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, 2007
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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 OMITTED]
CASTLE PHOTO
SEMI-ANNUAL REPORT
APRIL 30, 2007
COVER PHOTOGRAPH -- KYLEMORE ABBEY, CO. GALWAY
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
Dear Shareholder,
As may be seen in the Economic Review section below, the Irish Economy
remains strong with growth of 5.0% being forecast for the current year and a
slightly lower growth rate being forecast for 2008. Although the growth rate of
the European economies, as a whole, has shown a welcome increase over the past
12 months, Ireland's economy continues to grow at a faster pace than most of the
other countries.
The strong performance of the Irish market, allied to the weakness of the
U.S dollar, has continued to benefit the Fund during the first half of it's
fiscal year. This was reflected by the 20% increase in the Fund's Net Asset
Value ("NAV") over the period however, this type of return may be difficult to
replicate, over the remainder of the year, due to the current level of exchange
rates and the possibility of further interest rate increases within the
Eurozone.
Just before the end of the quarter, for personal reasons, Mr. James Walton
resigned, as a director of the Fund. We are very sorry to see him leave the
Board as he has served the Fund, with distinction both as a director, and as
Chairman of the Audit Committee, since the Fund was established in 1990. On
behalf of the Board, I would like to thank him, most sincerely, for this
commitment. The Board recently appointed Mr. David Dempsey to fill the vacancy
resulting from Mr. Walton's resignation.
PERFORMANCE
In the second fiscal quarter, the Fund's NAV increased by 10.2% to $36.10
compared to the 8.1% rise in the Irish Stock Market ("ISEQ"), in U.S. dollar
terms. Excluding Bank of Ireland, in which the fund is precluded from investing,
the Irish market was up 9.9%, in dollar terms. For the first half of the fiscal
year, the Fund's NAV increased by 20.0% while the ISEQ showed an overall rise of
17.5% over the same period, in dollar terms, or 19.2% excluding Bank of Ireland.
In the most recent quarter, while the Irish market generated gains in excess of
those achieved by most International markets, its performance was below a number
of the European indices.
The Euro rose by 4.8% and 6.5% against the US dollar over the three and six
month periods, respectively, and this factor has also helped the performance of
the Fund.
There were no share repurchases since the beginning of the Fund's fiscal
year as the market price was at, or close to, a premium to NAV for most of the
period.
ECONOMIC REVIEW
The Irish economy continues to expand at a strong pace with the Irish
Central Bank forecasting Gross Domestic Product ("GDP") growth of 5.0% for 2007,
which is lower than the 6.0% growth achieved in 2006. The international backdrop
remains largely supportive with accelerating growth in
1
Europe, and Asia, offsetting the moderate growth rates currently being
experienced in the US.
Despite the satisfactory growth being forecast for the Irish economy for
2007, and the expectation that unemployment will remain at historically low
levels, there are some economic risks. Inflationary pressures are evident
resulting from the continued strong growth of the economy, particularly relating
to domestic demand and this, coupled with lower productivity growth has, to some
degree, eroded export competitiveness in recent years.
The construction sector is also seeing signs of a slow down with
residential completions forecast at a more sustainable level for 2007, as
compared to 2006. However planned increases in infrastructure and strong
non-residential spending should continue to ensure that overall construction
output remains at a high level.
In April, The Consumer Sentiment Index improved to 83.0 as compared to 78.5
in March 2007. The corresponding figure for April 2006 was 98.8.
Retail sales pulled back 2.2% in February after the January increase of
3.9%. The annual change was a very healthy increase of 6.8% driven by new car
sales and strong spending on clothing, footwear, furniture and electrical goods.
Forecasts for the whole of 2007 are for 7% growth in consumer spending.
The economy remains close to full employment with the official unemployment
rate being 4.3% in April 2007. Other statistics confirm strength in the labor
market, which is very satisfactory given the continuing flow of new workers into
the country.
The Harmonized Index of Consumer Prices ("HCIP"), for Ireland, fell
marginally in April to 2.5%, from 2.6%. This compares to the core Euro-zone rate
of 1.8% in April. The forecast for average HCIP inflation, for Ireland, is 2.5%
through 2007, as compared to 2.7% in 2006.
