund's Net Asset Value ("NAV") rose by a very
satisfactory 17.51%. This was a significantly better performance than the return
on the Irish and US stock markets, as a whole. As a result of this performance,
the Fund continues to rank close to the top of its Western European peer group
in the 3, 5 and 10 year categories.
In early November, the Board of the Fund declared a distribution for the
fiscal year ended October 31, 2005, in an amount of $1.93 per share. This will
be a stock distribution, however, shareholders will be given the option of
taking the distribution in cash, should they so wish. The $1.93 is comprised of
long term capital gains of $1.77 and net income of $0.16 per share. The
distribution will be made under date of December 28, 2005 to all shareholders of
record as of November 14, 2005.
As set out in the notes to the financial statements, the Managed
Distribution Program, which was approved by the Board last year, remains on hold
because a response is still awaited from the SEC. It is understood that the SEC
is re-examining similar distribution plans that had already been approved for
other funds, prior to reviewing newly received plans, such as ours.
PERFORMANCE
In the fiscal year just ended, the Fund's NAV rose 17.51% to $24.36
compared to the 8.98% return of the Irish Equities Index ("ISEQ"), in US dollar
terms. The Fund's performance was driven by its exposure to quality Irish
companies, which are benefiting from the strong economic environment in their
home market while, at the same time, exploiting growth opportunities in the
U.S., the U.K., and elsewhere.
There was some pull back in the fourth fiscal quarter in what was a
volatile time for world markets. In this quarter, the Fund's NAV decreased by
5.33%, which compares with a 4.21% decline in the ISEQ, in US dollar terms. The
Euro declined by 5.8%, against the dollar, over the last year and by 1.4% in the
most recent quarter.
During fiscal 2005, we continued to implement the Share Repurchase Program,
and over the 12 months, the Fund repurchased, and retired, 165,350 shares at a
cost of $3.6 million. These repurchases represent a reduction of 3.53% of the
shares outstanding at October 31, 2004 and they positively impacted the Fund's
NAV by 11 cents per share. Since commencement of the
1
Program, in fiscal 2000, repurchases have totalled 1,254,300 shares
representing 21.7% of total shares which have been issued by the Fund.
ECONOMIC REVIEW
The overall outlook for the Irish economy remains good. The Central Bank's
forecast of GNP growth, for the current year, is close to 4.5%, with a similar
outcome expected in 2006. The international environment is very important for an
open economy, like Ireland, and growth in the world economy remains robust. The
European Central Bank's estimate of world GDP growth, outside of the Eurozone
area, is around 4.8% for 2005; on the other hand, weakness within the area,
which is reflective of low domestic demand, is resulting in a modest forecast of
1.3% for this year.
The two major risks, to International economies, remain oil price trends
and the potential for global imbalances, either, or both, of which could cause
sudden moves in currency exchange rates. In Ireland, the growing dependence on
the construction sector has increased the potential vulnerability of the
economy.
Consumer sentiment recovered a little in the month of October with the
overall consumer index being 85.0 as compared to the figure of 80.5 in
September. However, this still remains below the corresponding figure for 2004,
which was 99.6. Employment continues to be strong and unemployment claims remain
steady at 4.4%. This is the lowest jobless rate across the 25 member European
Union.
Overall, tax revenues in the first ten months of the year were up 8.6%, as
compared to last year, well ahead of the Government's forecast of 4% growth of
revenues. This buoyancy has been across virtually all taxation categories.
The annual rate of inflation was 3% in September, the highest rate since
August 2003. On an adjusted euro area standard, inflation rose by 2.8%, as
compared to the 2.5% Eurozone average. Higher energy prices have been a major
factor in pushing inflation higher than it would otherwise have been in the
first nine months of 2005.
Demand for credit strengthened further in September, with the year-on-year
increase in private sector credit rising to an adjusted rate of 28.6%. This is
the fastest rate of credit growth since March 2000. The annual growth rate for
mortgage credit fell marginally to 25.8% while the growth rate for non-mortgage
credit rose to 28.7%.
EQUITY MARKET REVIEW
In what was a volatile quarter for world markets, the Irish index fell 2.9%
in Euro terms, an underperformance versus its benchmark peers. Over the full
year, the index performance was more in line with its peers.
2
QUARTER ENDED YEAR ENDED
OCTOBER 31, 2005 OCTOBER 31, 2005
---------------- ----------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
-------- ------ -------- ------
Irish Equities (ISEQ) -2.9% -4.2% 15.7% 9.0%
S&P 500 -2.2% -2.2% 6.8% 6.8%
NASDAQ -3.0% -3.0% 7.4% 7.4%
UK Equities (FTSE 100) 0.7% 1.4% 15.0% 10.8%
Japanese Equities 14.3% 10.5% 26.3% 14.8%
Euroland Equities Eurostoxx 0.2% -0.9% 20.3% 12.7%
German Equities (DAX) 0.9% -0.2% 24.5% 16.6%
French Equities (CAC) -0.3% -1.4% 19.7% 12.1%
Dutch Equities (AEX) -0.4% -1.5% 19.3% 11.8%
As well as there being some significant corporate activity over the
quarter, the first half reporting season provided lots of news flow and mixed
reactions from the market.
Over the past number of months, there was considerable interest by a number
of investors in the possible acquisition of JURY'S DOYLE HOTEL GROUP.
Eventually, JDH Acquisitions, which is led by members of the Doyle family and
which already held a 42% stake in the group, agreed to buy the Group for
(EURO)18.90 per share.
First half results from ALLIED IRISH BANKS were ahead of estimates with
diluted EPS rising by 12% to 71.7 cents. Income grew 13.4% outstripping cost
growth of 9.8%. The Bank raised its full year guidance range from 138-140 cents
to 140-142 cents. The interim dividend was increased 10% to 0.23 cents.
KERRY GROUP announced the acquisition of NOON GROUP for (pound)124 million.
Noon Group produces a range of premium quality Indian, Asian and other
international cuisine ready made meals, mainly for UK multiple retailers. In the
UK, they are the market leader in chilled Indian, and Thai, ready made
categories. In August, Kerry reported first half results that disappointed the
market. Group sales rose 8.3% and EBITDA 6.2%. According to the results
statement, the environment, which is highly competitive, was made worse by high
input costs over the period.
First half turnover grew 13% at CRH, while operating profit expanded 20% to
(EURO)445 million. Strength in the Company's US business offset a weaker
performance in continental Europe. The dividend was increased 17%, which was
similar to the other increases in the past 12 months. Guidance was positive but
with the usual CRH type caveats: "The group will continue to benefit in the
second half from strong markets in its American operations and from sustained
focus on input cost recovery and operational performance although this will be
offset to some extent by the recent surge in energy costs".
3
First half results from KINGSPAN GROUP were very strong. Sales rose 32% to
(EURO)580 million, with an organic growth rate of 20%. Pre tax profit increased
55% and EPS 56% to 31 cents. In their positive outlook statement, management
cited the robust Irish market, the evolving UK construction market and improving
Central European and US markets. To meet current analyst forecasts the company
needs 17%, year on year, growth in the second half of the year, which does not
seem to be particularly demanding given what they have already achieved.
DCC'S stock price was weak in September following a disappointing trading
update on the IT division. According to the company, there was a sharp decline,
in July and August, in retail consumer expenditure on technology and
entertainment products. DCC now expects the division's profit to be down 45% in
the first half, with second half profit similar to last year. IT distribution
will account for 15% of group profits this year. The other divisions are
expected to perform in line with market forecasts.
