<PAGE>
The
IRISH
Investment Fund
[Graphic Omitted]
Annual Report
October 31, 1998
<PAGE>
Chairman's Letter
-----------------
Dear Stockholder,
Prior to reviewing The Irish Investment Fund Inc.'s (the "Fund") fiscal
year ended October 31, 1998. I would like to comment briefly on the final
quarter. During the period, the Irish equity market was negatively impacted
by turmoil in global markets and declined by 14.2% in Irish pound terms. Due
to the weakness of the dollar, this translated into a decline of 8.7% in
U.S. dollar terms. By comparison, the net asset value ("NAV") of the Fund
declined by 12.4% to $21.36 over the same period.
Over the fiscal year, the Irish equity market increased by 19.5% in both
Irish pound and dollar terms. In the same period the total return (based on
market price) of the Fund was 18.42%, inclusive of distributions. This
underperformance was due mainly to significant declines in a number of small
and medium capitalized stocks over both the quarter and fiscal year.
On December 8, 1998, the Board of Directors of the Fund declared the
annual distribution in the amount of $1.142 per share consisting solely of
long-term capital gains. The distribution was paid on December 31, 1998, to
stockholders of record on December 23, 1998.
ECONOMIC REVIEW
In a troubled global economic environment Ireland's economy remains in a
healthy state. Over the year the Irish Central Bank has had to continually
upgrade GNP growth expectations and is now forecasting that the economy will
expand by 7.75% in 1998. While the economy is not completely immune to
slowing global economic growth, domestic demand conditions remain extremely
strong.
Consumer spending is a key positive with retail sales volumes increasing
by 8.8% in the three months to end September 1998 over previous year levels.
New car sales have increased by 14.2% to a record 140,062 units in the first
ten months of 1998. As part of the Euro convergence process Irish short-term
interest rates were reduced by 2.5% to 3.69% during the quarter under review
which should underpin high consumer confidence into 1999. Employment
creation remains an important driver for the economy and Ireland's
unemployment rate fell to 8.7% in October 1998, its lowest level in fourteen
years. It compares favorably to the unemployment rate of 9.8% at the end of
1997 and the current European Union (EU) average unemployment rate of 9.9%.
Given identical interest and currency rates, the introduction of the Euro
currency on January 1, 1999 will focus attention on relative competitiveness
within the EU. Going forward, the challenge for Ireland is to contain
domestic inflationary pressures, particularly wage inflation, and to ensure
it continues to attract foreign direct investment. The recent decision by
Citigroup to increase its Irish workforce from 1,000 to 2,300 is indicative
of the attractiveness of Ireland to overseas investors.
Over the summer months Irish inflation increased to a peak of 3.2%, but
since then global deflationary pressures have pushed the inflation rate down
to 2.9% in October.
STOCK MARKET REVIEW
As mentioned above, the Irish equity market declined by 14.2% in the
quarter end of October, which left the market ahead by 19.5% over the Fund's
fiscal year. The following is a comparison of the Irish equity market with
major international markets:
Quarter Ended Year Ended
October 31, 1998 October 31, 1998
----------------------- ---------------------
Local Local
Currency U.S.$ Currency U.S.$
U.S. Equities - 1.9% - 1.9% 20.1% 20.1%
U.K. Equities - 8.4% - 6.2% 9.2% 9.1%
Japanese Equities -17.2% 2.6% -17.6% -14.9%
Irish Equities -14.2% - 8.7% 19.5% 19.5%
The key factor affecting the Irish market over the quarter was the
turmoil in international markets sparked by the devaluation of the Russian
ruble. Relative underperformance by small and medium capitalized stocks
within the Irish market was also a notable feature of both the quarter and
the fiscal year. While equity markets have recovered from the lows of early
October 1998, the past six months have been challenging for the Irish equity
investor.