In March 2007, Annual Private Sector Credit Growth was its lowest for 3
years at 23.2%, down from the 24.8% achieved in February. Annual growth in
non-mortgage credit (+30.7%) remained strong throughout the year to March,
driven by lending to the real estate and construction sectors. As expected,
growth in residential mortgage lending eased in the early part of the year with
growth moderating to an annual rate of 22% in March 2007.
2
EQUITY MARKET REVIEW
QUARTER ENDED HALF YEAR ENDED
APRIL 30TH, 2007 APRIL 30TH, 2007
------------------ ------------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
Irish Equities (ISEQ) 2.88% 8.09% 9.85% 17.57%
S&P 500 3.07% 3.07% 7.58% 7.58%
NASDAQ 2.48% 2.48% 6.69% 6.69%
UK Equities (FTSE 100) 3.97% 6.03% 5.22% 10.35%
Japanese Equities -1.22% -0.26% 5.17% 2.50%
Dow Jones Eurostoxx 50 5.59% 10.94% 5.15% 12.55%
German Equities (DAX) 9.13% 14.65% 18.18% 26.49%
French Equities (CAC 40) 6.27% 11.65% 11.43% 19.26%
Dutch Equities (AEX) 6.20% 11.58% 9.09% 16.76%
MAJOR MOVES OVER THE QUARTER (IN EURO TERMS)
POSITIVE NEGATIVE
Smurfit Kappa Group +21.8% Blackrock Intl. Land -17.5%
Icon PLC +19.8% Fyffes PLC -8.2%
CPL Resources PLC +13.8% Grafton Group PLC -7.9%
Independent News & Media +13.2% McInerney Holdings PLC -7.1%
Ryanair Holdings PLC +11.7% Irish Life Permanent PLC -5.3%
A number of the Fund's holdings released results or trading statements
during the period with highlights as follows:
CRH PLC reported an excellent set of 2006 numbers with operating profits
27% ahead at A1.77 billion and EPS up 20%. The Company also increased its full
year dividend by 33% to 52 cent per share. Performance across the Group's
European operations was very strong with all three divisions recording organic
EBIT growth in excess of 10%. The North American Materials and Products
operations also continued to benefit from the increases in infrastructural and
non-residential spend. The 2007 outlook remains largely positive with continued
strength in Europe expected to more than compensate for a weaker performance in
the group's U.S. business exposed to the residential sector.
KINGSPAN GROUP PLC released a buoyant set of 2006 results driven by
continued strong organic growth in Insulation Boards and Panels and extensive
margin improvement (+1.6% year-on-year). The Group enjoyed 50% sales growth in
Eastern Europe while it also expanded its geographical footprint in North
America through an acquisition in Canada. 2007 is expected to be another year of
positive progress with continued growth in the UK, and Eastern Europe,
offsetting some slow down in the Irish market.
3
RYANAIR HOLDINGS PLC issued strong Q3 results with yields ahead by over 7%
and, even though there was an increase in the Airline's overall seat capacity of
21%, this led to significant earnings upgrades in the quarter. The group has
also indicated that, due to its increasing cash balances, a special dividend of
up to A400 million may be paid to shareholders in the coming 12 months.
INDEPENDENT NEWS & MEDIA PLC was a strong performer in the quarter, driven
by excellent 2006 results with 8% EBIT growth to A329.5 million and record
operating margins of 20.1%. Good operational performances in Australasia and
South Africa helped drive the results. The shares also benefited from continued
stake building by Irish entrepreneur, Denis O'Brien, who recently raised his
holding in the Company to 7.3%.
ICON PLC reported Q1 results ahead of analyst consensus with revenues and
EBIT ahead 38% and 46% respectively. The group enjoyed net new business wins of
$223 million equating to a book-to-bill ratio of 1.6x - this was also ahead of
expectations and bodes well for the full year outturn.
CURRENT OUTLOOK
Ireland's economic environment continues to remain broadly favorable and
the forecast for GDP growth of 5.0% in 2007 should provide a strong backdrop for
Irish corporates in the coming months. Global economic conditions should also
remain largely supportive of equity markets in the year ahead and provide
support to the international operations of many Irish companies. Irish Stock
Market valuations remain undemanding with the benchmark index trading at 14.0x
2007 earnings, and yielding 2.1%, resulting in forecast EPS growth of over 16%.
This compares favourably with other European markets where consensus forecasts
are for EPS growth of 10-11%.
