UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5984
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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.
101 Federal Street
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, 2003
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Date of reporting period: APRIL 30, 2003
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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 NEW IRELAND FUND
[GRAPHIC OMITTED]
NEW IRELAND FUNDS LOGO ART
[GRAPHIC OMITTED]
COVER PHOTOGRAPH -- GLENDALOUGH, CO. WICKLOW
SEMI-ANNUAL REPORT
APRIL 30, 2003
COVER PHOTOGRAPH -- GLENDALOUGH, CO. WICKLOW
Provided courtesy of Tourism Ireland.
LETTER TO SHAREHOLDERS
INTRODUCTION
Although problems still remain in the Middle East and North Korea, the
ending of the conflict in Iraq has had a positive effect on most of the World's
equity markets which, we are hopeful, will continue over the coming months.
Despite this change in sentiment, economic growth seems likely to be delayed
until later in the year with the SARS epidemic, which has been centered in Asia,
perhaps delaying growth in that part of the World even more. As mentioned below,
along with most countries, Ireland's 2003 economic forecasts have also been cut
back, but they are expected to remain above the average rate of growth in
Europe.
As commented on in our last report, we are very conscious of the need to
keep down the expense ratio of the Fund which, due to the downturn in the
markets, had been rising steadily over the past two fiscal years. In our January
report, I advised that, as part of this exercise, we had discontinued the
consultancy agreement with Salomon Brothers Asset Management Inc. More recently,
we have renegotiated the agreement with PFPC Inc., the Fund's administrator that
will create further savings over the next couple of years. It is also our
intention to discontinue the printing and distribution to shareholders of our
fiscal first and third quarter reports, but these will continue to be prepared
and made available to shareholders through the Fund's web site
(www.newirelandfund.com). This will enable further worthwhile savings to be
achieved for the benefit of shareholders.
At the end of March, for personal reasons, Mr. William Clark resigned as a
director of the Fund. Mr. Clark had served on the Board since inception of the
Fund and his guidance over the years has been invaluable. I thank him for his
service and wish him well in the future.
PERFORMANCE
The Euro continued to strengthen against the US dollar in the quarter under
review. This benefited the Fund's performance with its Net Asset Value (NAV)
increasing, over the quarter, by 9.3% to $12.78. In the same period, the overall
Irish equity index (ISEQ) rose by 5.9% in Euro terms and by 10.1% in US dollar
terms.
In the first six months of the Fund's fiscal year, the NAV increased by
15.8% in U.S. dollar terms, which is considered very satisfactory given recent
stockmarket difficulties. The ISEQ Index advanced 12.4% in US dollar terms over
the same six months.
1
We continued to implement the Share Repurchase Program with 95,750 shares
being repurchased, since the beginning of the fiscal year, at a cost of
$897,907. These repurchases represent a reduction of 1.93% of the shares
outstanding at October 31, 2002 and they have resulted in a positive impact on
the Fund's NAV of 5 cents per share.
ECONOMIC REVIEW
As mentioned above, economic activity remains subdued around the world. As
a reflection of this, the Irish economy continues to show signs of slowing
growth and economic forecasts have been reduced. While this slowdown is hardly
surprising, on balance, we feel that the Irish economy is coping reasonably well
with the challenging environment.
The strong Euro has been a benefit to shareholders of the Fund but it does
have some less positive impacts on the competitiveness of the Irish economy.
Over the past 12 months, the Euro has appreciated by more than 30% against the
US dollar and it has also risen strongly against Sterling. In particular, these
increases in the value of the Euro will have a significant impact on Ireland's
exports, 42% of which (based on 2001 figures) were either to the US or the UK.
While the currency rate is but one element of competitiveness and Irish workers
rank highly on many measures of productivity, there is little doubt that these
currency movements present a challenge for Ireland and indeed for other European
economies as well.
Irish tax revenues are running somewhat behind budget expectations. In the
first four months of 2003 tax revenues were 5.6% higher than the same period
last year. That compares with the Government forecast of 8.0% for the year as a
whole. However after two years of very strong and above target increases in
Government spending, there are signs that the authorities are getting control of
the situation and growth in spending has slowed significantly in recent months.
