UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05984
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THE NEW IRELAND FUND, INC.
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(Exact name of registrant as specified in charter)
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
GREENWICH, CT 06830
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(Address of principal executive offices) (Zip code)
PFPC Inc.
99 High Street, 27th Floor
BOSTON, MA 02110
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(Name and address of agent for service)
registrant's telephone number, including area code: (203) 869-0111
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Date of fiscal year end: OCTOBER 31, 2004
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Date of reporting period: OCTOBER 31, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 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.
[GRAPHIC OMITTED]
NEW IRELAND FUND
[GRAPHIC OMITTED]
PHOTO
ANNUAL REPORT
OCTOBER 31, 2004
COVER PHOTOGRAPH -- AN IRISH CHRISTMAS DINNER
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
Dear Shareholder,
INTRODUCTION
The Irish economy continues its recovery with GNP forecasts again revised
upwards. Over the past few weeks, energy prices have fallen and, if they
continue at their current level, or fall further, the effect should be positive,
not just in Ireland but worldwide. However, the problems in the Middle East
continue and it is hoped that these, along with the rise in interest rates in
the US, will not offset the other positive factors. The relative strength of the
Irish economy fed through to the Irish Stock Market which, over the quarter and
the full year, outperformed most of the major stock markets in both Europe and
the US. In turn, this has resulted in excellent results for the New Ireland Fund
("the Fund") as detailed below.
With the exception of the Spain Fund, the Fund outperformed the rest of the
funds within its peer group over these past 12 months and was the top performer
within the group in the 3 and 5 year term categories. The Fund's carry forward
capital losses continue to offset realized capital gains but there will be a
small net income distribution to shareholders of $0.03 per share. This will be
paid by way of cash dividend, on December 29, 2004.
In the last quarterly report to shareholders, I mentioned that the Board
were reviewing the various options available to the Fund, with a view to
addressing the persistently high level of discount which has dogged the Fund in
recent years. At the September Board meeting, it was decided that, subject to
SEC approval, a Managed Distribution Policy, initially at a 10% level, would be
instituted. However, it should be emphasized that there could be delays in
implementing the Policy as, following the recent submission of the required
Exemptive Application to the SEC, we were advised that they are re-examining
similar distribution plans that have already been approved for other funds,
prior to reviewing newly received applications, such as ours. Details relating
to the intended Policy are set out in the notes at the back of this report.
Other developments, since the last report, were the appointment of a Chief
Compliance Officer, which was required under recent legislation, and the
appointment of a new Portfolio Manager, following John Forde's move to another
organization in Ireland. The new Portfolio Manager, Deirdre Kennedy, has been
with the Fund's Advisor for the past six years and as a result, the Board does
not expect that there will be any change in the approach to the management of
the Fund's assets going forward.
PERFORMANCE
During the final quarter of fiscal 2004, the Fund's Net Asset Value ("NAV")
increased by 13.33% to $20.74 driven by strength in the overall economy, as
reflected in solid corporate results. The Irish stock market increased by 12.23%
in US dollar terms in the quarter. This return benefited from a significant
appreciation in the Euro against the US dollar, with the Euro rising 5.8% over
the quarter.
1
Turning to the full year results, over the Fund's fiscal year ended October
31, 2004, the NAV increased by 27.32% from $16.29 to $20.74. Allowing for the
distribution to shareholders, the Fund's return was 28.14%. The Irish stock
market index increased by 30.84% in US dollar terms over that period. Again this
return was aided by the strength of the Euro, which increased by 9.7% against
the US dollar in the same 12 months.
It is worth noting that the Irish stock market derived about half its
return from a single stock, Elan, over the 12 months to October. Although the
Fund did not have Elan in its portfolio, it did benefit from its broader
exposure to quality medium sized Irish companies, with strong growth rates.
During fiscal 2004, we continued to implement the Share Repurchase Program
and, over the 12 months, the Fund repurchased and retired 86,200 shares at a
cost of $1,298,640. These repurchases represent a reduction of 1.81% of the
shares outstanding at October 31, 2003 and they positively impacted the Fund's
NAV by 5 cents per share. Since commencement of the Program in fiscal 2000,
repurchases have totalled 1,088,950 shares representing 18.8% of total shares,
which have been issued by the Fund.
ECONOMIC REVIEW
Economic indicators for Ireland continue their very positive trends. The
Central Bank raised its forecast for GNP growth to 4.5% for 2004 (5% GDP
growth), with a further increase to 5% GNP growth expected in 2005 (5.25% GDP
growth). As the international recovery continues, albeit at a more moderate pace
than that seen in the year to mid-2004, the prospects for the Irish economy are
highly favorable.
Irish consumer confidence improved again in October, with the index rising
to 99.6 compared to a figure of 95.5 in September and 69.4 in October 2003. The
improvement in expectations is due to consumers becoming more optimistic about
the outlook for the labor market and the general economic situation, as well as
the outlook over the next 12 months for their household financial situation.
Meanwhile, the numbers claiming unemployment benefit declined to a 29 month
low in October. The unemployment rate now stands at 4.3%. This downward trend is
expected to continue into 2005. Increasing numbers in employment have been
reflected in accelerating retail sales volumes and buoyant income tax and excise
duty receipts.
The exchequer returns for October provided another solid set of numbers
with year to date growth in tax receipts of 11.8% and with tax revenues, for the
full year, likely to be ahead of forecast. Overall, Public finances have shown a
marked improvement in the first nine months of 2004, with low debt ratios and
close to balance positions.
Headline inflation increased just 0.1% in September, taking the annual rate
to 2.5%. The cumulative effect of energy price increases added 0.6 percentage
points to the annual inflation rate. Of particular note, is the fact that
Ireland's inflation rate has fallen to close to that of the euro area as a
whole.
2
Private sector credit growth was strong again in September, with underlying
growth of 24.9% on a year-on-year basis. Demand for residential mortgages was
the main driving force behind the expansion, but growth in non-residential
mortgage credit also strengthened significantly to 21.1% in September.
EQUITY MARKET REVIEW
The Irish stock market increased by 6.0% in Euro terms over the quarter and
19.2% in the year ended October 31st 2004. This performance comfortably exceeded
the international benchmarks over both periods, both in local currency and US
dollar terms.
QUARTER ENDED YEAR ENDED
OCTOBER 31, 2004 OCTOBER 31, 2004
---------------- ----------------
LOCAL LOCAL
CURRENCY U.S. $ CURRENCY U.S. $
-------- ------ -------- -------
Irish Equities (ISEQ) +6.0% +12.2% +19.2% +30.8%
S&P 500 +2.6% +2.6% +7.6% +7.6%
NASDAQ +4.6% +4.6% +2.2% +2.2%
UK Equities (FTSE 100) +4.8% +4.8% +7.9% +16.9%
Japanese Equities -4.9% +0.1% +2.0% +6.0%
Euroland Equities Eurostoxx +3.5% +10.2% +9.8% +21.2%
German Equities (DAX) +1.7% +8.3% +8.3% +19.6%
French Equities (CAC) +1.6% +8.2% +9.9% +21.3%
Dutch Equities (AEX) +0.2% +6.7% +0.1% +10.5%
Generally impressive company earnings reports and specific corporate
activity were the key points in the Irish market over the quarter:
KERRY GROUP reported first half results at the end of August. Turnover
increased 8.5% to [EURO] 1.95 billion and adjusted earnings per share climbed
10.4% to [EURO] 0.51, which is impressive in the context of the global food
industry. The interim dividend of 4.5 cents per share was increased by 11.1%
as compared to the 2003 payout. Management said that all core businesses, and
recently acquired businesses, are performing well and the group is confident of
achieving a good outcome for the full year.
Interim results from CRH were strong and ahead of consensus forecasts.
There was a good organic bounce back from the weather depressed first half of
2003 and a significant incremental impact from 2003/2004 acquisitions. Sales
increased 22%, pre tax profit was up 71% and EPS increased by 72%. Management
raised the dividend by 17% and said that greater ongoing dividend increases were
appropriate, reflecting the better economic backdrop and market outlook.
Management completed 21 full or partial acquisitions in the first half of the
year with the most significant being Secil in Portugal, and they see plenty of
opportunities for further acquisitions in the future. CRH enjoys a strong
financial position with debt/market capitalization of 35% and interest cover of
13.4 times. The stock was little changed on the quarter
3
following a strong performance in July, at which time, management also put out a
very positive trading statement.
