<PAGE>
THE
IRISH
INVESTMENT FUND
Annual Report
October 31, 1995
<PAGE>
President's Letter
------------------
Dear Stockholder,
Prior to reviewing The Irish Investment Fund, Inc.'s (the "Fund" 's) fiscal year
ended October 31, 1995, I would like to comment briefly on the final quarter. In
line with international markets, the Irish equity market registered minor gains
during the quarter ended October 31, with a return of 2.1%. The strength of the
U.S. Dollar over the quarter translated this return into an increase of 0.3% in
U.S. Dollar terms. By comparison, the net asset value ("NAV") of the Fund was
unchanged at $13.61 per share over the same period.
Over the fiscal year, the Irish equity market produced a return of 15.4%.
As a result of the weakness in the U.S. Dollar, this converted into a return of
16.7% in U.S. Dollar terms. The Fund's NAV increased by 24.4% over the same
period, which is considered by your Board as a very satisfactory performance.
ECONOMIC REVIEW
Economic growth rates in the Irish economy remain well above international
levels. Official statistics indicate that the economy grew by 7.4% in 1994 and
the Irish Central Bank projects Gross National Product ("GNP") growth of 5.5%
for 1995.
Consumer spending was somewhat sluggish in the first half of 1995, with
retail sales volumes increasing by a modest 1.8%. However, since then retail
sales have rebounded, with data for July and August indicating year-on-year
retail sales volume growth of 4.8% and 4.2%, respectively.
Manufacturing production data shows a strong increase in output of 16.5% on
previous year levels. In addition to the high-technology sector which expanded
by 19.3% year-on-year, there was also an impressive performance by indigenous
industries which registered increases in production of 12.5%. Irish goods
clearly remain competitive in international markets and another record trade
surplus is anticipated for 1995.
The strength in the domestic economy is reflected in the 11.8% expansion in
private sector credit in the first nine months of 1995. However, this credit
growth has not resulted in pricing pressure, with annualized core inflation
(i.e., without the effect of mortgages) at 2.0% in the third quarter of 1995.
While unemployment continues at a stubbornly high level (14.7%), there was
some positive news on the job front with the Labor Force Survey indicating a
growth in total employment of 7.5% in the two-year period ended April 1995.
STOCK MARKET REVIEW
The Irish equity market performed satisfactorily over the final quarter of
the Fund year with a gain of 2.1%, which left the market ahead by 15.4% over the
fiscal year. A comparison with major international markets is shown following:
Quarter Ended Year Ended
October 31, 1995 October 31, 1995
-------------------- --------------------
Irish Irish
Punts U.S.$ Punts U.S.$
U.S. Equities +3.5% +3.5% +23.1% +23.1%
U.K. Equities +1.8% +0.4% +12.8% + 9.2%
Japanese Equities +5.8% -8.8% -11.7% -16.2%
Irish Equities +2.1% +0.3% +15.4% +16.4%
The positive international environment for equities has been driven
primarily by continuing low levels of inflation and the resulting downward
movement in bond yields. In line with international sector trends, both in the
most recent quarter and over the fiscal year, Irish financial stocks have been
among the best performing stocks in the market with AIB Bank and Hibernian Group
(Insurance) performing strongly.
Smurfit (Jefferson) Group continues to underperform the market despite
delivering excellent results and buying back $80 million of its stock in August.
A recovery in the company's share price is dependent on an improvement in
investor sentiment towards global paper stocks. Kerry Group continues to
outperform the market, registering a 39% increase in stock price over the fiscal
year. It now stands on a premium rating to the market and most of its
international peers. Waterford Foods completed a $200 million acquisition of The
Cheese Company (U.K. based) in September. This was positively received by the
market and gave a much needed upward stimulus to the company's stock price.
Corporate activity has been relatively muted, with net equity issuance on
the Irish Market amounting to $110 million in 1995 year-to-date. The only equity
issue of size was the successful placing of the Government's remaining 15% stake
in Irish Life during September. The initial public offering of CBT Group on the
U.S. NASDAQ Exchange, and its subsequent strong performance contributed
positively to the performance of the Fund over the year. The Fund reduced its
holding in CBT Group as part of a successful secondary offering by the company
in September.
