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 811-5984
-------------------
THE NEW IRELAND FUND, INC.
---------------------------------------------------------------
(Exact name of registrant as specified in charter)
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
GREENWICH, CT 06830
---------------------------------------------------------------
(Address of principal executive offices) (Zip code)
PFPC Inc.
99 High Street, 27th Floor
BOSTON, MA 02110
---------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (203) 869-0111
---------------
Date of fiscal year end: OCTOBER 31, 2004
----------------
Date of reporting period: APRIL 30, 2004
---------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
--------------------------------------------------------------------------------
THE
NEW IRELAND
FUND
[PHOTO OMITTED - JAMES JOYCE]
SEMI-ANNUAL REPORT
APRIL 30, 2004
--------------------------------------------------------------------------------
COVER PHOTOGRAPH -- DUBLIN -- STATUE OF JAMES JOYCE, AUTHOR OF ULYSSES
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
INTRODUCTION
Although problems still remain in the Middle East, things seem to be moving
in the right direction with the recent approval by the UN Security Council of
the US/UK proposal on Iraq and the return to a form of self-government in that
country. These moves and the global economic recovery have been helpful in
strengthening the Irish economy.
Earlier this month, at the annual stockholder meeting, a proposal was
submitted by a stockholder, requesting that the Board of the Fund take the steps
necessary to open end the Fund or otherwise enable shareholders to realise net
asset value for their shares. Although the proposal received a majority of the
votes specifically cast on it, these votes represented only 33.3% of total
shares in issue. However, as a result of the vote, the Board has undertaken to
review the options open to it, with a view to addressing the issues raised in
the proposal.
In May, The Board were pleased to announce that the New Ireland Fund had
been awarded Lipper's best performance award within its peer group for the 5
year period ended December 31, 2003. In making this award, Lipper stated that
this reflected, not alone the best Total Return over this period but also
Consistent Return, Preservation, Tax Efficiency and Expense. This obviously
reflects well on John Forde, of Bank of Ireland Asset Management, the Fund
Manager responsible for the day to day management of the Fund's assets and the
Board congratulate him on this achievement.
PERFORMANCE
Following the strong gains of earlier in the year, equity markets suffered
from profit taking during the most recent fiscal quarter. As a result, the
Fund's Net Asset Value (NAV) decreased by 1.9% in the quarter, however, for the
six month period under review, it increased by 8.90%, to $17.74 per share.
For the quarter, the overall Irish Equity Index (ISEQ), increased by 0.2%
in US dollar terms and by 15.5% over the six months with Elan Pharmaceutical,
which is not part of the Fund's portfolio, being the key driver of index
performance in both periods.
Economic recovery, both domestically and internationally, continues to
support the good performance of the Irish equity markets.
We continue to implement the Share Repurchase Program, with 55,850 shares
being repurchased and retired, since the beginning of the fiscal year, at a cost
of $840,865. These repurchases represent a reduction of 1.17% of the shares
outstanding at October 31, 2003 and they have resulted in a positive impact on
the Fund's NAV of 3 cents per share.
1
ECONOMIC REVIEW
Economic statistics continue to reflect a steady recovery in the Irish
economy. While retail spending remains lack-luster there is good news in terms
of unemployment and Government finances. The Irish Central Bank expects the
economy in 2004 to expand by 3.25% in GNP terms (3.75% GDP). Both of these
forecasts have increased by 0.25% over the past quarter.
The extraordinary growth of the Irish economy, in the `Celtic Tiger' years,
has been replaced by a more modest but impressive expansion. This has resulted
in what could best be described as a soft landing from the previous high growth
trajectory years. This is viewed as a very satisfactory outcome given the
inherent risks of a high growth pattern. While uncertainties remain, most
notably the housing market, the general outlook continues to mark Ireland as a
solid performer in both a European and global context.
In the first two months of 2004, the volume of retail sales of all
businesses was 1.1% above the same period a year ago. One may have expected a
greater rate of increase but there have been some negatives. With a ban on
smoking in public places being successfully introduced a few months ago, bar
sales remain weak, declining 5% in volume over the same period and it is likely
that sales in this area of the economy will remain weak for some time. Sales of
new cars are up 10%, year on year, in the first three months of 2004 versus
2003, which reflects solid and improving consumer confidence.