RYANAIR HOLDINGS reported fiscal first quarter results with earnings per
share up 21.6%. Volumes were strong with passenger growth of 28%, and with
ancillary activities up 40%. Yields were down 6%, in line with forecasts, and
management maintained its cautious outlook, forecasting a reduction in yields of
5-10% in the second quarter and 10-20% over the winter. The stock lost ground in
the quarter mainly due to higher oil price concerns.
KINGSPAN GROUP'S share price rose 36.2% in US dollar terms over the
quarter. The Company's results were ahead of expectations with revenues up 16%
to [EURO] 439.4 million and pre tax profits rising 33% year on year. Management
said that "markets are reasonably buoyant and, with the current momentum, the
group expects to see a satisfactory outcome for the year as a whole".
WARNER CHILCOTT attracted a lot of attention this quarter, with news in
September that it received a possible all cash offer from a consortium of
private equity institutions. The indicative offer price was (pound)8.00, or
(pound)1.5 billion, a 23% premium to its price prior to the announcement. In
October two more parties began due diligence enquires and on October 25th,
Warner announced that it had received a formal offer at (pound)8.37 from an
unidentified bidder, presumed to be a consortium led by Goldman Sachs. Just two
days later, Warner reached agreement with Waren, a JP Morgan led group, in a
deal worth (pound)8.62 per share, representing a 33% advance on the price prior
to the initial announcement. Waren has irrevocable undertakings, on 10.7% of the
company's shares, from the firm's directors. These remain binding unless an
offer of (pound)8.77 or more is made within 28 days. A break up fee of (pound)17
million is payable by Warner to Waren in the event that another proposal is
completed. (Since the close of the quarter Bain, previously part of a rival
consortium, joined the Waren group bid at the same terms.)
IRISH LIFE AND PERMANENT'S interim results were in line with forecasts.
Excluding securities gains recorded in the banking business last year,
underlying earnings growth was close to 15%. The dividend was increased by 10%.
First half earnings per share at FYFFES increased by 20.4%, and the group
expects full year EPS to rise by double digits. The company currently has cash
holdings of [EURO] 152 million after selling properties, and the plan is to
pursue further acquisitions, given the favorable interest rate environment.
IONA TECHNOLOGIES' quarterly numbers were at the top end of company
guidance. Revenues at $16.5mn declined 5% year on year. The gross margin at
82.3% was up from 81.5% last year as service margins continue to strengthen and
Iona maintains a tight control on costs. Profitability has been restored, with
EPS at $0.01 compared to a loss of $0.053 in the same quarter last year. A
recently introduced product, Artix, is beginning to achieve market traction and
it accounted for 10% of total revenues in the third quarter.
4
CURRENT OUTLOOK
Global equity markets have been somewhat directionless in 2004, following
the strong rebound last year. Investor concerns include rising interest rates,
slowing corporate earnings growth and the impact of high oil prices, but, while
global economic growth is moderating, the recovery very much continues and
Ireland's growth expectations stand out, as compared to forecasts for other
European countries. Irish fundamentals are supportive of continuing superior
growth, with its favorable demographics, flexible labor markets and strong
government finances.
Looking to valuation, the Irish market remains attractive with a P/E ratio
of 12.3% and a dividend yield of 2.5% for 2005, reflecting an expectation of
12.6% in earnings growth and close to 3 times dividend coverage. This
combination of yield and growth is particularly appealing in the context of a
low interest rate environment and stable inflation expectation.
Sincerely,
/S/ PETER HOOPER
Peter Hooper
Chairman
December 17, 2004
5
INVESTMENT SUMMARY
TOTAL RETURN (%)
----------------
MARKET VALUE NET ASSET VALUE (A)
------------ -------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------ ---------- ------
Current Quarter 15.81 15.81 13.33 13.33
One Year 34.47 34.47 28.14 28.14
Three Year 79.81 21.65 66.26 18.45
Five Year 61.99 10.14 40.57 7.04
Ten Year 210.03 12.00 195.86 11.45
PER SHARE INFORMATION AND RETURNS
---------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
-----------------------------------------------------------------------------------------------------
Net Asset
Value ($) 13.61 16.90 19.99 21.36 19.75 20.06 13.28 11.04 16.29 20.74
Income
Dividends ($) (0.11) (0.14) (0.22) (0.07) -- (0.13) (0.01) (0.03) -- (0.089)
Capital Gains
Other
Distributions ($) -- (0.13) (0.36) (0.70) (1.14) (1.60) (2.65) (0.69) -- --
Total
Return (%) (a) 25.72 26.65 22.46 11.68 (2.79) 13.27 (23.76) (12.07) 47.55 28.14
NOTES
-----
(a) Total investment returns reflect changes in net asset value per share
during each period and assume that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the Fund
based on market price.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
6
PORTFOLIO BY MARKET SECTOR AS OF OCTOBER 31, 2004
(PERCENTAGE OF NET ASSETS)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS
Construction and Building Materials ... 21.47%
Financial ............................. 20.58%
Food and Beverages .................... 14.46%
Other* Assets ......................... 13.31%
Health Care Services .................. 7.04%
Leisure and Hotels .................... 6.73%
Business Services ..................... 5.07%
Diversified Financial Services ........ 4.29%
Food and Agriculture .................. 3.57%
Transportation ........................ 3.48%
*Includes industries less than 3%.
TOP 10 HOLDINGS BY ISSUER AS OF OCTOBER 31, 2004
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
Allied Irish Banks PLC Financial 15.71%
CRH PLC Construction and Building Materials 12.34%
Kerry Group PLC, Series A Food and Beverages 11.78%
Kingspan Group PLC Construction and Building Materials 5.44%
DCC PLC Business Services 5.07%
FBD Holdings PLC Financial 4.87%
United Drug PLC Health Care Services 4.61%
Irish Life & Permanent PLC Diversified Financial Services 4.29%
Jury's Doyle Hotel Group PLC Leisure and Hotels 3.98%
Grafton Group PLC-UTS Construction and Building Materials 3.70%
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS
--------------------------------------------------------------------------------
Value (U.S.)
October 31, 2004 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (94.73%)
COMMON STOCKS OF IRISH COMPANIES (93.35%)
BUSINESS SERVICES (5.07%)
DCC PLC 243,763 $ 4,930,267
------------
COMPUTER SOFTWARE AND SERVICES (0.66%)
IONA Technologies PLC-ADR* 169,300 645,033
------------
CONSTRUCTION AND BUILDING MATERIALS (21.47%)
CRH PLC 504,637 12,004,007
Grafton Group PLC-UTS 400,820 3,594,546
Kingspan Group PLC 675,707 5,286,145
------------
20,884,698
------------
DIVERSIFIED FINANCIAL SERVICES (4.29%)
Irish Life & Permanent PLC 248,182 4,167,252
------------
FINANCIAL (20.58%)
Allied Irish Banks PLC 879,951 15,279,062
FBD Holdings PLC 202,314 4,735,319
------------
20,014,381
------------
FOOD AND AGRICULTURE (3.57%)
IAWS Group PLC 261,904 3,468,154
------------
FOOD AND BEVERAGES (14.46%)
Fyffes PLC 556,041 1,308,531
Greencore Group PLC 352,568 1,296,123
Kerry Group PLC, Series A 511,857 11,459,532
------------
14,064,186
------------
HEALTH CARE SERVICES (7.04%)
ICON PLC-Sponsored ADR* 71,646 2,365,035
United Drug PLC 1,129,687 4,483,511
------------
6,848,546
------------
LEISURE AND HOTELS (6.73%)
Jury's Doyle Hotel Group PLC 291,464 3,870,713
Paddy Power PLC 202,495 2,676,304
------------
6,547,017
------------
8
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
October 31, 2004 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PUBLISHING AND NEWS (2.18%)
Independent News & Media PLC 732,313 $ 2,123,915
------------
TECHNOLOGY (1.61%)
Horizon Technology Group PLC* 1,321,900 1,563,821
------------
TELECOMMUNICATIONS (0.86%)
Eircom Group PLC-144A*a 400,000 837,012
------------
TRANSPORTATION (3.48%)
Ryanair Holdings PLC* 650,000 3,381,756
------------
UTILITY/PUBLIC SERVICES (1.35%)
NTR PLC+
(6/14/02-Cost $549,657) 58,742 1,307,652
------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $41,879,129) 90,783,690
------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (1.38%)
(Cost U.S. $915,439)
PHARMACEUTICALS (1.38%)
Warner Chilcott PLC 85,060 1,341,921
------------
TOTAL INVESTMENT COMPANIES BEFORE FOREIGN
CURRENCY ON DEPOSIT
(Cost $42,794,568) $ 92,125,611
------------
9
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
October 31, 2004 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (5.40%)
(Interest Bearing)
British Pounds Sterling (pound) 27 $ 49
Euro (euro) 4,130,171 5,253,801
------------
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost $5,190,193)** 5,253,850
------------
TOTAL INVESTMENTS (100.13%)
(Cost $47,984,761) 97,379,461
OTHER ASSETS AND LIABILITIES (-0.13%) (126,193)
------------
NET ASSETS (100.00%)
$ 97,253,268
============
--------------------------------------------------------------------------------
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. Date represents acquisition date.