OUTLOOK
Economic growth rates in the Irish economy are likely to remain strong and
underpin earnings forecasts for the Equity market. The market currently stands
at 9.6 times 1996 earnings and a dividend yield of 3.6%. This leaves it at an
attractive discount on an international comparison basis. In light of the above,
we believe the long-term prospects to be favorable, and consequently, it is the
Fund's intention to continue with a fully-invested position.
Finally, I am pleased to advise you that the Board of Directors has
declared a distribution of $0.27 per share, consisting of $0.129 of long-term
capital gains and $0.141 of net investment income, to be paid on December 29,
1995 to shareholders of record at the close of business on December 21, 1995.
Sincerely,
/s/ Peter Hooper
Peter Hooper
Chairman of the Board of Directors December 21, 1995
<PAGE>
Statement of Net Assets
-----------------------
October 31, 1995
Shares Value (Note A)
- -------------------------------------------------------------------------------
IRISH COMMON STOCKS (92.9%)
- -------------------------------------------------------------------------------
Abbey 495,000 U.S. $ 1,041,697
AIB 1,917,688 9,685,575
Anglo Irish Bank Corporation 1,025,000 1,061,932
Barlo Group 1,000,356 453,425
Boxmore International 234,000 1,530,348
*+CBT Group 60,842 2,416,036
Clondalkin Group 298,850 1,717,412
Crean (James) 347,625 1,125,470
CRH 1,048,036 6,921,962
FBD Holdings 260,000 770,224
Fyffes 1,635,000 2,719,521
Green Property 825,000 2,230,300
Greencore 218,168 1,765,850
Hibernian Group 300,000 1,335,509
Independent Newspapers 255,000 1,527,337
Inishtech plc 105,000 662,898
Irish Life 700,000 2,577,937
I.W.P., International 194,943 1,309,630
Jones Group 100,000 323,760
Jury's Hotel Group 981,695 3,257,792
Kerry Group, Series A 465,000 3,613,159
Smurfit (Jefferson) Group 3,355,840 9,017,833
Unidare 150,000 607,049
United Drug 150,000 594,909
Waterford Foods, Class A 964,156 1,607,598
Waterford Glass 3,565,739 3,232,440
*++Yeoman International Group 122,812 218,689
TOTAL IRISH COMMON STOCKS
(Cost U.S. $50,925,765) 63,326,292
- -------------------------------------------------------------------------------
UNITED KINGDOM COMMON STOCK (2.1%)
- -------------------------------------------------------------------------------
Northern Ireland Electricity 200,000 1,463,914
TOTAL UNITED KINGDOM COMMON STOCK
(Cost U.S. $1,461,075) 1,463,914
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS BEFORE FOREIGN CURRENCY ON DEPOSIT
- -------------------------------------------------------------------------------
(Cost U.S. $52,386,840#) 64,790,206
<PAGE>
Statement of Net Assets
-----------------------
Value (Note A)
- -------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT (0.7%)
- -------------------------------------------------------------------------------
(Interest Bearing)
British Pound Sterling (Pds) 18,258 U.S.$ 28,865
Irish Pound IR(Pds) 255,081 412,924
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost U.S. $441,001) 441,789
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (95.7%)
- -------------------------------------------------------------------------------
(Cost U.S. $52,827,841) 65,231,995
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (4.3%)
- -------------------------------------------------------------------------------
Cash 2,775,838
Dividends and Interest Receivable 251,510
Prepaid Expenses 57,663
Principal Investment Advisor Fee Payable (Note B) (43,670)
Co-Advisor Fee Payable (Note B) (14,557)
Administration Fee Payable (Note B) (11,645)
Other Liabilities (61,402)
---------
2,953,737
- -------------------------------------------------------------------------------
NET ASSETS (100.0%)
- -------------------------------------------------------------------------------
Applicable to 5,009,000 outstanding U.S. $.01 par
value shares (authorized 20,000,000 shares) U.S. $68,185,732
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------
(U.S. $68,185,732 / 5,009,000) U.S. $ 13.61
=====
- -------------------------------------------------------------------------------
#Aggregate cost for Federal tax purposes at October 31, 1995 was U.S.
