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.
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(Exact name of registrant as specified in charter)
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
GREENWICH, CT 06830
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(Address of principal executive offices) (Zip code)
PFPC Inc.
99 High Street, 27th Floor
BOSTON, MA 02110
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(Name and address of agent for service)
registrant's telephone number, including area code: (203) 869-0111
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Date of fiscal year end: OCTOBER 31
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Date of reporting period: APRIL 30, 2006
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 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.
THE
NEW IRELAND
FUND
[GRAPHIC]
SEMI-ANNUAL REPORT
APRIL 30, 2006
COVER PHOTOGRAPH -- LAKES OF KILLARNEY, CO. KERRY
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
Dear Shareholder,
INTRODUCTION
As will be seen in the Economic Review below, the Irish economy remains
strong with growth of 5% expected for the current year and a higher growth rate
being projected for 2007. These growth rates place Ireland in the forefront of
the Western European economies, which although showing some improvement, still
remain well below the growth rate of both Ireland and the U.S.
The strong performance of the Irish Market, allied to the weakening US
dollar has been of considerable benefit to the Fund during the first half of the
Fund's fiscal year. This was reflected by the 28.3% increase in the Fund's Net
Asset Value ("NAV") and the 31.1% increase in the market price over that period.
These type of returns will be hard to replicate over the remainder of the Fund's
fiscal year, given the way the US dollar has moved in recent times and the
possible influence of further interest rate increases in both the Eurozone and
the U.S.
Just before the end of the quarter, Mr. James Boyle resigned as a director
of the Fund, for personal reasons. We are very sorry to see him leave the Board
as he has served the Fund, with distinction, for the past six years. The Board
recently appointed Ms. Margaret Duffy to fill the vacancy resulting from Mr.
Boyle's resignation.
PERFORMANCE
In the second fiscal quarter, the Fund's NAV increased by 12.4% to $28.62,
as compared to the 8.8% rise in the Irish Equities Index ("ISEQ"), in dollar
terms. Excluding Bank of Ireland, which the fund is precluded from investing in,
the Irish market was up 8.7% in dollar terms. For the first six months of the
year, NAV is up 28.3%. while the ISEQ is up 26.8% over that period, in dollar
terms, or 27.4% excluding Bank of Ireland. The performance of the Irish market
is in line with the overall Eurozone market over the last three and six months,
well ahead of the S&P index. Over the same periods, the Euro rose by 3.7% and
5.2%, respectively, against the US dollar. The Equity Market Review section
below gives a more detailed analysis of the performance of some of the key
stocks held by the Fund.
We continue to implement the Share Repurchase Program, with 53,950 shares
being repurchased and retired, since the beginning of the fiscal year, at a cost
of $1,281,640. These repurchases represent a reduction of 1.19% of the shares
outstanding at October 31, 2005 and they have resulted in a positive impact of 3
cents per share.
ECONOMIC REVIEW
The economic outlook in Ireland continues to be positive and the Irish
Central Bank recently increased its expectations for both GNP and GDP growth
1
to 5% this year, which is in line with the economy's growth trend potential.
Stronger growth is also being forecast for 2007. This, in part, relates to an
expectation of higher consumer spending, due mainly to the maturity of the
Special Savings Incentive Accounts ("SSIAs"), which will release very
substantial funds into the economy in the coming months. The International
backdrop also remains supportive, including signs of slightly higher growth
within the Eurozone.
The two major risks to the Global Economy continue to be the potential for
high oil prices to drive inflation and restrict growth, and the danger that
global imbalances could drive sudden moves in exchange rates. In the medium
term, a continuance of the boom in the Irish construction sector appears
unlikely, with the resultant possibility of adverse shocks to the economy.
Consumer sentiment strengthened in April to 98.8, recovering from a dip in
March. Last year the comparable figure was 97.3. Commentators regard the numbers
as an indication that consumers are cautiously optimistic. Consumer spending has
been strong with January and February retail sales figures, excluding autos, up
7.5%, and 7%, respectively. These increases would seem to indicate that the SSIA
funds are being spent in advance of payout.
The number of unemployment claims rose slightly in April taking the total
to the highest figure for 13 months, however the unemployment rate, at 4.5%, has
remained fairly steady on a seasonally adjusted basis.
The annual rate of inflation reached 3.5% in March, the highest since June
2003. The reasons are as follows: core services, excluding mortgages, are
beginning to rise as a result of spending related to the anticipated payouts
from the SSIAs mentioned above, core goods price deflation is slowing, mortgages
costs and rents are rising and, of course, energy costs. There is a risk of a
further rise in the CPI but this is unlikely to cause a slowdown in consumer
spending.
Private sector credit growth eased a little in March but remained strong
at 29%, year on year. Mortgage credit rose 29.8% and non-mortgage credit growth
was 28.1%.