ADR -American Depository Receipt traded in U.S. dollars
UTS -Units
10
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
October 31, 2004
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Cost $42,794,568)
See accompanying schedule U.S.$92,125,611
Cash 356,750
Foreign currency (Cost $5,190,193) 5,252,545
Receivable for investment securities sold 641,051
Receivable for Spectel plc shares acquired by Avaya
International Enterprises LTD. (net of valuation
allowance of $160,229) 187,094
Dividends receivable 166,454
Prepaid expenses 31,252
-----------
Total Assets 98,760,757
-----------
LIABILITIES:
Payable for investments purchased 1,225,216
Accrued legal fees payable 94,263
Investment advisory fee payable (Note B) 60,383
Accrued audit fees payable 45,701
Administration fee payable (Note B) 16,102
Directors' fees and expenses (Note C) 10,127
Transfer agent fees payable 1,811
Custodian fees payable (Bank of Ireland) (Note B) 1,462
Custodian fees payable (JP Morgan Chase & Co.) (Note B) 1,066
Accrued expenses and other payables 51,358
-----------
Total Liabilities 1,507,489
-----------
NET ASSETS U.S.$97,253,268
===========
AT OCTOBER 31, 2004 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares;
Issued and Outstanding 4,688,528 Shares U.S.$ 46,885
Additional Paid-in Capital 50,436,629
Undistributed Net Investment Income 134,590
Accumulated Net Realized Loss (2,768,994)
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 49,404,158
-----------
TOTAL NET ASSETS U.S.$97,253,268
===========
NET ASSET VALUE PER SHARE
(Applicable to 4,688,528 outstanding shares)
(authorized 20,000,000 shares)
(U.S. $97,253,268 / 4,688,528) U.S.$ 20.74
===========
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended
October 31, 2004
---------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of withholding taxes of U.S. $1,705) U.S.$ 1,544,318
Interest 8,597
------------
TOTAL INVESTMENT INCOME 1,552,915
------------
EXPENSES
Investment advisory fee (Note B) $ 647,139
Legal fees 289,955
Administration fee (Note B) 173,010
Directors' fees and expenses (Note C) 124,646
Printing fees 62,673
Custodian fees (Note B) 34,618
Other 221,168
------------
TOTAL EXPENSES 1,553,209
------------
NET INVESTMENT LOSS U.S.$ (294)
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE D)
Realized gain on:
Securities transactions 3,925,608
Foreign currency transactions 136,776
------------
Net realized gain on investments during the year 4,062,384
------------
Net change in unrealized appreciation of:
Securities 17,053,848
Foreign currency and net other assets 70,037
------------
Net unrealized appreciation of investments
during the year 17,123,885
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 21,186,269
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S.$ 21,185,975
============
See Notes to Financial Statements.
12
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Year Ended Year Ended
October 31, 2004 October 31, 2003
-----------------------------------------------------------------------------------
Net investment income/(loss) U.S. $ (294) U.S. $ 340,169
Net realized gain/(loss) on investments 4,062,384 (2,204,145)
Net unrealized appreciation of
investments, foreign currency holdings and net
other assets 17,123,885 26,854,166
----------- ------------
Net increase in net assets resulting
from operations 21,185,975 24,990,190
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (424,025) --
----------- ------------
Net increase in net assets 20,761,950 24,990,190
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Value of 86,200 and 194,450 shares
repurchased, respectively (Note F) (1,298,640) (2,056,220)
----------- ------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (1,298,640) (2,056,220)
----------- ------------
NET ASSETS
Beginning of year 77,789,958 54,855,988
----------- ------------
End of year (Including undistributed
net investment income/accumulated net
investment income of $134,590 and
$422,133 respectively) U.S. $97,253,268 U.S. $ 77,789,958
=========== ============
See Notes to Financial Statements.
13
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR)
--------------------------------------------------------------------------------
Year Ended October 31,
-----------------------------------------------------------------------
2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Year U.S. $16.29 U.S. $11.04 U.S. $13.28 U.S. $20.06 U.S. $19.75
-------- -------- ------- -------- --------
Net Investment Income/(Loss) (0.00)# 0.07 (0.08) (0.02) 0.15
Net Realized and Unrealized
Gain/(Loss) on Investments 4.49 5.08 (1.50) (3.65) 1.59
-------- -------- ------- -------- --------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 4.49 5.15 (1.58) (3.67) 1.74
-------- -------- ------- -------- --------
Distributions to Shareholders
from:
Net Investment Income (0.09) -- (.03) (0.01) (0.13)
Net Realized Gains -- -- (.69) (2.65) (1.60)
-------- -------- ------- -------- --------
Total from Distributions (0.09) -- (.72) (2.66) (1.73)
-------- -------- ------- -------- --------
Anti-Dilutive/(Dilutive) Impact
of Capital Share
Transactions 0.05 0.10 0.06++ (0.45)+ 0.30
-------- -------- ------- -------- --------
Net Asset Value,
End of Year U.S. $20.74 U.S. $ 16.29 U.S. $ 11.04 U.S. $ 13.28 U.S. $ 20.06
====== ======== ======== ======== ========
Share Price, End of Year U.S. $18.46 U.S. $ 13.81 U.S. $ 8.67 U.S. $ 11.02 U.S. $ 15.19
====== ======== ======== ======== ========
Total Investment Return(a) 28.14% 47.55% (12.07)% (23.76)% 13.27%
====== ======== ======== ======== ========
Total Investment Return(b) 34.47% 59.28% (16.05)% (12.73)% 3.43%
====== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Year (000's) U.S. $97,253 U.S. $77,790 U.S. $54,856 U.S. $68,223 U.S. $95,075
Ratio of Net Investment
Income/(Loss) to Average
Net Assets (0.00)%++ 0.54% (0.64)% (0.16)% 0.70%
Ratio of Operating Expenses
to Average Net Assets 1.80% 1.78% 2.10% 1.80% 1.42%
Portfolio Turnover Rate 5% 10% 13% 35% 34%
(a) Based on share net asset value and reinvestment of distributions at the
price obtained under the Dividend Reinvestment and Cash Purchase Plan.
(b) Based on share market price and reinvestment of distributions at the price
obtained under the Dividend Reinvestment and Cash Purchase Plan.
+ Amount represents $0.08 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.53) per share impact for the new
shares issued as Capital Gain Stock Distribution.
++ Amount represents $0.16 per share impact for shares repurchased by the Fund
under the Share Repurchase Program and $(0.10) per share impact for the new
shares issued as Capital Gain Stock Distribution.
# Amount represents less than $0.01 per share.
++ Amount represents less than 0.01%.
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on December 14, 1989 and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The 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, 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. At October 31, 2004 the Fund held 1.35% of its net assets in
securities valued in good faith with an aggregate cost of $549,657 and fair
value of $1,307,652. Short-term securities that mature in 60 days or less are
valued at amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO STOCKHOLDERS: Distributions are determined
on a tax basis and may differ from net investment income and realized capital
gains for financial reporting purposes. Differences may be permanent or
temporary. Permanent differences are reclassified among capital accounts in the
financial statements to reflect their tax character. Temporary differences arise
when certain items of income, expense, gain or loss are recognized in different
periods for financial statement and tax purposes; these differences will reverse
at some time in the future. Differences in classification may also result from
the treatment of short-term gain as ordinary income for tax purposes.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Ordinary Income $ 134,590
Accumulated Gains --
Unrealized Appreciation 49,331,043
-----------
$49,465,633
===========
For tax purposes, at October 31, 2004, the Fund distributed $424,025 of
ordinary income. There were no distributions for the fiscal year ended October
31, 2003. The Fund had available realized losses of $2,768,994 to offset future
net capital gains of $482,885 through October 31, 2010, and $2,286,109 through
October 31, 2011.