$52,516,907.
*Non-income producing security.
+Restricted security (Note I).
++Trading pursuant to Irish Stock Exchange Rule 535.2 (Note J).
<PAGE>
Statement of Net Assets
-----------------------
Value (Note A)
- -------------------------------------------------------------------------------
AT OCTOBER 31, 1995 NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------
Common Stock, U.S. $.01 Par Value --
Authorized 20,000,000 Shares;
Issued and Outstanding 5,009,000 Shares U.S.$ 50,090
Capital Surplus 54,517,462
Undistributed Net Investment Income 566,041
Accumulated Net Realized Gain 642,670
Unrealized Appreciation of Investments, Foreign
Currency and Net Other Assets 12,409,469
- -------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$68,185,732
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
Statement of Operations
-----------------------
For the Year Ended
October 31, 1995
- -------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------
Dividends (Net of Withholding Taxes of U.S.$12,426) U.S.$ 1,608,033
Interest (Net of Withholding Taxes of U.S.$4,598) 15,055
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,623,088
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------
Principal Investment Advisor Fee (Note B) U.S.$ 454,540
Co-Advisor Fee (Note B) 151,513
Administration Fee (Note B) 121,211
Directors' Fees and Expenses (Note C) 76,966
Custodians' Fees (Note B) 54,361
Legal and Audit Fees 54,124
Amortization of Organization Costs (Note F) 19,854
Other 121,883
- -------------------------------------------------------------------------------
TOTAL EXPENSES 1,054,452
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 568,636
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTE D)
- -------------------------------------------------------------------------------
Realized Gain/(Loss) on:
Securities Transactions 5,590,008
Foreign Currencies Transactions 31,416
Forward Foreign Currency Contracts (11,074)
---------
Net Realized Gain on Investments
during the Year 5,610,350
Net Change in Unrealized Appreciation/
(Depreciation) of:
Securities 7,796,109
Foreign Currency and Net Other Assets (47,967)
---------
Net Unrealized Appreciation of Investments
during the Year 7,748,142
---------
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 13,358,492
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S.$13,927,128
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
Statement of Changes in Net Assets
----------------------------------
Year Ended Year Ended
October 31, 1995 October 31, 1994
Net Investment Income U.S.$ 568,636 U.S.$ 484,588
Net Realized Gain/(Loss) on
Investments 5,610,350 (154,048)
Net Unrealized Appreciation
of Investments 7,748,142 6,998,890
----------- -----------
Net Increase in Net Assets
Resulting from Operations 13,927,128 7,329,430
Distributions to Shareholders from
Net Investment Income (525,945) (350,630)
----------- -----------
Net Increase in Net Assets 13,401,183 6,978,800
- -------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------
Beginning of Year 54,784,549 47,805,749
----------- -----------
End of Year (Including Undistributed
Net Investment Income of $566,041
and $503,008 at October 31, 1995
and October 31, 1994, respectively) U.S.$68,185,732 U.S.$54,784,549
=========== ===========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
--------------------
For a Fund share outstanding throughout each year.