EQUITY MARKET REVIEW
World stock markets continued their positive run in the quarter:
QUARTER ENDED SIX MONTHS ENDED
APRIL 30, 2006 APRIL 30, 2006
----------------- -----------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
-------- ------ -------- ------
Irish Equities (ISEQ) +4.9% +8.8% +20.6% +26.8%
S&P 500 +2.4% +2.4% +8.6% +8.6%
NASDAQ +0.7% +0.7% +9.5% +9.5%
UK Equities (FTSE 100) +4.6% +7.3% +13.3% +16.9%
Japanese Equities +1.5% +4.6% +24.3% +27.1%
2
QUARTER ENDED SIX MONTHS ENDED
APRIL 30, 2006 APRIL 30, 2006
----------------- -----------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
-------- ------ -------- ------
Euroland Equities Eurostoxx +5.8% +10.0% +19.0% +25.4%
German Equities (DAX) +5.9% +10.1% +21.9% +28.5%
French Equities (CAC 40) +4.9% +9.0% +17.0% +23.2%
Dutch Equities (AEX) +4.2% +8.3% +19.1% +25.5%
The annual reporting season dominated the news flow over the quarter, as
may be seen below:
EIRCOM reported third quarter numbers with revenue growth of 6.3% being in
line with projections but with margins weaker than expected. EBITDA margins (pre
restructuring & pension charges) were down 5 percentage points to 33.5%. Rising
competition in the fixed line business increased the sales and marketing costs.
Revenues for the recently acquired mobile business, Meteor, rose 9.4% with
subscriber growth ahead of expectations. However, results were overshadowed by
the recent announcement that Eircom had received a preliminary approach from the
Australian firm, Babcock and Brown Capital, which had acquired a 12.5% stake in
the company last October. In recent weeks, a formal offer has been made at a
price of Euro 2.20 per share.
ALLIED IRISH BANKS delivered a solid set of full year results. Net
interest income rose 15% to (euro)2.53 billion, resulting from 26% growth in
average interest-earning assets and a 20 basis points reduction in net interest
margin. Adjusted EPS rose 15.8% to (euro)1.46. Operating expenses rose 7%, which
was at the lower end of the 7-8% guidance range. The cost income ratio dropped
2.5% to 55.2%. Management has expressed confidence in the outlook for 2006 and
beyond.
IRISH LIFE & PERMANENT produced a strong set of 2005 results, beating
analyst's expectations. Operating profit before tax rose 9% to (euro)420 million
and EPS increased 10% to 134.9 cents. Performance of the Life and Pension's
division was impressive with operating profits up 16% to (euro)222 million.
Full year results from KINGSPAN GROUP were strong. Sales rose 30%,
operating profit was up 40% and EPS increased 41%. Growth was spread across the
group's operations. Underlying EBIT growth was 25% and the dividend was
increased by 40%.
CRH full year results were solid. Turnover rose 13% and EPS were up 14%.
The dividend was increased 18%. Guidance, from the typically cautious company,
was confident. CRH entered 2006 with good momentum. The Group is seeing a
gradual pick up in its European operations while, in the U.S., non-residential
construction should continue to recover, although housing starts are expected to
moderate. The company continued its run of acquisitions with the purchase of MMI
Products, in the U.S., for $350 million. The deal is immediately earnings
accretive and adds a new area to the Group's U.S. business. 45% of MMI's sales
are in fencing, 35% in welded wire reinforcement and 20% in construction
accessories.
3
Profits at GRAFTON Group rose 32% during 2005, on the back of high growth
in Ireland where profits rose 116%. The Group's Heiton division was a big
contributor to this. In 2005, Ireland accounted for 50% of group profits versus
32% in 2004. U.K. sales were flat on a like for like basis and profits were also
flat, which was not surprising given the deterioration in trading conditions in
that market. The Group commented that the outlook for their Irish businesses
remains strong, although conditions remain very competitive in the DIY sector.
INDEPENDENT NEWS AND MEDIA reported full year results that were in line
with guidance. Revenue rose 8%, operating profit rose 11% and adjusted EPS was
up 17%. The dividend was increased by 19%. All regions contributed to revenue
and profit growth. Management is confident that 2006 earnings growth will be in
line with market expectations, implying double-digit earnings growth for the
year.
FYFFE'S announced that it was moving its property portfolio with assets of
(euro)207 million into a separate company - Blackrock International Land plc.
This new company has since been listed on the Irish Stock Exchange.
CURRENT OUTLOOK
Prospects for the Irish economy remain good. As mentioned earlier, the 5%
GDP forecast for 2006, together with the positive global backdrop, provides a
very supportive operating environment for Irish companies in the current year.
Despite strong share price appreciation over the past few years, the
valuations attributed to Irish stocks are not demanding. With the market trading
at 13 times next year's earnings and with the expectation of mid-teen earnings
growth, we believe that the Irish market continues to be an attractive long-term
investment.