During the year ended October 31, 2004, the fund realized net foreign
currency gains of $136,776, which increased distributable net income for tax
purposes; accordingly such gains have been reclassified from accumulated net
realized losses to undistributed net investment income.
On September 21, 2004, the Board of Directors approved the implementation
of a Managed Distribution Program, subject to the granting of the appropriate
exemptive relief from the Securities and Exchange Commission. Under the proposed
Managed Distribution Program, the Fund would make quarterly distributions at an
annual rate, set once a year, that is a percentage of the rolling average of the
Fund's prior four quarter-end net asset values. The Board has determined that
the initial annual distribution rate shall be 10%, with quarterly distributions
in an amount equal to approximately 2.5% of the Fund's net asset value.
Distributions under the Distribution Plan may consist of, in order of preference
and priority, (i) net realized long-term capital gains, (ii) net investment
income, (iii) net realized short-term capital gains and, (iv) only to the extent
necessary to make up any shortfall, a return of capital (up to the amount of the
shareholder's adjusted tax basis in his or her shares).
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 the Fund excise tax. Accordingly,
no provision for U.S. Federal income taxes is required.
CURRENCY TRANSLATION: The books and records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
spot rate of such currencies against U.S. dollars by obtaining from FT-IDC each
day the current 4:00pm London time spot rate and future rate (the future rates
are quoted in 30-day increments) on foreign currency contracts. Net realized
foreign currency gains and losses resulting from changes in exchange rates
include foreign currency gains and losses between trade date and settlement date
on investment securities transactions, foreign currency transactions and the
difference between the amounts of interest and dividends recorded on the books
of the Fund and the amount actually received. The portion of foreign currency
gains and losses related to fluctuation in exchange rates between the initial
purchase trade date and
16
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
subsequent sale trade date is included in realized gains and losses on security
transactions.
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts for non-trading purposes in order to protect investment
securities and related receivables and payables against future changes in
foreign currency exchange rates. Fluctuations in the value of such contracts are
recorded as unrealized gains or losses; realized gains or losses include net
gains or losses on contracts which have terminated by settlements or by entering
into offsetting commitments. Risks associated with such contracts include
movement in the value of the foreign currency relative to the U.S. dollar and
the ability of the counterparty to perform. There were no such contracts open in
the Fund as of October 31, 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 year ended October 31, 2004, the Fund incurred expenses of
U.S. $173,010 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 year ended
October 31, 2004, the Fund incurred expenses for JP Morgan Chase & Co. U.S. of
$1,499. Bank of Ireland serves as the Fund's custodian of the Fund's assets held
in Ireland. During the year ended October 31, 2004, the Fund incurred expenses
of U.S. $33,119 in custodian fees to Bank of Ireland.
For the year ended October 31, 2004, the Fund incurred total brokerage
commissions of U.S. $18,864, of which U.S. $5,081 was paid to Davy Stockbrokers,
an affiliate of Bank of Ireland Asset Management.
C. DIRECTORS FEES:
The Fund currently pays each Director who is not a managing director,
officer or employee of Bank of Ireland Asset Management or any affiliate
thereof, an annual retainer of U.S. $11,500, plus U.S. $1,000 for each meeting
of the Board of Directors or Committee of the Board attended in person or via
telephone and any stockholder meeting attended in person not held on the same
day as a meeting of the Board. The Fund pays the Chairman of the Board of
Directors of the Fund an
17
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
additional fee of U.S. $32,500. Also, the Fund pays the Chairman of the Audit
Committee an additional U.S. $1,000 for each meeting of the Audit Committee
attended. Each Director is reimbursed for travel and certain out-of-pocket
expenses.
D. PURCHASES AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the year
ended October 31, 2004, excluding U.S. government and short-term investments,
aggregated U.S. $4,089,854 and U.S. $10,006,045, respectively.
At October 31, 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. $51,501,574 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. $2,170,531 . Also on this
date, the tax cost of securities for Federal Income Tax purposes is U.S.
$42,794,568.
At October 31, 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 October 31, 2004, Bank of Ireland Asset
Management held 11,548 shares representing .25% of the Fund's total issued
shares.
On October 31, 2004, Bank of Ireland Asset Management controlled 330,124
shares, representing 7.04% of the Fund's 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 12.16% of the Fund's
outstanding shares.
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the year ended October 31, 2004, the Fund repurchased 86,200 (1.81% of
the shares outstanding at October 31, 2003 year end) of its shares for a total
cost of $1,298,640 at an average discount of 15.13% of net asset value.
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.
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.
18
THE NEW IRELAND FUND, INC.
REPORT OF INDEPENDENT PUBLIC REGISTERED ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders
of The New Ireland Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of The
New Ireland Fund, Inc. (the "Fund"), including the portfolio holdings, as of
October 31, 2004, and the related statement of operations for the year then
ended and the statement of changes in net assets, and the financial highlights
for the two years then ended. The financial highlights for the years ended
October 31, 2002, October 31, 2001 and October 31, 2000, were audited by other
auditors. Those auditors expressed an unqualified opinion on those financial
statements in their report dated December 6, 2002. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of October 31, 2004, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund as of October 31, 2004, the results of its operations for the year then
ended and the changes in net assets and the financial highlights for the two
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/S/ GRANT THORNTON LLP
GRANT THORNTON LLP
New York, New York
November 29, 2004
19
ADDITIONAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund will distribute to stockholders, at least annually, substantially
all of its net income from dividends and interest payments and expects to
distribute substantially all its net realized capital gains annually. Pursuant
to the Dividend Reinvestment and Cash Purchase Plan approved by the Fund's Board
of Directors (the "Plan"), each stockholder will be deemed to have elected,
unless American Stock Transfer & Trust Company (the "Plan Agent") is instructed
otherwise by the stockholder in writing, to have all distributions automatically
reinvested by the Plan Agent in Fund shares pursuant to the Plan. Distributions
with respect to Fund shares registered in the name of a broker-dealer or other
nominee (i.e., in "street name") will be reinvested by the broker or nominee in
additional Fund shares under the Plan, unless the service is not provided by the
broker or nominee or the stockholder elects to receive distributions in cash.
Investors who own Fund shares registered in street name may not be able to
transfer those shares to another broker-dealer and continue to participate in
the Plan. These stockholders should consult their broker-dealer for details.
Stockholders who do not participate in the Plan will receive all distributions
in cash paid by check in U.S. dollars mailed directly to the stockholder by
American Stock Transfer & Trust Company, as paying agent. Stockholders who do
not wish to have distributions automatically reinvested should notify the Fund,
in care of the Plan Agent for The New Ireland Fund, Inc.
The Plan Agent will serve as agent for the stockholders in administering
the Plan. If the Directors of the Fund declare an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
stockholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive common stock to be issued by the Fund.
If the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
net asset value or, if the net asset value is less than 95% of the market price
on the valuation date, then at 95% of the market price. The valuation date will
be the dividend or distribution payment date or, if that date is not a trading
day on the New York Stock Exchange, Inc. ("New York Stock Exchange"), the next
preceding trading day. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan will be deemed to have elected to
receive shares of stock from the Fund, valued at market price on the valuation
date. If the Fund should declare a dividend or capital gains distribution
payable only in cash, the Plan Agent as agent for the participants, will buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere,
with the cash in respect of such dividend or distribution, for the participants'
account on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, annually, in any amount from U.S. $100 to U.S. $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
20
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
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.
The Plan Agent maintains all stockholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by stockholders for personal and U.S. Federal tax records. Shares in the
account of each Plan participant will be held by the Plan Agent in
non-certificated form in the name of the participant, and each stockholder's
proxy will include those shares purchased pursuant to the Plan.