Year Ended October 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C> <C>
Operating Performance:
Net Asset Value,
Beginning of Year U.S.$10.94 U.S.$ 9.54 U.S.$ 7.99 U.S.$ 9.75 U.S.$10.04 U.S.$11.16
------ ------ ------ ------ ------ ------
Net Investment Income 0.11 0.10 0.12 0.15 0.15 0.26
Net Realized and
Unrealized Gain/(Loss)
on Investments 2.67 1.37 1.66 (1.49) (0.11) (1.13)
------ ------ ------ ------ ------ ------
Net Increase/(Decrease) in
Net Assets Resulting From
Investment Operations 2.78 1.47 1.78 (1.34) 0.04 (0.87)
Offering Costs -- -- -- -- -- (0.25)
Distributions:
Distributions to Shareholders from:
Net Investment Income (0.11)++ (0.07) (0.12) (0.23) (0.33) --
Capital Surplus (Note A) -- -- (0.11) (0.19) -- --
------ ------ ------ ------ ------ ------
Total from Distributions (0.11) (0.07) (0.23) (0.42) (0.33) 0.00
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Year U.S.$13.61 U.S.$10.94 U.S.$ 9.54 U.S.$ 7.99 U.S.$ 9.75 U.S.$10.04
====== ====== ====== ====== ====== ======
Share Price, End of Period U.S.$11.25 U.S.$10.13 U.S.$ 8.75 U.S.$ 7.00 U.S.$ 7.88 U.S.$ 7.00
====== ====== ====== ====== ====== ======
Total Investment Return** 12.46% 16.59% 29.34% (6.35)% 18.07% (41.67)%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (000's) U.S.$68,186 U.S.$54,785 U.S.$47,806 U.S.$40,018 U.S.$48,847 U.S.$50,299
Ratio of Net Investment
Income to Average Net Assets 0.94% 0.93% 1.39% 1.62% 1.55% 4.28%+
Ratio of Operating
Expenses to Average Net Assets 1.74% 1.87% 1.88% 1.80% 2.03% 1.70%+
Portfolio Turnover Rate 21% 13% 15% 7% 28% 6%
<FN>
*The Fund commenced operations on March 29, 1990.
**Based on share price and reinvestment of income distributions.
+Annualized.
++Rounded.
</TABLE>
See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements
-----------------------------
The Irish Investment Fund, Inc. (the "Fund") was incorporated under the laws
of the State of Maryland on December 14, 1989 as a non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended.
A. SIGNIFICANT ACCOUNTING POLICIES:
The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are 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. Short-term securities that mature in 60 days or less are
valued at amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to distribute
to shareholders, 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 primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund as a whole.
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.
Accordingly, no provision for U.S. Federal income taxes is required.
For the year ended October 31, 1995, permanent differences resulting from
book and tax accounting for forward foreign currency contracts and currency
transactions were reclassified from accumulated net realized gain to
undistributed net investment income.
REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements.
Securities pledged as collateral for repurchase agreements are held by the
Fund's custodian bank until maturity of the repurchase agreements. Provisions of
the agreements require that the market value of the collateral be sufficient in
the event of default; however, in the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral may
be subject to legal proceedings.
CURRENCY TRANSLATION: The books and records of the Fund are maintained in
U.S. Dollars. Foreign currency amounts are translated into U.S. Dollars at the
bid price of such currencies against U.S. Dollars last quoted by a major bank as
follows: assets and liabilities at the closing rates of exchange on the
valuation date; security transactions and investment income and expenses at the
closing rates of exchange on the dates of such transactions. Net realized
foreign currency gains and losses 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.
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. Interest
income is recorded on the accrual basis.
B. MANAGEMENT SERVICES:
The Fund has entered into an investment advisory agreement (the "Principal
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 Principal Investment Advisory Agreement, the Fund pays a
monthly fee at an annual rate of 0.75% of the value of its average weekly net
assets.
The Fund has also entered into an investment advisory agreement (the "U.S.
Co-Advisory Agreement") with Salomon Brothers Asset Management Inc ("Salomon
Brothers Asset Management"). Under the U.S. Co-Advisory Agreement, the Fund pays
a monthly fee at an annual rate of 0.25% of the value of its average weekly net
assets.
The Fund has entered into an administration agreement (the "Administration
Agreement") with The Shareholder Services Group, Inc. ("TSSG"), a subsidiary of
First Data Corporation. Under the Administration Agreement, the Fund pays a
monthly fee at an annual rate of 0.20% of the value of its average monthly net
assets.
The First National Bank of Boston serves as custodian of the Fund's assets
held outside of Ireland. Prior to September 27, 1995, Boston Safe Deposit and
Trust Company served as custodian of the Fund's assets held outside of Ireland.
Bank of Ireland serves as custodian of the Fund's assets held in Ireland. During
the year ended October 31, 1995, the Fund paid U.S. $48,961 in custodial fees to
Bank of Ireland.