There has been evidence over the last couple of months which suggests that
the upward pressure on consumer prices in Ireland is abating. In April, the year
over year headline rate of inflation was 4.3%, which is a significant
improvement from a 5.1% rate in February. The slowing economy, lower energy
prices and the impact of the stronger Euro should help to push inflation lower
over the summer months.
EQUITY MARKET REVIEW
The Irish stock market increased by +5.9% in Euro terms during the quarter
ended April 30, 2003. Global equity market performance was mixed over the
quarter and volatility was very high. As the table below highlights, Irish
equities continued to perform well in the quarter.
2
QUARTER ENDED
APRIL 30, 2003
----------------
LOCAL
CURRENCY U.S. $
-------- ------
Irish Equities (ISEQ) +5.9% +10.1%
S&P 500 +7.1% +7.1%
NASDAQ +10.8% +10.8%
UK Equities (FTSE 100) +10.0% +6.8%
Japanese Equities -6.1% -5.3%
Euroland Equities
Eurostoxx +3.4% +7.4%
German Equities (DAX) +7.1% +11.2%
French Equities (CAC) +0.5% +4.4%
Dutch Equities (AEX) -4.1% -0.5%
AIB (+7.4% IN QUARTER). Whole year results were in-line with expectations,
with underlying earnings growth of 6%. This was a credible performance given
their problems in the US and once again was primarily driven by buoyant domestic
growth where earnings rose by 11% in 2002. For 2003, AIB has signalled a target
of mid-single digit underlying earnings growth. The stock is lowly valued with a
P/E of 11.3x for 2003 and a yield of 4.0%. These valuations, relatively
speaking, reflect the growth forecasts for the current year.
CRH had a strong quarter registering a return of 17.0% on the back of
excellent full-year 2002 results. EPS, before amortisation of goodwill,
increased by 4.5% and the dividend was increased by 10.2%. These results were
achieved within an industry where most of CRH comparables are registering
significant profit declines. While CRH's growth has slowed significantly over
the past couple of years it continues to build an enviable operating platform
through prodigious cash flow that helps to fund its acquisitions programme.
Volatile capital markets have been less favorable for IRISH LIFE &
PERMANENT (+2% IN THE QUARTER). Poor stock markets and difficult comparisons,
due to a boom in special savings products (SSIAs), resulted in a 40% reduction
in life and pensions sales in the first quarter of 2003. While this weakness is
being compensated somewhat by continued strength on the banking side, the
announcement has led to a 5% reduction in forecasted profits for 2003. A yield
of 4.7% and a P/E of 7.7x have put a floor on the stock despite the current lack
of operating momentum.
GALEN had an excellent quarter rising by 35.7% as the market welcomed a
strong set of second quarter results with EPS increasing by 42% in Sterling
terms. The results were positively impacted by recent acquisitions.
3
CURRENT OUTLOOK
In a challenging environment Ireland is performing reasonably well. The
Central Bank is now forecasting GNP growth for 2003 of 1.75% and GDP growth of
3.25%. On average, the Eurozone economy is forecasted to expand at approximately
1% in GDP terms in 2003. The European Central Bank (ECB) recently cut interest
rates by 0.5% in an effort to further stimulate the European economies.
Earnings growth, both domestically and internationally, remains in short
supply given the sluggish economic environment. A modest recovery in economic
growth helped by easy monetary policy should help markets to generate positive
returns in 2003. Based on current forecasts the Irish stock market trades on a
P/E for 2003 of 12.0X and offers an attractive dividend yield of 2.7%. Ireland
continues to outperform, on a relative basis, and the Fund retains a fully
invested position.
Sincerely,
/S/ SIGNATURE
Peter Hooper
Chairman
June 20, 2003
Please note: all stock performance figures are presented in Euro terms.