Sincerely,
/S/PETER HOOPER
Peter Hooper
Chairman
June 22, 2007
4
INVESTMENT SUMMARY (UNAUDITED)
TOTAL RETURN (%)
MARKET VALUE NET ASSET VALUE (A)
AVERAGE AVERAGE
CUMULATIVE ANNUAL (B) CUMULATIVE ANNUAL (B)
Six Months 26.90 26.90 19.97 19.97
One Year 47.65 47.65 36.44 36.44
Three Year 183.72 41.57 140.56 33.99
Five Year 296.42 31.71 229.67 26.95
Ten Year 346.67 16.14 297.17 14.79
PER SHARE INFORMATION AND RETURNS
SIX
MONTHS
ENDED
APRIL 30,
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
---------------------------------------------------------------------------------------------------------------------------
Net Asset Value ($) 19.99 21.36 19.75 20.06 13.28 11.04 16.29 20.74 24.36 32.55 36.10
Income Dividends ($) (0.22) (0.07) -- (0.13) (0.01) (0.03) -- (0.09) (0.03) (0.16) (0.24)
Capital Gains
Other Distributions ($) (0.36) (0.70) (1.14) (1.60) (2.65) (0.69) -- -- -- (1.77) (2.40)
Restated Total
Return (%) (a) (c) 23.04 11.68 (2.37) 12.86 (20.99) (11.44) 47.55 28.14 17.51 45.97 19.97
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.
(c) The Net Asset Value total return information set forth in the "Per Share
Information and Returns" table for 2002 and prior years, that appeared in
the Annual Report for 2003 and the Semi-Annual Report and the Annual Report
for each of 2004, 2005 and 2006 was calculated using the NAV reinvestment
prices rather than the market reinvestment prices. In order to be
consistent all historic returns should have been calculated using market
reinvestment prices. The information that appeared was 2002 - (12.07)%;
2001 - (23.76)%; 2000 - 13.27%; 1999 - (2.79)%; 1998 - 11.68%; and 1997 -
22.46%. The years of 2002 to 1997 have been restated to be consistent with
the methodology used beginning in 2003 to calculate the total returns.
The Net Asset Value total return information that appears in the table was
calculated using market reinvestment prices.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
5
PORTFOLIO BY MARKET SECTOR AS OF APRIL 30, 2007
(PERCENTAGE OF NET ASSETS)
[GRAPHIC OMITTED]
EDGAR REPRSENTATION OF DATA POINTS USED IN GRAPHIC AS FOLLOWS:
Construction and Building Materials 30.17%
Financial 18.59%
Food and Beverages 11.46%
Other Assets 10.01%
Transportation 6.77%
Business Services 5.78%
Health Care Services 4.74%
Diversified Financial Services 4.72%
Food and Agriculture 3.95%
Publishing and News 3.81%
TOP 10 HOLDINGS BY ISSUER AS OF APRIL 30, 2007
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
CRH PLC Construction and Building Materials 16.51%
Allied Irish Banks PLC Financial 14.92%
Kerry Group PLC, Series A Food and Beverages 6.24%
Ryanair Holdings PLC Transportation 6.17%
Kingspan Group PLC Construction and Building Materials 6.15%
Grafton Group PLC-UTS Construction and Building Materials 5.37%
C&C Group PLC Food and Beverages 4.45%
IAWS Group PLC Food and Agriculture 3.95%
DCC PLC Business Services 3.90%
Independent News & Media PLC Publishing and News 3.81%
6
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2007 Shares (Note A)
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COMMON STOCKS (98.49%)
COMMON STOCKS OF IRISH COMPANIES (97.32%)
BUSINESS SERVICES (5.78%)
CPL Resources PLC 307,297 $ 3,292,183
DCC PLC 202,501 6,798,580
-------------
10,090,763
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BUSINESS SUPPORT SERVICES (1.61%)
Veris PLC* 500,000 2,804,580
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COMPUTER SOFTWARE AND SERVICES (0.52%)
IONA Technologies PLC-ADR* 169,300 909,141
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CONSTRUCTION AND BUILDING MATERIALS (30.17%)
CRH PLC 654,474 28,805,677
Grafton Group PLC-UTS 630,458 9,378,613
Kingspan Group PLC 381,462 10,724,436
McInerney Holdings PLC 197,012 3,737,347
-------------
52,646,073
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DIVERSIFIED FINANCIAL SERVICES (4.72%)
IFG Group PLC 556,276 1,632,243
Irish Life & Permanent PLC 248,182 6,604,818
-------------
8,237,061
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FINANCIAL (18.59%)
Allied Irish Banks PLC 855,747 26,032,233
FBD Holdings PLC 117,402 6,420,233
-------------
32,452,466
-------------
FOOD AND AGRICULTURE (3.95%)
