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
The New Ireland Fund, Inc.
(Exact name of registrant as specified in charter)
Bank of Ireland Asset Management (U.S.) Limited
40 Mespil Road
Dublin 4, Ireland
(Address of principal executive offices) (Zip code)
BNY Mellon Investment Servicing (US) Inc.
One Boston Place, 34th Floor
Boston, MA 02108
(Name and address of agent for service)
Registrant's telephone number, including area code: 508 871 8500
Date of fiscal year end: October 31
Date of reporting period: October 31, 2010
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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE
NEW IRELAND
FUND
(GRAPHIC)
ANNUAL REPORT
OCTOBER 31, 2010
COVER PHOTOGRAPH - ST. PATRICK'S CATHEDRAL, ARMAGH
PROVIDED COURTESY OF TOURISM IRELAND
LETTER TO SHAREHOLDERS
Dear Shareholder,
INTRODUCTION
As all of you will be aware, Ireland has been going through a very
difficult period but the European Union and the IMF are now coming in to support
it with substantial financial aid and this, together with severe Government
cutbacks, should allow the Country to recover over the next two to three years.
Although Government spending was higher than it should have been in recent
years, at present, the problems within the banking sector are probably the more
critical factor not just related to their excessive lending to the property
sector but also related to their borrowings to finance such lending. Despite all
of this, as detailed below, the economy is expected to show marginal growth this
year and to grow by 2.4% in 2011.
In terms of the economy itself, the Property market, in both the
residential and non-residential sectors across the Country, continues to be a
major contributor to Ireland's poor economic performance and this, along with
other factors, has resulted in the current high rate of unemployment, which, in
turn, is leading to a new wave of emigration. However, on the plus side,
Ireland's exports are continuing to grow and this, together with a slowing down
of imports should result in a current account trade surplus for 2011.
As shown below, the Fund performed relatively strongly in the most recent
quarter with its Net Asset Value ("NAV") increasing by 3.5% as compared to a
decrease of 1.8% in the Irish Stock Market ("ISEQ"), in U.S. dollar terms.* For
the full 12 month period, although the NAV decreased by 6.1%, the Fund still
outperformed the ISEQ which showed a decrease of 11.8% over the same period.
In December, the Board declared an annual distribution of $0.06 per share,
which is wholly attributable to income. The distribution will be paid by way of
a cash dividend under date of December 30, 2010 to all shareholders of record on
December 20, 2010.
Although Bank of Ireland, the parent of the Fund's Advisor, Bank of Ireland
Asset Management (U.S.) Limited ("BIAM (U.S.)"), is selling its asset management
business to State Street Global Advisors, BIAM (U.S.), which is indirectly owned
by Bank of Ireland itself, will continue to act as the Fund's Advisor.
PERFORMANCE
The Fund's NAV increased by 3.5% to $7.70 in the fourth quarter compared to
a 1.8% decrease in the ISEQ in U.S. dollar terms and a 1.5% increase in the
ISEQ, excluding Bank of Ireland, in which the Fund is precluded from investing
in. For the fiscal year 2010 the Fund's NAV decreased by 6.1% whereas the ISEQ,
and the ISEQ ex BOI, were behind 11.8% and 8.0% respectively over the same
period.
* All returns are quoted in U.S. Dollars unless otherwise stated
1
The Irish market declined in local currency terms over the last quarter,
lagging equity markets globally. Global leading economic indicators have been
mixed since April and this has raised investor concern regarding the pace of
economic recovery. Sovereign debt issues have also come to the fore with the
public finances of peripheral European nations and Ireland, in particular,
commanding greater investor focus. Currency movements were more favorable for
the Fund during the recent quarter with the U.S. dollar weakening by 7% against
the Euro. Over the fiscal year, the Fund suffered a currency headwind with the
U.S. dollar strengthening 6% against the Euro.
During fiscal 2010, we continued to implement the Share Repurchase Program
and over the 12 months, the Fund repurchased and retired 367,300 shares at a
cost of $2.6 million. These repurchases represent a reduction of 5.21% of the
shares outstanding at October 31, 2009, and they positively impacted the Fund's
NAV by 6 cents per share.
ECONOMIC REVIEW
Gross Domestic Product ("GDP") forecasts were adjusted downwards in the
most recent period. Latest Central Bank of Ireland ("CBOI") forecasts are now
for a rise in GDP of 0.2% in 2010 followed by growth of 2.4% in 2011. The
expansion in 2010 is entirely export driven with GNP forecast to decline 1.7% in
2010 before recovering to a 1.7% growth rate in 2011. Continued softening in
domestic leading economic indicators would suggest that the bias to current
forecasts remains tilted to the downside. Consumer spending and net trade will
continue to be the largest swing factors, going forward, given the subdued
levels of domestic investment.
Consumer spending is forecast to decline 1.1% in 2010 and rise 0.4% in
2011. Employment growth continues to weaken and domestic austerity measures will
keep a lid on spending in 2011.
Gross fixed capital formation is expected to decline by 20.9% in 2010 and
3.3% in 2011 as the decline in residential construction output becomes less of a
drag on growth. New housing completions are expected to reach 12,000 - 15,000
units in 2010. Non-residential activity is forecast to decline further in 2010
and 2011 due to elevated vacancy levels and a lack of credit availability.
However, commercial capital values would seem to be bottoming and were 59% below
peak levels at Q3, 2010.
Exports are expected to rise by 5.4% in 2010 and 5.1% in 2011. Services
exports in the economy will continue to outpace merchandise trade. Deflation
across a range of goods and services will continue to improve the economy's
competitiveness. Imports are expected to lag in 2010 (+2.6%) but should see some
recovery in 2011 with growth forecast at 3.4%. The current account deficit is
forecast to move into surplus by 2011.
Macro concerns are currently dominating risk market sentiment with the
recent slowdown in leading global economic indicators and sovereign debt issues
clouding the outlook for growth into 2011. Quantitative easing has driven a
rally in risk asset markets since August but its impact on real economic
2
activity remains unclear. Corporate profitability remains largely robust and the
deleveraging of balance sheets has continued apace. Global equity markets are
likely to stay range bound as a combination of deteriorating public finances,
and an uncertain growth outlook, weigh on confidence.
Irish consumer sentiment declined in October. The overall Consumer
Sentiment Index stood at 48.1 compared to 52.4 in September. The corresponding
figure for October 2009 was 54.2. Consumers' perception of their future
financial situation was more negative over the period while perception of their
current financial situation was better reflecting ongoing price deflation across
a number of consumer items.
The Live Unemployment Register declined in September to a seasonally
adjusted 443,000 claimants. The standardized unemployment rate in the month was
estimated to be 13.6%. The Central Bank of Ireland forecasts an average
unemployment rate of 13.5% in 2010. There has been a decline in claimants in the
Live Register over the last two months due to seasonal impacts.
Volume of retail sales decreased by 0.3% on an annual basis in September.
Excluding the volatile autos component, core retail sales were down 2.5% over
the same period. Retail sales volumes are estimated to have grown by 0.2% in Q3,
2010, down from the 3.1% annual pace recorded in Q2.
The Annual Harmonized Index of Consumer Prices ("HICP") declined by 0.8% in
the year to October 2010. Largest contributors over the period to inflation
included Utilities (+9.4%) and Communications (+2.9%). The main detractors over
the period included Clothing & Footwear (-7.2%) with Furnishings & Household
Equipment (-2.9%). The headline CPI index was 0.7% higher over the year driven
primarily by increases in mortgage interest payments.
Demand for credit from businesses, and households, continues to remain
depressed with corporations and consumers in deleveraging mode. The rate of
annual change in loans to households was negative 4.5% in September 2010 with
mortgage lending and consumer loans down 1.6% and 14.8% respectively. Lending to
non-financial corporations registered a 3.0% annual decline in September
following an annual 2.2% decline in August. Private sector credit growth is
likely to continue to be weak as domestic financial institutions shrink their
balance sheets and consumers and corporations remain cautious.
The Exchequer deficit at end October 2010 was E14.4 billion, compared to a
deficit of E22.7 billion in the same period last year. Tax receipts totalled
E24.7 billion in the first ten months, 1.0% ahead of target. Value-added tax,
corporation tax and excise duties were ahead of expectations with income tax
below target. Net voted expenditure at E37.2 billion is 4% below last year's
levels and broadly in line with budgetary plans.
Current forecasts are for a general government balance (deficit) of E18.5
billion to E19.0 billion in 2010; this would give rise to an underlying budget
deficit of 11.9% compared to the 2009 level of 14.4%. The headline figure could
be materially larger depending on the EU treatment of 2010 promissory
3
note injections into state-owned Anglo Irish Bank and Irish Nationwide.
Debt/GDP totalled 65.5% in 2009 and this will rise to 98.6% in 2010 due to
increased bank recapitalisation costs. This figure is gross of assets held in
the National Pension Reserve Fund of E24.5 billion and approximately E20 billion
in cash balances held at the National Treasury Management Agency (NTMA).
The NTMA has raised E19.9 billion in debt markets to the end of October
which combined with net funding from Retail State Savings (E2.8 billion) and
existing cash balances cover the country's borrowing costs in relation to
current spending until mid 2011. Given recent developments, the NTMA has decided
to suspend bond market auctions until 2011. 10 year Irish government bond
spreads remained elevated at the end of October, yielding 4.40% over the
equivalent German bonds while 5 year Irish credit default swaps were at a 4.72%
premium. Irish owned credit institutions also had E83 billion of ECB funding at
the end of September 2010. These market dynamics together with general concerns
about Greece and other countries, along with concerns about the Euro itself, led
Ireland to go along with external funding to at least assist Irish banks with
their financing difficulties.
Due to mounting pressure on sovereign yields and elevated bank funding
costs, the Irish government applied in late November for external financial
assistance from the EU and IMF. An E85bn facility has been made available of
which E17.5bn will be sourced domestically from Ireland's sovereign wealth fund
and existing cash balances. E50bn has been allocated to cover budget deficits
out to 2014 should bond market conditions remain unsuitable for fund raising
over that period. E35bn has been allocated to shore up the country's domestic
banks through a E10bn recapitalization facility and a E25bn contingency fund. A
E15bn fiscal adjustment has been agreed with the loan providers to 2014 with the
specific aim of bringing the annual deficit below 3% of GDP by 2015.