Tax revenue data is a good barometer of the economy in Ireland and
exchequer returns in May confirmed an excellent start to the year for tax
receipts. Total tax revenue increased by 15.2%, year over year, helped by a
strong recovery in income taxes, which have rebounded for the first time since
2000. To date, these are now more than 21.9% ahead of last year as compared to
the government forecast of 13.9%.
In April, the Irish unemployment rate decreased to 4.4%, the lowest since
July 2002. It is encouraging that Irish unemployment has resumed a downward
trend confounding those who felt Ireland would lose jobs to low-cost
competitors.
April also saw slightly higher inflation, on a year to year basis, with the
headline rate rising to 1.4% from 1.3% on the back of higher energy prices. Oil
prices continue to be a cause for concern and are likely to put further upward
pressure on inflation later in the year.
EQUITY MARKET REVIEW
In local currency terms, the Irish market gained 4.3% in the quarter under
review, which represented another outperformance of European and international
markets. However, in both the quarter and over the first six months of the
Fund's fiscal year, the strong recovery of Elan had a significant influence on
the market's performance.
2
QUARTER ENDED
APRIL 30, 2004
--------------
LOCAL
CURRENCY U.S. $
-------- ------
Irish Equities (ISEQ) +4.3% +0.2%
S&P 500 -2.1% -2.1%
NASDAQ -7.1% -7.1%
UK Equities (FTSE 100) +2.2% -0.4%
Japanese Equities +9.1% +4.5%
Euroland Equities
Eurostoxx -0.5% -4.4%
German Equities (DAX) -1.8% -5.6%
French Equities (CAC) +1.0% -2.9%
Dutch Equities (AEX) -3.4% -7.1%
CRH announced impressive 2003 full year results with pre-tax profits ahead
by 1% to *864.2 million, which, on a constant currency basis, equates to an
improvement of 12.2%. Earnings per share increased by similar amounts with the
second half of 2003 showing particular strength. The stock increased by 4.4% in
the most recent quarter. During March, the group announced a *372 million
acquisition of a 49% shareholding in Senapa, Portugal's second largest cement
producer.
In the quarter, ALLIED IRISH BANKS' (AIB) stock declined by 11.2% after its
bright start to 2004. AIB's results for fiscal 2003 showed its profit before tax
to be *1.22 billion, which was in line with expectations. However, the results
were impacted by a series of once off adjustments related to the Irish
Government bank levy, a goodwill write-off on the sale of their Govett
subsidiary and charges related to early staff retirements.
KERRY GROUP announced an excellent set of full year results despite US
dollar weakness. Earnings per share growth of 10.1%, and 15%, ex-currency,
represented a credible performance in the context of difficult global food and
consumer markets. The results reflected Kerry's strong free cash generation and
an increase of 0.3% in group operating margin to 8.4% from a depressed 8.1% in
fiscal year 2002. In March, Kerry announced a major acquisition with a $440
million purchase of Quest Food Ingredients from ICI. The stock price has
responded strongly to both the results and the deal, gaining 12.3% in the
quarter.
INDEPENDENT NEWS & MEDIA ran into some profit-taking despite a solid set of
results for fiscal 2003, with pre-tax profits, before exceptional items,
increasing by just under 20% to *154.6 million. This reflected a combination of
7.5% growth in operating profits from continuing operations and an 11% reduction
in finance charges in the wake of the company's recapitalization program.
Earnings per share, pre goodwill amortization and exceptionals, were marginally
ahead of expectations, up by just under 11% to 12.6c per share,
3
despite the dilutive effects of last year's *103 million rights issue. As
expected, the group's finances show a significant improvement as compared with
2002 results.
CURRENT OUTLOOK
Equity markets are consolidating following the strong recoveries from 2003
lows. The prospect of higher US interest rates and concerns about higher
inflation are real but acceptable risks for equities and we remain strong
believers in the relative attractiveness of stocks. The Irish market, with a P/E
for 2004 of 13.6x and a dividend yield of 2.5%, remains solid value relative to
its own history and international comparables. The Fund retains a fully invested
position.