As highlighted earlier the Irish economy continues to deliver strong
growth but a number of Irish companies including Smurfit, Independent
Newspapers and Waterford Wedgwood have been negatively impacted by slowing
international economic growth particularly in the UK, Japan and the
developing countries. While the aforementioned companies and a number of
other smaller companies have suffered downward earnings revisions during the
quarter the overall outlook for earnings for Irish companies remains
positive. The two largest stocks in the Fund, Allied Irish Bank "AIB" and
CRH, delivered strong interim results during the quarter which were well
ahead of market expectations. AIB increased its earnings per share by 32.7%
and CRH by 27.5% in the first six months of 1998 over 1997 levels. Both
companies enjoyed strong performance in their respective Irish and U.S.
operations.
Smaller Irish companies, in line with small-cap stocks in international
markets have substantially underperformed large-capitalized stocks over both
the quarter and the fiscal year. An index of smaller Irish companies,
defined as those companies outside the top ten stocks by market
capitalization, declined by 3.0% over the fiscal year of the Fund, in
comparison to a gain of 19.5% by the overall market. While global investors
continue to shun the small caps, many good quality Irish companies trade on
single digit price-to-earnings ratios, which seems excellent value in the
current low interest rate environment.
OUTLOOK
Ireland continues to enjoy high levels of economic growth and while the
global economic environment has deteriorated, the official Irish government
forecast for GNP growth for 1999 stands at 6.0%. The overall price-to-
earnings ratio for the Irish market stands at 15.2 times prospective 1999
earnings and the market offers a prospective dividend yield of 1.9%. The
strength of the domestic economy helps to underpin a comparatively strong
outlook for profits growth for Irish companies and valuations in a global
context are attractive. The Fund retains its fully invested position.
Sincerely,
/s/ Peter Hooper
Peter Hooper
Chairman of the Board
December 15, 1998
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<PAGE>
Statement of Net Assets
October 31, 1998 Shares Value (Note A)
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IRISH COMMON STOCKS (94.75%)
- ------------------------------------------------------------------------------
Abbey 698,600 U.S. $ 2,466,671
Adare Printing 320,000 3,029,042
Allied Irish Banks 1,567,688 22,641,788
Avonmore Waterford 1,153,610 3,726,595
Boxmore 393,000 738,103
Clondalkin Group* 268,850 1,716,776
CRH 958,036 14,034,637
DCC 250,000 1,558,845
FBD Holdings 260,000 1,660,263
Fyffes 1,635,000 2,898,775
Green Property 907,143 4,838,590
Greencore 542,568 2,119,543
Hibernian 400,000 3,906,503
ICON-ADR* 85,000 2,380,000
Independent Newspapers 309,999 1,229,643
IONA Technologies-ADR* 169,300 4,486,450
Irish Life 500,000 4,432,378
I.W.P. 639,886 1,826,716
Jury's Hotel 691,792 5,197,091
Kerry Group, Series A 465,000 5,868,769
Smurfit Group 2,535,840 4,191,112
United Drug 437,500 3,220,986
Waterford Wedgewood 3,565,739 3,214,516
TOTAL IRISH COMMON STOCKS
(Cost U.S. $55,956,768) 101,383,792
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UNITED KINGDOM COMMON STOCKS (2.77%)
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BCO Technologies* 535,700 1,538,038
Galen Holdings 200,000 1,426,333
TOTAL UNITED KINGDOM COMMON STOCKS
(Cost U.S. $1,749,942) 2,964,371
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TOTAL INVESTMENTS BEFORE FOREIGN CURRENCY ON DEPOSIT
- ------------------------------------------------------------------------------
(Cost U.S. $57,706,710#) U.S. $104,348,163
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FOREIGN CURRENCY ON DEPOSIT (2.46%)
- ------------------------------------------------------------------------------
(Interest Bearing)
British Pound Sterling BPd 1,506 U.S. $ 2,521
Irish Pound IPd 1,754,638 2,636,345
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost U.S. $2,691,545) 2,638,866
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TOTAL INVESTMENTS (99.98%)
- ------------------------------------------------------------------------------
(Cost U.S. $60,398,255) 106,987,029
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OTHER ASSETS AND LIABILITIES (0.02%)
- ------------------------------------------------------------------------------
Cash 543
Receivable for Securities Sold 996,665
Dividends and Interest Receivable 201,262
Prepaid Expenses 10,015
Other Assets 112
Net Unrealized Appreciation of Forward Foreign Currency
Contract (Note A) 476,550
Payable for Securities Purchased (1,497,973)
Principal Investment Advisory Fee Payable (Note B) (64,576)
Co-Advisory Fee Payable (Note B) (17,337)
Administration Fee Payable (Note B) (17,337)
Accrued Directors' Fees and Expenses (Note C) (6,451)
Other Liabilities (63,380)
----------
18,093
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NET ASSETS (100.0%)
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Applicable to 5,009,000 outstanding
U.S. $.01 par value shares
(authorized 20,000,000 shares) U.S. $107,005,122
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NET ASSET VALUE PER SHARE
- ------------------------------------------------------------------------------
(U.S. $107,005,122 / 5,009,000) U.S. $ 21.36
=====
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#Aggregate cost for U.S. Federal income tax purposes.