EQUITY MARKET REVIEW
World stock markets posted decent returns in local currency terms during
the quarter;
QUARTER ENDED FISCAL YEAR
OCTOBER 31ST, 2010 OCTOBER 31ST, 2010
------------------ ------------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
-------- ------ -------- ------
Irish Equities (ISEQ) -7.9% -1.8% -6.4% -11.8%
S&P 500 +7.4% +7.4% +14.2% +14.2%
NASDAQ +11.2% +11.2% +22.6% +22.6%
UK Equities (FTSE 100) +7.9% +10.2% +12.5% +9.6%
Japanese Equities -4.5% +2.5% -9.4% +1.4%
Dow Jones Eurostoxx 50 +4.9% +11.8% +6.9% +1.0%
German Equities (DAX) +7.4% +14.5% +21.9% +15.1%
French Equities (CAC 40) +6.3% +0.4% +5.2% +12.2%
Dutch Equities (AEX) +2.0% +8.8% +11.5% +5.3%
4
MAJOR MOVES OVER THE QUARTER (IN EURO TERMS)
POSITIVE
--------
Origin Enterprises +24%
Aer Lingus Group +23%
IFG Group +14%
Elan Corp. +13%
Kingspan Group +12%
NEGATIVE
--------
Norkom Group -25%
CRH -23%
Icon -21%
CPL Resources -10%
FBD Holdings -10%
There was news flow in relation to a number of the Fund's holdings in
recent months, highlights are as follows;
ORIGIN ENTERPRISES PLC: Origin released a strong set of FY 2010 (July year
end) results. Despite an 11% drop in Group revenues to E1.34 billion, adjusted
earnings per share grew 3% to 37.3c. Strong cash generation reduced net debt to
E112 million leaving the group with significant scope for both organic and
acquisitive investment in the core agronomy business. Higher crop prices over
recent months have also increased demand for the Group's agri-inputs and Origin
continues to be a significant beneficiary of soft commodity price inflation.
AER LINGUS GROUP: Aer Lingus continued to perform strongly in the most
recent period and is on course to return to profit in 2010. The Group continues
to benefit from a combination of higher yields, reduced costs and the
elimination of loss making capacity. Aer Lingus is on track to record an
operating profit of E40 million this fiscal year, a significant turnaround from
the E80 million operating loss suffered in 2009. Ongoing capacity and yield
discipline will be key drivers for the Group going forward.
KINGSPAN GROUP PLC: Kingspan reported good results for the period ended
September 2010. Revenues have rebounded 6% to E865 million, driven primarily by
increased demand for the group's panels and board products. Higher input costs
in areas such as steel and chemicals have been more difficult to fully pass on
to customers and will weigh on margins in the second half. The Group is
conservatively guiding for an operating profit outturn in 2010 of E62 million to
E65 million. Activity in 2011 and 2012 will also be bolstered by the group's
recent acquisition of CRH's European insulation business for E120 million.
NORKOM GROUP PLC: Norkom was a disappointing performer in the period on
reduced revenue guidance for FY 2011 (year end March). Elongated sales cycles
and the delay in implementing financial fraud regulation in a number of Asian
countries impacted revenue performance in the first half. We view these issues
as temporary and recent evidence suggests that the pace of revenue conversion
has begun to pick up again. Longer term, Norkom is likely to prove an attractive
target for multinational technology firms that wish to tap the growing fraud
compliance space.
CRH PLC: CRH was a poor performer in the current quarter as the profit
outlook was downgraded again, due to continued weak demand in the Group's key
Americas Materials business. EBITDA in 2010 is expected to be E1.6 billion,
5
10% below 2009 levels. More recently, stock performance has improved as the
Group would seem to have stabilized operating performance. Comfort has also been
given regarding maintenance of the Group's attractive dividend yield of 4%. This
had become a source of concern for investors given continued tough trading
conditions.
CURRENT OUTLOOK
The Irish economy is currently moving through an uncertain growth period
with a modest increase in GDP of 0.2%, forecast for 2010 followed by growth of
2.4% in 2011. Consumer spending and net trade will continue to be the key
drivers of forecasts over the coming quarters. Resolution of the current
sovereign and banking difficulties will also be key for the restoration of
private sector confidence.
The ISEQ is currently trading on a forward price to book multiple of 1.3x
which is undemanding in a historic context and assumes individual market
components will see their future earnings and returns settle well below average
trends.
The trend in earnings revisions continues to be mainly positive with a
number of the Fund's holdings seeing forecast upgrades, in recent months,
through a combination of revenue growth and operating leverage, post extensive
cost cutting. The Fund remains invested in names with strong franchises,
management teams and balance sheets where, despite the macro concerns prevailing
at present, we see strong potential for capital gains over the medium term.
Sincerely,
/s/ Peter J. Hooper
Peter J. Hooper
Chairman
December 17, 2010
6
INVESTMENT SUMMARY (UNAUDITED)
TOTAL RETURN (%)
MARKET VALUE (a) NET ASSET VALUE (a)
-------------------- --------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- -------
One Year -8.18 -8.18 -6.10 -6.10
Three Year -55.44 -23.62 -50.69 -20.99
Five Year -30.54 -7.03 -25.94 -5.83
Ten Year 28.49 2.54 15.14 1.42
PER SHARE INFORMATION AND RETURNS
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
------ ------ ----- ----- ----- ----- ----- ------ ----- -----
Net Asset
Value ($) 13.28 11.04 16.29 20.74 24.36 32.55 30.95 10.18 8.20 7.70
Income
Dividends ($) (0.01) (0.03) -- (0.09) (0.03) (0.16) (0.24) (0.36) (0.33) --
Capital Gains
Other
Distributions ($) (2.65) (0.69) -- -- -- (1.77) (2.40) (4.86) (2.76) --
Total Net Asset Value
Return (%) (a) -20.99 -11.44 47.55 28.14 17.51 45.97 2.88 -58.62 26.91 -6.10
NOTES
(a) Total Market Value returns reflect changes in share market prices and
assume reinvestment of dividends and capital gain distributions, if any, at
the price obtained under the Dividend Reinvestment and Cash Purchase Plan
("the Plan"). Total Net Asset Value returns reflect changes in share net
asset value and assume reinvestment of dividends and capital gain
distributions, if any, at the price obtained under the Plan. For more
information with regard to the Plan, see page 22.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
7
PORTFOLIO BY MARKET SECTOR AS OF OCTOBER 31, 2010
(PERCENTAGE OF NET ASSETS)
(PIE CHART)
Construction and Building Materials 23.71%
Transportation 16.05%
Food and Beverages 15.26%
Other Assets 12.94%
Business Services 7.06%
Health Care Services 6.57%
Diversified Financial Services 4.97%
Leisure and Hotels 4.61%
Energy 4.45%
Agriculture Operations 4.38%
TOP 10 HOLDINGS BY ISSUER AS OF OCTOBER 31, 2010
HOLDING SECTOR % OF NET ASSETS
------- ----------------------------------- ---------------
CRH PLC Construction and Building Materials 14.63%
Ryanair Holdings PLC Transportation 10.46%
DCC PLC Business Services 7.06%
Kerry Group PLC, Series A Food and Beverages 5.82%
C&C Group PLC Food and Beverages 5.41%
Kingspan Group PLC Construction and Building Materials 4.82%
Paddy Power PLC Leisure and Hotels 4.61%
Dragon Oil PLC Energy 4.45%
Origin Enterprises PLC Agricultural Operations 4.38%
Grafton Group PLC-UTS Construction and Building Materials 4.25%
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS
Value (U.S.)
October 31, 2010 Shares (Note A)
---------------- --------- ------------
COMMON STOCKS (97.21%)
COMMON STOCKS OF IRISH COMPANIES (96.27%)
AGRICULTURAL OPERATIONS (4.38%)
Origin Enterprises PLC 531,790 $ 2,254,350
------------
BUSINESS SERVICES (7.06%)
DCC PLC 125,820 3,630,433
------------
BUSINESS SUPPORT SERVICES (2.87%)
CPL Resources PLC 497,050 1,478,411
------------
CONSTRUCTION AND BUILDING MATERIALS (23.71%)
CRH PLC 440,038 7,525,809
Grafton Group PLC-UTS 513,167 2,188,242
Kingspan Group PLC 296,937 2,479,153
------------
12,193,204
------------
DIVERSIFIED FINANCIAL SERVICES (4.97%)
FBD Holdings PLC 51,296 437,115
IFG Group PLC 624,801 1,134,139
TVC Holdings PLC* 815,973 567,058
Worldspreads Group PLC* 405,006 416,557
------------
2,554,869
------------
ENERGY (4.45%)
Dragon Oil PLC* 319,386 2,286,149
------------
FOOD AND AGRICULTURE (3.79%)
Aryzta AG 44,538 1,946,851
------------
FOOD AND BEVERAGES (15.26%)
C&C Group PLC 600,907 2,781,204
Glanbia PLC 378,488 1,788,597
Kerry Group PLC, Series A 81,481 2,995,459
Total Produce PLC 552,258 284,004
------------
7,849,264
------------
HEALTH CARE SERVICES (6.57%)
Elan Corp. PLC-Sponsored ADR* 262,200 1,428,990
ICON PLC-Sponsored ADR* 65,267 1,262,916
United Drug PLC 216,966 687,556
------------
3,379,462
------------
9
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
Value (U.S.)
October 31, 2010 Shares (Note A)
---------------- ---------- ------------
COMMON STOCKS (CONTINUED)
LEISURE AND HOTELS (4.61%)
Paddy Power PLC 58,771 $ 2,368,877
------------
TECHNOLOGY (2.55%)
Norkom Group PLC* 1,089,828 1,310,254
------------
TRANSPORTATION (16.05%)
Aer Lingus Group PLC* 596,670 952,874
Irish Continental Group PLC 91,000 1,922,500
Ryanair Holdings PLC 937,342 5,380,585
------------
8,255,959
------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $47,260,097) 49,508,083
------------
COMMON STOCKS OF FRENCH COMPANIES (0.94%)
FINANCIAL (0.94%)
BNP Paribas 6,657 486,220
------------
TOTAL COMMON STOCKS OF FRENCH COMPANIES
(Cost $469,468) 486,220
------------
TOTAL COMMON STOCKS BEFORE FOREIGN
CURRENCY ON DEPOSIT
(Cost $47,729,565) $ 49,994,303
------------
Face
Value
----------
FOREIGN CURRENCY ON DEPOSIT (0.27%)
British Pounds Sterling L 601 960
Euro E 99,505 138,301
------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $139,425)** 139,261
------------
TOTAL INVESTMENTS (97.48%)
(Cost $47,868,990) 50,133,564
OTHER ASSETS AND LIABILITIES (2.52%) 1,294,043
------------
NET ASSETS (100.00%)
$ 51,427,607
============
----------
* Non-income producing security.