Sincerely,
/S/ PETER HOOPER
Peter Hooper
Chairman
June 18, 2004
4
INVESTMENT SUMMARY
TOTAL RETURN (%)
----------------
MARKET VALUE NET ASSET VALUE (A)
------------ -------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- -------
Six Months 9.15 9.15 9.50 9.50
One Year 48.95 48.95 39.57 39.57
Three Year 28.16 8.64 19.71 6.17
Five Year 17.97 3.37 7.01 1.36
Ten Year 179.22 10.84 162.90 10.14
PER SHARE INFORMATION AND RETURNS
SIX MONTHS
ENDED
APRIL 30,
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
---------------------------------------------------------------------------------------------------------------
Net Asset
Value ($) 13.61 16.90 19.99 21.36 19.75 20.06 13.28 11.04 16.29 17.74
Income
Dividends ($) (0.11) (0.14) (0.22) (0.07) -- (0.13) (0.01) (0.03) -- (0.09)
Capital Gains
Other
Distributions ($) -- (0.13) (0.36) (0.70) (1.14) (1.60) (2.65) (0.69) -- --
Total
Return (%) (a) 25.72 26.25 22.46 11.68 (2.79) 13.27 (23.76) (12.07) 47.55 9.50
NOTES
-----
(a) Total investment returns reflect changes in net asset value per share
during each period and assume that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the Fund
based on market price.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
5
PORTFOLIO BY MARKET SECTOR AS OF APRIL 30, 2004
(PERCENTAGE OF NET ASSETS)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Other* Assets 7.73%
Telecommunications 3.29%
Business Services 4.55%
Transportation 4.47%
Construction and Building Materials 20.32%
Pharmaceuticals 3.40%
Leisure and Hotels 7.03%
Diversified Financial Services 4.19%
Health Care Services 8.07%
Financial 19.56%
Food and Beverages 14.29%
Food and Agriculture 3.10%
*Includes industries less than 3%.
TOP 10 HOLDINGS BY ISSUER AS OF APRIL 30, 2004
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
Allied Irish Banks PLC Financial 15.16%
CRH PLC Construction and Building Materials 12.64%
Kerry Group PLC, Series A Food and Beverages 11.73%
United Drug PLC Health Care Services 4.65%
DCC PLC Business Services 4.55%
Ryanair Holdings PLC Transportation 4.47%
FBD Holdings PLC Financial 4.40%
Kingspan Group PLC Construction and Building Materials 4.32%
Jury's Doyle Hotel Group PLC Leisure and Hotels 4.26%
Irish Life & Permanent PLC Diversified Financial Services 4.20%
6
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2004 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (98.83%)
COMMON STOCKS OF IRISH COMPANIES (95.43%)
BUSINESS SERVICES (4.55%)
DCC PLC 250,000 $ 3,806,041
------------
COMPUTER SOFTWARE AND SERVICES (1.14%)
IONA Technologies PLC-ADR* 169,300 956,545
------------
CONSTRUCTION AND BUILDING MATERIALS (20.32%)
CRH PLC 498,768 10,582,824
Grafton Group PLC-UTS 380,820 2,816,661
Kingspan Group PLC 675,707 3,612,626
------------
17,012,111
------------
DIVERSIFIED FINANCIAL SERVICES (4.19%)
Irish Life & Permanent PLC 226,707 3,511,213
------------
FINANCIAL (19.56%)
Allied Irish Banks PLC 879,951 12,689,772
FBD Holdings PLC 202,314 3,686,373
------------
16,376,145
------------
FOOD AND AGRICULTURE (3.10%)
IAWS Group PLC 227,619 2,592,160
------------
FOOD AND BEVERAGES (14.29%)
Fyffes PLC 467,400 868,461
Greencore Group PLC 352,568 1,272,152
Kerry Group PLC, Series A 511,857 9,817,442
------------
11,958,055
------------
HEALTH CARE SERVICES (8.07%)
ICON PLC-ADR* 71,646 2,858,675
United Drug PLC 1,249,687 3,894,972
------------
6,753,647
------------
LEISURE AND HOTELS (7.03%)