4
PORTFOLIO BY MARKET SECTOR AS OF APRIL 30, 2003
(PERCENTAGE OF NET ASSETS)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Financial ............................. 18.41%
Construction and Building Materials ... 17.98%
Food and Beverages .................... 17.26%
Transportation ........................ 7.14%
Other Assets .......................... 7.73%
Health Care Services .................. 7.91%
Leisure and Hotels .................... 7.16%
Telecommunications .................... 3.13%
Business Services ..................... 4.97%
Diversified Financial Services ........ 4.78%
Pharmaceuticals ....................... 3.53%
TOP 10 HOLDINGS BY ISSUER AS OF APRIL 30, 2003
HOLDING SECTOR % OF NET ASSETS
------- ------ ---------------
Allied Irish Banks PLC Financial 15.49%
Kerry Group PLC, Series A Food and Beverages 14.36%
CRH PLC Construction and Building Materials 12.34%
Ryanair Holdings PLC Transportation 7.14%
DCC PLC Business Services 4.97%
Irish Life & Permanent PLC Diversified Financial Services 4.78%
Jury's Doyle Hotel Group PLC Leisure and Hotels 4.59%
United Drug PLC Health Care Services 4.37%
ICON PLC-ADR Health Care Services 3.54%
Galen Holdings PLC Pharmaceuticals 3.53%
5
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2003 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (98.89%)
COMMON STOCKS OF IRISH COMPANIES (95.36%)
BUSINESS SERVICES (4.97%)
DCC PLC 250,000 $ 3,096,958
------------
COMPUTER SOFTWARE AND SERVICES (0.37%)
IONA Technologies PLC-ADR* 169,300 230,248
------------
CONSTRUCTION AND BUILDING MATERIALS (17.98%)
CRH PLC 500,577 7,681,499
Grafton Group PLC-UTS 380,820 1,496,011
Kingspan Group PLC 800,000 2,017,766
------------
11,195,276
------------
DIVERSIFIED FINANCIAL SERVICES (4.78%)
Irish Life & Permanent PLC 256,295 2,974,718
------------
FINANCIAL (18.41%)
Allied Irish Banks PLC 628,738 9,648,166
FBD Holdings PLC 260,000 1,813,534
------------
11,461,700
------------
FOOD & AGRICULTURE (1.88%)
IAWS Group PLC 144,900 1,172,408
------------
FOOD AND BEVERAGES (17.26%)
Fyffes PLC 467,400 725,063
Greencore Group PLC 352,568 1,082,052
Kerry Group PLC, Series A 604,750 8,942,606
------------
10,749,721
------------
HEALTH CARE SERVICES (7.91%)
ICON PLC-ADR* 85,000 2,201,500
United Drug PLC 196,700 2,722,064
------------
4,923,564
------------
LEISURE AND HOTELS (7.16%)
Jury's Doyle Hotel Group PLC 361,942 2,859,859
Paddy Power PLC 286,365 1,597,947
------------
4,457,806
------------
6
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Value (U.S.)
April 30, 2003 Shares (Note A)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PUBLISHING & NEWS (1.35%)
Independent News & Media PLC 578,142 $ 761,358
Independent News & Media PLC- Rights* 154,171 80,867
------------
842,225
------------
TECHNOLOGY (0.78%)
Horizon Technology Group PLC* 1,359,817 485,627
------------
TELECOMMUNICATIONS (3.13%)
ParthusCeva Inc.* 9,463 40,218
Spectel PLC++
(8/4/00, 11/22/00,11/30/01-Cost $2,699,475) 1,800,248 1,908,659
------------
1,948,877
------------
TRANSPORTATION (7.14%)
Ryanair Holdings PLC* 650,000 4,446,786
------------
UTILITY/PUBLIC SERVICES (2.24%)
NTR PLC+
(6/14/02-Cost $1,169,642) 125,000 1,395,026
------------
TOTAL COMMON STOCKS OF IRISH COMPANIES
(Cost $41,569,527) 59,380,940
------------
COMMON STOCKS OF UNITED KINGDOM COMPANIES (3.53%)
(Cost U.S. $2,470,577)
PHARMACEUTICALS (3.53%)
Galen Holdings PLC 310,419 2,195,378
------------
TOTAL INVESTMENT COMPANIES BEFORE FOREIGN
CURRENCY ON DEPOSIT
(Cost $44,040,104) $ 61,576,318
------------
7
THE NEW IRELAND FUND, INC.