** Foreign currency held on deposit at JPMorgan Chase & Co.
ADR - American Depositary Receipt traded in U.S. dollars.
UTS - Units
10
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
The Inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. Transfers
in and out of levels are recognized at market value at the end of the period.
The summary of inputs used to value the Fund's net assets as of October 31, 2010
is as follows (See Note A - Security Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
10/31/10 PRICE INPUT INPUT
----------- ----------- ----------- ------------
Investments in Securities +
Common Stocks
Agricultural Operations $ 2,254,350 $ -- $2,254,350 $--
Business Services 3,630,433 3,630,433 -- --
Business Support Services 1,478,411 1,478,411 -- --
Construction and Building
Materials 12,193,204 12,193,204 -- --
Diversified Financial Services 2,554,869 2,138,312 416,557 --
Energy 2,286,149 2,286,149 -- --
Financial 486,220 486,220 -- --
Food and Agriculture 1,946,851 1,946,851 -- --
Food and Beverages 7,849,264 7,849,264 -- --
Health Care Services 3,379,462 3,379,462 -- --
Leisure and Hotels 2,368,877 2,368,877 -- --
Technology 1,310,254 1,310,254 -- --
Transportation 8,255,959 8,255,959 -- --
----------- ----------- ---------- ---
Total Common Stocks $49,994,303 $47,323,396 $2,670,907 $--
=========== =========== ========== ===
+ Total Investments exclude Foreign Currency on Deposit.
The Fund did not have any significant transfers in and out of Level 1 and Level
2 during the period.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2010
ASSETS:
Investments at value (Cost $47,729,565)
See accompanying schedule U.S. $ 49,994,303
Cash 1,352,393
Foreign currency (Cost $139,425) 139,261
Dividends receivable 49,971
Prepaid expenses 33,240
------------
Total Assets 51,569,168
------------
LIABILITIES:
Accrued audit fees payable 40,300
Investment advisory fee payable (Note B) 28,313
Printing fees payable 27,275
Directors' fees and expenses 20,465
Accrued legal fees payable 13,515
Administration fee payable (Note B) 8,333
Custodian fees payable (Note B) 2,248
Accrued expenses and other payables 1,112
------------
Total Liabilities 141,561
------------
NET ASSETS U.S. $ 51,427,607
============
AT OCTOBER 31, 2010 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares
Issued and Outstanding 6,676,484 Shares U.S. $ 66,765
Additional Paid-in Capital 65,175,837
Undistributed Net Investment Income 374,384
Accumulated Net Realized Loss (16,453,851)
Net Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 2,264,472
------------
TOTAL NET ASSETS U.S. $ 51,427,607
============
NET ASSET VALUE PER SHARE
(Applicable to 6,676,484 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $51,427,607 / 6,676,484) U.S. $ 7.70
============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
For the
Year Ended
October 31, 2010
----------------
INVESTMENT INCOME
Dividends U.S.$ 1,441,105
Less: foreign taxes withheld (4,546)
-----------
TOTAL INVESTMENT INCOME 1,436,559
-----------
EXPENSES
Investment advisory fee (Note B) $ 344,571
Directors' fees and expenses 204,061
Administration fee (Note B) 114,301
Printing fees 75,831
Insurance premiums 70,527
Compliance fees 65,842
Audit fees 40,300
Custodian fees (Note B) 26,637
Legal fees 25,643
Stock exchange listing fee 25,000
Transfer agent fees 17,976
Other 62,148
------------
TOTAL EXPENSES 1,072,837
-----------
NET INVESTMENT INCOME U.S.$ 363,722
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY (NOTE D)
Realized gain/(loss) on:
Securities transactions (12,877,111)
Foreign currency transactions 10,662
------------
Net realized loss on investments and foreign
currency during the year (12,866,449)
-----------
Net change in unrealized appreciation/(depreciation) of:
Securities 8,780,339
Foreign currency and net other assets (4,185)
------------
Net unrealized appreciation of investments and
foreign currency during the year 8,776,154
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY (4,090,295)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS U.S.$(3,726,573)
===========
See Notes to Financial Statements.
13
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 2010 October 31, 2009
---------------- ----------------
Net investment income/(loss) U.S.$ 363,722 U.S.$ (431,124)
Net realized loss on investments (12,866,449) (3,567,628)
Net unrealized appreciation of investments,
foreign currency holdings and net other
assets 8,776,154 15,847,635
------------ -----------
Net increase/(decrease) in net assets resulting
from operations (3,726,573) 11,848,883
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (1,649,841)
Net realized gains -- (13,797,196)
------------ -----------
Total distributions -- (15,447,037)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Value of 367,300 and 558,500 shares
repurchased, respectively (Note F) (2,631,382) (3,414,029)
Value of shares issued to shareholders in
connection with a stock distribution (Note E) -- 13,901,795
------------ -----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (2,631,382) 10,487,766
------------ -----------
Total Increase/(decrease) in net assets (6,357,955) 6,889,612
------------ -----------
NET ASSETS
Beginning of year 57,785,562 50,895,950
------------ -----------
End of year (Including undistributed
net investment income of $374,384
and $0, respectively) U.S.$ 51,427,607 U.S.$57,785,562
============ ===========
See Notes to Financial Statements.
14
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Year Ended October 31,
---------------------------------------------------------
2010 2009 2008 2007 2006
------- ------- ------- -------- --------
Operating Performance:
Net Asset Value,
Beginning of Year U.S. $ 8.20 $ 10.18 $ 30.95 $ 32.55 $ 24.36
------- ------- ------- -------- --------
Net Investment Income/(Loss) 0.05 (0.06) 0.34 0.35 0.23
Net Realized and Unrealized
Gain/(Loss) on Investments (0.61) 1.23 (15.77) 0.69 9.98
------- ------- ------- -------- --------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations (0.56) 1.17 (15.43) 1.04 10.21
------- ------- ------- -------- --------
Distributions to Shareholders from:
Net Investment Income -- (0.33) (0.36) (0.24) (0.16)
Net Realized Gains -- (2.76) (4.86) (2.40) (1.77)
------- ------- ------- -------- --------
Total from Distributions -- (3.09) (5.22) (2.64) (1.93)
------- ------- ------- -------- --------
Anti-Dilutive/(Dilutive) Impact of
Capital Share Transactions 0.06+++++ (0.06)++++ (0.12)+++ 0.00++ (0.09)+
------- ------- ------- -------- --------
Net Asset Value,
End of Year U.S. $ 7.70 $ 8.20 $ 10.18 $ 30.95 $ 32.55
======= ======= ======= ======== ========
Share Price, End of Year U.S. $ 6.51 $ 7.09 $ 8.95 $ 28.96 $ 30.67
======= ======= ======= ======== ========
Total NAV Investment Return (a) (6.10)% 26.91% (58.62)% 2.88% 45.97%
======= ======= ======= ======== ========
Total Market Investment
Return (b) (8.18)% 25.06% (61.20)% 2.17% 52.47%
======= ======= ======= ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Year (000's) U.S. $51,428 $57,786 $50,896 $145,765 $151,102
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 0.69% (0.87)% 1.67% 1.02% 0.86%
Ratio of Operating Expenses
to Average Net Assets 2.02% 2.65% 1.56% 1.31% 1.40%
Portfolio Turnover Rate 11% 16% 21% 13% 11%
(a) Based on share net asset value and reinvestment of distribution at the
price obtained under the Dividend Reinvestment and Cash Purchase Plan.
(b) Based on share market price and reinvestment of distributions at the price
obtained under the Dividend Reinvestment and Cash Purchase Plan.
+ Amount represents $0.03 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.
++ Amount represents $0.07 per share impact for shares repurchased by the
Fund under the Share Repurchase Program and $0.07 per share impact for the
new shares issued as Capital Gain Stock Distribution.
+++ Amount represents $0.13 per share impact for shares repurchased by the
Fund under the Share Repurchase Program and $0.25 per share impact for the
new shares issued as Capital Gain Stock Distribution.
++++ Amount represents $0.08 per share impact for shares repurchased by the
Fund under the Share Repurchase Program and $0.14 per share impact for the
new shares issued as Capital Gain Stock Distribution.
+++++ Amount represents $0.06 per share impact for shares repurchased by the
Fund under the Share Repurchase Program and $0.00 per share impact for the
new shares issued as Capital Gain Stock Distribution.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
The New Ireland Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on December 14, 1989 and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). 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 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.
FAIR VALUE MEASUREMENTS: As described above, the Fund utilizes various
methods to measure the fair value of most of its investments on a recurring
basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation
methods. The three levels of inputs are:
Level 1 - unadjusted quoted prices in active markets for identical assets
or liabilities that the Fund has the ability to access.
Level 2 - observable inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly
or indirectly. These inputs may include quoted prices for the
identical instrument on an inactive market, prices for similar
instruments, interest rates, prepayment speeds, credit risk,
yield curves, default rates and similar data.
Level 3 - unobservable inputs for the asset or liability, to the extent
relevant observable inputs are not available, representing the
Fund's own assumptions about the assumptions a market participant
would use in valuing the asset or liability, and would be based
on the best information available.
The availability of observable inputs can vary from security to security
and is affected by a wide variety of factors, including, for example, the type
of security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
is based on models or inputs that are less observable or unobservable in the
market, the determination of fair value requires more judgment. Accordingly, the
degree of judgment exercised in determining fair value is greatest for
instruments categorized in level 3.
The inputs used to measure fair value may fall into different levels of the
fair value hierarchy. In such cases, for disclosure purposes, the level in the
fair value hierarchy within which the fair value measurement falls in its
entirety, is determined based on the lowest level input that is significant to
the fair value measurement in its entirety. A summary of the levels of the
Fund's investments as of October 31, 2010 is included with the Fund's Portfolio
of Investments.