In the case of stockholders such as banks, brokers or nominees who hold
shares for beneficial owners, the Plan Agent will administer the Plan on the
basis of the number of shares certified from time to time by the stockholder as
representing the total amount registered in the stockholder's name and held for
the account of beneficial owners who are participating in the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions. The Plan Agent's fee for the handling of the reinvestment
of dividends and distributions will be paid by the Fund. However, each
participant's account will be charged a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions. A participant
will also pay brokerage commissions incurred in purchases from voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock of individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. Federal income tax which may be payable on such
dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any voluntary cash payment made and any dividend or distribution paid
subsequent to notice of the change sent to all stockholders at least ninety days
before the record date for such dividend or distribution. The Plan also may be
amended or terminated by the Plan Agent with at least ninety days written notice
to all stockholders. All correspondence concerning the Plan should be directed
to the Plan Agent for The New Ireland Fund, Inc. in care of American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York, 10005, telephone
number (718) 921-8283.
21
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
MEETING OF STOCKHOLDERS
--------------------------------------------------------------------------------
On June 7, 2004, the Fund held its Annual Meeting of Stockholders. The
following Directors were elected by the following Votes: Denis P. Kelleher
3,591,094 For; 654,585 Abstaining; James M. Walton 3,591,094 For; 654,585
Abstaining; George G. Moore 3,591,094 For; 654,585 Abstaining. Peter J. Hooper,
James J. Boyle and Denis Curran continue to serve in their capacities as
Directors of the Fund.
Also voted on at the same meeting was Proposal 2, relating to a Stockholder
proposal requesting the Board to take steps necessary to open-end the Fund or
otherwise enable Stockholders to realize net asset value for their shares. The
following votes were recorded: 1,721,199 For; 1,329,136 Against; and 104,144
Abstaining. Out of the total 4,741,278 votes, entitled to be cast, 36.3% voted
in favor of the proposal. As a result of the positive vote on the proposal, the
Board of the Fund undertook to review the options open to it, in order to
address the issues raised in the proposal.
DIRECTOR'S FEES
--------------------------------------------------------------------------------
See note "C" in Notes to Financial Statements.
FUND'S PRIVACY POLICY
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. appreciates the privacy concerns and
expectations of its registered stockholders and safeguarding their nonpublic
personal information ("Information") is of great importance to the Fund.
The Fund collects Information pertaining to its registered stockholders,
including matters such as name, address, tax I.D. number, Social Security number
and instructions regarding the Fund's Dividend Reinvestment Plan. The
Information is collected from the following sources:
o Directly from the registered stockholder through data provided on
applications or other forms and through account inquiries by mail,
telephone or e-mail.
o From the registered stockholder's broker as the shares are initially
transferred into registered form.
Except as permitted by law, the Fund does not disclose any Information
about its current or former registered stockholders to anyone. The disclosures
made by the Fund are primarily to the Fund's service providers as needed to
maintain account records and perform other services for the Fund's stockholders.
The Fund maintains physical, electronic, and procedural safeguards to protect
the stockholders' Information in the Fund's possession.
The Fund's privacy policy applies only to its individual registered
stockholders. If you own shares of the Fund through a third party broker, bank
or other financial institution, that institution's privacy policies will apply
to you and the Fund's privacy policy will not.
22
ADDITIONAL INFORMATION (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
PORTFOLIO INFORMATION
--------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Fund's Form N-Q is available (1) by calling
1-800-468-6475; (2) on the Fund's website located at
HTTP://WWW.NEWIRELANDFUND.COM; (3) on the SEC's website at HTTP://WWW.SEC.GOV;
------------------------------ -------------------
or (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 1-800-SEC-0330.
PROXY VOTING INFORMATION
--------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities held by the Fund
is available, without charge and upon request, by calling 1-800-468-6475. This
information is also available from the EDGAR database or the SEC's website at
HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is
available at HTTP://WWW.SEC.GOV.
CERTIFICATIONS
--------------------------------------------------------------------------------
The Fund's president has certified to the New York Stock Exchange that, as
of July 6, 2004, he was not aware of any violation by the fund of applicable
NYSE corporate governance listing standards. The Fund's reports to the
Securities and Exchange Commission on Forms N-CSR and N-CSRS contain
certifications by the fund's principal executive officer and principal financial
officer that relate to the fund's disclosure in such reports and that are
required by rule 30a-2(a) under the Investment Company Act.
TAX INFORMATION
--------------------------------------------------------------------------------
For the fiscal year ended October 31, 2004, 100% of the undistributed net
income qualifies for the 15% dividend tax rate as of January 1, 2003. The above
tax information represents fiscal year end percentages and may differ from those
provided to shareholders at calendar year end as dividend income earned by the
Fund prior to January 1, 2003 does not qualify for the reduced tax rate.
23
BOARD OF DIRECTORS/OFFICERS (UNAUDITED)
--------------------------------------------------------------------------------
LENGTH OF PRINCIPAL NUMBER OF
POSITION(S) TIME OCCUPATION(S) PORTFOLIOS IN
HELD WITH SERVED AND OTHER FUND COMPLEX
NAME, ADDRESS, THE AND TERM DIRECTORSHIPS DURING OVERSEEN BY
AND AGE FUND OF OFFICE* PAST FIVE YEARS DIRECTOR
------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS:
Peter J. Hooper, 64 Director and Since 1990. President of Hooper Associates- 1
Westchester Financial Chairman of Current term Consultants; Director, The Ireland
Center, Suite 1000 the Board expires in United States Council for Commerce
50 Main Street 2006. and Industry; Director, Flax Trust -
White Plains, NY 10606 America; Director, Children's Medical
Research Foundation.
James J. Boyle, 65 Director Since 2000. Chairman and President of Cardinal 1
50 Main Street Current term Resources, Inc. (oil and gas production);
White Plains, NY 10606 expires in Formerly Director, Standard Microsystems
2005. Corporation; Trustee, Alvernia College.
Denis P. Kelleher, 65 Director Since 1991. Chief Executive Officer, Wall Street 1
17 Battery Place Current term Access-Financial Services; Director,
New York, NY 10004 expires in SI Bank & Trust; Chairman and
2007. Member of the Board of Trustees
St. John's University.
George G. Moore, 53 Director Since 2004. Chairman/Chief Executive Officer, 1
8010 Towers Crescent Drive Current term TARGUS info; Chairman, AMACAI
Vienna, VA 22182 expires in Information Corporation.
2006.
James M. Walton, 73 Director Since 1990. Chairman, Vira I. Heinz Endowment; 1
Room 3902 Current term Formerly, Director, FireFly, Inc., Director
525 William Penn Place expires in and Vice Chairman, MMC Group, Inc.
Pittsburgh, PA 15219 2007. (management company).
INTERESTED DIRECTORS:
Denis Curran, 57** Director and Since 2000. Director and President-International, 1
75 Holly Hill Lane President*** Current term Bank of Ireland Asset Management
Greenwich, CT 06830 expires in Limited; Director, Bank of Ireland Asset
2005. Management (U.S.) Limited; Director,
Iridian Asset Management.
OFFICERS:***
Denis Curran President Appointed see description above
Annually
Lelia Long, 42 Treasurer Since 2002. Senior Vice President and Director, Bank of
75 Holly Hill Lane Appointed Ireland Asset Management (U.S.) Limited;
Greenwich, CT 06830 Annually Director, Iridian Asset Management.
Linda J. Hoard, 56 Secretary Since 1998. Vice President and Senior Counsel, PFPC
99 High Street Appointed Inc.; Previously, Vice President, PFPC Inc.
Boston, MA 02110 Annually
Debra M. Brown, 42 Chief Since 2004. Principal, Brown & Associates;
20 Oak Street, Suite 200 Compliance Appointed President, Self Audit , Inc.
Beverly Farms, MA 01915 Officer Annually
Hugh Carter, 47 Assistant Since 1999. Vice President and Investment
4400 Computer Drive Treasurer Appointed Accounting Director, PFPC, Inc.
Westborough, MA 01581 Annually
----------------------
* Each Director shall serve until the expiration of his current term and
until his successor is elected and qualified.
** Mr. Curran 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.
24
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
Debra M. Brown - CHIEF COMPLIANCE OFFICER
PRINCIPAL INVESTMENT ADVISOR
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
Greenwich, Connecticut 06830
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
CUSTODIANS
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 PUBLIC REGISTERED ACCOUNTING FIRM
Grant Thornton LLP
60 Broad Street
New York, NY 10004
CORRESPONDENCE
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The New Ireland Fund, Inc.
PFPC Inc.
99 High Street
27th Floor
Boston, Massachusetts 02110
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
WEBSITE ADDRESS:
www.newirelandfund.com
IR-AR 10/04
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
directors has determined that James J. Boyle is qualified to serve as an audit
committee financial expert serving on its audit committee and that he is
"independent."