Jury's Doyle Hotel Group PLC 291,464 3,563,812
Paddy Power PLC 202,495 2,318,181
------------
5,881,993
------------
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2004 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS OF IRISH COMPANIES (CONTINUED)
PUBLISHING AND NEWS (1.99%)
Independent News & Media PLC 732,313 $ 1,667,938
------------
TECHNOLOGY (1.74%)
Horizon Technology Group PLC* 1,321,900 1,457,861
------------
TELECOMMUNICATIONS (3.29%)
Eircom Group PLC-144A a* 400,000 700,072
Spectel PLC++
(8/4/00, 11/22/00,11/30/01-Cost $2,699,475) 1,800,248 2,050,150
------------
2,750,222
------------
TRANSPORTATION (4.47%)
Ryanair Holdings PLC* 650,000 3,740,109
------------
UTILITY/PUBLIC SERVICES (1.69%)
NTR PLC+
(6/14/02-Cost $918,234) 98,132 1,411,632
------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $43,838,952) 79,875,672
------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (3.40%)
(Cost U.S. $2,166,754)
PHARMACEUTICALS (3.40%)
Galen Holdings PLC 201,154 2,843,053
------------
TOTAL INVESTMENT COMPANIES BEFORE FOREIGN
CURRENCY ON DEPOSIT
(Cost $46,005,706) $ 82,718,725
------------
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
April 30, 2004 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.32%)
(Interest Bearing)
British Pounds Sterling (POUND) 423 $ 751
Euro (EURO) 223,732 268,199
------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $266,159)** 268,950
------------
TOTAL INVESTMENTS (99.15%)
(Cost $46,271,865) $ 82,987,675
OTHER ASSETS AND LIABILITIES (0.85%) 711,692
------------
NET ASSETS (100.00%) $ 83,699,367
============
--------------------------------------------------------------------------------
a Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933, as amended.
* Non-income producing security.
** Foreign currency held on deposit at the Bank of Ireland.
+ Not readily marketable. Dates represent acquisition date.
++ Not readily marketable and non-income producing security. Dates represent
acquisition date.
ADR - American Depository Receipt traded in U.S. dollars
UTS - Units
9
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
April 30, 2004
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $46,005,706)
See accompanying schedule U.S.$82,718,725
Cash 155,986
Foreign currency (Cost $266,159) 268,950
Dividends receivable 738,560
-----------
Total Assets 83,882,221
-----------
LIABILITIES:
Investment advisory fee payable (Note B) 52,772
Payable for Fund shares redeemed 51,092
Printing fees payable 35,024
Directors' fees and expenses (Note C) 25,834
Administration Fee payable (Note B) 16,232
Custodian fees payable (Bank of Ireland) (Note B) 3,884
Custodian fees payable (Chase Manhattan Bank) (Note B) 1,000
Accrued expenses and other payables (2,984)
-----------
Total Liabilities 182,854
-----------
NET ASSETS U.S.$83,699,367
===========
AT APRIL 30, 2004 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares
Issued and Outstanding 4,718,878 Shares U.S.$ 47,189
Additional Paid-in Capital 50,894,100
Undistributed Net Investment Income 280,103
Accumulated Net Realized Loss (4,231,099)
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 36,709,074
-----------
TOTAL NET ASSETS U.S.$83,699,367
===========
NET ASSET VALUE PER SHARE
(Applicable to 4,718,878 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $83,699,367 / 4,718,878) U.S.$ 17.74
===========
See Notes to Financial Statements.