PORTFOLIO HOLDINGS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Face Value (U.S.)
April 30, 2003 Value (Note A)
--------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.25%)
(Interest Bearing)
British Pounds Sterling (pound) 6,613 $ 10,569
Euro (EURO) 132,067 147,390
------------
TOTAL FOREIGN CURRENCY ON DEPOSIT**
(Cost $155,974) 157,959
------------
TOTAL INVESTMENTS (99.14%)
(Cost $44,196,077) $ 61,734,277
------------
OTHER ASSETS AND LIABILITIES (0.86%) 536,689
------------
NET ASSETS (100.00%)
$ 62,270,966
============
--------------------------------------------------------------------------------
* Non-income producing security.
** Foreign currency held on deposit at the Bank of Ireland.
+ Not readily marketable. Dates represent acquisition date.
++ Not readily marketable and non-income producing security. Dates
represent acquisition date.
ADR -American Depository Receipt traded in U.S. dollars
UTS -Units
8
THE NEW IRELAND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
April 30, 2003
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $44,040,104) (Note A)
See accompanying schedule U.S. $61,576,318
Cash 209,997
Foreign currency (Cost $155,974) 157,959
Dividends receivable 532,020
Prepaid expenses 19,413
-----------
Total Assets 62,495,707
-----------
LIABILITIES:
Accrued legal fees payable 67,082
Investment advisory fee payable (Note B) 36,606
Printing fees payable 25,889
Directors' fees and expenses (Note C) 21,338
Payable for Fund shares repurchased 19,038
Accrued audit fees payable 16,766
Administration fee payable (Note B) 14,657
Custodian fees payable (Bank of Ireland) (Note B) 4,852
Custodian fees payable (Chase Manhattan Bank) (Note B) 750
Accrued expenses and other payables 17,763
-----------
Total Liabilities 224,741
-----------
NET ASSETS U.S. $62,270,966
===========
AT APRIL 30, 2003 NET ASSETS CONSISTED OF:
Common Stock, U.S. $.01 Par Value -
Authorized 20,000,000 Shares;
Issued and Outstanding 4,873,428 Shares U.S. $ 48,734
Additional Paid-in Capital 52,891,733
Undistributed Net Investment Income 318,261
Accumulated Net Realized Loss (8,539,605)
Unrealized Appreciation of Securities,
Foreign Currency and Net Other Assets 17,551,843
-----------
TOTAL NET ASSETS U.S. $62,270,966
===========
NET ASSET VALUE PER SHARE
(Applicable to 4,873,428 outstanding shares)
(authorized 20,000,0000 shares)
(U.S. $62,270,966 (DIVIDE) 4,873,428) U.S. $ 12.78
===========
See Notes to Financial Statements.
9
THE NEW IRELAND FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended
April 30, 2003
(unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of withholding taxes of U.S. $1,113) U.S.$ 941,512
Interest 4,332
------------
TOTAL INVESTMENT INCOME 945,844
------------
EXPENSES
Investment advisory fee (Note B) 214,623
Administration fee (Note B) 91,740
Legal fees 73,967
Directors' fees and expenses (Note C) 63,558
Consulting fee (Note B) 56,810
Printing fees 32,137
Custodian fees (Note B) 14,167
Other 80,581
------------
TOTAL EXPENSES 627,583
------------
NET INVESTMENT INCOME U.S.$ 318,261
------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (NOTE D)
Realized gain/(loss) on:
Securities transactions (4,169,191)
Foreign currency transactions 38,079
------------
Net realized loss on investments
during the period (4,131,112)
------------
Net change in unrealized appreciation of:
Securities 12,112,057
Foreign currency and net other assets 13,679
------------
Net unrealized appreciation of investments
during the period 12,125,736
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 7,994,624
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S.$ 8,312,885
============
See Notes to Financial Statements.