IAWS Group PLC 277,427 6,890,902
-------------
FOOD AND BEVERAGES (11.46%)
C&C Group PLC 460,018 7,766,056
Fyffes PLC 552,258 761,236
Kerry Group PLC, Series A 363,898 10,895,633
Total Produce PLC* 552,258 580,348
-------------
20,003,273
-------------
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2007 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMMON STOCKS OF IRISH COMPANIES (CONTINUED)
FOREST PRODUCTS & PAPER (2.38%)
Smurfit Kappa Group PLC (a)* 151,515 $ 4,156,307
-------------
HEALTH CARE SERVICES (4.74%)
ICON PLC-Sponsored ADR* 73,087 3,429,973
United Drug PLC 880,687 4,843,760
-------------
8,273,733
-------------
PUBLISHING AND NEWS (3.81%)
Independent News & Media PLC 1,419,240 6,643,638
-------------
REAL ESTATE DEVELOPMENT (0.08%)
Blackrock International Land PLC* 218,009 139,839
-------------
TECHNOLOGY (2.38%)
Horizon Technology Group PLC* 1,321,900 1,912,319
Norkom Group PLC* 818,699 2,234,654
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4,146,973
-------------
TELECOMMUNICATIONS (0.36%)
Zamano PLC* 1,100,000 630,519
-------------
TRANSPORTATION (6.77%)
Aer Lingus Group PLC (a)* 249,183 1,054,232
Ryanair Holdings PLC* 1,300,000 10,769,313
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11,823,545
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TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $62,710,240) 169,848,813
-------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (1.17%)
(Cost U.S. $1,136,973)
CONSULTING SERVICES (1.17%)
RPS Group PLC 317,549 2,038,501
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TOTAL COMMON STOCKS BEFORE
FOREIGN CURRENCY ON DEPOSIT
(Cost $63,847,213) $ 171,887,314
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8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
April 30, 2007 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.00%)
British Pounds Sterling (pound) 132 $ 264
Euro (euro) 873 1,192
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TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $1,447)** 1,456
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TOTAL INVESTMENTS (98.49%)
(Cost $63,848,660) 171,888,770
OTHER ASSETS AND LIABILITIES (1.51%) 2,626,525
-------------
NET ASSETS (100.00%) $ 174,515,295
=============
--------------------------------------------------------------------------------
(a) Securities exempt from registration pursuant to Rule 144A under the
Securities Act of 1933, as amended. These securities may only
be resold, in transactions exempt from registration, to
qualified institutional buyers. At April 30, 2007, these
securities amounted to $5,210,539 or 2.99% of net assets.
* Non-income producing security.
** Foreign currency held on deposit at JPMorgan Chase & Co.
ADR -American Depositary Receipt traded in U.S. dollars.
UTS -Units
9
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
April 30, 2007
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $63,847,213)
See accompanying schedule U.S.$ 171,887,314
Cash 934,954
Foreign currency (Cost $1,447) 1,456
Receivable for investment securities sold 1,053,494
Dividends receivable 1,472,831
Prepaid expenses 31,291
Other assets 18,070
-------------
Total Assets 175,399,410
-------------
LIABILITIES:
Payable for investments purchased 683,326
Investment advisory fee payable (Note B) 91,588
Printing fees payable 39,533
Accrued audit fees payable 17,172
Administration fee payable (Note B) 25,421
Directors' fees and expenses (Note C) 10,574
Accrued legal fees payable 16,239
Transfer Agent 262
-------------
Total Liabilities 884,115
-------------
NET ASSETS U.S.$ 174,515,295
=============
AT APRIL 30, 2007 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares
Issued and Outstanding 4,834,813 Shares U.S.$ 48,348
Additional Paid-in Capital 55,297,186
Undistributed Net Investment Income 716,013
Accumulated Net Realized Gain 10,379,666
Net Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 108,074,082
-------------
TOTAL NET ASSETS U.S.$ 174,515,295
=============
NET ASSET VALUE PER SHARE
(Applicable to 4,834,813 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $174,515,295 / 4,834,813) U.S.$ 36.10
=============
See Notes to Financial Statements.
