<PAGE>
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THE
IRISH
INVESTMENT FUND
[Graphic omitted]
Annual Report
October 31, 1999
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<PAGE>
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Chairman's Letter
Dear Stockholder,
Prior to reviewing The Irish Investment Fund, Inc.'s (the "Fund") fiscal
year ended October 31, 1999, I would like to comment briefly on the final
quarter. During this period, the Irish equity market declined by 7.85% in
Euro currency terms. After adjusting for movements in exchange rates, this
decrease converted into a decline of 9.4% in U.S. dollar terms. By
comparison, the Fund's Net Asset Value (NAV) declined by 3.3% to US$19.75
over the same period.
For the Fund 's fiscal year ended October 31, 1999, the Irish equity
market rose by 3.0% in Euro currency terms, but the strength of the dollar
converted this increase into a decline of 8.5% in dollar terms. In the same
period, the Fund's NAV declined by 7.5%. The Fund paid a dividend of $1.142
in December 1998 and when account is taken of this distribution, the total
return to stockholders was -2.4% for the year.
The absolute performance of the Fund and, indeed, the Irish market over
the fiscal year has been disappointing. A number of factors have resulted in
underperformance of the Irish equity market following almost four years of
strong absolute and relative returns. Firstly, an increase in Irish/European
bond yields during 1999 resulted in underperformance by financial stocks
which account for approximately 35% of the Irish stock market. More
importantly, we have seen a change in international investor sentiment
towards the Irish economy and the Irish stockmarket over the year. At the
beginning of 1999 most international investors were extremely positive on
the Irish growth story, but as the year wore on that enthusiasm was replaced
by concerns over the sustainability of economic growth and fears of
overheating. Additionally, the introduction of the Euro currency at the
start of 1999 caused some domestic asset managers to reduce their holdings
in Irish stocks. This reduction in Irish equity portfolio weightings has led
to market weakness, given that it has coincided with the rather negative
international investor sentiment towards Ireland.
ECONOMIC REVIEW
While some international economic commentators seem to have concluded
that the Irish economic growth story is at an end, there is little data
available to support such pessimism. The Irish Central Bank is predicting
Irish economic growth of 6.5% in 1999, following a five-year period from
1993-1998 of 8.0% average economic growth. The rate of growth of 6.5% in
1999, which seems achievable given current trends, is particularly
impressive given recent sluggish economic activity in the United Kingdom and
Europe. In the second half of 1999 there is evidence that international
economic growth is accelerating, which should support activity in an open
economy like Ireland.
Those who are pessimistic about Ireland's economic prospects focus
particularly on the Irish real estate sector. While we would share some of
their concerns about residential house price inflation, particularly in
Dublin, we do not believe this is likely to lead to a collapse in the Irish
economy. In simple terms, Ireland currently enjoys, and most likely will
continue to enjoy, low and stable Euro currency interest rates. The economic
consequences of the property price increases are being felt in pressure on
wage costs and competitiveness, not in higher interest rates that could
derail the economy. The upcoming renegotiation of the national wage
agreement will be a key test for the Irish partnership model that has helped
to underpin Irish competitiveness.
In our opinion, the key risks to continued strong economic growth are
reduced availability of labor and infrastructural bottlenecks following
recent rapid growth. The Irish unemployment rate in October 1999 was 5.2%
and employment growth going forward is limited to labor force growth
together with net immigration. The bigger impediment to growth is the
country's infrastructure, which is creaking under the pressure of economic
expansion. During the Fund's fourth quarter, the Government launched an
ambitious six-year program that envisages a massive investment in
infrastructure together with social inclusion programs. To put this plan in
context, total investment over the period is Euro 51.5bn, which compares to
the previous six-year plan expenditure of Euro 16.8bn. It is vital that this
plan is successfully implemented to ensure continued strong Irish economic
growth.
EQUITY MARKET REVIEW
A comparison of major international and European equity market
performance is shown below.