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$73,261.00.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0.00
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $5,000.00.
TAX PREPARATION
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0.00.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
THE NEW IRELAND FUND, INC.
AUDIT COMMITTEE POLICY
ON
PRE-APPROVAL OF SERVICES PROVIDED BY THE INDEPENDENT ACCOUNTANTS
The Audit Committee of The New Ireland Fund, Inc. (the "Fund") is charged with
the responsibility to monitor the independence of the Fund's independent
accountants. As part of this responsibility, the Audit Committee must
pre-approve any independent accounting firm's engagement to render audit and/or
permissible non-audit services, as required by law. In evaluating a proposed
engagement of the independent accountants, the Audit Committee will assess the
effect that the engagement might reasonably be expected to have on the
accountant's independence. The Committee's evaluation will be based on:
a review of the nature of the professional services expected to be
provided,
a review of the safeguards put into place by the accounting firm to
safeguard independence, and
periodic meetings with the accounting firm.
POLICY FOR AUDIT AND NON-AUDIT SERVICES PROVIDED TO THE FUNDS
On an annual basis, the scope of audits for the Fund, audit fees and expenses,
and audit-related and non-audit services (and fees proposed in respect thereof)
proposed to be performed by the Fund's independent accountants will be presented
by the Treasurer and the independent accountants to the Audit Committee for
review and, as appropriate, approval prior to the initiation of such services.
Such presentation shall be accompanied by confirmation by both the Treasurer and
the independent accountants that the proposed services will not adversely affect
the independence of the independent accountants. Proposed services shall be
described in sufficient detail to enable the Audit Committee to assess the
appropriateness of such services and fees, and the compatibility of the
provision of such services with the auditor's independence. The Committee shall
receive periodic reports on the progress of the audit and other services which
are approved by the Committee or by the Committee Chairman pursuant to authority
delegated in this Policy.
The categories of services enumerated under "Audit Services", "Audit-related
Services", and "Tax Services" are intended to provide guidance to the Treasurer
and the independent accountants as to those categories of services which the
Committee believes are generally consistent with the independence of the
independent accountants and which the Committee (or the Committee Chairman)
would expect upon the presentation of specific proposals to pre-approve. The
enumerated categories are not intended as an exclusive list of audit,
audit-related or tax services which the Committee (or the Committee Chairman)
would consider for pre-approval.
AUDIT SERVICES
The following categories of audit services are considered to be consistent with
the role of the Fund's independent accountants:
Annual Fund financial statement audits
SEC and regulatory filings and consents
AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to be
consistent with the role of the Fund's independent accountants:
Accounting consultations
Agreed upon procedure reports
Attestation reports
Other internal control reports
Individual audit-related services that fall within one of these categories and
are not presented to the Audit Committee as part of the annual pre-approval
process will be subject to pre-approval by the Committee
1
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.
2
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
3
(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 zero percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0.00.
(h) The registrant's audit committee of the board of directors HAS
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of
all the independent directors of the registrant. The members of the audit
committee are: James J. Boyle, Peter J. Hooper, Denis P. Kelleher and James
M. Walton.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
BANK OF IRELAND ASSET MANAGEMENT
PROXY VOTING POLICY
TABLE OF CONTENTS:
I: PROXY VOTING PROCEDURES
A. PURPOSE 3
B. SCOPE 3
C. GUIDING PRINCIPLES 3
D. DECISION AND VOTING PROCESS 3
E. PROXY VOTING COMMITTEE 4
F. CONFLICTS OF INTEREST 4
G. WHEN BIAM DOES NOT VOTE PROXIES 5
II: PROXY VOTING GUIDELINES 6
A. AUDITORS 6
B. BOARD OF DIRECTORS 6
- Election of Directors
- Director Indemnification and Liability Provisions
- Board Size
- Independent Chairman (Separate Chairman/CEO)
- Majority of Independent Directors/Establishment of Committees
- Director Tenure/Retirement Age
- Filling of Vacancies/Removal of Directors
C. SHAREHOLDER RIGHTS 8
- Confidential Voting
- Shareholder Ability to Call Special Meetings
D. PROXY CONTESTS 9
- Voting for Director Nominees in Contested Elections
- Voting for Strategic Initiatives in Contested Elections
E. ANTI-TAKEOVER MEASURES 9
- Amend Bylaws without Shareholder Consent
- Anti-Takeover Provisions
- Poison Pill Plans
- Greenmail
F. CAPITAL STRUCTURE 10
- Adjustments to Par Value of Common Stock
- Common Stock Authorization
- Preferred Stock
- Preemptive Rights
- Share Repurchase Programs
- Stock Distributions: Splits and Dividends
G. MERGERS AND CORPORATE RESTRUCTURINGS 12
- Going Private Transactions (LBOs and Minority Squeezeouts)
- Spin-offs
H. EXECUTIVE AND DIRECTOR COMPENSATION 12
- Golden and Tin Parachutes
- Director Compensation
- Stock Option Expensing
I. MISCELLANEOUS 13
- Amending Minor Bylaws
- Changing Corporate Name
- Changing Date, Time or Location of Annual Meeting
I PROXY VOTING PROCEDURES
A. PURPOSE
Bank of Ireland Asset Management Limited and the BIAM group of companies
("BIAM") has adopted and implemented these policies and procedures ("Policies")
to seek to ensure that client proxies are voted in the clients' best interests,
in accordance with BIAM's fiduciary duties to clients and, in the case of BIAM
(U.S.), with SEC rule 206(4)-6 under the Investment Advisers Act of 1940. BIAM
believes that the Policies set forth herein are reasonably designed to achieve
that goal.
B. SCOPE
BIAM's authority to vote the proxies of its clients is established by its
advisory contracts and its proxy voting guidelines have been tailored to reflect
these specific contractual obligations. These Policies apply where clients have
delegated the authority and responsibility to BIAM to decide how to vote
proxies. Where BIAM has agreed to follow client guidelines in voting proxies,
client guidelines will be followed and supercede these Policies. BIAM also will
follow these Policies, as applicable, if it provides advice or recommendations
about specific proxy votes to clients that have not delegated voting
responsibility to BIAM. These Policies may be changed from time to time.
C. GUIDING PRINCIPLES
It is the policy of BIAM to vote all proxies for the exclusive benefit of its
clients. The maximization of total return for the client as an investor in the
stock being voted is the governing influence in considering corporate voting
decisions.
D. DECISION AND VOTING PROCESS
BIAM's proxy voting decisions are made by the Asset Managers. (For clients that
have specific voting guidelines, Portfolio Construction will determine the votes
to be cast at a client level.) BIAM may vote differently on the same matter if
client guidelines or specific instructions call for a vote that is inconsistent
with BIAM's Proxy Voting Guidelines or a decision made by BIAM's Asset Managers.
In unusual circumstances, BIAM Asset Managers may make different proxy voting
decisions for different clients.
Portfolio Construction is responsible for the communication of voting decisions
between the Asset Managers and BIAM's proxy voting agent (the "Agent").
Portfolio Construction provides the Agent with up to date portfolio holdings
information. As a
result, the Agent can provide BIAM with all voting and shareholder meeting
information necessary for informed and timely decision making. The Agent is
responsible for the timely and accurate processing of the voting decision, and
the distribution of this decision to all relevant parties. The Agent is also
responsible for unblocking/rescinding a voting decision upon request from BIAM.
E. PROXY VOTING COMMITTEE
BIAM has established a Proxy Voting Committee ("Committee") to deal with various
issues associated with proxy voting. The role of the Committee is to develop and
periodically review these Policies to help ensure they are up to date and
reflect current regulatory requirements; review compliance with these Policies;
and critically evaluate exceptions to the Policies. The Committee also is
responsible for taking reasonable steps to seek to identify any material
conflicts of interest on the part of BIAM or its personnel that may affect
particular proxy votes. The Committee is comprised of representatives from Asset
Management; Portfolio Construction; Compliance and Client Service.
F. CONFLICTS OF INTEREST
Occasions may arise where BIAM may have a material conflict of interest with
respect to a matter to be voted. A material conflict of interest may exist, for
example, if BIAM has a very significant business relationship with either the
company whose stock is being voted, the person soliciting the proxy or a third
party that has a material interest in the outcome of the proxy vote.