BABOCK AND BROWN CAPITAL, ("B & B") an Australian investment company,
announced that it had taken a 10.8% stake in EIRCOM GROUP while, at the same
time, its parent exercised its co-investment right, which adds another 1.7%
stake. B&B said it was optimistic about the fundamentals for the Irish economy
and believes that Eircom's management made the correct strategic move with the
recent acquisition of Meteor. Over time, B & B also said that they believe the
market will recognise the Company's inherent value and re-rate it in line with
other utilities.
In recent weeks, Swisscom were in discussions with EIRCOM GROUP about the
possibility of acquisition but these talks were terminated as a result of
intervention by the Swiss Government. The Company's share price, which rose when
the talks were initiated, dropped back to the pre-discussions range, following
their termination.
C&C GROUP'S half year figures were ahead of expectations with sales up 9%
and EPS up 14% over the period. The cider division delivered a stellar
performance with revenues and operating profits up 28% and 26% respectively.
Volume growth for MAGNERS (C&C's cider brand for markets other than the Republic
of Ireland) was 112%, following the successful launch in London. The company
maintained its earlier guidance for the full year. It is forecasting mid-single
digit growth in operating profit, for the second half of the year, as the strong
performance of its cider division continues to drive growth, despite the fact
that the other divisions (snacks and soft drinks) are unlikely to match their
year-ago performance.
CURRENT OUTLOOK
With the outlook for the economy remaining favourable, the Irish market
continues to provide an attractive operating environment for Irish companies.
This is supported by the economy's medium term growth potential, based on the
GNP forecast of 4.5% for the current year and Global growth forecasts resulting
from the strong performance of the U.S. and Chinese economies.
4
Against this background, the valuation of the Irish market is not
demanding. The ISEQ is trading on 13.0x next year's earnings, the same multiple
as the European market as a whole, but with higher earnings growth of 13% for
the ISEQ versus 10% for the European market. The 2.7% dividend yield of the
Irish market provides further support, particularly compared to the 10 year
Eurozone government bonds, which yield 3.4%.
Sincerely,
/S/ PETER HOOPER
Peter Hooper
Chairman
December 23, 2005
5
INVESTMENT SUMMARY (UNAUDITED)
TOTAL RETURN (%)
----------------
MARKET VALUE NET ASSET VALUE (A)
------------ ------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------ ---------- ------
One Year 19.07 19.07 17.51 17.51
Three Year 155.05 36.59 122.20 30.46
Five Year 86.84 13.31 48.96 8.29
Ten Year 228.27 12.61 176.54 10.70
PER SHARE INFORMATION AND RETURNS
---------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-----------------------------------------------------------------------------------------------------------------
Net Asset
Value ($) 16.90 19.99 21.36 19.75 20.06 13.28 11.04 16.29 20.74 24.36
Income
Dividends ($) (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) 26.65 22.46 11.68 (2.79) 13.27 (23.76) (12.07) 47.55 28.14 17.51
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.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
6
PORTFOLIO BY MARKET SECTOR AS OF OCTOBER 31, 2005
(PERCENTAGE OF NET ASSETS)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC
Construction and Building Materials 25.87%
Financial 22.09%
Other Assets 11.34%
Food and Beverages 14.50%
Health Care Services 6.61%
Transportation 4.95%
Business Services 4.11%
Diversified Financial Services 3.97%
Publishing and News 3.46%
Leisure and Hotels 3.10%
TOP 10 HOLDINGS BY ISSUER AS OF OCTOBER 31, 2005
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
Allied Irish Banks PLC Financial 16.88%
CRH PLC Construction and Building Materials 13.43%
Kerry Group PLC, Series A Food and Beverages 8.85%
Kingspan Group PLC Construction and Building Materials 6.92%
FBD Holdings PLC Financial 5.21%
Ryanair Holdings PLC Transportation 4.95%
DCC PLC Business Services 4.11%
United Drug PLC Health Care Services 3.99%
Irish Life & Permanent PLC Diversified Financial Services 3.97%
Grafton GRP PLC-UTS Construction and Building Materials 3.73%
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS
--------------------------------------------------------------------------------
Value (U.S.)
October 31, 2005 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (97.80%)
COMMON STOCKS OF IRISH COMPANIES (97.31%)
BUSINESS SERVICES (4.11%)
DCC PLC 243,763 $ 4,525,483
--------------
COMPUTER SOFTWARE AND SERVICES (0.48%)
IONA Technologies PLC-ADR* 169,300 529,909
--------------
CONSTRUCTION AND BUILDING MATERIALS (25.87%)
CRH PLC 592,479 14,796,005
Grafton Group PLC-UTS 417,114 4,106,691
Kingspan Group PLC 663,458 7,628,693
McInerney Holdings PLC 196,675 1,974,052
--------------
28,505,441
--------------
DIVERSIFIED FINANCIAL SERVICES (3.97%)
Irish Life & Permanent PLC 248,182 4,369,715
--------------
FINANCIAL (22.09%)
Allied Irish Banks PLC 881,321 18,599,680
FBD Holdings PLC 156,192 5,743,315
--------------
24,342,995
--------------
FOOD AND AGRICULTURE (2.87%)
IAWS Group PLC 229,652 3,163,250
--------------
FOOD AND BEVERAGES (14.50%)
C&C Group 462,383 2,852,164
Fyffes PLC 640,733 1,857,197
Greencore Group PLC 401,256 1,513,901
Kerry Group PLC, Series A 466,873 9,752,382
--------------
15,975,644
--------------
HEALTH CARE SERVICES (6.61%)
ICON PLC-Sponsored ADR* 71,646 2,882,319
United Drug PLC 1,129,687 4,397,511
--------------
7,279,830
--------------
LEISURE AND HOTELS (3.10%)
Paddy Power PLC 202,495 3,419,785
--------------
PUBLISHING AND NEWS (3.46%)
Independent News & Media PLC 1,407,440 3,809,814
--------------
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
October 31, 2005 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BUSINESS SUPPORT SERVICES (0.98%)
Irish Estates PLC* 500,000 $ 1,077,973
--------------
TECHNOLOGY (1.41%)
Horizon Technology Group PLC* 1,321,900 1,551,637
--------------
TELECOMMUNICATIONS (2.91%)
Eircom Group PLC 546,468 1,309,062
Eircom Group PLC - 144Aa 794,361 1,902,888
--------------
3,211,950
--------------
TRANSPORTATION (4.95%)
Ryanair Holdings PLC* 650,000 5,457,539
--------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $52,170,616) 107,220,965
--------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (0.49%)
(Cost U.S. $931,778)
MOBILE SERVICES (0.49%)
Getmobile Europe PLC* 900,000 538,987
--------------
TOTAL INVESTMENT COMPANIES BEFORE
FOREIGN CURRENCY ON DEPOSIT
(Cost $53,102,394) $ 107,759,952
--------------
9
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
October 31, 2005 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.27%)
(Interest Bearing)
British Pounds Sterling (pound) 767 $ 1,359
Euro (EURO) 248,286 297,384
--------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $298,851)** 298,743
--------------
TOTAL INVESTMENTS (98.07%)
(Cost $53,401,245) 108,058,695
OTHER ASSETS AND LIABILITIES (1.93%) 2,130,578
--------------
NET ASSETS (100.00%)
$ 110,189,273
==============
--------------------------------------------------------------------------------
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 JP Morgan Chase & Co.
ADR -American Depository Receipt traded in U.S. dollars.