Sincerely,
/s/ Peter Hooper
Peter Hooper
Chairman
June 16, 2006
4
INVESTMENT SUMMARY
TOTAL RETURN (%)
----------------
MARKET VALUE NET ASSET VALUE (a)
------------ -------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL (b) CUMULATIVE ANNUAL (b)
---------- ---------- ---------- ----------
Six Months 31.13 31.13 28.34 28.34
One Year 35.77 35.77 30.65 30.65
Three Year 186.54 41.99 146.35 35.02
Five Year 146.54 19.77 111.29 16.13
Ten Year 268.22 13.91 209.35 11.95
PER SHARE INFORMATION AND RETURNS
---------------------------------
2006
2ND
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 QUARTER
----------------------------------------------------------------------------------------------------------------------------------
Net Asset
Value ($) 16.90 19.99 21.36 19.75 20.06 13.28 11.04 16.29 20.74 24.36 28.62
Income
Dividends ($) (0.14) (0.22) (0.07) -- (0.13) (0.01) (0.03) -- (0.089) (0.03) (0.16)
Capital Gains Other
Distributions ($) (0.13) (0.36) (0.70) (1.14) (1.60) (2.65) (0.69) -- -- -- (1.77)
Total Return (%) (a) 26.65 22.46 11.68 (2.79) 13.27 (23.76) (12.07) 47.55 28.14 17.51 28.34(b)
NOTES
(a) Total investment returns reflect changes in net asset value per share
during each period and assume that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the Fund
based on market price.
(b) Periods less than one year are not annualized.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
5
PORTFOLIO BY MARKET SECTOR AS OF APRIL 30, 2006
(PERCENTAGE OF NET ASSETS)
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Publishing and News 3.67%
Food and Agriculture 3.12%
Construction and Building Materials 32.24%
Financial 20.20%
Other Assets 7.31%
Food and Beverages 13.69%
Health Care Services 6.46%
Transportation 4.12%
Business Services 4.44%
Diversified Financial Services 4.75%
TOP 10 HOLDINGS BY ISSUER AS OF APRIL 30, 2006
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
CRH PLC Construction and Building Materials 16.35%
Allied Irish Banks PLC Financial 15.98%
Kingspan Group PLC Construction and Building Materials 8.23%
Kerry Group PLC, Series A Food and Beverages 8.14%
Grafton GRP PLC-UTS Construction and Building Materials 5.25%
Irish Life & Permanent PLC Diversified Financial Services 4.75%
DCC PLC Business Services 4.44%
FBD Holdings PLC Financial 4.22%
Ryanair Holding PLC Transportation 4.12%
Independent News & Media PLC Publishing and News 3.67%
6
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2006 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (98.73%)
COMMON STOCKS OF IRISH COMPANIES (97.65%)
BUSINESS SERVICES (4.44%)
DCC PLC 243,763 $ 5,910,839
-------------
BUSINESS SUPPORT SERVICES (1.61%)
Irish Estates PLC* 500,000 2,141,408
-------------
COMPUTER SOFTWARE AND SERVICES (0.58%)
IONA Technologies PLC-ADR* 169,300 768,622
-------------
CONSTRUCTION AND BUILDING MATERIALS (32.24%)
CRH PLC 592,479 21,755,151
Grafton Group PLC-UTS 504,565 6,984,984
Kingspan Group PLC 663,458 10,948,013
McInerney Holdings PLC 196,675 3,208,260
-------------
42,896,408
-------------
DIVERSIFIED FINANCIAL SERVICES (4.75%)
Irish Life & Permanent PLC 248,182 6,321,236
-------------
FINANCIAL (20.20%)
Allied Irish Banks PLC 881,321 21,259,521
FBD Holdings PLC 117,402 5,619,655
-------------
26,879,176
-------------
FOOD AND AGRICULTURE (3.12%)
IAWS Group PLC 229,783 4,147,770
-------------
FOOD AND BEVERAGES (13.69%)
C&C Group 462,383 3,582,016
Fyffes PLC 640,733 1,743,337
Greencore Group PLC 401,256 2,047,044
Kerry Group PLC, Series A 434,434 10,835,266
-------------
18,207,663
-------------
HEALTH CARE SERVICES (6.46%)
ICON PLC-Sponsored ADR* 71,646 3,905,424
United Drug PLC 996,401 4,694,143
-------------
8,599,567
-------------
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2006 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PUBLISHING AND NEWS (3.67%)
Independent News & Media PLC 1,564,683 $ 4,887,971
-------------
TECHNOLOGY (1.29%)
Horizon Technology Group PLC* 1,321,900 1,715,088
-------------
TELECOMMUNICATIONS (1.48%)
Eircom Group PLC 546,468 1,486,856
Eircom Group PLC-144Aa 177,764 483,669
-------------
1,970,525
-------------
TRANSPORTATION (4.12%)
Ryanair Holdings PLC* 650,000 5,477,597
-------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $51,371,474) 129,923,870
-------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (1.08%)
(Cost U.S. $1,391,127)
CONSULTING SERVICES (1.08%)
Rps Group PLC 400,000 1,439,581
-------------
TOTAL INVESTMENT COMPANIES BEFORE
FOREIGN CURRENCY ON DEPOSIT
(Cost $52,762,601)
$ 131,363,451
-------------
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
April 30, 2006 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.37%)
British Pounds Sterling (pound) 767 $ 1,395
Euro (euro)389,100 490,131
-------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $485,331)** 491,526
-------------
TOTAL INVESTMENTS (99.10%)
(Cost $53,247,932) 131,854,977
OTHER ASSETS AND LIABILITIES (0.90%) 1,197,673
-------------
NET ASSETS (100.00%) $ 133,052,650
=============
--------------------------------------------------------------------------------
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
9
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
April 30, 2006
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $52,762,601)
See accompanying schedule U.S.$131,363,451
Cash 553,205
Foreign currency (Cost $485,331) 491,526
Receivable for investment securities sold 1,672,082
Dividends receivable 705,797
Prepaid expenses 35,266
------------
Total Assets 134,821,327
------------