The Proxy Voting Committee provides guidance to assist BIAM personnel in
identifying potential conflicts of interest and bringing them to the attention
of the Committee. The Committee is responsible for evaluating the materiality of
any conflicts. These Policies describe some, but not all, of the specific types
of conflicts of interest that BIAM may encounter in connection with proxy
voting. The Committee is expected to evaluate the particular facts and
circumstances of each situation and exercise its best judgment in deciding
whether the conflicts are material and how they should be addressed. A member of
BIAM's senior management will be designated, upon request from the Committee,
for consultation and to resolve any conflicts issue on which the Committee has
been unable to reach a decision on its own.
When a material conflict of interest is identified, BIAM may (1) vote the
proxies in accordance with the general rule stated in the Proxy Voting
Guidelines set forth in these Policies (as may be amended from time to time),
provided the guidelines specify how votes generally will be cast on that
particular type of matter, i.e., the guidelines state that BIAM generally will
vote "for" or "against" the proposal; (2) seek voting instructions or a waiver
of the conflict from the clients whose securities are to be voted on their
specific shares; (3) cast the votes for its clients in the same proportion as
the vote of all other holders of such security, or "mirror vote," if information
about the votes cast by other
holders is reasonably and timely available to BIAM; (4) refrain from voting,
other than to vote "present" for purposes of a quorum or (5) take other action
appropriate under the circumstances.
An adviser-client relationship will not be considered material for conflict
purposes if the gross investment advisory income received from the relationship
by BIAM during its most recent fiscal year did not exceed one percent (1%) of
BIAM's annual gross investment advisory income and is not expected to exceed
that amount in the current fiscal year.
BIAM sets its Proxy Voting Guidelines and makes each proxy voting decision
independently, in the best interests of its clients and without regard to the
interests of BIAM, its parent company or any other affiliates of BIAM. In
addition, as a matter of policy, BIAM will not accept or consider direction from
its affiliates on how to vote any particular proxy.
G. WHEN BIAM DOES NOT VOTE PROXIES
In appropriate circumstances, BIAM may not vote proxies respecting client
securities, including, but not limited to, situations where (a) the securities
are no longer held in a client's account; (b) the proxy and other necessary
documents are not received in sufficient time to allow BIAM to analyze the
material or cast an informed vote by the voting deadline; (c) BIAM concludes
that the cost of voting the proxy outweighs any potential benefit to the client;
(d) in BIAM's judgment, the matter to be voted is neither material nor relevant
to shareholders and the issuer of the securities; (e) securities have been
loaned out pursuant to a client's securities lending program and are unavailable
to vote; or (f) the value or amount of the securities to be voted is
insignificant or undeterminable. BIAM also may refrain from voting a proxy where
BIAM believes that it is in the client's best interest to do so. Generally, this
will occur if BIAM is in disagreement with the proposals but the management have
committed to make, within an agreed time frame, appropriate changes which in
BIAM's view will favor shareholders.
In certain markets, shareholders are required to stop trading securities for a
specified time before or after a shareholder meeting ("Blocking Period"). BIAM
may refrain from voting or cancel a vote when BIAM concludes that it is more
beneficial to clients to be free to trade the securities than to vote
securities. In addition, BIAM will, to the best of its ability, unblock a share
position that is subject to a Blocking Period if there is danger of a failed
trade. Blocking only occurs in certain markets and the Blocking Periods and
rules vary from country to country, and in certain circumstances, from company
to company.
II PROXY VOTING GUIDELINES
The following are guidelines and as such are not exhaustive and do not include
all potential voting issues. Because proxy issues and the circumstances of
individual companies are so varied, there may be instances when BIAM will not
vote in strict adherence to these guidelines. Votes on matters not covered by
these guidelines will be determined in accordance with the guiding principles
set forth above. Certain proxy questions that are company specific and of a
non-routine nature may be more appropriately handled on a case-by-case basis. At
any time, BIAM may seek voting instructions from some or all clients holding the
securities to be voted.
A. AUDITORS
BIAM generally will vote FOR proposals to ratify auditors, unless there is
reason to believe that an auditor has a material financial interest in or
association with the company, and is therefore not independent, or there is
reason to believe that the independent auditor has rendered an opinion which is
neither accurate nor indicative of the company's financial position.
B. BOARD OF DIRECTORS
ELECTION OF DIRECTORS
Electing directors is an important stock ownership right that shareholders can
exercise. Shareholders should seek to elect directors who represent their
interests and will act in a manner which will maximize the value of their
ownership interest and who can ultimately be held accountable for their actions.
>> BIAM generally will vote FOR all nominees in uncontested elections.
However, each election is examined on a case-by-case basis and BIAM
will withhold votes for individual nominees or entire slates of
directors if it believes such action is in the best interest of
shareholders.
DIRECTOR INDEMNIFICATION AND LIABILITY PROVISIONS
Directors and officers are often faced with difficult choices and should be
willing to make decisions that are not risk-averse. BIAM believes that directors
should not be held accountable for actions taken where they have acted honestly
and in good faith but should not be fully released from liability if they act
outside of such parameters.
>> BIAM generally will vote FOR proposals providing for indemnification
and liability limitations for officers and directors, provided the
policies are limited to the director acting honestly and in good faith
and putting the interests of the company first, rather than eliminating
entirely director's and officer's liability for monetary damages for
violating the duty of care.
BOARD SIZE
Proposals to allow management to increase or decrease the size of the board at
its own discretion are often used by companies as a takeover defense. By
increasing the size of the board, management can make it more difficult for
dissidents to gain control.
>> BIAM generally will vote FOR proposals that seek to fix the size
of the board.
>> BIAM generally will vote AGAINST proposals that give management the
ability to alter the size of the board without shareholder approval.
INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)
>> BIAM generally will vote FOR proposals to separate the roles of
Chairman and CEO.
MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES
BIAM believes that having a board independent of management is of the utmost
importance to both a company and its shareholders.
>> BIAM generally will vote FOR proposals asking that a majority or more
of directors be independent.
>> BIAM generally will vote FOR proposals asking that board audit,
compensation, and/or nominating committees be "independent".
Independence does not necessarily require that the entire committee be
composed of independent directors.
DIRECTOR TENURE/RETIREMENT AGE
Tenure and Age limits impose an arbitrary threshold beyond which director's may
not serve regardless of the director's performance.
>> BIAM believes that directors should be judged on their own merit and
generally will not support proposals for such arbitrary guidelines as
age restrictions.
>> BIAM generally will vote FOR proposals that require directors to
present themselves for re-election on a periodic basis.
FILLING VACANCIES/REMOVAL OF DIRECTORS
Shareholder ability to remove directors, with or without cause, is prescribed by
a state's business corporation law, an individual company's articles of
incorporation, or its bylaws. If the state or company has specified that removal
may only be for cause, then such things as self-dealing or fraud will allow for
the removal of a director. Removal without cause requires no such showing, which
would allow shareholders to remove through a majority vote any director before
his or her term expires.
>> BIAM will evaluate on a CASE-BY-CASE basis proposals that members of
the board can only be removed for cause.
C. SHAREHOLDER RIGHTS
CONFIDENTIAL VOTING
In a confidential voting system, all proxies, and voting tabulations that
identify individual shareholders are kept confidential. This confidentiality can
eliminate any real or perceived coercion towards voters.
>> BIAM generally will vote FOR proposals that corporations adopt
confidential voting, use independent vote tabulators or use independent
inspectors of election, as long as the proposal includes a provision
for proxy contests as follows: In the case of a contested election,
management should be permitted to request that the dissident group
honor its confidential voting policy. If the dissidents agree, the
policy remains in place. If the dissidents will not agree, the
confidential voting policy is waived.
>> BIAM generally will vote FOR proposals to adopt confidential voting by
shareholders.
SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Certain matters may arise between regularly scheduled shareholder meetings that
require attention. The inability of shareholders to call meetings could result
in shareholders being unable to remove directors, initiate a shareholder
resolution or respond to a beneficial offer without having to wait for the next
scheduled meeting. The inability to call a special meeting and the resulting
insulation of management could adversely affect corporate performance and
shareholder returns.
>> BIAM generally will vote AGAINST proposals to restrict or prohibit
shareholder ability to call special meetings.
>> BIAM generally will vote FOR proposals that remove restrictions on the
right of shareholders to act independently of management.
D. PROXY CONTESTS
Proxy contests can play a valuable role in removing entrenched directors and
creating a means for corporate change.