At the end of each calendar quarter, management evaluates the Level 2 and 3
assets and liabilities for changes in liquidity, including but not limited to:
whether a broker is willing to execute at the quoted price, the depth and
consistency of prices from third party services, and the existence of
contemporaneous, observable trades in the market. Additionally, management
evaluates the Level 1 and 2 assets and liabilities on a quarterly basis for
changes in listings or delistings on national exchanges.
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.
For tax purposes at October 31, 2010 and October 31, 2009, the Fund
distributed $0 and $1,649,841, respectively, of ordinary income. The Fund also
distributed, for tax purposes at October 31, 2010 and October 31, 2009, $0 and
$13,797,196, respectively, of long-term capital gains.
Permanent differences between book and tax basis reporting for the year
ended October 31, 2010 have been identified and appropriately reclassified to
reflect an increase in undistributed net investment income of $10,662 and a
decrease in accumulated net realized gain (loss) of $10,662. These adjustments
were related to Section 988 gain (loss) reclasses and net operating losses. Net
assets were not affected by this reclassification.
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.
Management has analyzed the Fund's tax positions taken on Federal income
tax returns for all open tax years (October 31, 2010, 2009, 2008 and 2007), and
has concluded that no provision for federal income tax is required in the Fund's
financial statements. The Fund's federal and state income and federal excise tax
returns for tax years for which the applicable statutes of limitations have not
expired are subject to examination by the Internal Revenue Service and state
departments of revenue. Management reviewed the treatment of tax positions taken
by the Fund, including but not limited to whether the Fund satisfies the various
requirements to be treated as a
17
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
regulated investment company under the Code. Although there is some uncertainty
as to whether the Fund satisfies these requirements, management determined that
the Fund has satisfied such requirements.
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-Interactive Data Corp. ("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 been terminated by settlements or by
entering into offsetting commitments. Risks associated with such contracts
include movement in the value of the foreign currency relative to the U.S.
dollar and the ability of the counterparty to perform. There were no such
contracts open in the Fund as of October 31, 2010.
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. Withholding
taxes on foreign dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates. 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. Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENT: In January 2010, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06
"Improving Disclosures about Fair Value Measurements". ASU 2010-06 amends FASB
Accounting Standards Codification Topic 820, Fair Value Measurements and
Disclosures, to require additional disclosures regarding fair value
measurements. Certain disclosures required by ASU No. 2010-06 are effective for
interim and annual reporting periods beginning after December 15, 2009, and
other required disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years. Management
has evaluated the impact and has incorporated the appropriate disclosures
required by ASU No. 2010-06 in its financial statement disclosures.
18
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (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"). Effective May
1, 2009, under the Investment Advisory Agreement, the Fund pays a monthly fee at
an annualized rate equal to 0.65% 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 BNY Mellon Investment Servicing (US) Inc. ("BNY Mellon"),
formerly known as PNC Global Investment Servicing (U.S.), Inc. The Fund pays BNY
Mellon an annual fee payable monthly. During the year ended October 31, 2010,
the Fund incurred expenses of U.S. $114,301 on administration fees to BNY
Mellon.
The Fund has entered into an agreement with JPMorgan Chase & Co. to serve
as custodian of the Fund's assets. During the year ended October 31, 2010, the
Fund incurred expenses for JPMorgan Chase & Co. of U.S. $26,637.
C. PURCHASES AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the year
ended October 31, 2010 excluding U.S. government and short-term investments,
aggregated U.S. $5,990,209 and U.S. $9,518,960, respectively.
D. COMPONENTS OF DISTRIBUTABLE EARNINGS:
At October 31, 2010, the components of distributable earnings on a tax
basis were as follows:
Capital Undistributed Undistributed
Loss Ordinary Long-Term Net Unrealized
Carryforward Income Gains Depreciation
------------- ------------- ------------- --------------
$(14,144,947) $374,384 $-- $(44,432)
For Federal income tax purposes, capital loss carryforwards are available
to offset future capital gains. As of October 31, 2010, the Fund had a capital
loss carryforward of $14,144,947, of which $1,267,836 and $12,877,111 will
expire on October 31, 2017, and October 31, 2018, respectively.
The aggregate cost of investments and the composition of unrealized
appreciation and depreciation on investments and appreciation on assets and
liabilities in foreign currencies on a tax basis as of October 31, 2010 were as
follows:
Gross
Gross Gross Unrealized
Unrealized Unrealized Net Unrealized Depreciation Net
Total Cost of Appreciation Depreciation Depreciation on Foreign Unrealized
Investments on Investments on Investments on Investments Currency Depreciation
------------- -------------- -------------- -------------- ------------ ------------
$50,038,469 $12,161,434 $(12,205,600) $(44,166) $(266) $(44,432)
There were no permanent tax and book differences in gross appreciation/
depreciation of securities or the cost basis of securities. The difference
between book basis net unrealized appreciation and tax basis net unrealized
depreciation is attributable to the tax deferral of losses on wash sales.
19
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
E. COMMON STOCK:
For the year ended October 31, 2010, the Fund issued no shares in
connection with stock distribution.
For the year ended October 31, 2009, the Fund issued 2,603,300 shares in
connection with stock distribution in the amount of $13,901,795.
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the year ended October 31, 2010, the Fund repurchased 367,300 (5.21% of
the shares outstanding at October 31, 2009) of its shares for a total cost of
$2,631,382, at an average discount of 12.84% of net asset value.
For the year ended October 31, 2009, the Fund repurchased 558,500 (7.35% of
the shares outstanding at January 31, 2009 year end) of its shares for a total
cost of $3,414,029, at an average discount of 14.13% of net asset value.
G. MARKET CONCENTRATION:
Because the Fund concentrates its investments in securities issued by
corporations in Ireland, its portfolio may be subject to special risks and
considerations typically not associated with investing in a broader range of
domestic securities. In addition, the Fund is more susceptible to factors
adversely affecting the Irish economy than a comparable fund not concentrated in
these issuers to the same extent.
H. RISK FACTORS:
Investing in the fund may involve certain risks including, but not limited
to,those described below.
The prices of securities held by the fund may decline in response to
certain events, including those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency, interest rate and commodity price fluctuations. The
growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss.
Investments in securities issued by entities based outside the United
States may also be affected by currency controls; different accounting,
auditing, financial reporting, and legal standards and practices in some
countries; expropriation; changes in tax policy; greater market volatility;
differing securities market structures; higher transaction costs; and various
administrative difficulties, such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. These risks may be heightened
in connection with investments in developing countries.
I. SUBSEQUENT EVENT:
Management has evaluated the impact of all subsequent events on the Fund
through the date the financial statements were issued.
20
THE NEW IRELAND FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTOR AND SHAREHOLDERS OF
THE NEW IRELAND FUND, INC.
We have audited the accompanying statements of assets and liabilities of
The New Ireland Fund, Inc. (the "Fund"), including the portfolio holdings, as of
October 31, 2010, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the four years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended October 31, 2006 have been
audited by other auditors, whose report dated December 5, 2006 expressed an
unqualified opinion on such financial highlights.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2010, by correspondence with the
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
New Ireland Fund, Inc. as of October 31, 2010, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period, and the financial highlights for each of the four years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
December 13, 2010
21
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.
22
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
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, 59 Maiden Lane, New York, New York, 10038, telephone
number (718) 921-8283.
23
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
MEETING OF SHAREHOLDERS
On June 8, 2010, the Fund held its Annual Meeting of Shareholders. The
following Directors were elected by the following votes: Denis Kelleher
5,167,344 For; 656,251 Abstaining, David Dempsey 5,181,709 For; 642,156
Abstaining and Chris Johns 5,180,399 For; 643,466 Abstaining. Peter J. Hooper,
Margaret Duffy, and George G. Moore continue to serve in their capacities as
Directors of the Fund.
FUND'S PRIVACY POLICY
The New Ireland Fund, Inc. appreciates the privacy concerns and
expectations of its registered shareholders and safeguarding their nonpublic
personal information ("Information") is of great importance to the Fund.
The Fund collects Information pertaining to its registered shareholders,
including matters such as name, address, tax I.D. number, Social Security number
and instructions regarding the Fund's Dividend Reinvestment Plan. The
Information is collected from the following sources:
- Directly from the registered shareholder through data provided on
applications or other forms and through account inquiries by mail,
telephone or e-mail.
- From the registered shareholder's broker as the shares are initially
transferred into registered form.
Except as permitted by law, the Fund does not disclose any Information
about its current or former registered shareholders to anyone. The disclosures
made by the Fund are primarily to the Fund's service providers as needed to
maintain account records and perform other services for the Fund's shareholders.
The Fund maintains physical, electronic, and procedural safeguards to protect
the shareholders' Information in the Fund's possession.
The Fund's privacy policy applies only to its individual registered
shareholders. If you own shares of the Fund through a third party broker, bank
or other financial institution, that institution's privacy policies will apply
to you and the Fund's privacy policy will not.
PORTFOLIO INFORMATION
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Fund's Form N-Q is available (1) by calling
1-800-468-6475; (2) on the Fund's website located at
http://www.newirelandfund.com; (3) on the SEC's website at http://www.sec.gov;
or (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 1-800-SEC-0330.
24
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities held by the Fund
is available, without charge and upon request, by calling 1-800-468-6475. This
information is also available from the EDGAR database or the SEC's website at
http://www.sec.gov. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is
available at http://www.sec.gov.
CERTIFICATIONS
The Fund's President has certified to the New York Stock Exchange ("NYSE")
that, as of July 2, 2010 he was not aware of any violation by the Fund of
applicable NYSE corporate governance listing standards. The Fund's reports to
the SEC on Forms N-CSR and N-CSRS contain certifications by the Fund's principal
executive officer and principal financial officer that relate to the Fund's
disclosure in such reports and that are required by rule 30a2(a) under the
Investment Company Act.
TAX INFORMATION
For non-corporate shareholders 100%, or the maximum amount allowable under
the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by
the Fund for the period November 1, 2009 to October 31, 2010 may represent
qualified dividend income.
For the fiscal year ended October 31, 2010, the Fund had no designated
long-term capital gains.