Quarter Ended Year Ended
October 31, 1999 October 31, 1999
------------------------ -------------------------
Local Local
Currency U.S.$ Currency U.S.$
Irish Equities - 7.8% - 9.4% + 3.0% - 8.5%
US Equities + 2.6% + 2.6% +24.1% +24.1%
UK Equities - 0.7% + 0.6% +15.9% +13.6%
Japanese Equities + 5.7% +16.3% +51.0% +68.6%
Euroland Equities + 6.9% + 5.0% +26.7% +12.1%
German Equities + 7.1% + 5.2% +16.4% + 3.6%
French Equities +11.6% + 9.6% +38.7% +23.6%
Dutch Equities + 3.4% + 1.5% +23.7% +10.2%
Irish financials stocks are mainly a play on the domestic economy and,
therefore, they have borne the brunt of negative investor sentiment towards
Ireland. This had led to a de-rating of Irish banks with Allied Irish Banks
("AIB") (-7.6% in quarter) ending the quarter at a 2000 P/E of 12.5X and
offering a yield of 3.0%. At current valuations, AIB trades on a 20%
discount to the average Euro zone bank stock, which seems to be an excellent
value given the long-term track record of the bank. Since the last quarter
ended, sentiment towards Irish financials has improved following a bid by
UK-based insurance company, CGU, for Hibernian which was announced in
November. The bid is priced at Euro 9.65 and represents a 57% premium to the
closing price of Hibernian at quarter end.
Iona Technologies (+34.0% in quarter) delivered a solid set of third
quarter results, which have restored investor confidence in the company
following their difficulties in the first half of 1999. During the quarter,
the Fund purchased a position in Trintech. The company is an emerging
software provider in the areas of security for electronic payments. Trintech
provides a range of end-to-end solutions which enables secure transfer of
funds to both the physical world and the Internet.
OUTLOOK
The Irish economy is moving into a somewhat slower growth phase, but it
is likely to remain one of Europe's fastest growing economies and is
underpinned by a young, well-educated labor force. Despite these positive
aspects, investors have de-rated Irish stocks over the past year. We believe
the market is attractively priced at a P/E ratio for 2000 of 13.7x.
Consequently, the Fund retains a fully invested position.
The Board of Directors of the Fund has declared an annual distribution
in the amount of $1.731 per share consisting of $1.559 per share of long-
term capital gains, $0.045 per share of short-term capital gains and $0.127
per share of net investment income. The distribution will be payable on
December 20, 1999 to stockholders of record on December 13, 1999.
Sincerely,
/s/ Peter Hooper
Peter Hooper
Chairman of the Board
December 14, 1999
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THE IRISH INVESTMENT FUND, INC.
Statement of Net Assets
-----------------------
October 31, 1999 Shares Value (Note A)
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IRISH COMMON STOCKS (97.25%)
-----------------------------------------------------------------------------
Abbey 548,600 U.S. $ 2,048,315
Adare Printing 320,000 2,406,405
Allied Irish Banks 1,567,688 19,620,915
Boxmore International 393,000 930,010
Clondalkin 271,902 2,545,164
CRH 664,462 12,544,324
DCC 400,000 2,944,901
Eircom* 1,800,000 7,492,143
FBD Holding 260,000 1,312,584
Fyffes 1,635,000 2,923,340
Glanbia 1,153,610 1,431,705
Green Property 757,143 4,204,598
Greencore 542,568 1,557,864
Hibernian 300,000 1,940,479
Horizon Technology*+ 897,436 934,813
ICON-ADR* 85,000 1,147,500
Independent News & Media 397,071 2,100,626
IONA Technologies-ADR* 139,300 2,977,538
Irish Life & Permanent 306,991 3,131,916
I.W.P., International 639,886 1,278,701
Jury's Doyle Hotel Group 481,792 4,155,144
Kerry Group, Series A 465,000 5,746,501
Kingspan 550,000 1,376,741
Smurfit Group 1,435,840 3,730,059
Trintech Group-ADR* 44,000 786,709
United Drug 287,500 1,874,745
Waterford Wedgwood 2,865,739 3,044,182
TOTAL IRISH COMMON STOCKS
(Cost U.S. $60,242,708) 96,187,922
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UNITED KINGDOM COMMON STOCKS (1.72%)
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BCO Technologies* 535,700 330,118
Galen Holdings 150,000 1,374,209
TOTAL UNITED KINGDOM COMMON STOCKS
(Cost U.S. $1,623,230) 1,704,327
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TOTAL INVESTMENTS BEFORE FOREIGN CURRENCY ON DEPOSIT
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(Cost U.S. $61,865,938) U.S. $97,892,249
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FOREIGN CURRENCY ON DEPOSIT (0.84%)
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(Interest Bearing)
British Pound Sterling Brt Pd 1,576 U.S. $ 2,589
Euro EUR 788,748 829,567
TOTAL FOREIGN CURRENCY ON DEPOSIT
(Cost U.S. $829,810) 832,156