10
THE NEW IRELAND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended
April 30, 2003 Year Ended
(unaudited) October 31, 2002
----------------------------------------------------------------------------------------
Net investment gain/(loss) U.S. $ 318,261 U.S. $ (405,581)
Net realized loss on investments (4,131,112) (4,412,615)
Net unrealized appreciation/(depreciation)
of investments, foreign currency holdings
and net other assets 12,125,736 (3,306,808)
------------ ------------
Net increase/(decrease) in net assets
resulting from operations 8,312,885 (8,125,004)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (174,493)
Net realized gains -- (3,546,301)
------------ ------------
Net increase/(decrease) in net assets 8,312,885 (11,845,798)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Value of 95,750 and 363,400 shares
repurchased, respectively (Note F) (897,907) (3,647,021)
Value of shares issued to shareholders in
connection with a stock distribution (Note E) -- 2,125,513
------------ ------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (897,907) (1,521,508)
------------ ------------
NET ASSETS
Beginning of period 54,855,988 68,223,294
------------ ------------
End of period (Including undistributed
net investment income of $318,261
and $0, respectively) U.S. $ 62,270,966 U.S. $ 54,855,988
============ ============
See Notes to Financial Statements.
11
THE NEW IRELAND FUND, INC.
FINANCIAL HIGHLIGHTS (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
--------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 2003 -------------------------------------------------------------------------
(unaudited) 2002 2001 2000 1999 1998+
------------------------------------------------------------------------------------------------------------------------------------
Operating Performance:
Net Asset Value,
Beginning of Period U.S. $ 11.04 U.S. $ 13.28 U.S. $ 20.06 U.S. $ 19.75 U.S. $ 21.36 U.S.$ 19.99
-------- -------- -------- -------- -------- --------
Net Investment Income/(Loss) 0.07 (0.08) (0.02) 0.15 0.13 0.07
Net Realized and Unrealized
Gain/(Loss) on Investments 1.62 (1.50) (3.65) 1.59 (0.60) 2.07
-------- -------- -------- -------- -------- --------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 1.69 (1.58) (3.67) 1.74 (0.47) 2.14
-------- -------- -------- -------- -------- --------
Distributions to Shareholders
from:
Net Investment Income -- (.03) (0.01) (0.13) -- (0.07)
Net Realized Gains -- (.69) (2.65) (1.60) (1.14) (0.70)
-------- -------- -------- -------- -------- --------
Total from Distributions -- (.72) (2.66) (1.73) (1.14) (0.77)
-------- -------- -------- -------- -------- --------
Anti-Dilutive/(Dilutive) Impact
of Capital Share
Transactions 0.05++++ 0.06+++ (0.45)++ 0.30 -- --
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period U.S. $12.78 U.S. $11.04 U.S. $ 13.28 U.S. $ 20.06 U.S. $ 19.75 U.S. $21.36
======== ======== ======== ======== ======== ========
Share Price, End of Period U.S. $10.12 U.S. $ 8.67 U.S. $ 11.02 U.S. $ 15.19 U.S. $ 16.38 U.S. $17.88
======== ======== ======== ======== ======== ========
Total Investment Return(a) 15.76%(c) (12.07)% (23.76)% 13.27% (2.79)% 11.68%
======== ======== ======== ======== ======== ========
Total Investment Return(b) 16.72%(c) (16.05)% (12.73)% 3.43% (3.30)% 18.42%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000's) U.S. $62,271 U.S. $54,856 U.S. $68,223 U.S. $95,075 U.S. $98,916 U.S. $107,005
Ratio of Net Investment
Income/(Loss) to Average
Net Assets 1.11% (0.64)% (0.16)% 0.70% 0.53% 0.33%
Ratio of Operating Expenses
to Average Net Assets 2.19% 2.10% 1.80% 1.42% 1.33% 1.37%
Portfolio Turnover Rate 7% 13% 35% 34% 13% 9%
(a) Based on share net asset value and reinvestment of distributions at the price obtained under
the Dividend Reinvestment and Cash Purchase Plan.
(b) Based on share market price and reinvestment of distributions at the price obtained under the
Dividend Reinvestment and Cash Purchase Plan.
(c) Return is based on the six months ended April 30, 2003.
+ Per-share numbers have been calculated using the average share method, which more appropriately
represents the per-share data for the year since the use of the undistributed income method did
not accord with the results of operations.