UTS -Units
10
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
October 31, 2005
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $53,102,394)
See accompanying schedule U.S.$ 107,759,952
Cash 2,035,092
Foreign currency (Cost $298,851) 298,743
Dividends receivable 296,023
Prepaid expenses 58,926
-------------
Total Assets 110,448,736
-------------
LIABILITIES:
Investment advisory fee payable (Note B) 69,582
Payable for Fund shares redeemed 55,491
Accrued audit fees payable 38,135
Printing fees payable 32,624
Administration fee payable (Note B) 18,751
Custodian fees payable (JP Morgan Chase & Co.) (Note B) 14,961
Directors' fees and expenses (Note C) 12,835
Accrued legal fees payable 8,478
Accrued expenses and other payables 8,606
-------------
Total Liabilities 259,463
-------------
NET ASSETS U.S.$ 110,189,273
=============
AT OCTOBER 31, 2005 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares;
Issued and Outstanding 4,523,178 Shares U.S.$ 45,232
Additional Paid-in Capital 46,774,527
Undistributed Net Investment Income 733,578
Accumulated Net Realized Gain 7,986,177
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 54,649,759
-------------
TOTAL NET ASSETS U.S.$ 110,189,273
=============
NET ASSET VALUE PER SHARE
(Applicable to 4,523,178 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $110,189,273 / 4,523,178) U.S.$ 24.36
=============
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended
October 31, 2005
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends U.S.$ 2,235,183
Interest 36,471
-------------
TOTAL INVESTMENT INCOME 2,271,654
-------------
EXPENSES
Investment advisory fee (Note B) $ 818,107
Administration fee (Note B) 220,432
Directors' fees and expenses (Note C) 155,071
Legal fees 58,142
Custodian fees (Note B) 50,490
Printing fees 49,978
Other 173,408
------------
TOTAL EXPENSES 1,525,628
-------------
NET INVESTMENT INCOME U.S.$ 746,026
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE D)
Realized gain/(loss) on:
Securities transactions 10,755,171
Foreign currency transactions (6,382)
------------
Net realized gain on investments during the year 10,748,789
-------------
Net change in unrealized appreciation/(depreciation) of:
Securities 5,326,515
Foreign currency and net other assets (80,914)
------------
Net unrealized appreciation of investments during the year 5,245,601
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 15,994,390
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S.$ 16,740,416
=============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Year Ended Year Ended
October 31, 2005 October 31, 2004
--------------------------------------------------------------------------------
Net investment income/(loss) U.S.$ 746,026 U.S.$ (294)
Net realized gain on investments 10,748,789 4,062,384
Net unrealized appreciation of
investments, foreign currency holdings and
net other assets 5,245,601 17,123,885
------------ ------------
Net increase in net assets resulting from
operations 16,740,416 21,185,975
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (140,656) (424,025)
------------ ------------
Net increase in net assets 16,599,760 20,761,950
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Value of 165,350 and 86,200 shares
repurchased, respectively (Note F) (3,663,755) (1,298,640)
------------ ------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (3,663,755) (1,298,640)
------------ ------------
NET ASSETS
Beginning of year 97,253,268 77,789,958
------------ ------------
End of year (Including undistributed
net investment income of $733,578
and $134,590, respectively) U.S.$110,189,273 U.S.$ 97,253,268
============ ============
See Notes to Financial Statements.
13
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR)
--------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Year U.S. $ 20.74 $ 16.29 $ 11.04 $ 13.28 $ 20.06
------- ------- ------- ------- -------
Net Investment Income/(Loss) 0.16 (0.00)# 0.07 (0.08) (0.02)
Net Realized and Unrealized
Gain/(Loss) on Investments 3.38 4.49 5.08 (1.50) (3.65)
------- ------- ------- ------- -------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 3.54 4.49 5.15 (1.58) (3.67)
------- ------- ------- ------- -------
Distributions to Shareholders from:
Net Investment Income (0.03) (0.09) -- (0.03) (0.01)
Net Realized Gains -- -- -- (0.69) (2.65)
------- ------- ------- ------- -------
Total from Distributions (0.03) (0.09) -- (0.72) (2.66)
------- ------- ------- ------- -------
Anti-Dilutive/(Dilutive) Impact
of Capital Share Transactions 0.11 0.05 0.10 0.06++ (0.45)+
------- ------- ------- ------- -------
Net Asset Value,
End of Year U.S. $ 24.36 $ 20.74 $ 16.29 $ 11.04 $ 13.28
======= ======= ======= ======= =======
Share Price, End of Year U.S. $ 21.95 $ 18.46 $ 13.81 $ 8.67 $ 11.02
======= ======= ======= ======= =======
Total Investment Return (a) 17.51% 28.14% 47.55% (12.07)% (23.76)%
======= ======= ======= ======= =======
Total Investment Return (b) 19.07% 34.47% 59.28% (16.05)% (12.73)%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Year (000's) U.S. $110,189 $97,253 $77,790 $54,856 $68,223
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 0.66% (0.00)%++ 0.54% (0.64)% (0.16)%
Ratio of Operating Expenses
to Average Net Assets 1.34% 1.80% 1.78% 2.10% 1.80%
Portfolio Turnover Rate 13% 5% 10% 13% 35%
(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.
+ 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.
# Amount represents less than $0.01 per share.
++ Amount represents less than 0.01%.
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. (the "Fund") 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 Fund's investment objective is long-term
capital appreciation through investment primarily in equity securities of Irish
companies. The Fund is designed for U.S. and other investors who wish to
participate in the Irish securities markets. In order to take advantage of
significant changes that have occurred in the Irish economy over the past few
years and to advance the Fund's investment objective, the investment strategy
now has a bias towards Ireland's growth companies.
Under normal circumstances, the Fund will invest at least 80% of its total
assets in equity and fixed income securities of Irish companies. To the extent
that the balance of the Fund's assets is not so invested, it will have the
flexibility to invest the remaining assets in non-Irish companies that are
listed on a recognized stock exchange. The Fund may invest up to 25% of its
assets in equity securities that are not listed on any securities exchange.
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. 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 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 point in the future. Differences in classification may also result from
the treatment of short-term gain as ordinary income for tax purposes.
As of October 31, 2005, the components of distributable earnings on a tax
basis were as follows:
Ordinary Income $ 733,578
Accumulated Gains 7,986,177
Unrealized Appreciation 54,649,759
------------
$ 63,369,514
============
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
For tax purposes, at October 31, 2005 and October 31, 2004, the Fund
distributed $140,656 and $424,025, respectively, of ordinary income.
During the year ended October 31, 2005, the fund realized net foreign
currency losses of $6,382, which decreased distributable net income for tax
purposes; accordingly such losses have been reclassified to undistributed net
investment income from accumulated net realized gains.
On September 21, 2004, the Board of Directors approved the implementation
of a Managed Distribution Program, subject to the granting of the appropriate
exemptive relief from the Securities and Exchange Commission. Under the proposed
Managed Distribution Program, the Fund would make quarterly distributions at an
annual rate, set once a year, that is a percentage of the rolling average of the
Fund's prior four quarter-end net asset values. The Board had determined that
the initial annual distribution rate would be 10%, with quarterly distributions
in an amount equal to approximately 2.5% of the Fund's net asset value.
Distributions under the Distribution Plan would consist of, in order of
preference and priority, (i) net realized long-term capital gains, (ii) net
investment income, (iii) net realized short-term capital gains and, (iv) only to
the extent necessary to make up any shortfall, a return of capital (up to the
amount of the shareholder's adjusted tax basis in his or her shares). As of
October 31, 2005, the Fund is still awaiting a response from the SEC.