10
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended
April 30, 2004
(unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of withholding taxes of U.S. $1,114) U.S. $ 953,767
Interest 4,957
-----------
TOTAL INVESTMENT INCOME 958,724
-----------
EXPENSES
Investment advisory fee (Note B) 314,689
Administration fee (Note B) 86,508
Legal fees 70,878
Directors' fees and expenses (Note C) 66,570
Custodian fees (Note B) 18,449
Other 119,635
----------
TOTAL EXPENSES 676,729
-----------
NET INVESTMENT INCOME U.S. $ 281,995
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE D)
Realized gain on:
Securities transactions 2,454,913
Foreign currency transactions 8,590
----------
Net realized gain on investments
during the period 2,463,503
-----------
Net change in unrealized appreciation/(depreciation) of:
Securities 4,435,824
Foreign currency and net other assets (7,023)
----------
Net unrealized appreciation of investments
during the period 4,428,801
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 6,892,304
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S. $ 7,174,299
===========
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------------
Six Months Ended
April 30, 2004 Year Ended
(unaudited) October 31, 2003
-----------------------------------------------------------------------------------
Net investment income U.S. $ 281,995 U.S. $ 340,169
Net realized gain/(loss) on investments 2,463,503 (2,204,145)
Net unrealized appreciation of investments,
foreign currency holdings and net
other assets 4,428,801 26,854,166
----------- ------------
Net increase in net assets
resulting from operations 7,174,299 24,990,190
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (424,025) --
----------- ------------
Net increase in net assets 6,750,274 24,990,190
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Value of 55,850 and 194,450 shares
repurchased, respectively (Note F) (840,865) (2,056,220)
----------- ------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (840,865) (2,056,220)
----------- ------------
NET ASSETS
Beginning of period 77,789,958 54,855,988
----------- ------------
End of period (Including undistributed
net investment income of $280,103
and $422,133 respectively) U.S. $83,699,367 U.S. $ 77,789,958
=========== ============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
--------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 2004 --------------------------------------------------------------------
(unaudited) 2003 2002 2001 2000 1999
-------------------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Period U.S. $16.29 U.S. $11.04 U.S. $13.28 U.S. $20.06 U.S. $19.75 U.S. $21.36
------ ------ ------ ------ ------ ------
Net Investment Income/(Loss) 0.06 0.07 (0.08) (0.02) 0.15 0.13
Net Realized and Unrealized
Gain/(Loss) on Investments 1.45 5.08 (1.50) (3.65) 1.59 (0.60)
------ ------ ------ ------ ------ ------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 1.51 5.15 (1.58) (3.67) 1.74 (0.47)
------ ------ ------ ------ ------ ------
Distributions to Shareholders
from:
Net Investment Income (0.09) -- (.03) (0.01) (0.13) --
Net Realized Gains -- -- (.69) (2.65) (1.60) (1.14)
------ ------ ------ ------ ------ ------
Total from Distributions (0.09) -- (.72) (2.66) (1.73) (1.14)
------ ------ ------ ------ ------ ------
Anti-Dilutive/(Dilutive) Impact
of Capital Share
Transactions 0.03 0.10 0.06++ (0.45)+ 0.30 --
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period U.S. $17.74 U.S. $16.29 U.S. $11.04 U.S. $13.28 U.S. $20.06 U.S. $19.75
====== ====== ====== ====== ====== ======
Share Price, End of Period U.S. $15.00 U.S. $13.81 U.S. $ 8.67 U.S. $11.02 U.S. $15.19 U.S. $16.38
====== ====== ====== ====== ====== ======
Total Investment Return(a) 9.50% 47.55% (12.07)% (23.76)% 13.27% (2.79)%
====== ====== ======== ======== ====== =======
Total Investment Return(b) 9.15% 59.28% (16.05)% (12.73)% 3.43% (3.30)%
====== ====== ======== ======== ====== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000's) U.S. $83,699 U.S. $77,790 U.S. $54,856 U.S.$68,223 U.S. $95,075 U.S. $98,916
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 0.67% 0.54% (0.64)% (0.16)% 0.70% 0.53%
Ratio of Operating Expenses
to Average Net Assets 1.61% 1.78% 2.10% 1.80% 1.42% 1.33%
Portfolio Turnover Rate 3% 10% 13% 35% 34% 13%
(a) Based on share net asset value and reinvestment of distributions at the
price obtained under the Dividend Reinvestment and Cash Purchase Plan.
(b) Based on share market price and reinvestment of distributions at the price
obtained under the Dividend Reinvestment and Cash Purchase Plan.
+ Amount represents $0.08 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.53) per share impact for the new
shares issued as Capital Gain Stock Distribution.
++ Amount represents $0.16 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.10) per share impact for the new
shares issued as Capital Gain Stock Distribution.
13
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on December 14, 1989 and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The investment strategy of the Fund, as revised
in March 2001, involved a bias toward high growth Irish companies including
listed and unlisted firms, drawn from the technology, telecommunications and
health care sectors. Since then, due to the broadly based decline in the
technology and telecommunications sectors, this strategy has been amended but
the bias continues toward Ireland's growth companies.
A. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: Securities listed on a stock exchange for which market
quotations are readily available are valued at the closing prices on the date of
valuation, or if no such closing prices are available, at the last bid price
quoted on such day. If there are no such quotations available for the date of
valuation, the last available closing price will be used. The value of
securities and other assets for which no market quotations are readily available
is determined in good faith at fair value using estimation methods approved by
the Board of Directors. At April 30, 2004 the Fund held 4.1% of its net assets
in securities valued in good faith with an aggregate cost of $3,617,709 and fair
value of $3,461,782. Short-term securities that mature in 60 days or less are
valued at amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO STOCKHOLDERS: The Fund intends to distribute
to stockholders, at least annually, substantially all of its net income from
dividends and interest payments and substantially all of its net realized
capital gains, if any. Income distributions and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles. These differences are due primarily to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and characterizations of distributions made by
the Fund.
U.S. FEDERAL INCOME TAXES: It is the Fund's intention to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and distribute all of its taxable income
within the prescribed time. It is also the intention of the Fund to make
distributions in sufficient amounts to avoid Fund excise tax. Accordingly, no
provision for U.S. Federal income taxes is required.
CURRENCY TRANSLATION: The books and records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
bid price of such currencies against U.S. dollars last quoted by a major bank as
follows: assets and liabilities at the closing rates of exchange on the
valuation date; security transactions and investment income and expenses at the
closing rates of exchange on the dates of such transactions. Net realized
foreign currency gains and losses
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
resulting from changes in exchange rates include foreign currency gains and
losses between trade date and settlement date on investment securities
transactions, foreign currency transactions and the difference between the
amounts of interest and dividends recorded on the books of the Fund and the
amount actually received. The portion of foreign currency gains and losses
related to fluctuation in exchange rates between the initial purchase trade date
and subsequent sale trade date is included in realized gains and losses on
security transactions.
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts for non-trading purposes in order to protect investment
securities and related receivables and payables against future changes in
foreign currency exchange rates. Fluctuations in the value of such contracts are
recorded as unrealized gains or losses; realized gains or losses include net
gains or losses on contracts which have terminated by settlements or by entering
into offsetting commitments. Risks associated with such contracts include
movement in the value of the foreign currency relative to the U.S. dollar and
the ability of the counterparty to perform. There were no such contracts open in
the Fund as of April 30, 2004.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Dividend income is recorded on the
ex-dividend date except that certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend date. Non-cash
dividends, if any, are recorded at the fair market value of the securities
received. Interest income is recorded on the accrual basis.
B. MANAGEMENT SERVICES:
The Fund has entered into an investment advisory agreement (the "Investment
Advisory Agreement") with Bank of Ireland Asset Management (U.S.) Limited ("Bank
of Ireland Asset Management"), an indirect wholly-owned subsidiary of The
Governor and Company of the Bank of Ireland ("Bank of Ireland"). Under the
Investment Advisory Agreement, the Fund pays a monthly fee at an annualized rate
equal to 0.75% of the value of the average weekly net assets of the Fund up to
the first $100 million and 0.50% of the value of the average weekly net assets
of the Fund on amounts in excess of $100 million. In addition, Bank of Ireland
Asset Management provides investor services to existing and potential
shareholders.
The Fund has entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. The Fund pays PFPC Inc. an annual fee payable
monthly. During the six months ended April 30, 2004, the Fund paid U.S. $86,508
in administration fees to PFPC, Inc.
The Fund has entered into an agreement with JP Morgan Chase & Co. to serve
as custodian of the Fund's assets held outside of Ireland. During the six months
ended April 30, 2004, the Fund paid JP Morgan Chase & Co. U.S. $773. Bank of
Ireland serves as the Fund's custodian of the Fund's assets held in Ireland.
During the six months ended April 30, 2004, the Fund paid U.S. $17,676 in
custodian fees to Bank of Ireland.