++ Amount represents $0.08 per share impact for shares repurchased by the Fund under the Share
Repurchase Program and $(0.53) per share impact for the new shares issued as Capital Gain Stock
Distribution.
+++ Amount represents $0.16 per share impact for shares repurchased by the Fund under the Share
Repurchase Program and $(0.10) per share impact for the new shares issued as Capital Gain Stock
Distribution.
++++ Amount represents $0.05 per share impact for shares repurchased by the Fund under the Share
Repurchase Program.
12
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
The New Ireland Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on December 14, 1989 and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The investment strategy of the Fund, as revised
in March 2001, involved a bias toward high growth Irish companies including
listed and unlisted firms, drawn from the technology, telecommunications and
health care sectors. More recently, due to the broadly based decline in the
technology and telecommunications sectors, this strategy has been amended but
the bias continues toward Ireland's growth companies.
A. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: Securities listed on a stock exchange for which market
quotations are readily available are valued at the closing prices on the date of
valuation, or if no such closing prices are available, at the last bid price
quoted on such day. If there are no such quotations available for the date of
valuation, the last available closing price will be used. The value of
securities and other assets for which no market quotations are readily available
is determined in good faith at fair value using estimation methods approved by
the Board of Directors. At October 31, 2003 the Fund held 5.3% of its net assets
in securities valued in good faith by the Board of Directors with an aggregate
cost of $3,869,117 and fair value of $3,303,685. Short-term securities that
mature in 60 days or less are valued at amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO STOCKHOLDERS: The Fund intends to distribute
to stockholders, at least annually, substantially all of its net income from
dividends and interest payments and substantially all of its net realized
capital gains, if any. Income distributions and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles.These differences are due primarily to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and characterizations of distributions made by
the Fund.
U.S. FEDERAL INCOME TAXES: It is the Fund's intention to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and distribute all of its taxable income
within the prescribed time. It is also the intention of the Fund to make
distributions in sufficient amounts to avoid Fund excise tax. Accordingly, no
provision for U.S. Federal income taxes is required.
CURRENCY TRANSLATION: The books and records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
bid price of such currencies against U.S. dollars last quoted by a major bank as
follows: assets and liabilities at the closing rates of exchange on the
valuation date; security
13
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
transactions and investment income and expenses at the closing rates of exchange
on the dates of such transactions. Net realized foreign currency gains and
losses resulting from changes in exchange rates include foreign currency gains
and losses between trade date and settlement date on investment securities
transactions, foreign currency transactions and the difference between the
amounts of interest and dividends recorded on the books of the Fund and the
amount actually received. The portion of foreign currency gains and losses
related to fluctuation in exchange rates between the initial purchase trade date
and subsequent sale trade date is included in realized gains and losses on
security transactions.
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts for non-trading purposes in order to protect investment
securities and related receivables and payables against future changes in
foreign currency exchange rates. Fluctuations in the value of such contracts are
recorded as unrealized gains or losses; realized gains or losses include net
gains or losses on contracts which have terminated by settlements or by entering
into offsetting commitments. Risks associated with such contracts include
movement in the value of the foreign currency relative to the U.S. dollar and
the ability of the counterparty to perform. There were no such contracts open in
the Fund as of April 30, 2003.
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 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.
As of March 4, 2003, the Fund's Consulting Agreement with Salomon Brothers
Asset Management Inc. (SBAM) was terminated. Up to this date, under the
Agreement, SBAM received an annual fee of $165,000, payable monthly, for which
they evaluated trends in the closed-end fund marketplace and provided Fund
management with future Fund development options and comparative fund analysis.
From March 4, 2003, Bank of Ireland Asset Management agreed to provide investor
services to existing and potential shareholders which, up to then, had also been
provided by SBAM.
The Fund has entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. The Fund pays PFPC Inc. an annual fee of $185,000
payable monthly.
14
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
The Fund has entered into an agreement with The Chase Manhattan Bank to
serve as custodian of the Fund's assets held outside of Ireland. During the six
months ended, April 30, 2003, the Fund paid The Chase Manhattan Bank U.S.