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 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 October 31, 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
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
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 year ended October 31, 2005, the Fund incurred expenses of
U.S $220,432 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 year ended, October 31, 2005 the
Fund incurred expenses for JP Morgan Chase & Co. of U.S. $42,942. 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 year ended, October 31, 2005, the Fund incurred total brokerage
commissions of U.S. $44,325, of which U.S. $12,238 was paid to Davy
Stockbrokers, an affiliate of Bank of Ireland Asset Management.
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 year
ended, October 31, 2005 excluding U.S. government and short-term investments,
aggregated U.S. $13,900,073 and U.S. $14,347,418, respectively.
At October 31, 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. $57,336,004 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. $2,678,446. Also, on this
date, the tax cost of securities for Federal Income Tax purposes is $53,102,394.
At October 31, 2005, there were no permanent tax and book differences in
gross unrealized appreciation/depreciation of securities or the cost basis of
securities.
17
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
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 October 31, 2005 Bank of Ireland Asset
Management held 11,548 shares representing 0.26% of the Fund's total issued
shares.
On October 31, 2005, Bank of Ireland Asset Management controlled 319,455
shares, representing 7.06% of the Funds outstanding shares. The Wachovia
Corporation held 563,200 shares, as stated in a 13G filed with the Securities
and Exchange Commission on May 3, 2005, representing 12.45% 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 year ended, October 31, 2005, the Fund repurchased 165,350 (3.53%
of the shares outstanding at October 31, 2004 year end) of it shares for a total
cost of $3,663,755 at an average discount of 12.07% 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 Irish economy than a comparable fund not concentrated in
these issuers to the same extent.
H. CAPITAL LOSS CARRYFORWARD:
The capital loss carryforward of $2,768,994, determined as of October 31,
2005, has been utilized.
I. SUBSEQUENT EVENT:
On November 14, 2005, the Fund declared a stock distribution of $1.93 per
share, which represents a distribution from net investment income of $0.16 and
realized capital gains of $1.77 to shareholders of record November 4, 2005,
payable December 28, 2005.
18
THE NEW IRELAND FUND, INC.
REPORT OF INDEPENDENT PUBLIC REGISTERED ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders
of The New Ireland Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of The
New Ireland Fund, Inc. (the "Fund"), including the portfolio holdings, as of
October 31, 2005, and the related statement of operations for the year then
ended and the statement of changes in net assets for the two years then ended
and the financial highlights for the three years then ended. The financial
highlights for the years ended October 31, 2002 and October 31, 2001 were
audited by other auditors. Those auditors expressed an unqualified opinion on
those financial statements in their report dated December 6, 2002. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of October 31, 2005, by
correspondence with the Fund's custodian and brokers. 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
Fund as of October 31, 2005, the results of its operations for the year then
ended and the changes in net assets for the two years then ended and the
financial highlights for the three years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/S/ GRANT THORNTON LLP
New York, New York
December 2, 2005
19
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. $3000, 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 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
20
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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.
21
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
MEETING OF STOCKHOLDERS
--------------------------------------------------------------------------------
On June 7, 2005 the Fund held its Annual Meeting of Stockholders. The
following Directors were elected by the following Votes: James Boyle 3,600,840
For; 53,293 Abstaining; Brendan Donohoe 3,580,039 For; 74,094 Abstaining. Peter
J. Hooper, Denis P. Kelleher, James M. Walton and George G. Moore continue to
serve in their capacities as Directors of the Fund.
DIRECTOR'S FEES
--------------------------------------------------------------------------------
See note "C" in Notes to Financial Statements.
FUND'S PRIVACY POLICY
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. appreciates the privacy concerns and
expectations of its registered stockholders and safeguarding their nonpublic
personal information ("Information") is of great importance to the Fund.
The Fund collects Information pertaining to its registered stockholders,
including matters such as name, address, tax I.D. number, Social Security number
and instructions regarding the Fund's Dividend Reinvestment Plan. The
Information collected from the following sources:
o Directly from the registered stockholder through data provided on
applications or other forms and through account inquiries by mail,
telephone or e-mail.
o From the registered stockholder's broker as the shares are initially
transferred into registered form.
Except as permitted by law, the Fund does not disclose any Information
about its current or former registered stockholders to anyone. The disclosures
made by the Fund are primarily to the Fund's service providers as needed to
maintain account records and perform other services for the Fund's stockholders.
The Fund maintains physical, electronic, and procedural safeguards to protect
the stockholders' Information in the Fund's possession.
The Fund's privacy policy applies only to its individual registered
stockholders. If you own shares of the Fund through a third party broker, bank
or other financial institution, that institution's privacy policies will apply
to you and the Fund's privacy policy will not.
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.
--------------------------------------------------------------------------------
22
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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.
CERTIFICATIONS
--------------------------------------------------------------------------------
The Fund's president has certified to the New York Stock Exchange that, as
of June 21, 2005, he was not aware of any violation by the fund of applicable
NYSE corporate governance listing standards. The Fund's reports to the
Securities and Exchange Commission on Forms N-CSR and N-CSRS contain
certifications by the Fund's principal executive officer and principal financial
officer that relate to the fund's disclosure in such reports and that are
required by rule 30a2(a) under the Investment Company Act.
TAX INFORMATION
--------------------------------------------------------------------------------
For non-corporate shareholders 100%, or the maximum amount allowable under
the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by
the Fund for the period November 1, 2004 to October 31, 2005 may represent
qualified dividend income. Final information will be provided in your 2005 1099
Div Form.
For the fiscal year ended October 31, 2005, the Fund designates long-term
capital gains of $7,986,177.
23
BOARD OF DIRECTORS/OFFICERS
--------------------------------------------------------------------------------
LENGTH OF PRINCIPAL NUMBER OF
POSITION(S) TIME OCCUPATION(S) PORTFOLIOS IN
HELD WITH SERVED AND OTHER FUND COMPLEX
NAME, ADDRESS, THE AND TERM DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND OF OFFICE* PAST FIVE YEARS DIRECTOR
---------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS:
Peter J. Hooper, 65 Director and Since 1990. President of Hooper Associates- 1
Westchester Financial Chairman of Current term Consultants; Director, The Ireland
Center, Suite 1000 the Board expires in United States Council for Commerce
50 Main Street 2006. and Industry; Director, Flax Trust -
White Plains, NY 10606 America.
James J. Boyle, 66 Director Since 2000. Chairman and President of Cardinal 1
50 Main Street Current term Resources, Inc. (oil and gas
White Plains, NY 10606 expires in production); Formerly Director,
2008. Standard Microsystems Corporation;
Trustee, Alvernia College.
Denis P. Kelleher, 66 Director Since 1991. Chief Executive Officer, Wall Street 1
17 Battery Place Current term Access-Financial Services; Director,
New York, NY 10004 expires in SI Bank & Trust; Chairman and
2007. Member of the Board of Trustees
St. John's University.
George G. Moore, 54 Director Since 2004. Chairman/Chief Executive Officer, 1
8010 Towers Crescent Current term TARGUS info; Chairman, AMACAI
Drive Vienna, VA 22182 expires in Information Corporation.
2006.
James M. Walton, 74 Director Since 1990. Chairman, Vira I. Heinz Endowment; 1
Room 3902 Current term Formerly, Director, FireFly, Inc.,
525 William Penn Place expires in Director and Vice Chairman, MMC
Pittsburgh, PA 15219 2007. Group, Inc. (management company).