10
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended
April 30, 2007
(unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends U.S.$ 1,712,043
Interest 17,231
-------------
TOTAL INVESTMENT INCOME 1,729,274
-------------
EXPENSES
Investment advisory fee (Note B) $ 522,707
Administration fee (Note B) 144,415
Directors' fees and expenses (Note C) 105,902
Legal fees 50,056
Compliance fees 30,793
Audit fees 19,976
Printing fees 31,745
Custodian fees (Note B) 27,070
Other 93,658
------------
TOTAL EXPENSES 1,026,322
-------------
NET INVESTMENT INCOME U.S.$ 702,952
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE D)
Realized gain on:
Securities transactions 10,385,210
Foreign currency transactions 24,179
------------
Net realized gain on investments during the period 10,409,389
-------------
Net change in unrealized appreciation of:
Securities 18,310,217
Foreign currency and net other assets 25,268
------------
Net unrealized appreciation of investments during the period 18,335,485
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 28,744,874
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS U.S.$ 29,447,826
=============
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended
April 30, 2007 Year Ended
(unaudited) October 31, 2006
----------------------------------------------------------------------------------------------
Net investment income U.S.$ 702,952 U.S.$ 1,076,882
Net realized gain on investments 10,409,389 11,161,156
Net unrealized appreciation of investments,
foreign currency holdings and net other assets 18,335,485 35,088,838
------------ --------------
Net increase in net assets resulting from
operations 29,447,826 47,326,876
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,113,999) (722,941)
Net realized gains (11,139,986) (7,997,529)
------------ --------------
Net increase in net assets 17,193,841 38,606,406
------------ --------------
CAPITAL SHARE TRANSACTIONS:
Value of 0 and 60,950 shares
repurchased, respectively (Note F) -- (1,460,049)
Value of shares issued to shareholders in
connection with a stock distribution (Note E)
6,219,513 3,766,311
------------ --------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS 6,219,513 2,306,262
------------ --------------
NET ASSETS
Beginning of period 151,101,941 110,189,273
------------ --------------
End of period (Including undistributed
net investment income of $716,013
and $1,127,060, respectively) U.S.$174,515,295 U.S.$ 151,101,941
============ ==============
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, 2007 --------------------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Year U.S.$32.55 $24.36 $20.74 $16.29 $11.04 $13.28
------ ------ ------ ------ ------ ------
Net Investment Income/(Loss) 0.15 0.23 0.16 (0.00)# 0.07 (0.08)
Net Realized and Unrealized
Gain/(Loss) on Investments 6.10 9.98 3.38 4.49 5.08 (1.50)
------ ------ ------ ------ ------ ------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 6.25 10.21 3.54 4.49 5.15 (1.58)
------ ------ ------ ------ ------ ------
Distributions to Shareholders from:
Net Investment Income (0.24) (0.16) (0.03) (0.09) -- (0.03)
Net Realized Gains (2.40) (1.77) -- -- -- (0.69)
------ ------ ------ ------ ------ ------
Total from Distributions (2.64) (1.93) (0.03) (0.09) -- (0.72)
------ ------ ------ ------ ------ ------
Anti-Dilutive/(Dilutive) Impact
of Capital Share Transactions (0.06) (0.09)++ 0.11 0.05 0.10 0.06+
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period U.S.$36.10 $32.55 $24.36 $20.74 $16.29 $11.04
====== ====== ====== ====== ====== ======
Share Price, End of Period U.S.$35.97 $30.67 $21.95 $18.46 $13.81 $ 8.67
====== ====== ====== ====== ====== ======
Total NAV Investment Return (a) 19.97%(c) 45.97% 17.51% 28.14% 47.55% (11.44)%
====== ====== ====== ====== ====== =======
Total Market Investment
Return (b) 26.90%(c) 52.57% 19.07% 34.47% 59.28% (16.19)%
====== ====== ====== ====== ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Year (000's) U.S.$174,515 $151,102 $110,189 $97,253 $77,790 $54,856
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 0.88%+++ 0.86% 0.66% (0.00)%++ 0.54% (0.64)%
Ratio of Operating Expenses
to Average Net Assets 1.29%+++ 1.40% 1.34% 1.80% 1.78% 2.10%
Portfolio Turnover Rate 5% 11% 13% 5% 10% 13%
(a) The Total NAV Investment Return for 2002 as set forth in prior
financial highlights (of 12.07%), was calculated using the NAV
reinvestment prices rather than the market reinvestment prices.