25
BOARD OF DIRECTORS/OFFICERS (UNAUDITED)
TERM OF PRINCIPAL NUMBER OF
POSITION(S) OFFICE AND OCCUPATION(S) PORTFOLIOS IN
HELD WITH LENGTH AND OTHER FUND COMPLEX
NAME, ADDRESS, THE OF TIME DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND SERVED* PAST FIVE YEARS DIRECTOR
------------------------- ------------ ------------ --------------------------------------- -------------
NON-INTERESTED DIRECTORS:
Peter J. Hooper, 70 Director and Since 1990 President of Hooper Associates- 1
Westchester Financial Chairman of Current Consultants (1994 to present);
Center, Suite 1000 the Board term expires Director, The Ireland United States
50 Main Street in 2012. Council for Commerce and Industry
White Plains, NY 10606 (1984 to present); Director, Flax Trust
- America (1988 to 2007).
David Dempsey, 61 Director Since 2007 Managing Director, Bentley 1
360 Lexington Avenue Current Associates L.P., (1991 to present);
3rd Floor term expires Director and Vice President, 205-69
New York, NY 10017 in 2013. Inc. (2000 to 2006).
Margaret Duffy, 67 Director Since 2006 Financial Consultant, Director, The 1
164 East 72 Street Current Dyson-Kissner-Moran Corporation
Suite 7B term expires (2000 to present).
New York, NY 10021 in 2011.
Denis P. Kelleher, 71 Director Since 1991 Chief Executive Officer, Wall Street 1
17 Battery Place Current Access-Financial Services (1981 to
New York, NY 10004 term expires present); Director, Independence
in 2013. Community Bank (1992 to 2006);
Chairman and Member of the Board
of Trustees, St. John's University
(1998 to 2007).
George G. Moore, 59 Director Since 2004 Chairman/Chief Executive Officer, 1
8010 Towers Crescent Current TARGUSinfo (1993 to present);
Drive term expires Chairman, AMACAI Information
Vienna, VA 22182 in 2012. Corp., a wholly-owned subsidiary of
TARGUS info, (2001 to 2007);
Chairman, Erne Heritage Holdings
(1990 to present).
----------
* Each Director shall serve until the expiration of their current term and
until their successor is elected and qualified.
26
BOARD OF DIRECTORS/OFFICERS (UNAUDITED)
TERM OF PRINCIPAL NUMBER OF
POSITION(S) OFFICE AND OCCUPATION(S) PORTFOLIOS IN
HELD WITH LENGTH AND OTHER FUND COMPLEX
NAME, ADDRESS, THE OF TIME DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND SERVED* PAST FIVE YEARS DIRECTOR
------------------------- ------------ ------------ --------------------------------------- -------------
INTERESTED DIRECTOR:
Chris Johns, 52** Director and Since 2009 Interim Chief Executive, Bank of 1
Bank of Ireland Asset President*** Current Ireland Asset Management (2010 to
Management (U.S.) term expires present); Head of Investments, Bank
Limited in 2011. of Ireland Asset Management
40 Mespil Road, Limited (2008 to present); Head of
Dublin 4, Ireland Global Research & Equity Portfolio
Management, Bank of Ireland Asset
Management Limited (2006 to
2008); Bank of Ireland Asset
Management Limited (2007 to
present); Bank of Ireland Unit Trust
Managers Limited (2009 to present);
Investment Strategist, Collins Stewart
(2004 to 2006); Director, Cadwyn
Global Hedge Fund (2005 to 2009).
OFFICERS***:
Chris Johns see description above
Lelia Long, 48 Treasurer Since 2002 Consultant (2009 to present); Senior
BNY Mellon Center Vice President & Director, Bank of
One Boston Place Ireland Asset Management (U.S.)
201 Washington Street Limited (1999 to 2008).
34th Floor
Boston, MA 02109
Salvatore Faia, 47 Chief Since 2005 President, Vigilant Compliance
BNY Mellon Center Compliance Services, (2004 to present); Trustee,
One Boston Place Officer Energy Income Partnership, (2005 to
201 Washington Street present).
34th Floor
Boston, MA 02109
Colleen Cummings, 39 Assistant Since 2006 Vice President and Director, BNY
4400 Computer Drive Treasurer Mellon Investment Servicing (US) Inc.
Westborough, MA (2004 to present).
01580
----------
* Each Director shall serve until the expiration of their current term and
until their successor is elected and qualified.
** Mr. Johns is deemed to be an "interested" Director because of his
affiliation with the Investment Adviser.
*** Each Officer of the Fund will hold office until a successor has been
elected by the Board of Directors.
27
BOARD OF DIRECTORS/OFFICERS (UNAUDITED)
TERM OF PRINCIPAL NUMBER OF
POSITION(S) OFFICE AND OCCUPATION(S) PORTFOLIOS IN
HELD WITH LENGTH AND OTHER FUND COMPLEX
NAME, ADDRESS, THE OF TIME DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND SERVED* PAST FIVE YEARS DIRECTOR
------------------------- ------------ ------------ --------------------------------------- -------------
OFFICER***
Vincenzo A. Scarduzio, 38 Secretary Since 2005 Vice President & Assistant Counsel,
301 Bellevue Parkway, BNY Mellon Investment Servicing
2nd Floor (US) Inc. (2010 to Present); Assistant
Wilmington, DE 19809 Vice President, BNY Mellon
Investment Servicing (US) Inc. (2006
to 2010); Senior Regulatory
Administrator, BNY Mellon
Investment Servicing (US) Inc. (2001
to 2006).
----------
*** Each Officer of the Fund will hold office until a successor has been
elected by the Board of Directors.
28
THE NEW IRELAND FUND, INC.
DIRECTORS AND OFFICERS
Peter J. Hooper - CHAIRMAN OF THE BOARD
Chris Johns - 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
40 Mespil Road
Dublin 4, Ireland
ADMINISTRATOR
BNY Mellon Investment Servicing (US) 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
59 Maiden Lane
New York, New York 10038
LEGAL COUNSEL
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
INDEPENDENT REGISTERED PUBLIC 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 BNY Mellon Center
One Boston Place
201 Washington Street
34th Floor
Boston, Massachusetts 02109
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
WEBSITE ADDRESS:
www.newirelandfund.com
IR-SAR 10/10
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
directors has determined that Margaret Duffy is qualified to serve as an audit
committee financial expert serving on its audit committee and that she is
"independent."
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$34,800 (2009) and $36,500 (2010).
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 (2009) and $0 (2010).
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $3,700 (2009) and $3,800
(2010).
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0 (2009) and $0 (2010).
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
THE NEW IRELAND FUND, INC.
AUDIT COMMITTEE POLICY
ON
PRE-APPROVAL OF SERVICES PROVIDED BY THE INDEPENDENT ACCOUNTANTS
The Audit Committee of The New Ireland Fund, Inc. (the "Fund") is
charged with the responsibility to monitor the independence of the
Fund's independent accountants. As part of this responsibility, the
Audit Committee must pre-approve any independent accounting firm's
engagement to render audit and/or permissible non-audit services, as
required by law. In evaluating a proposed engagement of the
independent accountants, the Audit Committee will assess the effect
that the engagement might reasonably be expected to have on the
accountant's independence. The Committee's evaluation will be based
on:
a review of the nature of the professional services expected to
be provided,
a review of the safeguards put into place by the accounting firm
to safeguard independence, and
periodic meetings with the accounting firm.
POLICY FOR AUDIT AND NON-AUDIT SERVICES PROVIDED TO THE FUNDS
On an annual basis, the scope of audits for the Fund, audit fees and
expenses, and audit-related and non-audit services (and fees proposed
in respect thereof) proposed to be performed by the Fund's independent
accountants will be presented by the Treasurer and the independent
accountants to the Audit Committee for review and, as appropriate,
approval prior to the initiation of such services. Such presentation
shall be accompanied by confirmation by both the Treasurer and the
independent accountants that the proposed services will not adversely
affect the independence of the independent accountants. Proposed
services shall be described in sufficient detail to enable the Audit
Committee to assess the appropriateness of such services and fees, and
the compatibility of the provision of such services with the auditor's
independence. The Committee shall receive periodic reports on the
progress of the audit and other services which are approved by the
Committee or by the Committee Chairman pursuant to authority delegated
in this Policy.
The categories of services enumerated under "Audit Services",
"Audit-related Services", and "Tax Services" are intended to provide
guidance to the Treasurer and the independent accountants as to those
categories of services which the Committee believes are generally
consistent with the independence of the independent accountants and
which the Committee (or the Committee Chairman) would expect upon the
presentation of specific proposals to pre-approve. The enumerated
categories are not intended as an exclusive list of audit,
audit-related or tax services which the Committee (or the Committee
Chairman) would consider for pre-approval.
AUDIT SERVICES
The following categories of audit services are considered to be
consistent with the role of the Fund's independent accountants:
Annual Fund financial statement audits
SEC and regulatory filings and consents
AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to
be consistent with the role of the Fund's independent accountants:
Accounting consultations
Agreed upon procedure reports
Attestation reports
Other internal control reports
Individual audit-related services that fall within one of these
categories and are not presented to the Audit Committee as part of the
annual pre-approval process will be subject to pre-approval by the
Committee Chairman (or any other Committee member on whom this
responsibility has been delegated) so long as the estimated fee for
those services does not exceed $7,500.
TAX SERVICES
The following categories of tax services are considered to be
consistent with the role of the Fund's independent accountants:
Tax compliance services related to the filing or amendment
of the following:
Federal, state and local income tax compliance; and
Sales and use tax compliance
Timely RIC qualification reviews
Tax distribution analysis and planning
Accounting methods studies
Tax consulting services and related projects
Individual tax services that fall within one of these categories and
are not presented to the Audit Committee as part of the annual
pre-approval process will be subject to pre-approval by the Committee
Chairman (or any other Committee member on whom this responsibility
has been delegated) so long as the estimated fee for those services
does not exceed $7,500.
OTHER NON-AUDIT SERVICES
Certain non-audit services that the independent accountants are
legally permitted to render will be subject to pre-approval by the
Committee or by one or more Committee members to whom the Committee
has delegated this authority and who will report to the full Committee
any pre-approval decisions made pursuant to this Policy. Non-audit
services presented for pre-approval pursuant to this paragraph will be
accompanied by a confirmation from both the Treasurer and the
independent accountants that the proposed services will not adversely
affect the independence of the independent accountants.