INTERESTED DIRECTORS:
Brendan Donohoe, 46 ** Director and Since 2005. President, Bank of Ireland Asset
75 Holly Hill Lane President*** Current term Management (U.S.) Limited (2005
Greenwich, CT 06830 expires in to present); Director & Regional Director,
2008. Asia/Pacific, BIAM Australia Pty Limited
(2000 to 2005); Director & Regional
Director Asia/Pacific, Bank of Ireland
Asset Management (Japan) Limited
(2000 to 2005); Managing Director,
BIAM Australia Pty Limited, (1996-2000);
Director, Iridian Asset Management
(2005 to present).
OFFICERS:***
Brendan Donohoe President Appointed see description above
Annually
Lelia Long, 43 Treasurer Since 2002. Senior Vice President and Director,
75 Holly Hill Lane Appointed Bank of Ireland Asset Management
Greenwich, CT 06830 Annually (U.S.) Limited.
Vincenzo A. Scarduzio, 33 Secretary Since 2005. Senior Regulatory Administrator,
760 Moore Road Appointed PFPC Inc. (2001 to present).
King of Prussia, PA Annually
19406
24
BOARD OF DIRECTORS/OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
LENGTH OF PRINCIPAL NUMBER OF
POSITION(S) TIME OCCUPATION(S) PORTFOLIOS IN
HELD WITH SERVED AND OTHER FUND COMPLEX
NAME, ADDRESS, THE AND TERM DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND OF OFFICE* PAST FIVE YEARS DIRECTOR
---------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED):***
Debra M. Brown, 43 Chief Since 2004. Principal, Brown & Associates;
20 Oak Street, Compliance Appointed President, Self Audit, Inc.
Suite 200 Officer Annually
Beverly Farms,
MA 01915
Hugh Carter, 48 Assistant Since 1999. Vice President and Investment
4400 Computer Drive Treasurer Appointed Accounting Director, PFPC, Inc.
Westborough, MA 01581 Annually
----------------------
* Each Director shall serve until the expiration of his current term and/or
until his successor is elected and qualified.
** Mr. Donohoe is deemed to be an "interested" Director because of his
affiliation with the Investment Advisor.
*** Each officer of the Fund will hold office until a successor has been
elected by the Board of Directors.
25
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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
Vincenzo Scarduzio - 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
IR-AR 10/05
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
directors has determined that James J. Boyle is qualified to serve as an audit
committee financial expert serving on its audit committee and that he is
"independent."
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$35,201 and $35,560.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant 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 are $0.00.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for the
review of the federal and state tax returns including review of related
extension requests are $2,500 and $2,575.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0.00.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
THE NEW IRELAND FUND, INC.
AUDIT COMMITTEE POLICY
ON
PRE-APPROVAL OF SERVICES PROVIDED BY THE INDEPENDENT ACCOUNTANTS
The Audit Committee of The New Ireland Fund, Inc. (the "Fund") is
charged with the responsibility to monitor the independence of the
Fund's independent accountants. As part of this responsibility, the
Audit Committee must pre-approve any independent accounting firm's
engagement to render audit and/or permissible non-audit services, as
required by law. In evaluating a proposed engagement of the independent
accountants, the Audit Committee will assess the effect that the
engagement might reasonably be expected to have on the accountant's
independence. The Committee's evaluation will be based on:
a review of the nature of the professional services expected to be
provided,
a review of the safeguards put into place by the accounting firm
to safeguard independence, and
periodic meetings with the accounting firm.
POLICY FOR AUDIT AND NON-AUDIT SERVICES PROVIDED TO THE FUNDS
On an annual basis, the scope of audits for the Fund, audit fees and
expenses, and audit-related and non-audit services (and fees proposed
in respect thereof) proposed to be performed by the Fund's independent
accountants will be presented by the Treasurer and the independent
accountants to the Audit Committee for review and, as appropriate,
approval prior to the initiation of such services. Such presentation
shall be accompanied by confirmation by both the Treasurer and the
independent accountants that the proposed services will not adversely
affect the independence of the independent accountants. Proposed
services shall be described in sufficient detail to enable the Audit
Committee to assess the appropriateness of such services and fees, and
the compatibility of the provision of such services with the auditor's
independence. The Committee shall receive periodic reports on the
progress of the audit and other services which are approved by the
Committee or by the Committee Chairman pursuant to authority delegated
in this Policy.
The categories of services enumerated under "Audit Services",
"Audit-related Services", and "Tax Services" are intended to provide
guidance to the Treasurer and the independent accountants as to those
categories of services which the Committee believes are generally
consistent with the independence of the independent accountants and
which the Committee (or the Committee Chairman) would expect upon the
presentation of specific proposals to pre-approve. The enumerated
categories are not intended as an exclusive list of audit,
audit-related or tax services which the Committee (or the Committee
Chairman) would consider for pre-approval.
AUDIT SERVICES
The following categories of audit services are considered to be
consistent with the role of the Fund's independent accountants:
Annual Fund financial statement audits
SEC and regulatory filings and consents
AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to be
consistent with the role of the Fund's independent accountants:
Accounting consultations Agreed upon procedure reports
Attestation reports Other internal control reports
Individual audit-related services that fall within one of these
categories and are not presented to the Audit Committee as part of the
annual pre-approval process will be subject to pre-approval by the
Committee Chairman (or any other Committee member on whom this
responsibility has been delegated) so long as the estimated fee for
those services does not exceed $7,500.
TAX SERVICES
The following categories of tax services are considered to be
consistent with the role of the Fund's independent accountants:
Tax compliance services related to the filing or amendment of
the following:
Federal, state and local income tax compliance; and
Sales and use tax compliance
Timely RIC qualification reviews
Tax distribution analysis and planning
Accounting methods studies
Tax consulting services and related projects
Individual tax services that fall within one of these categories and
are not presented to the Audit Committee as part of the annual
pre-approval process will be subject to pre-approval by the Committee
Chairman (or any other Committee member on whom this responsibility has
been delegated) so long as the estimated fee for those services does
not exceed $7,500.
OTHER NON-AUDIT SERVICES
Certain non-audit services that the independent accountants are legally
permitted to render will be subject to pre-approval by the Committee or
by one or more Committee members to whom the Committee has delegated
this authority and who will report to the full Committee any
pre-approval decisions made pursuant to this Policy. Non-audit services
presented for pre-approval pursuant to this paragraph will be
accompanied by a confirmation from both the Treasurer and the
independent accountants that the proposed services will not adversely
affect the independence of the independent accountants.
PROSCRIBED SERVICES
The Fund's independent accountants will NOT render services in the
following categories of non-audit services:
Bookkeeping or other services related to the accounting
records or financial statements of the Fund
Financial information systems design and implementation
Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
Actuarial services
Internal audit outsourcing services
Management functions or human resources
Broker or dealer, investment adviser, or investment
banking services
Legal services and expert services unrelated to the audit
Any other service that the Public Company Accounting
Oversight Board determines, by regulation, is impermissible.
PRE-APPROVAL OF NON-AUDIT SERVICES PROVIDED TO BIAM AND BIAM AFFILIATES
Certain non-audit services provided to Bank of Ireland Asset Management
(U.S.) Limited ("BIAM") or any entity controlling, controlled by or
under common control with BIAM that provides ongoing services to the
Fund ("BIAM Affiliates") will be subject to pre-approval by the Audit
Committee. The only non-audit services provided to these entities that
will require pre-approval are those RELATED DIRECTLY TO THE OPERATIONS
AND FINANCIAL REPORTING OF THE FUND. Individual projects that are not
presented to the Audit Committee as part of the annual pre-approval
process, will be subject to pre-approval by the Committee Chairman (or
any other Committee member on whom this responsibility has been
delegated) so long as the estimated fee for those services does not
exceed $75,000. Services presented for pre-approval pursuant to this
paragraph will be accompanied by a confirmation from both the Treasurer
and the independent accountants that the proposed services will not
adversely affect the independence of the independent accountants.