In order to be consistent with the methodology used since 2003, the
return for 2002 has been restated.
(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, 2007. Periods
less than one year are not annualized.
+ 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 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.
In 2004, the Fund submitted an application to the Securities and Exchange
Commission seeking exemptive relief for the implementation of a managed
distribution program. At the meeting of the Board of Directors held on December
5, 2006, the Directors decided to withdraw this application because they felt
that, at the present time, this was in the best interests of shareholders due to
the reduced level of discount and the strong performance of the Fund.
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
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
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, 2007.
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.
USE OF ESTIMATES: The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Accrual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS: In July 2006, the Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income Taxes." This pronouncement provides
guidance on the recognition, measurement, classification, and disclosures
related to uncertain tax positions, along with any related interest and
penalties. FIN 48 is effective for fiscal years beginning after December 15,
2006. The impact from the adoption of FIN 48 is being evaluated, but is not
anticipated to have a material effect on the financial statements.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157 Fair Value Measurements ("SFAS 157") was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
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 daily net assets of the Fund up to
the first $100 million and 0.50% of the value of the average daily net assets of
the Fund on amounts in excess of $100 million. In addition, Bank of Ireland
Asset Management provides investor services to existing and potential
shareholders.
The Fund has entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. The Fund pays PFPC Inc. an annual fee payable
monthly. During the six months ended April 30, 2007, the Fund incurred expenses
of U.S $144,415 in administration fees to PFPC Inc.
The Fund has entered into an agreement with JPMorgan Chase & Co. to serve
as custodian of the Fund's assets. During the six months ended April 30, 2007
the Fund incurred expenses for JPMorgan Chase & Co. of U.S. $27,070.
C. DIRECTOR'S 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. $16,000, plus U.S. $2,000 for each meeting
of the Board of Directors attended in person or via telephone and any
shareholder meeting attended in person not held on the same day as a meeting of
the Board. A fee of U.S. $1,500 is paid for each meeting of a Committee of the
Board attended in person or via telephone. The Fund pays the Chairman of the
Board of Directors of the Fund an additional fee of U.S. $35,000 annually. Also,
the Fund pays the Chairperson of the Audit Committee an additional U.S. $3,000
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 period
ended April 30, 2007 excluding U.S. government and short-term investments,
aggregated U.S. $8,399,134 and U.S. $14,061,053, respectively.
At April 30, 2007, 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. $110,088,923 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. $2,048,822. Also, on this
date, the tax cost of securities for Federal Income Tax purposes is $63,847,213.
At April 30, 2007, 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, 2007, the Fund issued 193,152 shares in
connection with stock distribution in the amount of $6,219,513.
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On April 30, 2007, Bank of Ireland Asset
Management held 13,642 shares representing 0.28% of the Fund's total issued
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, 2007, the Fund did not repurchase
shares.
For the year ended October 31, 2006, the Fund repurchased 60,950 (1.31% of
the shares outstanding at October 31, 2005 year end) of its shares for a total
cost of $1,460,049, at an average discount of 9.85% 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.
17
ADDITIONAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund will distribute to shareholders, 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 (the "Plan") approved by the
Fund's Board of Directors (the "Directors"), each shareholder will be deemed to
have elected, unless American Stock Transfer & Trust Company (the "Plan Agent")
is instructed otherwise by the shareholder 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 shareholder elects to
receive distributions in cash. Investors who own Fund shares registered in
street names may not be able to transfer those shares to another broker-dealer
and continue to participate in the Plan. These shareholders should consult their
broker-dealer for details. Shareholders who do not participate in the Plan will
receive all distributions in cash paid by check in U.S. dollars mailed directly
to the shareholder by the Plan Agent, as paying agent. Shareholders 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 shareholders 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
shareholders 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.
18
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders 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 shareholder's
proxy will include those shares purchased pursuant to the Plan.
In the case of shareholders 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 shareholder as
representing the total amount registered in the shareholder'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 shareholders 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 shareholders. 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.
19
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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.
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.
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 6, 2007.