For the six months ended April 30, 2004, the Fund incurred total brokerage
commissions of U.S. $11,769, of which U.S. $4,623 was paid to Davy Stockbrokers,
an affiliate of Bank of Ireland Asset Management.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
C. DIRECTORS FEES:
The Fund currently pays each Director who is not a managing director,
officer or employee of Bank of Ireland Asset Management or any affiliate
thereof, an annual retainer of U.S. $11,500, plus U.S. $1,000 for each meeting
of the Board of Directors or Committee of the Board attended in person or via
telephone and any stockholder meeting attended in person not held on the same
day as a meeting of the Board. The Fund pays the Chairman of the Board of
Directors of the Fund an additional fee of U.S. $20,000. Also, the Fund pays the
Chairman of the Audit Committee an additional U.S. $1,000 for each meeting of
the Audit Committee attended. Each Director is reimbursed for travel and certain
out-of-pocket expenses.
D. PURCHASES AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the six
months ended April 30, 2004, excluding U.S. government and short-term
investments, aggregated U.S. $2,864,638 and U.S. $4,098,996, respectively.
At April 30, 2004, aggregate gross unrealized appreciation for all
securities (excluding foreign currency on deposit) in which there was an excess
value over tax cost was U.S. $39,286,251 and aggregate gross unrealized
depreciation for all securities (excluding foreign currency on deposit) in which
there was an excess of tax cost over value was U.S. $2,573,232. Also on this
date, the tax cost of securities for Federal Income Tax purposes is U.S.
$46,005,706.
At April 30, 2004, there were no permanent tax and book differences in
gross unrealized appreciation/depreciation of securities or the cost basis of
securities.
E. COMMON STOCK:
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On April 30, 2004, Bank of Ireland Asset
Management held 11,548 shares representing 0.24% of the Fund's total issued
shares.
On April 30, 2004, the Bank of Ireland EUT Smaller Equities Fund held
338,539 shares, representing 7.17% of the Funds outstanding shares. The Wachovia
Corporation held 570,137 shares, as stated in a 13F-HR filed with the Securities
and Exchange Commission on April 28, 2004, representing 12.08% of the Funds
outstanding shares.
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the six months ended April 30, 2004, the Fund repurchased 55,850 (1.17%
of the shares outstanding at October 31, 2003 year end) of its shares for a
total cost of $840,865, at an average discount of 15.13% of net asset value.
For the fiscal year ended October 31, 2003, the Fund repurchased 194,450
(3.91% of the shares outstanding at October 31, 2002) of its shares for a total
cost of $2,056,220, at an average discount of 18.84% of net asset value.
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
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. 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 EDGARdatabase or the Securities and
Exchange Commission's Internet site at http://www.sec.gov.
17
This page left blank intentionally.
This page left blank intentionally.
This page left blank intentionally.
--------------------------------------------------------------------------------
THE NEW IRELAND FUND, INC.
DIRECTORS AND OFFICERS
Peter J. Hooper - CHAIRMAN OF THE BOARD
James J. Boyle - DIRECTOR
Denis Curran - PRESIDENT AND DIRECTOR
Denis P. Kelleher - DIRECTOR
George G. Moore - DIRECTOR
James M. Walton - DIRECTOR
Lelia Long - TREASURER
Hugh Carter - ASSISTANT TREASURER
Linda J. Hoard - SECRETARY
PRINCIPAL INVESTMENT ADVISOR
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
Greenwich, Connecticut 06830
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
CUSTODIANS
Bank of Ireland
Lower Baggot Street
Dublin 2, Ireland
JP Morgan Chase & Co.
North America Investment Services
3 Metro Tech - 7th Floor
Brooklyn, New York 11245
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
INDEPENDENT ACCOUNTANTS
Grant Thornton LLP
60 Broad Street
New York, NY 10004
CORRESPONDENCE
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The New Ireland Fund, Inc.
c/o PFPC Inc.
99 High Street
27th Floor
Boston, Massachusetts 02110
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
WEBSITE ADDRESS:
www.newirelandfund.com
--------------------------------------------------------------------------------
IR-SAR 04/04
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not yet applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 10. 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 last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) 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/ DENIS CURRAN
-------------------------------------------------------
Denis Curran, President
(principal executive officer)
Date JULY 7, 2004
----------------------------------------------------------------------------
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/ DENIS CURRAN
-------------------------------------------------------
Denis Curran, President
(principal executive officer)
Date JULY 7, 2004
----------------------------------------------------------------------------
By (Signature and Title)* /S/ LELIA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JULY 7, 2004
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.