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TOTAL INVESTMENTS (99.81%)
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(Cost U.S. $62,695,748)** 98,724,405
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OTHER ASSETS AND LIABILITIES (0.19%)
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Cash 209,759
Prepaid Expenses 11,312
Dividends and Interest Receivable 139,411
Investment Advisory Fee Payable (Note B) (64,302)
Consulting Fee Payable (Note B) (14,012)
Administration Fee Payable (Note B) (20,030)
Other Liabilities (70,985)
-----------
191,153
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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. $98,915,558
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NET ASSET VALUE PER SHARE
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(U.S. $98,915,558 / 5,009,000) U.S. $ 19.75
=====
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* Non-income producing security.
** Foreign currency held on deposit at the Bank of Ireland.
+ Not readily marketable.
ADR -- American Depository Receipt traded in U.S. dollars.
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AT OCTOBER 31, 1999 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
Additional Paid-in Capital 54,171,460
Undistributed Net Investment Income 633,156
Accumulated Net Realized Gain 8,032,734
Unrealized Appreciation of Securities, Foreign
Currency and Net Other Assets 36,028,118
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TOTAL NET ASSETS U.S. $98,915,558
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See Notes to Financial Statements.
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THE IRISH INVESTMENT FUND, INC.
Statement of Operations
-----------------------
For the Year Ended
October 31, 1999
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INVESTMENT INCOME
-----------------------------------------------------------------------------
Dividends (Net of Withholding Taxes of U.S. $732) U.S. $ 1,941,196
Interest 49,871
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TOTAL INVESTMENT INCOME 1,991,067
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EXPENSES
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Investment Advisory Fee (Note B) U.S.$ 787,047
Consulting Fee (Note B) 170,638
Administration Fee (Note B) 217,227
Custodian Fee (Note B) 48,401
Directors' Fees and Expenses (Note C) 52,558
Legal and Audit Fees 29,678
Other 121,678
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TOTAL EXPENSES 1,427,227
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NET INVESTMENT INCOME 563,840
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REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTE D)
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Realized Gain/(Loss) on:
Securities Transactions 8,036,900
Forward Foreign Currency Contracts 476,550
Foreign Currency Transactions (407,234)
-----------
Net Realized Gain on Investments 8,106,216
During the Year -----------
Net Change in Unrealized Appreciation of:
Securities (10,615,142)
Forward Foreign Currency Contracts (476,550)
Foreign Currency and Net Other Assets 52,350
-----------
Net Unrealized Depreciation of Investments
During the Year (11,039,342)
-----------
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (2,933,126)
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NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS U.S. $(2,369,286)
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See Notes to Financial Statements.
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<TABLE>
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THE IRISH INVESTMENT FUND, INC.
Statement of Changes in Net Assets
----------------------------------
<CAPTION>
Year Ended Year Ended
October 31, 1999 October 31, 1998
<S> <C> <C>
Net Investment Income U.S. $ 563,840 U.S. $ 372,446
Net Realized Gain on Investments 8,106,216 5,020,613
Net Unrealized Appreciation/
(Depreciation) of Investments (11,039,342) 5,347,786
----------- ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (2,369,286) 10,740,845
Distributions to Shareholders from:
Net Investment Income -- (330,594)
Net Realized Gains (5,720,278) (3,526,343)
----------- ------------
Net Increase/(Decrease) in Net Assets (8,089,564) 6,883,908
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NET ASSETS
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Beginning of Year 107,005,122 100,121,214
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End of Year (Including Undistributed Net
Investment Income of $663,156 and $0 at
October 31, 1999 and 1998, respectively) U.S. $98,915,558 U.S. $107,005,122
=========== ============
See Notes to Financial Statements.