PROSCRIBED SERVICES
The Fund's independent accountants will NOT render services in the
following categories of non-audit services:
Bookkeeping or other services related to the accounting
records or financial statements of the Fund
Financial information systems design and implementation
Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
Actuarial services
Internal audit outsourcing services
Management functions or human resources
Broker or dealer, investment adviser, or investment banking
services
Legal services and expert services unrelated to the audit
Any other service that the Public Company Accounting Oversight
Board determines, by regulation, is impermissible.
PRE-APPROVAL OF NON-AUDIT SERVICES PROVIDED TO BIAM AND BIAM
AFFILIATES
Certain non-audit services provided to Bank of Ireland Asset
Management (U.S.) Limited ("BIAM") or any entity controlling,
controlled by or under common control with BIAM that provides ongoing
services to the Fund ("BIAM Affiliates") will be subject to
pre-approval by the Audit Committee. The only non-audit services
provided to these entities that will require pre-approval are those
RELATED DIRECTLY TO THE OPERATIONS AND FINANCIAL REPORTING OF THE
FUND. Individual projects that are not presented to the Audit
Committee as part of the annual pre-approval process, will be subject
to pre-approval by the Committee Chairman (or any other Committee
member on whom this responsibility has been delegated) so long as the
estimated fee for those services does not exceed $75,000. Services
presented for pre-approval pursuant to this paragraph will be
accompanied by a confirmation from both the Treasurer and the
independent accountants that the proposed services will not adversely
affect the independence of the independent accountants.
Although the Audit Committee will not pre-approve all services
provided to BIAM Affiliates, the Committee will receive an annual
report from the Fund's independent accounting firm showing the
aggregate fees for all services provided to BIAM and BIAM Affiliates.
December 10, 2003
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $3,700 (2009) and $3,800 (2010).
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following independent directors of the registrant: Margaret Duffy, Peter J.
Hooper, George G. Moore and David Dempsey.
ITEM 6. INVESTMENTS.
(a) 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.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
BANK OF IRELAND ASSET MANAGEMENT
PROXY VOTING POLICY FOR ACTIVELY MANAGED CLIENTS
REVIEWED: MARCH 2009
TABLE OF CONTENTS:
I: PROXY VOTING PROCEDURES
PURPOSE ................................................................... 3
SCOPE ..................................................................... 3
GUIDING PRINCIPLES ........................................................ 3
DECISION AND VOTING PROCESS ............................................... 3
PROXY VOTING COMMITTEE .................................................... 4
CONFLICTS OF INTEREST ..................................................... 4
WHEN BIAM DOES NOT VOTE PROXIES ........................................... 5
II: PROXY VOTING GUIDELINES
AUDITORS .................................................................. 6
BOARD OF DIRECTORS ........................................................ 6
Election of Directors
Classification/Declassification of the Board
Majority Voting Proposals in the election of Directors
Voting for Director Nominees in Contested Elections
Voting for Strategic Initiatives in Contested Elections
Director Indemnification and Liability Provisions
Board Size
Independent Chairman (Separate Chairman/CEO)
Majority of Independent Directors/Establishment of Committees
Director Tenure/Retirement Age
Filling of Vacancies/Removal of Directors
Executive and Director Compensation
SHAREHOLDER RIGHTS ........................................................ 9
Confidential Voting
Shareholder Ability to Call Special Meetings
ANTI-TAKEOVER MEASURES .................................................... 9
Amend Bylaws without Shareholder Consent
Anti-Takeover Provisions
Poison Pill Plans
Greenmail
Golden and Tin Parachutes
CAPITAL STRUCTURE ......................................................... 11
Adjustments to Par Value of Common Stock
Common Stock Authorization
Preferred Stock
Pre-emptive Rights
Share Repurchase Programs
Stock Distributions: Splits and Dividends
MERGERS AND CORPORATE RESTRUCTURING ....................................... 12
Going Private Transactions (LBOs and Minority Squeezeouts)
Spin-offs
MISCELLANEOUS ............................................................. 13
Stock Option Expensing
Amending Minor Bylaws
Changing Corporate Name
Changing Date, Time or Location of Annual Meeting
Cumulative Voting
2
I PROXY VOTING PROCEDURES
A. PURPOSE
Bank of Ireland Asset Management Limited and the BIAM group of companies
("BIAM") has adopted and implemented these policies and procedures ("Policies")
to seek to ensure that client proxies are voted in the clients' best interests,
in accordance with BIAM's fiduciary duties to clients and, in the case of BIAM
(U.S.), with SEC rule 206(4)-6 under the Investment Advisers Act of 1940. BIAM
believes that the Policies set forth herein are reasonably designed to achieve
that goal.
B. SCOPE
BIAM's authority to vote the proxies of its clients is established by its
advisory contracts and its proxy voting guidelines have been tailored to reflect
these specific contractual obligations. These Policies apply where clients have
delegated the authority and responsibility to BIAM to decide how to vote
proxies. Where BIAM has agreed to follow client guidelines in voting proxies,
client guidelines will be followed and supersede these Policies. BIAM also will
follow these Policies, as applicable, if it provides advice or recommendations
about specific proxy votes to clients that have not delegated voting
responsibility to BIAM. These Policies may be changed from time to time.
C. GUIDING PRINCIPLES
It is the policy of BIAM to vote all proxies for the exclusive benefit of its
clients. The maximization of total return for the client as an investor in the
stock being voted is the governing influence in considering corporate voting
decisions.
D. DECISION AND VOTING PROCESS
BIAM's proxy voting decisions are made by the Asset Managers. (For clients that
have specific voting guidelines, the Investment Support Unit will determine the
votes to be cast at a client level.) BIAM may vote differently on the same
matter if client guidelines or specific instructions call for a vote that is
inconsistent with BIAM's Proxy Voting Guidelines or a decision made by BIAM's
Asset Managers. In unusual circumstances, BIAM Asset Managers may make different
proxy voting decisions for different clients.
The Investment Support Unit is responsible for the communication of voting
decisions between the Asset Managers and BIAM's proxy voting agent (the
"Agent"). The Agent provides BIAM with all voting and shareholder meeting
information necessary for informed and timely decision making. The Agent is
responsible for the timely and accurate processing of the voting decision, and
the distribution of this decision to all relevant parties. The Agent is also
responsible for unblocking / rescinding a voting decision upon request from
BIAM.
3
E. PROXY VOTING COMMITTEE
BIAM has established a Proxy Voting Committee ("Committee") to deal with various
issues associated with proxy voting. The role of the Committee is to develop and
periodically review these Policies to help ensure they are up to date and
reflect current regulatory requirements; review compliance with these Policies;
and critically evaluate exceptions to the Policies. The Committee also is
responsible for taking reasonable steps to seek to identify any material
conflicts of interest on the part of BIAM or its personnel that may affect
particular proxy votes. The Committee is comprised of representatives from Asset
Management; the Investment Support Unit; Compliance and Client Service.
F. CONFLICTS OF INTEREST
Occasions may arise where BIAM may have a material conflict of interest with
respect to a matter to be voted. A material conflict of interest may exist, for
example, if BIAM has a very significant business relationship with either the
company whose stock is being voted, the person soliciting the proxy or a third
party that has a material interest in the outcome of the proxy vote.
The Proxy Voting Committee provides guidance to assist BIAM personnel in
identifying potential conflicts of interest and bringing them to the attention
of the Committee. The Committee is responsible for evaluating the materiality of
any conflicts. These Policies describe some, but not all, of the specific types
of conflicts of interest that BIAM may encounter in connection with proxy
voting. The Committee is expected to evaluate the particular facts and
circumstances of each situation and exercise its best judgment in deciding
whether the conflicts are material and how they should be addressed. A member of
BIAM's senior management will be designated, upon request from the Committee,
for consultation and to resolve any conflicts issue on which the Committee has
been unable to reach a decision on its own. This designate will appoint a
conflict resolution team in order to come to a decision on the vote in question.
The conflict resolution team appointed will include a minimum of three members
of the management team. The conflict team will also include either the Chief
Executive Officer and /or the of Head of Compliance. The Chief Executive Officer
will exclude himself from the conflict resolution team in the event that he is
involved in the vote (i.e. election / re-election).
When a material conflict of interest is identified, BIAM may (1) vote the
proxies in accordance with the general rule stated in the Proxy Voting
Guidelines set forth in these Policies (as may be amended from time to time),
provided the guidelines specify how votes generally will be cast on that
particular type of matter, i.e., the guidelines state that BIAM generally will
vote "for" or "against" the proposal; (2) seek voting instructions or a waiver
of the conflict from the trustee's / clients whose securities are to be voted
on; (3) cast the votes for its clients in the same proportion as the vote of all
other holders of such security, or "mirror vote," if information about the votes
cast by other holders is reasonably and timely available to BIAM; (4) refrain
from voting, other than to vote "present" for purposes of a quorum or (5) take
other action appropriate under the circumstances.
An adviser-client relationship will not be considered material for conflict
purposes if the gross investment advisory income received from the relationship
by BIAM during its most recent
4
fiscal year did not exceed one percent (1%) of BIAM's overall annual gross
investment advisory income and is not expected to exceed that amount in the
current fiscal year.
BIAM sets its Proxy Voting Guidelines and makes each proxy voting decision
independently, in the best interests of its clients and without regard to the
interests of BIAM, its parent company or any other affiliates of BIAM. In
addition, as a matter of policy, BIAM will not accept or consider direction from
its affiliates on how to vote any particular proxy.
G. WHEN BIAM DOES NOT VOTE PROXIES
In appropriate circumstances, BIAM may not vote proxies respecting client
securities, including, but not limited to, situations where (a) the securities
are no longer held in a client's account; (b) the proxy and other necessary
documents are not received in sufficient time to allow BIAM to analyze the
material or cast an informed vote by the voting deadline; (c) BIAM concludes
that the cost of voting the proxy outweighs any potential benefit to the client;
(d) in BIAM's judgment, the matter to be voted is neither material nor relevant
to shareholders and the issuer of the securities; (e) securities have been
loaned out pursuant to a client's securities lending program and are unavailable
to vote; or (f) the value or amount of the securities to be voted is
insignificant or undeterminable. BIAM also may refrain from voting a proxy where
BIAM believes that it is in the client's best interest to do so. Generally, this
will occur if BIAM is in disagreement with the proposals but the management have
committed to make, within an agreed time frame, appropriate changes which in
BIAM's view will favor shareholders.