*Non-income producing security.
ADR -- Denominated in U.S. dollars
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACT
FORWARD FOREIGN CURRENCY CONTRACT TO SELL
Contract to Deliver
-------------------------------------------------
Delivery Local In Exchange Value in Unrealized
Date Currency For U.S. $ U.S. $ Appreciation
-------- ----------------------- ---------- -------- ------------
11/13/1998 Irish Pound 13,500,000 20,700,900 20,224,350 U.S. $ 476,550
==========
Value (Note A)
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AT OCTOBER 31, 1998 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 54,171,460
Accumulated Net Realized Gain 5,716,112
Unrealized Appreciation of Securities, Forward
Foreign Currency Contracts, Foreign Currency and
Net Other Assets 47,067,460
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TOTAL NET ASSETS U.S. $107,005,122
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See Notes to Financial Statements.
<PAGE>
Statement of Operations
For the Year Ended
October 31, 1998
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INVESTMENT INCOME
- ------------------------------------------------------------------------------
Dividends (Net of Withholding Taxes of U.S. $11,894) U.S. $ 1,871,453
Interest 59,818
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TOTAL INVESTMENT INCOME 1,931,271
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- ------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------
Principal Investment Advisory Fee
(Note B) U.S.$ 824,925
Administration Fee (Note B) 234,065
Co-Advisory Fee (Note B) 231,177
Directors' Fees and Expenses (Note C) 52,836
Custodian Fees (Note B) 51,446
Legal and Audit Fees 34,800
Other 129,576
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TOTAL EXPENSES 1,558,825
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- ------------------------------------------------------------------------------
NET INVESTMENT INCOME 372,446
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- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTE D)
- ------------------------------------------------------------------------------
Realized Gain/(Loss) on:
Securities Transactions 5,717,579
Forward Foreign Currency Contracts (29,712)
Foreign Currency Transactions (667,254)
---------
Net Realized Gain on Investments 5,020,613
During the Year
Net Change in Unrealized Appreciation of:
Securities 4,930,468
Forward Foreign Currency Contracts 700,580
Foreign Currency and Net Other Assets (283,262)
---------
Net Unrealized Appreciation of Investments
During the Year 5,347,786
---------
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 10,368,399
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S. $10,740,845
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See Notes to Financial Statements.
<PAGE>
Statement of Changes in Net Asset
---------------------------------
Year Ended Year Ended
October 31, 1998 October 31, 1997
Net Investment Income U.S. $ 372,446 U.S. $ 703,290
Net Realized Gain on Investments 5,020,613 3,145,831
Net Unrealized Appreciation
of Investments 5,347,786 14,518,848
------------- ------------
Net Increase in Net Assets
Resulting from Operations 10,740,845 18,367,969
Distributions to Shareholders
from:
Net Investment Income (330,594) (1,091,962)
Net Realized Gains (3,526,343) (1,788,213)
------------- ------------
Net Increase in Net Assets 6,883,908 15,487,794
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NET ASSETS
- -----------------------------------------------------------------------
Beginning of Year 100,121,214 84,633,420
------------- ------------
End of Year (Including
Undistributed Net Investment
Income of $0 and $310,565 at
October 31, 1998 and 1997,
respectively) U.S. $107,005,122 U.S. $100,121,214
============ ============
See Notes to Financial Statements.