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 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;
20
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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 determined that the overall arrangements between the Fund and
the Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, the expenses incurred and such other matters as
the Directors considered relevant in the exercise of their reasonable judgment.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISER
The Adviser manages the investment of the assets of the Fund, including
making purchases and sales of portfolio securities consistent with the Fund's
investment objective and policies. Although the Fund retains a separate third
party administrator, the Adviser also provides the Fund with certain other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and with certain executive personnel necessary for
its operations. The Adviser pays all of the compensation of the Director and the
officers of the Fund who are employees of the Adviser.
The Directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided had expanded over time as a result of regulatory and other
developments. The Directors noted that, for example, the Adviser is responsible
for maintaining and monitoring its own compliance program and coordinates
certain activities with the Fund's Chief Compliance Officer, and these
compliance programs have recently been refined and enhanced in light of new
regulatory requirements. The Directors considered the quality of the investment
research capabilities of the Adviser and the other resources they have dedicated
to performing services for the Fund. The quality of other services, including
the Adviser's assistance in the coordination of the activities of some of the
Fund's other service providers, also were considered. The Directors also
considered the Adviser's response to recent regulatory compliance issues
affecting it and the Fund. The Directors concluded that, overall, they were
satisfied with the nature, extent and quality of services provided (and expected
to be provided) to the Fund under the Advisory Agreement.
COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISER
At the request of the Directors, the Adviser provided information
concerning the profitability to the Adviser of the Advisory Agreement. The
Directors reviewed 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
21
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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
received brokerage commissions from the Fund for execution services only up
until November 1, 2006, when it was sold.
The Directors also noted that the Adviser derives reputational and other
benefits from its association with the Fund.
INVESTMENT RESULTS
The Directors considered the investment results of the Fund as compared to
investment companies with analogous investment objectives. This was determined
based on the information provided by the 15c Provider and by reviewing the Irish
Stock Exchange index ("ISEQ"). The ISEQ was reviewed, both including and
excluding the common shares, of the Adviser's parent company, which represents
approximately 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,
2007. 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
22
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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 33 portfolios in the relevant 15c
Provider category. The information showed that the Fund's effective advisory fee
rate of .65% (based on net assets at January 31, 2007) 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), in comparison to others in the Fund's peer group.
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
23
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
that institutional client accounts are more portable than registered investment
companies that require Board and stockholder approval, prior to changing
investment advisers.
24
--------------------------------------------------------------------------------
THE NEW IRELAND FUND, INC.
DIRECTORS AND OFFICERS
Peter J. Hooper - CHAIRMAN OF THE BOARD
Brendan Donohoe - PRESIDENT AND DIRECTOR
David Dempsey - DIRECTOR
Margaret Duffy - DIRECTOR
Denis P. Kelleher - DIRECTOR
George G. Moore - DIRECTOR
Lelia Long - TREASURER
Colleen Cummings - ASSISTANT TREASURER
Vincenzo Scarduzio - SECRETARY
Salvatore Faia - CHIEF COMPLIANCE OFFICER
PRINCIPAL INVESTMENT ADVISER
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
Greenwich, Connecticut 06830
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
CUSTODIAN
JPMorgan 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
Tait Weller Baker LLP
1818 Market Street
Philadelphia, PA 19103
CORRESPONDENCE
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The New Ireland Fund, Inc.
c/o PFPC Inc.
99 High Street
27th Floor
Boston, Massachusetts 02110
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
WEBSITE ADDRESS:
www.newirelandfund.com
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IR-AN 04/07
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.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
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(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
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November 1, 2006 0 0 0 464,166
to November 30,
2006
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December 1, 2006 0 0 0 464,166
to December 31,
2006
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January 1, 2007 0 0 0 464,166
to January 31,
2007
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February 1, 2007 0 0 0 464,166
to February 28,
2007
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March 1, 2007 to 0 0 0 464,166
March 31, 2007
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April 1, 2007 to 0 0 0 464,166
April 30, 2007
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Total 0 0 0 464,166
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Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced. FEBRUARY 2000
b. The dollar amount (or share or unit amount) approved. 10% OF THE 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 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) 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
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Brendan Donohoe, President
(principal executive officer)
Date JUNE 21, 2007
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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
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Brendan Donohoe, President
(principal executive officer)
Date JUNE 21, 2007
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By (Signature and Title)* /S/ LELIA LONG
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Lelia Long, Treasurer
(principal financial officer)
Date JUNE 25, 2007
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* Print the name and title of each signing officer under his or her signature.