In certain markets, shareholders are required to stop trading securities for a
specified time before or after a shareholder meeting ("Blocking Period"). BIAM
may refrain from voting or cancel a vote when BIAM concludes that it is more
beneficial to clients to be free to trade the securities than to vote
securities. In addition, BIAM will, to the best of its ability, unblock a share
position that is subject to a Blocking Period if there is danger of a failed
trade. Blocking only occurs in certain markets and the Blocking Periods and
rules vary from country to country, and in certain circumstances, from company
to company.
5
II PROXY VOTING GUIDELINES
The following are guidelines and as such are not exhaustive and do not include
all potential voting issues. Because proxy issues and the circumstances of
individual companies are so varied, there may be instances when BIAM will not
vote in strict adherence to these guidelines. Votes on matters not covered by
these guidelines will be determined in accordance with the guiding principles
set forth above. Certain proxy questions that are company specific and of a
non-routine nature may be more appropriately handled on a case-by-case basis. At
any time, BIAM may seek voting instructions from some or all clients holding the
securities to be voted.
AUDITORS
BIAM generally will vote FOR proposals to ratify auditors, unless there is
reason to believe that an auditor has a material financial interest in or
association with the company, and is therefore not independent, or there is
reason to believe that the independent auditor has rendered an opinion which is
neither accurate nor indicative of the company's financial position.
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
Electing directors is an important stock ownership right that shareholders can
exercise. Shareholders should seek to elect directors who represent their
interests and will act in a manner which will maximize the value of their
ownership interest and who can ultimately be held accountable for their actions.
- BIAM generally will vote FOR all nominees in uncontested elections.
However, each election is examined on a case-by-case basis and BIAM will
withhold votes for or vote against individual nominees or entire slates of
directors if it believes such action is in the best interest of
shareholders.
CLASSIFICATION/DECLASSIFICATION OF THE BOARD
A classified board is one in which directors are divided into classes with each
class serving a fixed term. Elections are staggered with each class up for
re-election in different years. Board classification can result in less
accountability and can make it more difficult for dissidents to gain control.
- BIAM will generally vote AGAINST proposals to classify the Board. BIAM will
generally Vote FOR proposals to repeal classified Boards, and to elect
directors annually.
6
MAJORITY VOTING PROPOSALS IN DIRECTOR ELECTIONS
Majority voting gives shareholders a meaningful voice in director election. A
shift from plurality to majority voting in director elections means a director
needs to get an affirmative majority of votes cast. The plurality system elects
a director in an uncontested election once there is one affirmative vote, with
votes withheld/against not being counted.
- BIAM will generally vote FOR resolutions requesting that the board change
the company's bylaws to stipulate that directors need to be elected with an
affirmative majority of votes cast, provided it does not conflict with the
state law where the company is incorporated.
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Proxy contests can play a valuable role in removing entrenched directors and
creating a means for corporate change.
- BIAM will review on a CASE-BY-CASE basis how it will cast its votes for
directors in a contested election based upon what BIAM believes are the
director nominees that will serve in the best interests of shareholders and
will enhance shareholder value.
VOTING FOR STRATEGIC INITIATIVES IN CONTESTED ELECTIONS
- Votes in a contested election to approve a strategic initiative will be
evaluated on a CASE-BY-CASE basis and voted in favor of the position that
BIAM believes will be in the best interest of shareholders and will enhance
shareholder value.
DIRECTOR INDEMNIFICATION AND LIABILITY PROVISIONS
Directors and officers are often faced with difficult choices and should be
willing to make decisions that are not risk-averse. BIAM believes that directors
should not be held accountable for actions taken where they have acted honestly
and in good faith but should not be fully released from liability if they act
outside of such parameters.
- BIAM generally will vote FOR proposals providing for indemnification and
liability limitations for officers and directors, provided the policies are
limited to the director acting honestly and in good faith and putting the
interests of the company first, rather than eliminating entirely director's
and officer's liability for monetary damages for violating the duty of
care.
BOARD SIZE
Proposals to allow management to increase or decrease the size of the board at
its own discretion are often used by companies as a takeover defense. By
increasing the size of the board, management can make it more difficult for
dissidents to gain control.
- BIAM generally will vote FOR proposals that seek to fix the size of the
board.
7
- BIAM generally will vote AGAINST proposals that give management the ability
to alter the size of the board without shareholder approval.
INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)
BIAM will review on a CASE-BY-CASE basis proposals to separate the roles of
chairman and CEO. BIAM will vote in favor of a combined role if the company has
implemented an appropriate counterbalancing governance structure. In determining
if the appropriate measures are in place BIAM may consider the following:
A. Designated lead director
B. 2/3 independent board
C. All independent key committees
D. Committee chairpersons nominated by independent directors
E. Established governance guidelines
MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES
BIAM believes that having a board independent of management is of the utmost
importance to both a company and its shareholders.
- BIAM generally will vote FOR proposals asking that a majority or more of
directors be independent.
- BIAM generally will vote FOR proposals asking that board audit,
compensation, and/or nominating committees be "independent". Independence
does not necessarily require that the entire committee be composed of
independent directors.
DIRECTOR TENURE/RETIREMENT AGE
Tenure and Age limits impose an arbitrary threshold beyond which director's may
not serve regardless of the director's performance.
- BIAM believes that directors should be judged on their own merit and will
generally vote AGAINST proposals for such arbitrary guidelines as age
restrictions.
- BIAM generally will vote FOR proposals that require directors to present
themselves for re-election on a periodic basis.
FILLING VACANCIES/REMOVAL OF DIRECTORS
Shareholder ability to remove directors, with or without cause, is prescribed by
a state's business corporation law, an individual company's articles of
incorporation, or its bylaws. If the state or company has specified that removal
may only be for cause, then such things as self-dealing or fraud will allow for
the removal of a director. Removal without cause requires
8
no such showing, which would allow shareholders to remove through a majority
vote any director before his or her term expires.
- BIAM will evaluate on a CASE-BY-CASE basis proposals that members of the
board can only be removed for cause.
EXECUTIVE AND DIRECTOR COMPENSATION
Directors compensation plans should be aligned with shareholders long-term
interests.
- Evaluation of plans will be done on a CASE-BY-CASE basis, considering
several factors in determining if it is reasonable and fair
SHAREHOLDER RIGHTS
CONFIDENTIAL VOTING
In a confidential voting system, all proxies, and voting tabulations that
identify individual shareholders are kept confidential. This confidentiality can
eliminate any real or perceived coercion towards voters.
- BIAM generally will vote FOR proposals that corporations adopt confidential
voting, use independent vote tabulators or use independent inspectors of
election, as long as the proposal includes a provision for proxy contests
as follows: In the case of a contested election, management should be
permitted to request that the dissident group honor its confidential voting
policy. If the dissidents agree, the policy remains in place. If the
dissidents will not agree, the confidential voting policy is waived.
- BIAM generally will vote FOR proposals to adopt confidential voting by
shareholders.
SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Certain matters may arise between regularly scheduled shareholder meetings that
require attention. The inability of shareholders to call meetings could result
in shareholders being unable to remove directors, initiate a shareholder
resolution or respond to a beneficial offer without having to wait for the next
scheduled meeting. The inability to call a special meeting and the resulting
insulation of management could adversely affect corporate performance and
shareholder returns.
- BIAM generally will vote AGAINST proposals to restrict or prohibit
shareholder ability to call special meetings.
- BIAM generally will vote FOR proposals that remove restrictions on the
right of shareholders to act independently of management.
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ANTI-TAKEOVER MEASURES
BIAM generally will vote AGAINST anti-takeover proposals if such proposals act
against the common interests of shareholders.
AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT
- BIAM generally will vote AGAINST proposals giving the board exclusive
authority to amend the Bylaws.
- BIAM generally will vote FOR proposals giving the board the ability to
amend the bylaws with shareholder consent.
ANTI-TAKEOVER PROVISIONS
- BIAM generally will vote AGAINST any proposed amendments to corporate
Articles, Bylaws or Charters that include anti-takeover provisions.
POISON PILL PLANS
Poison pills (or shareholder rights plans) are tactics used by management
fearing an unwelcome takeover bid. They cause a variety of events to occur which
may make the company financially less attractive to a potential acquirer.
- BIAM generally will vote FOR a proposal that the company submit a
shareholder rights plan (poison pill) to a shareholder vote.
- BIAM generally will vote AGAINST a proposal to renew or amend an existing
shareholder rights plan (poison pill).
- BIAM generally will vote FOR a proposal to redeem a shareholder rights plan
(poison pill).
- BIAM generally will vote AGAINST an increase in capital stock for use in
the implementation of a shareholder rights plan (poison pill).
GREENMAIL
Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the market
value of its shares, the practice discriminates against all other shareholders.
This transferred cash could, absent the greenmail payments, be put to use for
reinvestment in the company, payment of dividends, or to fund a public share
repurchase program.
10
- BIAM generally will vote FOR proposals to adopt anti-greenmail charter or
bylaw amendments or otherwise restrict a company's ability to make a
greenmail payment.
GOLDEN AND TIN PARACHUTES
Golden and tin parachutes are designed to protect the employees of a corporation
in the event of a change in control. Golden parachutes are payments to senior
level management that are triggered during a change of control. The calculation
is usually based on some multiple of an employee's annual or monthly
compensation. Some companies are extending the coverage to all employees via tin
parachutes.
- BIAM generally will vote FOR proposals that the company eliminate or
restrict existing severance agreements, change-in-control provisions, or
golden parachutes.
CAPITAL STRUCTURE
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK
Stock that has a fixed per share value printed on its certificate is called par
value stock. The purpose of par value stock is to establish the maximum
responsibility of a shareholder in the event that a company becomes insolvent.
Many times proposals to reduce par value stem from state law requirements or
banking regulations.
- BIAM generally will vote FOR management proposals to reduce the par value
of common stock.
COMMON STOCK AUTHORIZATION
State statutes and stock exchanges require shareholder approval for increases in
the number of common shares a board is authorized to issue. Companies increase
their supply of common stock for a variety of ordinary business purposes:
raising new capital, funding stock compensation programs, business acquisitions,
and implementation of stock splits or payment of stock dividends.