<PAGE>
Financial Highlights
--------------------
For a Fund share outstanding throughout each year.
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------------------------
1998+ 1997+ 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Operating Performance:
Net Asset Value,
Beginning of Year U.S. $ $19.99 U.S. $ 16.190 U.S. $ 13.161 U.S. $ 10.194 U.S. $ 9.154
-------- -------- -------- -------- -------
Net Investment Income 0.07 0.14 0.14 0.11 0.10
Net Realized and
Unrealized Gain/
(Loss) on Investments 2.07 3.53 3.42 2.67 1.37
-------- -------- -------- -------- -------
Net Increase/(Decrease) in
Net Assets Resulting from
Investment Operations 2.14 3.67 3.56 2.78 1.47
Distributions to Shareholders
from:
Net Investment Income (0.07) (0.22) (0.14) (0.11) (0.07)
Net Realized Gains (0.70) (0.36) (0.13) -- --
-------- -------- -------- -------- -------
Total from Distributions (0.77) (0.58) (0.27) (0.11) (0.07)
Net Asset Value,
End of Year U.S. $ 21.36 U.S. $ 19.99 U.S. $ 16.90 U.S. $ 13.61 U.S. $ 10.94
======== ======== ======== ======== =======
Share Price, End
of Year U.S. $ 17.88 U.S. $ 15.75 U.S. $ 14.00 U.S. $ 11.25 U.S. $ 10.13
======== ======== ======== ======== =======
Total Investment
Return* 18.42% 17.03% 27.12% 12.46% 16.59%
===== ===== ===== ===== =====
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RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------
Net Assets, End
of Period (000's) U.S. $107,005 U.S. $100,121 U.S. $ 84,633 U.S. $ 68,186 U.S. $54,785
Ratio of Net Investment
Income to Average Net
Assets 0.33% 0.78% 0.95% 0.94% 0.93%
Ratio of Operating
Expenses to Average Net
Assets 1.37% 1.54% 1.63% 1.74% 1.87%
Portfolio Turnover Rate 9% 11% 12% 21% 13%
*Based on share price and reinvestment of income distributions.
+Per-share numbers have been calculated using the average share method, which more
appropriately represents the per-share data for the period since the use of the undistributed
income method did not accord with results of operations.
</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 and is registered as a non-
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended.
A. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in accordance with generally
accepted accounting principles 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. 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 differing
characterization 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. For the year ended
October 31, 1998, permanent differences resulting from book and tax accounting
for currency gains and losses were reclassified from undistributed net
investment income to net realized gains.
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% on the first $100 million and 0.50% of
the value of the average weekly net assets of the Fund in excess of $100
million. Prior to April 1, the monthly fee was 0.75% on the average weekly net
assets of the Fund.
Upon the merger of Salomon Inc. and Travelers Group Inc., the Fund became
a party to an investment advisory agreement as of November 28, 1997 (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 0.20% of the value of its average
weekly net assets. Prior to November 28, 1997 the fee under the former U.S.
co-advisory agreement with Salomon Brothers Asset Management was 0.25% of the
value of its average weekly net assets.
The Fund has entered into an administration agreement (the "Administration
Agreement") with First Data Investor Services Group, Inc., 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.
Investors Bank & Trust Company ("IBT") serves as custodian of the Fund's
assets held outside of Ireland as of September 30, 1998, at which date IBT
purchased the domestic custody business of BankBoston, N.A., the Fund's former
custodian. Bank of Ireland serves as custodian of the Fund's assets held in
Ireland. During the year ended October 31, 1998, the Fund paid U.S. $40,755 in
custodial fees to Bank of Ireland.
For the year ended October 31, 1998, the Fund incurred total brokerage
commissions of U.S. $46,724, of which U.S. $4,927 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 Salomon Brothers
Asset Management of 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 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 U.S. $3,500 annually in
addition to the amount he may receive as detailed above. Each Director is
reimbursed for travel and 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, 1998, excluding U.S. government and short-term investments,
aggregated U.S. $10,225,495 and U.S. $14,117,545, respectively.