Although the Audit Committee will not pre-approve all services provided
to BIAM Affiliates, the Committee will receive an annual report from
the Fund's independent accounting firm showing the aggregate fees for
all services provided to BIAM and BIAM Affiliates.
December 10, 2003
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0.00.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of all the
independent directors of the registrant. The members of the audit committee are:
James J. Boyle, Peter J. Hooper, George G. Moore and James M. Walton.
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.
The Proxy Voting Policies are attached herewith.
BANK OF IRELAND ASSET MANAGEMENT
--------------------------------
PROXY VOTING POLICY
-------------------
TABLE OF CONTENTS:
------------------
I: PROXY VOTING PROCEDURES
--------------------------
A. PURPOSE 3
B. SCOPE 3
C. GUIDING PRINCIPLES 3
D. DECISION AND VOTING PROCESS 3
E. PROXY VOTING COMMITTEE 4
F. CONFLICTS OF INTEREST 4
G. WHEN BIAM DOES NOT VOTE PROXIES 5
II: PROXY VOTING GUIDELINES
---------------------------
A. AUDITORS 6
B. BOARD OF DIRECTORS 6
- Election of Directors
- Director Indemnification and Liability Provisions
- Board Size
- Independent Chairman (Separate Chairman/CEO)
- Majority of Independent Directors/Establishment of Committees
- Director Tenure/Retirement Age
- Filling of Vacancies/Removal of Directors
C. SHAREHOLDER RIGHTS 8
- Confidential Voting
- Shareholder Ability to Call Special Meetings
D. PROXY CONTESTS 9
- Voting for Director Nominees in Contested Elections
- Voting for Strategic Initiatives in Contested Elections
E. ANTI-TAKEOVER MEASURES 9
- Amend Bylaws without Shareholder Consent
- Anti-Takeover Provisions
- Poison Pill Plans
- Greenmail
F. CAPITAL STRUCTURE 10
- Adjustments to Par Value of Common Stock
- Common Stock Authorization
- Preferred Stock
- Preemptive Rights
- Share Repurchase Programs
- Stock Distributions: Splits and Dividends
G. MERGERS AND CORPORATE RESTRUCTURINGS 12
- Going Private Transactions (LBOs and Minority Squeezeouts)
- Spin-offs
H. EXECUTIVE AND DIRECTOR COMPENSATION 12
- Golden and Tin Parachutes
- Director Compensation
- Stock Option Expensing
I. MISCELLANEOUS 13
- Amending Minor Bylaws
- Changing Corporate Name
- Changing Date, Time or Location of Annual Meeting
I PROXY VOTING PROCEDURES
-----------------------
A. PURPOSE
Bank of Ireland Asset Management Limited and the BIAM group of companies
("BIAM") has adopted and implemented these policies and procedures ("Policies")
to seek to ensure that client proxies are voted in the clients' best interests,
in accordance with BIAM's fiduciary duties to clients and, in the case of BIAM
(U.S.), with SEC rule 206(4)-6 under the Investment Advisers Act of 1940. BIAM
believes that the Policies set forth herein are reasonably designed to achieve
that goal.
B. SCOPE
BIAM's authority to vote the proxies of its clients is established by its
advisory contracts and its proxy voting guidelines have been tailored to reflect
these specific contractual obligations. These Policies apply where clients have
delegated the authority and responsibility to BIAM to decide how to vote
proxies. Where BIAM has agreed to follow client guidelines in voting proxies,
client guidelines will be followed and supercede these Policies. BIAM also will
follow these Policies, as applicable, if it provides advice or recommendations
about specific proxy votes to clients that have not delegated voting
responsibility to BIAM. These Policies may be changed from time to time.
C. GUIDING PRINCIPLES
It is the policy of BIAM to vote all proxies for the exclusive benefit of its
clients. The maximization of total return for the client as an investor in the
stock being voted is the governing influence in considering corporate voting
decisions.
D. DECISION AND VOTING PROCESS
BIAM's proxy voting decisions are made by the Asset Managers. (For clients that
have specific voting guidelines, Portfolio Construction will determine the votes
to be cast at a client level.) BIAM may vote differently on the same matter if
client guidelines or specific instructions call for a vote that is inconsistent
with BIAM's Proxy Voting Guidelines or a decision made by BIAM's Asset Managers.
In unusual circumstances, BIAM Asset Managers may make different proxy voting
decisions for different clients.
Portfolio Construction is responsible for the communication of voting decisions
between the Asset Managers and BIAM's proxy voting agent (the "Agent").
Portfolio Construction provides the Agent with up to date portfolio holdings
information. As a
result, the Agent can provide BIAM with all voting and shareholder
meeting information necessary for informed and timely decision making. The
Agent is responsible for the timely and accurate processing of the voting
decision, and the distribution of this decision to all relevant parties. The
Agent is also responsible for unblocking / rescinding a voting decision upon
request from BIAM.
E. PROXY VOTING COMMITTEE
BIAM has established a Proxy Voting Committee ("Committee") to deal with various
issues associated with proxy voting. The role of the Committee is to develop and
periodically review these Policies to help ensure they are up to date and
reflect current regulatory requirements; review compliance with these Policies;
and critically evaluate exceptions to the Policies. The Committee also is
responsible for taking reasonable steps to seek to identify any material
conflicts of interest on the part of BIAM or its personnel that may affect
particular proxy votes. The Committee is comprised of representatives from Asset
Management; Portfolio Construction; Compliance and Client Service.
F. CONFLICTS OF INTEREST
Occasions may arise where BIAM may have a material conflict of interest with
respect to a matter to be voted. A material conflict of interest may exist, for
example, if BIAM has a very significant business relationship with either the
company whose stock is being voted, the person soliciting the proxy or a third
party that has a material interest in the outcome of the proxy vote.
The Proxy Voting Committee provides guidance to assist BIAM personnel in
identifying potential conflicts of interest and bringing them to the attention
of the Committee. The Committee is responsible for evaluating the materiality of
any conflicts. These Policies describe some, but not all, of the specific types
of conflicts of interest that BIAM may encounter in connection with proxy
voting. The Committee is expected to evaluate the particular facts and
circumstances of each situation and exercise its best judgment in deciding
whether the conflicts are material and how they should be addressed. A member of
BIAM's senior management will be designated, upon request from the Committee,
for consultation and to resolve any conflicts issue on which the Committee has
been unable to reach a decision on its own.
When a material conflict of interest is identified, BIAM may (1) vote the
proxies in accordance with the general rule stated in the Proxy Voting
Guidelines set forth in these Policies (as may be amended from time to time),
provided the guidelines specify how votes generally will be cast on that
particular type of matter, i.e., the guidelines state that BIAM generally will
vote "for" or "against" the proposal; (2) seek voting instructions or a waiver
of the conflict from the clients whose securities are to be voted on their
specific shares; (3) cast the votes for its clients in the same proportion as
the vote of all other holders of such security, or "mirror vote," if information
about the votes cast by other
holders is reasonably and timely available to BIAM; (4) refrain from voting,
other than to vote "present" for purposes of a quorum or (5) take other action
appropriate under the circumstances.
An adviser-client relationship will not be considered material for conflict
purposes if the gross investment advisory income received from the relationship
by BIAM during its most recent fiscal year did not exceed one percent (1%) of
BIAM's annual gross investment advisory income and is not expected to exceed
that amount in the current fiscal year.