LIABILITIES:
Payable for investments purchased 1,391,128
Payable for Fund shares redeemed 202,147
Investment advisory fee payable (Note B) 73,151
Printing fees payable 41,995
Accrued audit fees payable 21,643
Administration fee payable (Note B) 19,891
Directors' fees and expenses (Note C) 12,258
Custodian fees payable (JP Morgan Chase & Co.) (Note B) 3,659
Accrued legal fees payable 2,198
Accrued expenses and other payables 607
------------
Total Liabilities 1,768,677
------------
NET ASSETS U.S.$133,052,650
============
AT APRIL 30, 2006 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares;
Issued and Outstanding 4,648,661 Shares U.S.$ 46,487
Additional Paid-in Capital 49,257,943
Undistributed Net Investment Income 648,079
Accumulated Net Realized Gain 4,475,678
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 78,624,463
------------
TOTAL NET ASSETS U.S.$133,052,650
============
NET ASSET VALUE PER SHARE
(Applicable to 4,648,661 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $133,052,650 / 4,648,611) U.S.$ 28.62
============
See Notes to Financial Statements.
10
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended
April 30, 2006
(unaudited)
-------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends U.S.$ 1,471,248
Interest 11,824
------------
TOTAL INVESTMENT INCOME 1,483,072
------------
EXPENSES
Investment advisory fee (Note B) $ 414,619
Administration fee (Note B) 111,989
Directors' fees and expenses (Note C) 98,907
Legal fees 66,566
Printing fees 26,928
Custodian fees (Note B) 24,957
Other 101,664
----------
TOTAL EXPENSES 845,630
------------
NET INVESTMENT INCOME U.S.$ 637,442
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE D)
Realized gain on:
Securities transactions 4,478,700
Foreign currency transactions 8,330
----------
Net realized gain on investments during the period 4,487,030
------------
Net change in unrealized appreciation of:
Securities 23,943,292
Foreign currency and net other assets 31,412
----------
Net unrealized appreciation of investments during the period 23,974,704
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 28,461,734
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS U.S.$ 29,099,176
============
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended
April 30, 2006 Year Ended
(unaudited) October 31, 2005
---------------------------------------------------------------------------------------------
Net investment income U.S.$ 637,442 U.S.$ 746,026
Net realized gain on investments 4,487,030 10,748,789
Net unrealized appreciation of
investments, foreign currency holdings and
net other assets 23,974,704 5,245,601
---------------- --------------
Net increase in net assets resulting from
operations 29,099,176 16,740,416
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (722,941) (140,656)
Net realized gains (7,997,529) --
---------------- --------------
Net increase in net assets 20,378,706 16,599,760
---------------- --------------
CAPITAL SHARE TRANSACTIONS:
Value of 53,950 and 165,350 shares
repurchased, respectively (Note F) (1,281,640) (3,663,755)
Value of shares issued to shareholders in
connection with a stock distribution (Note E) 3,766,311 --
---------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS 2,484,671 (3,663,755)
---------------- --------------
NET ASSETS
Beginning of period 110,189,273 97,253,268
---------------- --------------
End of period (Including undistributed
net investment income of $648,079
and $733,578 respectively) U.S.$ 133,052,650 U.S.$ 110,189,273
================ ==============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR)
--------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 2006 ----------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value, Beginning of Year U.S. $ 24.36 $ 20.74 $ 16.29 $ 11.04 $ 13.28 $ 20.06
----------- --------- ------- ------- ------- --------
Net Investment Income/(Loss) 0.14 0.16 (0.00)# 0.07 (0.08) (0.02)
Net Realized and Unrealized Gain/
(Loss) on Investments 6.14 3.38 4.49 5.08 (1.50) (3.65)
----------- --------- ------- ------- ------- --------
Net Increase/(Decrease) in Net Assets
Resulting from Investment
Operations 6.28 3.54 4.49 5.15 (1.58) (3.67)
----------- --------- ------- ------- ------- --------
Distributions to Shareholders from:
Net Investment Income (0.16) (0.03) (0.09) -- (0.03) (0.01)
Net Realized Gains (1.77) -- -- -- (0.69) (2.65)
----------- --------- ------- ------- ------- --------
Total from Distributions (1.93) (0.03) (0.09) -- (0.72) (2.66)
----------- --------- ------- ------- ------- --------
Anti-Dilutive/(Dilutive) Impact of
Capital Share Transactions (0.09)+++ 0.11 0.05 0.10 0.06++ (0.45)+
----------- --------- ------- ------- ------- --------
Net Asset Value, End of Period U.S. $ 28.62 $ 24.36 $ 20.74 $ 16.29 $ 11.04 $ 13.28
=========== ========= ======= ======= ======= ========
Share Price, End of Period U.S. $ 26.36 $ 21.95 $ 18.46 $ 13.81 $ 8.67 $ 11.02
=========== ========= ======= ======= ======= ========
Total Investment Return (a) 28.34%(c) 17.51% 28.14% 47.55% (12.07)% (23.76)%
=========== ========= ======= ======= ======= ========
Total Investment Return (b) 31.13%(c) 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. $ 133,053 $ 110,189 $97,253 $77,790 $54,856 $ 68,223
Ratio of Net Investment Income/(Loss)
to Average Net Assets 1.10%++++ 0.66% (0.00)%@ 0.54% (0.64)% (0.16)%
Ratio of Operating Expenses to
Average Net Assets 1.45%++++ 1.34% 1.80% 1.78% 2.10% 1.80%
Portfolio Turnover Rate 3% 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.