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Electing directors is an important stock ownership right that shareholders can
exercise.
>> BIAM will review on a CASE-BY-CASE basis how it will cast its votes for
directors in a contested election based upon what BIAM believes are the
director nominees that will serve in the best interests of shareholders and
will enhance shareholder value.
VOTING FOR STRATEGIC INITIATIVES IN CONTESTED ELECTIONS
>> Votes in a contested election to approve a strategic initiative will be
evaluated on a CASE-BY-CASE basis and voted in favor of the position that
BIAM believes will be in the best interest of shareholders and will enhance
shareholder value.
E. ANTI-TAKEOVER MEASURES
BIAM generally will vote AGAINST anti-takeover proposals if such proposals act
against the common interests of shareholders.
AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT
>> BIAM generally will vote AGAINST proposals giving the board exclusive
authority to amend the Bylaws.
>> BIAM generally will vote FOR proposals giving the board the ability
to amend the bylaws with shareholder consent.
ANTI-TAKEOVER PROVISIONS
>> BIAM generally will vote AGAINST any proposed amendments to corporate
Articles, Bylaws or Charters that include anti-takeover provisions.
POISON PILL PLANS
Poison pills (or shareholder rights plans) are tactics used by management
fearing an unwelcome takeover bid. They cause a variety of events to occur which
may make the company financially less attractive to a potential acquirer.
>> BIAM generally will vote FOR a proposal that the company submit a
shareholder rights plan (poison pill) to a shareholder vote.
>> BIAM generally will vote AGAINST a proposal to renew or amend an
existing shareholder rights plan (poison pill).
>> BIAM generally will vote FOR a proposal to redeem a shareholder rights
plan (poison pill).
>> BIAM generally will vote AGAINST an increase in capital stock for use
in the implementation of a shareholder rights plan (poison pill).
GREENMAIL
Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the market
value of its shares, the practice discriminates against all other shareholders.
This transferred cash could, absent the greenmail payments, be put to use for
reinvestment in the company, payment of dividends, or to fund a public share
repurchase program.
>> BIAM generally will vote FOR proposals to adopt anti-greenmail charter
or bylaw amendments or otherwise restrict a company's ability to make a
greenmail payment.
F. CAPITAL STRUCTURE
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK
Stock that has a fixed per share value printed on its certificate is called par
value stock. The purpose of par value stock is to establish the maximum
responsibility of a
shareholder in the event that a company becomes insolvent. Many times proposals
to reduce par value stem from state law requirements or banking regulations.
>> BIAM generally will vote FOR management proposals to reduce the par
value of common stock.
COMMON STOCK AUTHORIZATION
State statutes and stock exchanges require shareholder approval for increases in
the number of common shares a board is authorized to issue. Companies increase
their supply of common stock for a variety of ordinary business purposes:
raising new capital, funding stock compensation programs, business acquisitions,
and implementation of stock splits or payment of stock dividends.
>> BIAM generally will vote FOR increases in common stock authorized
provided such action is determined to be in the shareholders' best
interests.
>> BIAM will review on a CASE-BY-CASE basis proposals to approve a
reduction in the number of shares of common stock authorized for issue
or an elimination of an authorized class of common stock.
PREFERRED STOCK
>> BIAM will review on a CASE-BY-CASE basis proposals to increase the
number of blank check preferred shares after analyzing the number of
preferred shares available for issue given a company's industry and
performance in terms of shareholder returns.
>> BIAM will review on a CASE-BY-CASE basis proposal to eliminate a
currently authorized class of preferred stock.
PREEMPTIVE RIGHTS
Preemptive rights permit shareholders to share proportionately in any new issues
of stock of the same class. These rights guarantee existing shareholders the
first opportunity to purchase shares of new issues of stock in the class they
own, in an amount equal to the percentage of the class they already own. These
rights provide shareholders with some protection from involuntary dilution of
their ownership interest.
>> BIAM generally will vote FOR proposals that restore preemptive rights
of shareholders.
SHARE REPURCHASE PROGRAMS
>> BIAM generally will vote FOR management proposals to institute
open-market share repurchase plans (Stock Repurchase Program).
STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
>> BIAM generally will vote FOR management proposals to increase the
common share authorization for a stock split or share dividend.
>> BIAM generally will vote FOR recommended stock splits.
G. MERGERS AND CORPORATE RESTRUCTURINGS
>> BIAM will review on a CASE-BY-CASE basis proposals for mergers
and acquisitions.
GOING PRIVATE TRANSACTIONS (LBOS AND MINORITY SQUEEZEOUTS)
>> BIAM will review on a CASE-BY-CASE basis proposals to take a company
private, taking into account factors including, but not limited to,
offer price/premium, fairness opinion, how the deal was negotiated,
conflicts of interest, other alternatives/offers considered, and
non-completion risk.
SPIN-OFFS
>> BIAM will review on a CASE-BY-CASE basis proposed spin-offs, taking
into consideration factors including, but not limited to, tax and
regulatory advantages, planned use of the sale proceeds, valuation of
the spin-off, fairness opinion, benefits to the parent company,
conflicts of interest, managerial incentives, corporate governance
changes and changes in the capital structure.
H. EXECUTIVE AND DIRECTOR COMPENSATION
>> BIAM will evaluate on a CASE-BY-CASE basis all proposed executive
and director compensation plans.
GOLDEN AND TIN PARACHUTES
Golden and tin parachutes are designed to protect the employees of a corporation
in the event of a change in control. Golden parachutes are payments to senior
level management that are triggered during a change of control. The calculation
is usually based on some multiple of an employee's annual or monthly
compensation. Some companies are extending the coverage to all employees via tin
parachutes.
>> BIAM generally will vote FOR proposals that the company eliminate or
restrict existing severance agreements, change-in-control provisions,
or golden parachutes.
DIRECTOR COMPENSATION
BIAM believes that director compensation should be appropriate for the time and
effort that directors spend executing their duties.
>> BIAM evaluates all director compensation proposals on a CASE-BY-CASE
basis.
STOCK OPTION EXPENSING
>> BIAM generally will vote FOR proposals that the company to expense
stock options unless management has already publicly committed to start
expensing by a specific date.
I. MISCELLANEOUS
AMENDING MINOR BYLAWS
>> BIAM generally will vote FOR management proposals for bylaw or charter
changes that are of a housekeeping nature (updates or corrections).
CHANGING CORPORATE NAME
>> BIAM generally will vote WITH MANAGEMENT with regard to changing
the corporate name.
CHANGING DATE, TIME OR LOCATION OF ANNUAL MEETING
>> BIAM generally will vote FOR management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. BIAM requires at least ten days notice of any such change
in order to allow for custodian deadlines.
07/01/2003
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
====================================================================================================================================
(D) MAXIMUM NUMBER (OR
(C) TOTAL NUMBER OF SHARES APPROXIMATE DOLLAR VALUE) OF SHARES
(A) TOTAL NUMBER (B) AVERAGE (OR UNITS) PURCHASED AS PART (OR UNITS) THAT MAY YET BE
OF SHARES (OR PRICE PAID PER OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE PLANS OR
PERIOD UNITS) PURCHASED SHARES (OR UNIT) OR PROGRAMS PROGRAMS
====================================================================================================================================
Month #1 18,850 $14.41 18,850 477,852
(May 1, 2004 to
May 31 2004)
====================================================================================================================================
Month #2 2,800 $15.07 2,800 475,052
(June 1 2004 to
June 30 2004)
====================================================================================================================================
Month #3 0 0 0
(July 1 2004 to
July 31 2004)
====================================================================================================================================
Month #4 0 0 0
(August 1 2004
to August 31
2004)
====================================================================================================================================
Month #5 0 0 0
(September 1
2004 to
September 30
2004)
====================================================================================================================================
Month #6 6,200 $17.20 6,200 468,852
(October 1 2004
to October 31
2004)
====================================================================================================================================
Total 27,850 $15.10 27,850
====================================================================================================================================
a. The date each plan or program was announced: February : 2000
b. The dollar amount (or share or unit amount) approved: 10% of shares
outstanding at the previous fiscal year end
c. The expiration date (if any) of each plan or program: None
d. Each plan or program that has expired during the period covered by the
table: None
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases: None
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.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(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 JANUARY 7, 2005
----------------------------------------------------------------------------
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 JANUARY 7, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /S/ LEILA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JANUARY 7, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.