C. DIRECTORS FEES:
Effective June 1, 1995, the Fund pays each Director who is not a managing
director, officer or employee of Bank of Ireland Asset Management or Salomon
Brothers Asset Management or any affiliate thereof, an annual retainer of U.S.
$7,000, plus U.S. $700 for each meeting of the Board of Directors or Committee
of the Board attended in person or via telephone and any Stockholders' 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 U.S. $3,500 annually in
addition to the amount he may receive as detailed above. Prior to June 1, 1995,
the annual retainer paid to such Directors was U.S. $5,000, plus U.S. $500 for
each meeting attended. Each Director will be reimbursed for travel and
out-of-pocket expenses.
D. PURCHASE AND SALES OF SECURITIES:
The cost of purchases and proceeds from sales of securities for the year
ended October 31, 1995, excluding U.S. government and short-term investments,
aggregated U.S. $12,182,732 and U.S. $13,683,159, respectively.
At October 31, 1995, aggregate gross unrealized appreciation for all
securities (excluding foreign currency on deposit) in which there is excess
value over tax cost was U.S. $15,570,043 and aggregate gross unrealized
depreciation for all securities (excluding foreign currency on deposit) in which
there is an excess of tax cost over value was U.S. $3,296,744.
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 March 30, 1990, in conjunction with its
initial underwriting, 5,000,000 shares of common stock were issued. Costs
incurred in the initial offering of shares aggregated U.S. $1,231,000 and were
charged to capital upon commencement of operations. No subsequent shares have
been issued since the initial underwriting.
F. ORGANIZATION COSTS:
Costs incurred by the Fund in connection with its organization aggregated
U.S. $238,000. The organization costs were being amortized using the
straight-line basis over a five-year period from the date the Fund commenced
operations. As of October 31, 1995, all such costs have been fully amortized.
G. CONCENTRATION OF CREDIT:
Because the Fund concentrates its investments in securities issued by
corporations in Ireland, its portfolio may be subject to special risks and
considerations not typically associated with investing in a broader range of
domestic securities. In addition, the Fund is more susceptible to factors
adversely affecting the Irish economy than a comparable Fund not concentrated in
these issuers to the same extent.
H. CAPITAL LOSS UTILIZATION:
During the year ending October 31, 1995 the Fund utilized U.S. $4,947,339 of
capital losses carried forward from previous years to offset capital gains
crystallizing in the current year. The Fund has no remaining capital losses at
October 31, 1995.
I. RESTRICTED SECURITY:
The Fund has entered into an agreement which prohibits it from disposing of
its remaining shares in the following security until after December 12, 1995. To
account for this restriction, the directors have "fair valued" the security.
The following table, in addition to showing the security's fair value and
value per unit, shows the acquisition date, the percentage of the Fund's total
net assets that the security comprises as well as the aggregate cost at October
31, 1995.
<TABLE>
<CAPTION>
FAIR PERCENTAGE
ACQUISITION PAR VALUE VALUE OF TOTAL
SECURITY DATE OF SHARES PER UNIT FAIR VALUE NET ASSETS COST
<S> <C> <C> <C> <C> <C> <C>
CBT Group 4/6/93 60,842 U.S. $39.71 U.S. $2,416,036 3.54% U.S. $119,284
</TABLE>
The Fund may purchase securities which are subject to legal or contractual
restriction on resale if not more than 10% of the value of the Fund's total
assets would be invested in such securities or in securities for which there is
no readily available market. In purchasing securities which could not be sold by
the Fund without registration under Securities Act of 1933, as amended, the Fund
will endeavor to obtain the right to registration at the expense of the issuer.
There generally will be a lapse of time between the decision by the Fund to sell
any such security and the registration of the security permitting sale. During
any such period, the security will be subject to market fluctuations.
J. SECURITY TRADING PURSUANT TO IRISH STOCK EXCHANGE RULE 535.2:
The Irish Stock Exchange (the "Exchange") Rule 535.2 (the "Rule") permits
certain companies, not required to meet the regulatory requirements of the
Exchange, to engage in certain securities transactions. Trading pursuant to the
Rule takes place on a matched basis, facilitated by member firms of the
Exchange.