At October 31, 1998, 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. $46,641,453 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. $0.
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. 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.
G. SUBSEQUENT EVENTS:
Effective December 8, 1998, the U.S. Co-Advisory Agreement was terminated
and the Fund entered into a Consulting Agreement with Salomon Brothers Asset
Management. Effective February 1, 1999, The Chase Manhattan Bank will serve as
custodian of the Fund's assets held outside of Ireland.
* * * *
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 Shareholders 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, 1998, the results
of its operations, the changes in its net assets and the financial highlights
for 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, 1998 by correspondence with the
custodians and brokers, provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 14, 1998
<PAGE>
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
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 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, then at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a trading day on the New York Stock Exchange, Inc. ("New York
Stock Exchange"), the next preceding trading day. If the net asset value
exceeds the market price of Fund shares at such time, participants in the Plan
will be deemed to have elected to receive shares of stock from the Fund,
valued at market price on the valuation date. If the Fund should declare a
dividend or capital gains distribution payable only in cash, the Plan Agent as
agent for the participants, will buy Fund shares in the open market, on the
New York Stock Exchange or elsewhere, with the cash in respect of such
dividend or distribution, for the participants' account on, or shortly after,
the payment date.
Participants in the Plan have the option of making additional cash
payments to the Plan Agent, annually, in any amount from U.S. $100 to U.S.
$3,000, for investment in the Fund's common stock. The Plan Agent will use all
funds received from participants (as well as any dividends and capital gain
distributions received in cash) to purchase Fund shares in the open market on
or about January 15 of each year. Any voluntary cash payments received more
than thirty days prior to such date will be returned by the Plan Agent, and
interest will not be paid on any uninvested cash payments. To avoid
unnecessary cash accumulations and to allow ample time for receipt and
processing by the Plan Agent, it is suggested that the participants send in
voluntary cash payments to be received by the Plan Agent approximately ten
days before January 15. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less than
forty-eight hours before such payment is to be invested.
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 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.
TAX INFORMATION (UNAUDITED)
For the year ended October 31, 1998, the amount of long term capital gains
distributed to stockholders by the Fund was $2,476,167.
YEAR 2000 (UNAUDITED)
Like other registered investment companies and financial and business
organizations worldwide, the Fund could be adversely affected if computer
systems on which the Fund relies, which primarily include those used by the
Fund, its affiliates or other service providers, are unable to correctly
process date-related information on and after January 1, 2000. This risk is
commonly called the Year 2000 issue. Failure to successfully address the Year
2000 issue could result in interruptions to and other material adverse effects
on the Fund's business and operations. The Fund has commenced a review of the
Year 2000 issues as it may affect the Fund and is taking steps it believes are
reasonably designed to address the Year 2000 issue, although there can be no
assurances that these steps will be sufficient. In addition, there can be no
assurances that the Year 2000 issue will not have an adverse effect on the
companies whose securities are held by the Fund or on global markets or
economies generally.
<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
Elizabeth A. Russell - Secretary
Linda J. Hoard - Assistant Secretary
- -------------------------- PRINCIPAL INVESTMENT ADVISOR -----------------------
Bank of Ireland Asset Management (U.S.) Limited
20 Horseneck Lane
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.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
- ---------------------------------- CUSTODIANS ---------------------------------
Bank of Ireland
Lower Baggot Street
Dublin 2, Ireland
Investors Bank & Trust Company
150 Royall Street
Canton, Massachusetts 02021
- -------------------------- STOCKHOLDER 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, Massachusetts 02110
- --------------------------------- CORRESPONDENCE ------------------------------
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The Irish Investment Fund, Inc.
c/o First Data Investor Services Group, Inc.
One Exchange Place -- BOS865
53 State Street
Boston, Massachusetts 02109
TELEPHONE INQUIRIES SHOULD BE DIRECTED TO:
1-800-GO-TO-IRL (1-800-468-6475)