(c) Return is based on the six months ended April 30, 2006. Periods less
than one year are not annualized.
+ Amount represents $0.08 per share impact for shares repurchased by
the Fund under the Share Repurchase Program and $(0.53) per share impact for the
new shares issued as Capital Gain Stock Distribution.
++ Amount represents $0.16 per share impact for shares repurchased by
the Fund under the Share Repurchase Program and $(0.10) per share impact for the
new shares issued as Capital Gain Stock Distribution.
+++ Amount represents $0.03 per share impact for shares repurchased by the
Fund under the Share Repurchase Program and $(0.12) per share impact for the new
shares issued as Capital Gain Stock Distribution.
++++ Annualized
# Amount represents less than $0.01 per share.
@ Amount represents less than 0.01%.
13
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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.
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,
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THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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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 April 30, 2006, 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 April 30, 2006.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Dividend income is recorded on the
ex-dividend date except that certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend date. Non-cash
dividends, if any, are recorded at the fair market value of the securities
received. Interest income is recorded on the accrual basis.
B. MANAGEMENT SERVICES:
The Fund has entered into an investment advisory agreement (the
"Investment Advisory Agreement") with Bank of Ireland Asset Management (U.S.)
Limited ("Bank of Ireland Asset Management"), an indirect wholly-owned
subsidiary of The Governor and Company of the Bank of Ireland ("Bank of
Ireland"). Under the Investment Advisory Agreement, the Fund pays a monthly fee
at an annualized rate equal to 0.75% of the value of the average weekly net
assets of the Fund up to the first $100 million and 0.50% of the value of the
average weekly net assets of the Fund on amounts in excess of $100 million. In
addition, Bank of Ireland Asset Management provides investor services to
existing and potential shareholders.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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The Fund has entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. The Fund pays PFPC Inc. an annual fee payable
monthly. During the six months ended April 30, 2006, the Fund incurred expenses
of U.S $111,989 in administration fees to PFPC Inc.
The Fund has entered into an agreement with JP Morgan Chase & Co. to serve
as custodian of the Fund's assets. During the six months ended, April 30, 2006
the Fund incurred expenses for JP Morgan Chase & Co. of U.S. $24,957.
For the six months ended, April 30, 2006, the Fund incurred total
brokerage commissions of U.S. $16,968, of which U.S. $10,160 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 which, effective December 1, 2005, was increased
from 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 to U.S. $14,500, plus U.S. $1,500 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 fee which, effective December 1, 2005, was increased from U.S.
$32,500 to U.S. $35,000. Also, effective December 1, 2005, the Fund pays the
Chairman of the Audit Committee an additional U.S. $1,500 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 period
ended, April 30, 2006 excluding U.S. government and short-term investments,
aggregated U.S. $3,394,581 and U.S. $8,213,074, respectively.
At April 30, 2006, 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. $80,647,792 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. $2,046,942. Also, on this
date, the tax cost of securities for Federal Income Tax purposes is $52,762,601.
At April 30, 2006, there were no permanent tax and book differences in
gross unrealized appreciation/depreciation of securities or the cost basis of
securities.
E. COMMON STOCK:
For the six months ended April 30, 2006, the Fund issued 179,433 shares in
connection with stock distribution in the amount of $3,766,311.
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On April 30, 2006 Bank of Ireland Asset
Management held 12,609 shares representing 0.27% of the Fund's total issued
shares.
On April 30, 2006, Bank of Ireland Asset Management controlled 312,953
shares, representing 6.7% of the Funds outstanding shares. The Wachovia
Corporation held 650,287 shares, as stated in a 13G filed with the Securities
and Exchange Commission on February 13, 2006, representing 13.99% of the Funds
outstanding shares.
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the six months ended, April 30, 2006, the Fund repurchased 53,950
(1.19% of the shares outstanding at October 31, 2005 year end) of it shares for
a total cost of $1,281,640, at an average discount of 10.10% of net asset value.
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 its shares for a
total cost of $3,663,755, at an average discount of 12.07% 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. PORTFOLIO INFORMATION
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Fund's Form N-Q is available (1) by calling
1-800-468-6475; (2) on the Fund's website located at
HTTP://WWW.NEWIRELANDFUND.COM; (3) on the SEC's website at HTTP://WWW.SEC.GOV;
or (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 1-800-SEC-0330.
I. PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities held by the Fund
is available, without charge and upon request, by calling 1-800-468-6475. This
information is also available from the EDGAR database or the SEC's website at
HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is
available at HTTP://WWW.SEC.GOV.
J. ADVISORY AGREEMENT
(In this disclosure, the term "Fund" refers to The New Ireland Fund, Inc.,
the term "Adviser" refers to Bank of Ireland Asset Management (U.S.) Limited and
the term "Administrator" refers to PFPC).
The directors unanimously approved the continuance of the Investment
Advisory Agreement (the "Advisory Agreement") between the Fund and the Adviser
in respect of the Fund at a meeting held on March 7, 2006.
In preparation for the meeting, the directors had requested and evaluated
various materials from the Adviser and the Administrator, including performance
and expense information for other investment companies with analogous objectives
(i.e., single-country closed-end funds) derived from data compiled by an
independent third party provider ("15c Provider"). Prior to voting, the
directors reviewed the proposed continuance of the Advisory Agreement with
management and with experienced counsel to the Fund and received a memorandum
from such counsel discussing the legal
17
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
standards for their consideration of the proposed continuances. The directors
who were not "interested persons" of the Fund or the Adviser also discussed the
proposed continuances in a private session with counsel at which no
representatives of the Adviser were present. In reaching their determinations
relating to continuance of the Advisory Agreement in respect of the Fund, the
directors considered all factors they believed relevant, including the
following:
1. information comparing the performance of the Fund to other
investment companies with analogous investment objectives and to the
Irish Stock Exchange index;
2. the nature, extent and quality of investment and other services
rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Fund;
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Fund;
5. comparative fee and expense data for the Fund and other investment
companies with analogous investment objectives;
6. the extent to which economies of scale would be realized as the Fund
grows and whether fee levels reflect these economies of scale for
the benefit of investors;
7. fall-out benefits which the Adviser and its affiliates receive from
their relationships to the Fund;
8. the professional experience and qualifications of the Fund's
portfolio management team and other senior personnel of the Adviser;
and
9. the terms of the Advisory Agreement.
The directors also considered the nature and quality of the services
provided by the Adviser to the Fund, based on their experience as directors of
the Fund, their confidence in the Adviser's integrity and competence gained from
that experience and the Adviser's responsiveness to concerns raised by them in
the past and to personnel changes in the Adviser's portfolio managers. The
directors also considered the lowering of the management fees by the Adviser in
1998 on assets in excess of $100 million.
The directors determined that the overall arrangements between the Fund
and the Adviser, as provided in the Advisory Agreement, were fair and reasonable
in light of the services performed, the expenses incurred and such other matters
as the directors considered relevant in the exercise of their reasonable
judgment.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISER
The Adviser manages the investment of the assets of the Fund, including
making purchases and sales of portfolio securities consistent with the Fund's
investment objective and policies. Although the Fund retains a separate third
party administrator, the Adviser also provides the Fund with certain other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and with certain executive personnel necessary for
its operations. The Adviser pays all of the compensation of the director and the
officers of the Fund who are employees of the Adviser.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided had expanded over time as a result of regulatory and other
developments. The directors noted that, for example, the Adviser is responsible
for maintaining and monitoring its
18
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
own compliance program and coordinates certain activities with the Fund's Chief
Compliance Officer, and these compliance programs have recently been refined and
enhanced in light of new regulatory requirements. The directors considered the
quality of the investment research capabilities of the Adviser and the other
resources they have dedicated to performing services for the Fund. The quality
of other services, including the Adviser's assistance in the coordination of the
activities of some of the Fund's other service providers, also were considered.
The directors also considered the Adviser's response to recent regulatory
compliance issues affecting it and the Fund. The directors concluded that,
overall, they were satisfied with the nature, extent and quality of services
provided (and expected to be provided) to the Fund under the Advisory Agreement.
COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISER
At the request of the directors, the Adviser provided information
concerning the profitability to the Adviser of the Advisory Agreement. The
directors reviewed with the Adviser assumptions and methods of allocation used
by the Adviser in preparing this Fund-specific profitability data. The Adviser
stated its belief that the methods of allocation used were reasonable, but it
noted that there are limitations inherent in allocating costs to multiple
individual advisory products served by an organization such as the Adviser where
each of the advisory products draws on, and benefits from, the research and
other resources of the organization.
The directors recognized that it is difficult to make comparisons of
profitability from investment advisory contracts. This is because comparative
information is not generally publicly available and is affected by numerous
factors, including the structure of the particular adviser, the type of clients
it advises, its business mix, and numerous assumptions regarding allocations and
the adviser's capital structure and cost of capital. In considering
profitability information, the directors considered the effect of fall-out
benefits on the Adviser's expenses. The directors recognized that the Adviser
should, in the abstract, be entitled to earn a reasonable level of profits for
the services it provides, to the Fund. Based on their review, they concluded
they were satisfied that the Adviser's level of profitability, from its
relationship with the Fund, was not excessive.