BIAM sets its Proxy Voting Guidelines and makes each proxy voting decision
independently, in the best interests of its clients and without regard to the
interests of BIAM, its parent company or any other affiliates of BIAM. In
addition, as a matter of policy, BIAM will not accept or consider direction from
its affiliates on how to vote any particular proxy.
G. WHEN BIAM DOES NOT VOTE PROXIES
In appropriate circumstances, BIAM may not vote proxies respecting client
securities, including, but not limited to, situations where (a) the securities
are no longer held in a client's account; (b) the proxy and other necessary
documents are not received in sufficient time to allow BIAM to analyze the
material or cast an informed vote by the voting deadline; (c) BIAM concludes
that the cost of voting the proxy outweighs any potential benefit to the client;
(d) in BIAM's judgment, the matter to be voted is neither material nor relevant
to shareholders and the issuer of the securities; (e) securities have been
loaned out pursuant to a client's securities lending program and are unavailable
to vote; or (f) the value or amount of the securities to be voted is
insignificant or undeterminable. BIAM also may refrain from voting a proxy where
BIAM believes that it is in the client's best interest to do so. Generally, this
will occur if BIAM is in disagreement with the proposals but the management have
committed to make, within an agreed time frame, appropriate changes which in
BIAM's view will favor shareholders.
In certain markets, shareholders are required to stop trading securities for a
specified time before or after a shareholder meeting ("Blocking Period"). BIAM
may refrain from voting or cancel a vote when BIAM concludes that it is more
beneficial to clients to be free to trade the securities than to vote
securities. In addition, BIAM will, to the best of its ability, unblock a share
position that is subject to a Blocking Period if there is danger of a failed
trade. Blocking only occurs in certain markets and the Blocking Periods and
rules vary from country to country, and in certain circumstances, from company
to company.
II PROXY VOTING GUIDELINES
-----------------------
The following are guidelines and as such are not exhaustive and do not include
all potential voting issues. Because proxy issues and the circumstances of
individual companies are so varied, there may be instances when BIAM will not
vote in strict adherence to these guidelines. Votes on matters not covered by
these guidelines will be determined in accordance with the guiding principles
set forth above. Certain proxy questions that are company specific and of a
non-routine nature may be more appropriately handled on a case-by-case basis. At
any time, BIAM may seek voting instructions from some or all clients holding the
securities to be voted.
A. AUDITORS
BIAM generally will vote FOR proposals to ratify auditors, unless there is
reason to believe that an auditor has a material financial interest in or
association with the company, and is therefore not independent, or there is
reason to believe that the independent auditor has rendered an opinion which is
neither accurate nor indicative of the company's financial position.
B. BOARD OF DIRECTORS
ELECTION OF DIRECTORS
Electing directors is an important stock ownership right that shareholders can
exercise. Shareholders should seek to elect directors who represent their
interests and will act in a manner which will maximize the value of their
ownership interest and who can ultimately be held accountable for their actions.
>> BIAM generally will vote FOR all nominees in uncontested elections.
However, each election is examined on a case-by-case basis and BIAM
will withhold votes for individual nominees or entire slates of
directors if it believes such action is in the best interest of
shareholders.
DIRECTOR INDEMNIFICATION AND LIABILITY PROVISIONS
Directors and officers are often faced with difficult choices and should be
willing to make decisions that are not risk-averse. BIAM believes that directors
should not be held accountable for actions taken where they have acted honestly
and in good faith but should not be fully released from liability if they act
outside of such parameters.
>> BIAM generally will vote FOR proposals providing for indemnification
and liability limitations for officers and directors, provided the
policies are limited to the director acting honestly and in good faith
and putting the interests of the company first, rather than eliminating
entirely director's and officer's liability for monetary damages for
violating the duty of care.
BOARD SIZE
Proposals to allow management to increase or decrease the size of the board at
its own discretion are often used by companies as a takeover defense. By
increasing the size of the board, management can make it more difficult for
dissidents to gain control.
>> BIAM generally will vote FOR proposals that seek to fix the size
of the board.
>> BIAM generally will vote AGAINST proposals that give management
the ability to alter the size of the board without shareholder
approval.
INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)
>> BIAM generally will vote FOR proposals to separate the roles of
Chairman and CEO.
MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES
BIAM believes that having a board independent of management is of the utmost
importance to both a company and its shareholders.
>> BIAM generally will vote FOR proposals asking that a majority or more
of directors be independent.
>> BIAM generally will vote FOR proposals asking that board audit,
compensation, and/or nominating committees be "independent".
Independence does not necessarily require that the entire committee be
composed of independent directors.
DIRECTOR TENURE/RETIREMENT AGE
Tenure and Age limits impose an arbitrary threshold beyond which director's may
not serve regardless of the director's performance.
>> BIAM believes that directors should be judged on their own merit and
generally will not support proposals for such arbitrary guidelines as
age restrictions.
>> BIAM generally will vote FOR proposals that require directors to
present themselves for re-election on a periodic basis.
FILLING VACANCIES/REMOVAL OF DIRECTORS
Shareholder ability to remove directors, with or without cause, is prescribed by
a state's business corporation law, an individual company's articles of
incorporation, or its bylaws. If the state or company has specified that removal
may only be for cause, then such things as self-dealing or fraud will allow for
the removal of a director. Removal without cause requires no such showing, which
would allow shareholders to remove through a majority vote any director before
his or her term expires.
>> BIAM will evaluate on a CASE-BY-CASE basis proposals that members of
the board can only be removed for cause.
C. SHAREHOLDER RIGHTS
CONFIDENTIAL VOTING
In a confidential voting system, all proxies, and voting tabulations that
identify individual shareholders are kept confidential. This confidentiality can
eliminate any real or perceived coercion towards voters.
>> BIAM generally will vote FOR proposals that corporations adopt
confidential voting, use independent vote tabulators or use independent
inspectors of election, as long as the proposal includes a provision
for proxy contests as follows: In the case of a contested election,
management should be permitted to request that the dissident group
honor its confidential voting policy. If the dissidents agree, the
policy remains in place. If the dissidents will not agree, the
confidential voting policy is waived.
>> BIAM generally will vote FOR proposals to adopt confidential voting
by shareholders.
SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Certain matters may arise between regularly scheduled shareholder meetings that
require attention. The inability of shareholders to call meetings could result
in shareholders being unable to remove directors, initiate a shareholder
resolution or respond to a beneficial offer without having to wait for the next
scheduled meeting. The inability to call a special meeting and the resulting
insulation of management could adversely affect corporate performance and
shareholder returns.
>> BIAM generally will vote AGAINST proposals to restrict or prohibit
shareholder ability to call special meetings.
>> BIAM generally will vote FOR proposals that remove restrictions on
the right of shareholders to act independently of management.
D. PROXY CONTESTS
Proxy contests can play a valuable role in removing entrenched directors and
creating a means for corporate change.
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Electing directors is an important stock ownership right that shareholders can
exercise.
>> BIAM will review on a CASE-BY-CASE basis how it will cast its votes for
directors in a contested election based upon what BIAM believes are the
director nominees that will serve in the best interests of shareholders
and will enhance shareholder value.
VOTING FOR STRATEGIC INITIATIVES IN CONTESTED ELECTIONS
>> Votes in a contested election to approve a strategic initiative will be
evaluated on a CASE-BY-CASE basis and voted in favor of the position that
BIAM believes will be in the best interest of shareholders and will enhance
shareholder value.
E. ANTI-TAKEOVER MEASURES
BIAM generally will vote AGAINST anti-takeover proposals if such proposals act
against the common interests of shareholders.
AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT
>> BIAM generally will vote AGAINST proposals giving the board exclusive
authority to amend the Bylaws.