- BIAM generally will vote FOR increases in common stock authorized provided
such action is determined to be in the shareholders' best interests.
- BIAM will review on a CASE-BY-CASE basis proposals to approve a reduction
in the number of shares of common stock authorized for issue or an
elimination of an authorized class of common stock.
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PREFERRED STOCK
- BIAM will review on a CASE-BY-CASE basis proposals to increase the number
of blank check preferred shares after analyzing the number of preferred
shares available for issue given a company's industry and performance in
terms of shareholder returns.
- BIAM will review on a CASE-BY-CASE basis proposal to eliminate a currently
authorized class of preferred stock.
SHARE REPURCHASE PLANS
- BIAM will generally vote FOR share repurchase plans .
PRE-EMPTIVE RIGHTS
Pre-emptive rights permit shareholders to share proportionately in any new
issues of stock of the same class. These rights guarantee existing shareholders
the first opportunity to purchase shares of new issues of stock in the class
they own, in an amount equal to the percentage of the class they already own.
- BIAM will generally vote FOR proposals on issuance requests with
pre-emptive rights up to a maximum of 100% of currently issued share
capital.
- For issuance requests without pre-emptive rights, BIAM will generally vote
FOR issuances up to a maximum of 20% of currently issued share capital.
SHARE REPURCHASE PROGRAMS
- BIAM generally will vote FOR management proposals to institute open-market
share repurchase plans (Stock Repurchase Program).
STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
- BIAM generally will vote FOR management proposals to increase the common
share authorization for a stock split or share dividend.
- BIAM generally will vote FOR recommended stock splits.
MERGERS AND CORPORATE RESTRUCTURINGS
- BIAM will review on a CASE-BY-CASE basis proposals for mergers and
acquisitions.
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GOING PRIVATE TRANSACTIONS (LBOS AND MINORITY SQUEEZEOUTS)
- BIAM will review on a CASE-BY-CASE basis proposals to take a company
private, taking into account factors including, but not limited to, offer
price/premium, fairness opinion, how the deal was negotiated, conflicts of
interest, other alternatives/offers considered, and non-completion risk.
SPIN-OFFS
- BIAM will review on a CASE-BY-CASE basis proposed spin-offs, taking into
consideration factors including, but not limited to, tax and regulatory
advantages, planned use of the sale proceeds, valuation of the spin-off,
fairness opinion, benefits to the parent company, conflicts of interest,
managerial incentives, corporate governance changes and changes in the
capital structure.
MISCELLANEOUS
STOCK OPTION EXPENSING
- BIAM generally will vote FOR proposals that the company expense stock
options unless management has already publicly committed to start expensing
by a specific date.
AMENDING MINOR BYLAWS
- BIAM generally will vote FOR management proposals for bylaw or charter
changes that are of a housekeeping nature (updates or corrections).
CHANGING CORPORATE NAME
- BIAM generally will vote WITH MANAGEMENT with regard to changing the
corporate name.
CHANGING DATE, TIME OR LOCATION OF ANNUAL MEETING
- BIAM generally will vote FOR management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. BIAM requires at least ten days notice of any such change in
order to allow for custodian deadlines.
CUMULATIVE VOTING
Cumulative voting is a method of voting that permits shareholders to combine
their total votes and cast different numbers of votes for different candidates.
- BIAM will generally vote AGAINST proposals to adopt cumulative voting
practices.
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ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
PETER O'DONOGHUE, CFA, EQUITY MANAGER
Peter O'Donoghue joined Bank of Ireland Asset Management (the "Advisor")
in 2001 though the graduate recruitment programme. Prior to joining the
Asset Management team, Peter held a number of roles in various areas of
the business including Portfolio Construction, Global Support and our
European office. He holds a BA in International Business & Languages from
Dublin City University and is also a CFA charterholder. Peter is also a
member of the Society of Investment Analysts of Ireland. Peter O'Donoghue
is primarily responsible for the management of the Registrant's portfolio
and has responsibility for all the day-to-day management of the
Registrant portfolio including stock research, stock selection and
portfolio management. Peter O'Donoghue was appointed as Portfolio Manager
of the Registrant on December 7, 2006.
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
As of October 31, 2010 Mr. O'Donoghue did not manage any other registered
investment companies or any other accounts.
As of October 31, 2010 Mr. O'Donoghue managed the following accounts:
Total No. of Accounts where Total Assets in Accounts
No. of Accounts Advisory Fee is Based on where Advisory Fee is
Type of Accounts Managed Total Assets Performance Based on Performance
--------------------- --------------- ------------ ------------------------ ------------------------
Registered Investment
Companies: 1 $51m 0 0
Other Pooled
Investment Vehicles: 0 0 0 0
Other Accounts: 0 0 0 0
POTENTIAL CONFLICTS OF INTERESTS
In recognition of the fact that conflicts of interest are inherent in
the investment management business, the Advisor has adopted policies
and procedures reasonably designed to identify and manage the effects
of actual or potential conflicts of interest in the areas of employee
personal trading, managing multiple accounts for multiple clients and
allocation of investment opportunities.
The Advisor has adopted a code of ethics policy that is designed to
reduce the risk of actual or potential conflicts of interest with
dealings on behalf of clients. The code reflects the Advisor's
fiduciary obligations and those of its employees, and requires that
all employees comply with all applicable federal securities laws. The
Advisor's personal dealing rules apply to all employees. In summary,
the code requires pre-approval of all personal dealings in equity
securities or securities that derive their value from equity
securities. As a general matter, permission to execute a proposed
personal trade in a security will generally be refused if the Advisor
has executed, or intends to execute material client trades in the same
security, in the seven days before or the seven days following the
proposed employee deal. The code requires employees to report any
transactions in mutual funds where the Advisor acts as an adviser or
sub-adviser to the fund. The code also covers issues such as
prohibited transactions, blackout periods for transactions, and short
term trading.
In addition to managing the Registrant's Portfolio, the Portfolio
Manager is a member of a team that manages multiple portfolios for
multiple clients. Accordingly the Portfolio Manager may have
responsibility for managing the investments of multiple accounts with
a common investment strategy or several investment styles.
Accordingly, client portfolios may have investment objectives,
strategies, time horizons and risk profiles that differ from those of
the Registrant. The portfolio Manager makes investment decisions for
the Registrant based on its investment objective, policies and other
relevant investment considerations, Consequently, the Portfolio
Manager may purchase or sell securities for one client portfolio and
not another client portfolio, and the performance of securities
purchased for one portfolio may vary from the performance of
securities purchased for other portfolios. The Portfolio Manager may
place transactions on behalf of other clients that are directly or
indirectly contrary to investment decisions made on behalf of the
Registrant, which has the potential to adversely impact the
Registrant, depending on market conditions. There is a fiduciary duty
for the Advisor to act in good faith for the benefit of its clients;
to disclose fully and fairly all material facts; and to allocate
trades in a fair and equitable manner. The Advisor has implemented
allocation procedures that specify the factors taken into account in
making allocation decisions for its clients and to ensure that all
accounts with substantially similar investment objectives are treated
equitably. These procedures ensure that clients are treated fairly as
to the securities purchased or sold for their accounts, in the
priority of execution of orders and the allocation of trades.
Generally, the above will be achieved by allocating on a simple
pro-rata basis. However, to ensure that all clients get meaningful
order sizes in a cost effective manner, allocations to clients are
generally targeted to be greater than 0.03% of each client's account
assets. There are exceptions to the 0.03% De
Minimus allocation such as when IPO orders are only partially filled.
Partially filled IPO orders are generally allocated pro-rata in
accordance with the original order without reference to achieving a
minimum targeted percentage of client assets. Lastly the performance
of similarly managed accounts is monitored to ensure consistency of
performance and to detect any unexplained significant differences.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBERS
The Registrant pays the Advisor a fee based on the assets under
management of the Fund as set forth in the Advisory Agreement. The
Advisor pays its investment professionals out of its total revenues
and other resources, including the advisory fee earned with respect to
the Registrant. There are three components to the compensation
structure used by the Advisor. The compensation package is highly
competitive and includes a competitive fixed base salary, a
performance-linked bonus and a Bank of Ireland Group capital stock
issue plan. Compensation is not based on the value of assets held in
the Registrant's portfolio. The performance measures used are applied
consistently among all portfolio managers and portfolios.
The bonuses paid to the portfolio managers are linked both to the
quality of an individual's stock research and also to the contribution
they make to the performance of the product group and/or portfolio to
which they are associated. The primary performance assessment of the
portfolio manager is based on how the client portfolios perform
relative to benchmarks, market indices and similar funds run by
competitor managers.
The stock issue plan is based on the overall profitability of Bank of
Ireland while bonuses are based on the profitability of Bank of
Ireland Asset Management and on individual achievement.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
As of October 31, 2010 beneficial ownership of shares of the
registrant by the Portfolio Manager is as follows:
Name of Portfolio Manager Dollar ($) Range of Fund
or Team Member Shares Beneficially Owned
------------------------- -------------------------
Peter O'Donoghue 0
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
(d) MAXIMUM NUMBER
(OR APPROXIMATE
DOLLAR VALUE) OF
(c) TOTAL NUMBER OF SHARES SHARES (OR UNITS)
(a) TOTAL NUMBER (b) AVERAGE (OR UNITS) PURCHASED AS PART THAT MAY YET BE
OF SHARES (OR PRICE PAID PER OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE
PERIOD UNITS) PURCHASED SHARE (OR UNIT) OR PROGRAMS PLANS OR PROGRAMS
------ ---------------- --------------- ---------------------------- -------------------
May 1 2010 to May 31 2010 0 337,078
June 1 2010 to June 30 2010 0 337,078
July 1 2010 to July 31 2010 0 337,078
August 1 2010 to August 31 2010 0 337,078
September 1, 2010 to
September 30 2010 0 337,078
October 1 2010 to October 31
2010 0 337,078
Total 0 337,078
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 as of October 31, 2009
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The New Ireland Fund, Inc.
By (Signature and Title)* /s/ Chris Johns
-------------------------------------
Chris Johns, President
(principal executive officer)
Date 12/22/10
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/ Chris Johns
-------------------------------------
Chris Johns, President
(principal executive officer)
Date 12/22/10
By (Signature and Title)* /s/ Lelia Long
-------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date 12/22/10
* Print the name and title of each signing officer under his or her
signature.