FALL-OUT BENEFITS
The Adviser advised the directors that no portfolio transactions were
allocated pursuant to arrangements whereby the Adviser receives brokerage and
research services from brokers that execute the Fund's purchases and sales of
securities. As a result, none of the Adviser's research or other expenses were
offset by the use of the Fund's commissions.
The directors also considered that a broker-dealer affiliate of the
Adviser receives brokerage commissions from the Fund for execution services
only.
The directors recognized that the impact on the Adviser's broker-dealer
affiliate's profitability would be negligible if it did not receive the
brokerage commissions described above. The directors noted that the Adviser
derives reputational and other benefits from its association with the Fund.
INVESTMENT RESULTS
The directors considered the investment results of the Fund as compared to
investment companies with analogous investment objectives. This was determined
based on the information provided by the 15c Provider and by reviewing the Irish
Stock Exchange index ("ISEQ"). The ISEQ was reviewed, both including and
excluding the
19
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
common shares, of the Adviser's parent company, which represents approximately
14% of the capitalization weighted ISEQ index, and which the Fund is not
permitted to purchase. In addition to the information received by the directors
for the meeting, the directors receive detailed performance information for the
Fund at each regular Board meeting during the year.
At the meeting, the directors also reviewed information, showing the
performance of the Fund. This compared the Fund to certain funds in its 15c
Provider category (i.e., Western European single-country closed-end funds) over
annualized rolling one-, three-, five- and ten-year periods ended at January 31,
2006. They also compared the Fund to a securities index over one-year and
annualized rolling three-year periods, and for the most recent interim period.
The comparative information showed that the performance of the Fund compared
favorably to such funds and was at or above that of the securities index. The
directors also noted that the Fund's diversification criteria limited its
investment flexibility compared to many advisory accounts advised by the
Adviser. Based upon their review, the directors concluded that the Fund's
relative investment performance over time had been satisfactory.
EXPENSE RATIO
The directors also considered the total expense ratio of the Fund in
comparison to the fees and expenses of funds within the relevant 15c Provider
category (referred to herein as the Fund's "peer group") and viewed such
comparison to be favorable to the Fund.
ADVISORY FEE
The directors were advised that the Fund is the Adviser's only U.S.
client, managed exclusively, in Irish equity securities and subject to its
diversification restraints and inability to purchase the common shares of the
Adviser's parent company. Other institutional accounts, which included Irish
equities, generally had much broader mandates with fee structures differing
substantially from the Fund and, recognizing its current level of assets, such
institutional fees appeared somewhat but not significantly lower.
The Adviser reviewed with the directors the major differences in the scope
of services, it provides to institutional clients and to the Fund. For example,
despite not being required, under the Advisory Agreement, the Adviser provides,
among other things, employees who serve as officers of the Fund (which officers
provide required certifications, with the attendant costs and exposure to
liability). The Adviser also assists in coordinating the provision of services
to the Fund by certain nonaffiliated service providers. In looking at fee
comparisons, the directors took these aspects into consideration.
The Fund's peer group consisted of 42 portfolios in the relevant 15c
Provider category. The information showed that the Fund's effective advisory fee
rate of .71% (based on net assets at January 31, 2006) was well within the range
of advisory fees paid by the portfolios in the group, and was below the average
and the median for the group.
The directors recognized the limitations on the usefulness of these
comparisons, given the nature, extent and quality of the services provided by
the advisers of other portfolios. Similar limitations are inherent in comparing
services etc. being provided by the Adviser to its other clients.
The directors noted that the Adviser's fee has a substantial decrement
(from .75% to .50% of average net assets) at a relatively low level of total net
assets ($100 million),
20
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
which level of assets, although recently above this figure, has rarely been
exceeded in the past.
The directors took into account that, although the Adviser may realize
economies of scale in managing the Fund, as its assets increase, there are
substantial restraints on the growth of Fund assets. These are: (a) a public
offering may only reasonably be made in rights offerings, or when the market
price of the Fund's shares exceeds the net asset value per share; and (b)
stockholders either take dividends or distributions in cash or they reinvest
them in secondary market purchases of Fund shares, neither of which serves to
increase Fund assets.
After considering the information, the directors concluded that they
believed that the Fund's advisory fee was reasonable, with the breakpoint set at
a relatively low level of assets. They also concluded that the absolute dollar
fees paid to the Adviser were modest, in light of the commitment required to
advise the Fund, and that they were satisfied with the nature and quality of the
services provided.
In addition, the directors recognized that many industry observers have
noted that the level of services required and risks involved in managing
registered investment companies are significantly different from those for
pension and institutional accounts and that market fees vary accordingly.
Although for investment advisers (such as the Adviser), who are not also
administrators of closed-end funds, this may be true to a lesser extent than for
more full-service fund managers. However, the directors noted that institutional
client accounts are more portable than registered investment companies that
require Board and stockholder approval, prior to changing investment advisers.