>> BIAM generally will vote FOR proposals giving the board the ability to
amend the bylaws with shareholder consent.
ANTI-TAKEOVER PROVISIONS
>> BIAM generally will vote AGAINST any proposed amendments to corporate
Articles, Bylaws or Charters that include anti-takeover provisions.
POISON PILL PLANS
Poison pills (or shareholder rights plans) are tactics used by management
fearing an unwelcome takeover bid. They cause a variety of events to occur which
may make the company financially less attractive to a potential acquirer.
>> BIAM generally will vote FOR a proposal that the company submit a
shareholder rights plan (poison pill) to a shareholder vote.
>> BIAM generally will vote AGAINST a proposal to renew or amend an
existing shareholder rights plan (poison pill).
>> BIAM generally will vote FOR a proposal to redeem a shareholder rights
plan (poison pill).
>> BIAM generally will vote AGAINST an increase in capital stock for use
in the implementation of a shareholder rights plan (poison pill).
GREENMAIL
Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the market
value of its shares, the practice discriminates against all other shareholders.
This transferred cash could, absent the greenmail payments, be put to use for
reinvestment in the company, payment of dividends, or to fund a public share
repurchase program.
>> BIAM generally will vote FOR proposals to adopt anti-greenmail charter
or bylaw amendments or otherwise restrict a company's ability to make a
greenmail payment.
F. CAPITAL STRUCTURE
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK
Stock that has a fixed per share value printed on its certificate is called par
value stock. The purpose of par value stock is to establish the maximum
responsibility of a
shareholder in the event that a company becomes insolvent. Many times proposals
to reduce par value stem from state law requirements or banking regulations.
>> BIAM generally will vote FOR management proposals to reduce the par
value of common stock.
COMMON STOCK AUTHORIZATION
State statutes and stock exchanges require shareholder approval for increases in
the number of common shares a board is authorized to issue. Companies increase
their supply of common stock for a variety of ordinary business purposes:
raising new capital, funding stock compensation programs, business acquisitions,
and implementation of stock splits or payment of stock dividends.
>> BIAM generally will vote FOR increases in common stock authorized
provided such action is determined to be in the shareholders' best
interests.
>> BIAM will review on a CASE-BY-CASE basis proposals to approve a
reduction in the number of shares of common stock authorized for issue
or an elimination of an authorized class of common stock.
PREFERRED STOCK
>> BIAM will review on a CASE-BY-CASE basis proposals to increase the
number of blank check preferred shares after analyzing the number of
preferred shares available for issue given a company's industry and
performance in terms of shareholder returns.
>> BIAM will review on a CASE-BY-CASE basis proposal to eliminate a
currently authorized class of preferred stock.
PREEMPTIVE RIGHTS
Preemptive rights permit shareholders to share proportionately in any new issues
of stock of the same class. These rights guarantee existing shareholders the
first opportunity to purchase shares of new issues of stock in the class they
own, in an amount equal to the percentage of the class they already own. These
rights provide shareholders with some protection from involuntary dilution of
their ownership interest.
>> BIAM generally will vote FOR proposals that restore preemptive rights
of shareholders.
SHARE REPURCHASE PROGRAMS
>> BIAM generally will vote FOR management proposals to institute
open-market share repurchase plans (Stock Repurchase Program).
STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
>> BIAM generally will vote FOR management proposals to increase the
common share authorization for a stock split or share dividend.
>> BIAM generally will vote FOR recommended stock splits.
G. MERGERS AND CORPORATE RESTRUCTURINGS
>> BIAM will review on a CASE-BY-CASE basis proposals for mergers
and acquisitions.
GOING PRIVATE TRANSACTIONS (LBOS AND MINORITY SQUEEZEOUTS)
>> BIAM will review on a CASE-BY-CASE basis proposals to take a company
private, taking into account factors including, but not limited to,
offer price/premium, fairness opinion, how the deal was negotiated,
conflicts of interest, other alternatives/offers considered, and
non-completion risk.
SPIN-OFFS
>> BIAM will review on a CASE-BY-CASE basis proposed spin-offs, taking
into consideration factors including, but not limited to, tax and
regulatory advantages, planned use of the sale proceeds, valuation of
the spin-off, fairness opinion, benefits to the parent company,
conflicts of interest, managerial incentives, corporate governance
changes and changes in the capital structure.
H. EXECUTIVE AND DIRECTOR COMPENSATION
>> BIAM will evaluate on a CASE-BY-CASE basis all proposed executive
and director compensation plans.
GOLDEN AND TIN PARACHUTES
Golden and tin parachutes are designed to protect the employees of a corporation
in the event of a change in control. Golden parachutes are payments to senior
level management that are triggered during a change of control. The calculation
is usually based on some multiple of an employee's annual or monthly
compensation. Some companies are extending the coverage to all employees via tin
parachutes.
>> BIAM generally will vote FOR proposals that the company eliminate or
restrict existing severance agreements, change-in-control provisions,
or golden parachutes.
DIRECTOR COMPENSATION
BIAM believes that director compensation should be appropriate for the time and
effort that directors spend executing their duties.
>> BIAM evaluates all director compensation proposals on a CASE-BY-CASE
basis.
STOCK OPTION EXPENSING
>> BIAM generally will vote FOR proposals that the company to expense
stock options unless management has already publicly committed to start
expensing by a specific date.
I. MISCELLANEOUS
AMENDING MINOR BYLAWS
>> BIAM generally will vote FOR management proposals for bylaw or charter
changes that are of a housekeeping nature (updates or corrections).
CHANGING CORPORATE NAME
>> BIAM generally will vote WITH MANAGEMENT with regard to changing
the corporate name.
CHANGING DATE, TIME OR LOCATION OF ANNUAL MEETING
>> BIAM generally will vote FOR management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. BIAM requires at least ten days notice of any such change
in order to allow for custodian deadlines.
07/01/2003
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------------------
(B) AVERAGE (C)TOTAL NUMBER OF SHARES (D) MAXIMUM NUMBER (OR
(A) TOTAL NUMBER PRICE PAID PER (OR UNITS) PURCHASED AS PART APPROXIMATE DOLLAR VALUE) OF
OF SHARES (OR SHARE (OR OF PUBLICLY ANNOUNCED PLANS SHARES (OR UNITS)THAT MAY YET BE
PERIOD UNITS) PURCHASED UNIT) OR PROGRAMS PURCHASED UNDER THE PLANS OR PROGRAMS
---------------------------------------------------------------------------------------------------------------------------
May 1 2005 to May 26,050 21.27 26,050 412,152
31 2005
---------------------------------------------------------------------------------------------------------------------------
June 1 2005 to 3,950 21.18 3,950 412,152
June 30 2005
---------------------------------------------------------------------------------------------------------------------------
July 1 2005 to 4,200 22.35 4,200 412,152
July 31 2005
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
August 1 2005 to 28,800 22.83 28,800 412,152
August 31 2005
---------------------------------------------------------------------------------------------------------------------------
September 1 2005 30,000 23.38 30,000 412,152
to September 30
2005
---------------------------------------------------------------------------------------------------------------------------
October 1 2005 to 15,650 22.16 15,650 412,152
October 31 2005
---------------------------------------------------------------------------------------------------------------------------
Total 108,650 22.43 108,650 412,152
---------------------------------------------------------------------------------------------------------------------------
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) Code of ethics, or any amendment thereto, that is the subject
of disclosure required by Item 2 is attached hereto.
(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 JANUARY 5, 2006
----------------------------------------------------------------------------
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 JANUARY 5, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /S/ LELIA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JANUARY 5, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.