K. SUBSEQUENT EVENT:
As of November 1, 1995, The Shareholder Services Group, Inc. will be known
as First Data Investor Services Group, Inc.
----------------------------------------------------------------------
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.
----------------------------------------------------------------------
<PAGE>
Report of Independent Accountants
---------------------------------
To the Stockholders and Board of Directors
The Irish Investment Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Irish Investment Fund, Inc. (the "Fund") at October 31, 1995, and the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for each of the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 15, 1995
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Net Increase/
Net Realized and (Decrease)
Unrealized Gain/ in Net Assets
Net Investment (Loss) on Resulting From
Income/(Loss) Investments Operations
------------- --------------- ---------------
Total Per Total Per Total Per
Quarter Ended (000) Share (000) Share (000) Share
- ------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
January 31, 1994 U.S.$23 U.S.$0.00 U.S.$2,786 U.S.$0.56 U.S.$2,809 U.S.$0.56
April 30, 1994 241 0.05 2,170 0.44 2,411 0.49
July 31, 1994 74 0.02 (495) (0.10) (421) (0.08)
October 31, 1994 146 0.03 2,384 0.47 2,530 0.50
January 31, 1995 (38) (0.01) 386 0.08 348 0.07
April 30, 1995 423 0.09 5,354 1.07 5,777 1.16
July 31, 1995 (51) (0.01) 7,784 1.55 7,733 1.54
October 31, 1995 235 0.04 (166) (0.03) 69 0.01
</TABLE>
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (UNAUDITED)
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 otherwise
instructed 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, c/o the Plan Agent for The Irish Investment 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, 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 $100 to $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 also
to allow ample time for receipt and processing by the Plan Agent, it is
suggested that the participants send in voluntary cash payments to be received
by the Plan Agent approximately ten days before January 15. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than forty-eight hours before such payment is to be
invested.
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 and questions concerning the Plan
should be directed to the Plan Agent for The Irish Investment Fund, Inc. in care
of American Stock Transfer & Trust Company, 40 Wall Street, New York, New York,
10005, telephone number (718) 921-8283.
MEETING OF STOCKHOLDERS
On June 20, 1995, the Company held its Annual Meeting of Stockholders. The
following directors were elected by the following votes: (i) Denis P. Kelleher
- -- 3,858,940 For, 72,321 Against; (ii) James M. Walton -- 3,841,827 For, 89,434
Against. Gerald F. Colleary, Peter J. Hooper and William P. Clark continue to
serve in their capacities as Directors of the Fund. In the only other matter
voted upon at the Annual Meeting, the selection of Price Waterhouse LLP as the
Company's independent public accountants for the fiscal year ending October 31,
1995, was ratified by the following votes: 3,876,827 For, 34,683 Against, 19,750
Abstaining.
<PAGE>
THE IRISH INVESTMENT FUND, INC.
------------------------- DIRECTORS AND OFFICERS -------------------------
Peter J. Hooper - Chairman of the Board
William P. Clark - Director
Gerald F. Colleary - Director
Denis P. Kelleher - Director
James M. Walton - Director
Richard H. Rose - President and Treasurer
Brigid O. Bieber - Secretary
Patricia L. Bickimer - Assistant Secretary
---------------------- PRINCIPAL INVESTMENT ADVISOR ----------------------
Bank of Ireland Asset Management (U.S.) Limited
Two Greenwich Plaza
Greenwich, Connecticut 06830
----------------------------- U.S. CO-ADVISOR ----------------------------
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
------------------------------ ADMINISTRATOR -----------------------------
First Data Investor Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
------------------------------- CUSTODIANS -------------------------------
Bank of Ireland
Lower Baggot Street, Dublin 2, Ireland
The First National Bank of Boston
150 Royall Street
Canton, Massachusetts 02021
----------------------- 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 ------------------------
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
----------------------------- CORRESPONDENCE -----------------------------
All correspondence should be addressed to
The Irish Investment Fund, Inc.
c/o First Data Investor Services Group, Inc.
Exchange Place -- BOS665
Boston, Massachusetts 02109
Telephone inquiries should be directed to
1-800-GO-TO-IRL (1-800-468-6475)