21
ADDITIONAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund will distribute to stockholders, at least annually, substantially
all of its net income from dividends and interest payments and expects to
distribute substantially all its net realized capital gains annually. Pursuant
to the Dividend Reinvestment and Cash Purchase Plan approved by the Fund's Board
of Directors (the "Plan"), each stockholder will be deemed to have elected,
unless American Stock Transfer & Trust Company (the "Plan Agent") is instructed
otherwise by the stockholder in writing, to have all distributions automatically
reinvested by the Plan Agent in Fund shares pursuant to the Plan. Distributions
with respect to Fund shares registered in the name of a broker-dealer or other
nominee (i.e., in "street name") will be reinvested by the broker or nominee in
additional Fund shares under the Plan, unless the service is not provided by the
broker or nominee or the stockholder elects to receive distributions in cash.
Investors who own Fund shares registered in street name may not be able to
transfer those shares to another broker-dealer and continue to participate in
the Plan. These stockholders should consult their broker-dealer for details.
Stockholders who do not participate in the Plan will receive all distributions
in cash paid by check in U.S. dollars mailed directly to the stockholder by
American Stock Transfer & Trust Company, as paying agent. Stockholders who do
not wish to have distributions automatically reinvested should notify the Fund,
in care of the Plan Agent for The New Ireland Fund, Inc.
The Plan Agent will serve as agent for the stockholders in administering
the Plan. If the Directors of the Fund declare an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
stockholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive common stock to be issued by the Fund.
If the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
net asset value or, if the net asset value is less than 95% of the market price
on the valuation date, then at 95% of the market price. The valuation date will
be the dividend or distribution payment date or, if that date is not a trading
day on the New York Stock Exchange, Inc. ("New York Stock Exchange"), the next
preceding trading day. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan will be deemed to have elected to
receive shares of stock from the Fund, valued at market price on the valuation
date. If the Fund should declare a dividend or capital gains distribution
payable only in cash, the Plan Agent as agent for the participants, will buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere,
with the cash in respect of such dividend or distribution, for the participants'
account on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash
payments to the Plan Agent, annually, in any amount from U.S. $100 to U.S.
$3,000, for investment in the Fund's common stock. The Plan Agent will use all
funds received from participants (as well as any dividends and capital gain
distributions received in cash) to purchase Fund shares in the open market on or
about January 15 of each year. Any voluntary cash payments received more than
thirty days prior to such date will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations and to allow ample time for receipt and processing by the Plan
Agent, it is suggested that the participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before January 15. A
participant may withdraw a voluntary cash payment by written notice, if the
notice is received by the Plan Agent not less than forty-eight hours before such
payment is to be invested.
22
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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 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.
23
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THE NEW IRELAND FUND, INC.
DIRECTORS AND OFFICERS
Peter J. Hooper - CHAIRMAN OF THE BOARD
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
Salvatore Faia - 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
Seward & Kissel LLP
One Battery Park Plaza
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-SAR 04/06
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
-----------------------------------------------------------------------------------------------------------------------------
(D) MAXIMUM NUMBER (OR
(B) AVERAGE (C) TOTAL NUMBER OF SHARES APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER PRICE PAID PER (OR UNITS) PURCHASED AS PART SHARES (OR UNITS) THAT MAY YET BE
OF SHARES (OR SHARE (OR OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE PLANS OR
PERIOD UNITS) PURCHASED UNIT) OR PROGRAMS PROGRAMS
-----------------------------------------------------------------------------------------------------------------------------
November 1, 2005 5,850 21.63 5,850 452,318
to November 30,
2005
-----------------------------------------------------------------------------------------------------------------------------
December 1, 2005 0 0 0 452,318
to December 31,
2005
-----------------------------------------------------------------------------------------------------------------------------
January 1, 2006 0 0 0 452,318
to January 31,
2006
-----------------------------------------------------------------------------------------------------------------------------
February 1, 2006 16,900 22.84 16,900 452,318
to February 28,
2006
-----------------------------------------------------------------------------------------------------------------------------
March 1, 2006 to 20,800 24.04 20,800 452,318
March 31, 2006
-----------------------------------------------------------------------------------------------------------------------------
April 1, 2006 to 10,400 25.86 10,400 452,318
April 30, 2006
-----------------------------------------------------------------------------------------------------------------------------
Total 53,950 23.76 53,950 452,318
-----------------------------------------------------------------------------------------------------------------------------
a. The date each plan or program was announced : FEBRUARY 2000
b. The dollar amount (or share or unit amount) approved : 10% OF SHARES
OUTSTANDING AT THE PREVIOUS FISCAL YEAR END
c. The expiration date (if any) of each plan or program : NONE
d. Each plan or program that has expired during the period covered by the
table : NONE
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. : NONE
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 302 of the Sarbanes-Oxley Act of 2002 are
attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are
attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) THE NEW IRELAND FUND, INC.
By (Signature and Title)* /S/ BRENDAN DONOHOE
-------------------------------------------------------
Brendan Donohoe, President
(principal executive officer)
Date JUNE 28, 2006
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ BRENDAN DONOHOE
-------------------------------------------------------
Brendan Donohoe, President
(principal executive officer)
Date JUNE 28, 2006
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By (Signature and Title)* /S/ LELIA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JUNE 28, 2006
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* Print the name and title of each signing officer under his or her signature.