$1,000. Bank of Ireland serves as the Fund's custodian of the Fund's assets held
in Ireland. During the six months ended, April 30, 2003, the Fund paid U.S.
$13,167 in custodian fees to Bank of Ireland.
For the six months ended, April 30, 2003, the Fund incurred total brokerage
commissions of U.S. $10,845, of which U.S. $3,300 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 additional U.S. $13,500 annually. Each Director is
reimbursed for travel and certain out-of-pocket expenses.
D. PURCHASES AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the six
months ended, April 30, 2003, excluding U.S. government and short-term
investments, aggregated U.S. $3,731,418 and U.S. $3,895,488, respectively.
At April 30, 2003, there were no permanent tax and book differences in
gross unrealized appreciation/depreciation of securities or the cost basis of
securities.
E. COMMON STOCK:
For the six months ended, April 30, 2003, the Fund has not issued shares in
connection with a stock Distribution.
For the year ended, October 31, 2002, the Fund issued 196,443 shares in
connection with stock Distribution in the amount of $2,125,513.
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On April 30, 2003 Bank of Ireland held
11,548 shares representing 0.24% of the Fund's total issued shares.
F. SHARE REPURCHASE PROGRAM:
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, the Fund hereby gives notice that it may from time to time repurchase
shares of the Fund in the open market at the option of the Board of Directors
and upon such terms as the Directors shall determine.
For the six months ended April 30, 2003, the Fund repurchased 95,750 (1.93%
of the shares outstanding at October 31, 2002 year end) of its shares for a
total cost of $897,907, at an average discount of 20.30% of net asset value.
For the fiscal year ended October 31, 2002, the Fund repurchased 363,400
(7.08% of the shares outstanding at October 31, 2001) of its shares for a total
cost of $3,647,021, at an average discount of 17.83% of net asset value.
15
THE NEW IRELAND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
G. MARKET CONCENTRATION:
Because the Fund concentrates its investments in securities issued by
corporations in Ireland, its portfolio may be subject to special risks and
considerations typically not associated with investing in a broader range of
domestic securities. In addition, the Fund is more susceptible to factors
adversely affecting the Irish economy than a comparable fund not concentrated in
these issuers to the same extent.
16
--------------------------------------------------------------------------------
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
James M. Walton - DIRECTOR
Lelia Long - TREASURER
Hugh Carter - ASSISTANT TREASURER
Linda J. Hoard - SECRETARY
PRINCIPAL INVESTMENT ADVISOR
Bank of Ireland Asset Management (U.S.) Limited
75 Holly Hill Lane
Greenwich, Connecticut 06830
ADMINISTRATOR
PFPC Inc.
101 Federal Street
Boston, Massachusetts 02110
CUSTODIANS
Bank of Ireland
Lower Baggot Street
Dublin 2, Ireland
Chase Manhattan Bank
Global Investor Services
4 Chase Metro Tech Center 18th Floor
Brooklyn, New York 11245
SHAREHOLDER SERVICING AGENT
American Stock Transfer &Trust Company
40 Wall Street
New York, New York 10005
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
CORRESPONDENCE
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The New Ireland Fund, Inc.
C/0 PFPC Inc.
101 Federal Street
6th 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-SAR04/03
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer or officers and principal
financial officer or 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
(17 CFR 270.30a-3(c))) are effective, based on their evaluation of
these controls and procedures as of the date within 90 days of the
filing date of the report that includes the disclosure required by this
paragraph.
(b) There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) THE NEW IRELAND FUND, INC.
---------------------------------------------------------------------
By (Signature and Title)* /S/ DENIS CURRAN
-------------------------------------------------------
Denis Curran, President
(principal executive officer)
Date JULY 7, 2003
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ DENIS CURRAN
-------------------------------------------------------
Denis Curran, President
(principal executive officer)
Date JULY 7, 2003
-----------------------------------------------------------------------------
By (Signature and Title)* /S/ LELIA LONG
-------------------------------------------------------
Lelia Long, Treasurer
(principal financial officer)
Date JULY 7, 2003
-----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.