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</TABLE>
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<TABLE>
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THE IRISH INVESTMENT FUND, INC.
Financial Highlights
--------------------
For a Fund share outstanding throughout each year.
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------------------------------
1999 1998+ 1997+ 1996 1995
<S> <C> <C> <C> <C> <C>
Operating Performance:
Net Asset Value,
Beginning of
Year U.S. $21.36 U.S. $19.99 U.S. $16.90 U.S. $13.61 U.S. $10.94
------ ------ ------ ------ ------
Net Investment
Income 0.13 0.07 0.14 0.14 0.11
Net Realized and
Unrealized
Gain/(Loss) on
Investments (0.60) 2.07 3.53 3.42 2.67
------ ------ ------ ------ ------
Net Increase/
(Decrease) in
Net Assets
Resulting from
Investment
Operations (0.47) 2.14 3.67 3.56 2.78
Distributions to
Shareholders
from:
Net Investment
Income -- (0.07) (0.22) (0.14) (0.11)
Net Realized
Gains (1.14) (0.70) (0.36) (0.13) --
------ ------ ------ ------ ------
Total from Distributions (1.14) (0.77) (0.58) (0.27) (0.11)
------ ------ ------ ------ ------
Net Asset Value,
End of Year U.S. $19.75 U.S. $21.36 U.S. $19.99 U.S. $16.90 U.S. $13.61
====== ====== ====== ====== ======
Share Price, End
of Year U.S. $16.38 U.S. $17.88 U.S. $15.75 U.S. $14.00 U.S. $11.25
====== ====== ====== ====== ======
Total Investment
Return* (3.30%) 18.42% 17.03% 27.12% 12.46%
====== ====== ====== ====== ======
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RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End
of Year (000's) U.S. $98,916 U.S. $107,005 U.S. $100,121 U.S. $84,633 U.S. $68,186
Ratio of Net Investment Income
to Average Net Assets
0.53% 0.33% 0.78% 0.95% 0.94%
Ratio of
Operating
Expenses to
Average Net
Assets 1.33% 1.37% 1.54% 1.63% 1.74%
Portfolio Turnover Rate
13% 9% 11% 12% 21%
* 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 year since the use of the undistributed income method did not accord with results of
operations.
See Notes to Financial Statements.
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</TABLE>
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THE IRISH INVESTMENT FUND, INC.
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. At October 31, 1999 the Fund held 0.945%
of its net assets in securities valued in good faith by the Board of Directors
with an aggregate cost of $1,021,064 and fair value of $934,813. 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.
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. There were no
such contracts open in the Fund as of October 31, 1999.
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
"Investment Advisory Agreement") with Bank of Ireland Asset Management (U.S.)
Limited ("Bank of Ireland Asset Management"), an indirect wholly-owned
subsidiary of The Governor and Company of the Bank of Ireland ("Bank of
Ireland"). Under the Investment Advisory Agreement, the Fund pays a monthly
fee at an annualized rate equal to 0.75% of the value of the average weekly
net assets of the Fund up to the first $100 million and 0.50% of the value of
the average weekly net assets of the Fund on amounts in excess of $100
million.
Effective December 8, 1998, the Fund entered into a Consulting Agreement
with Salomon Brothers Asset Management Inc. (Salomon Brothers Asset Management).
The Fund pays Salomon Brothers Asset Management an annual fee of $165,000,
payable monthly. The Fund incurred $151,597 from December 8, 1998 through
October 31, 1999 under the new agreement. Prior to December 8, 1998, the Fund
was a party to a U. S. Co-Advisory Agreement dated as of November 28, 1997 (the
"U.S. Co-Advisory Agreement") with Salomon Brothers Asset Management. Under the
U.S. Co-Advisory Agreement, the Fund paid a monthly fee at an annual rate of
0.20% of the value of its average weekly net assets. Fees under the U.S.
Co-Advisory Agreement for the period November 1, 1998 through December 7, 1998
were $22,366.
The Fund has entered into an administration agreement (the "Administration
Agreement") with First Data Investor Services Group, Inc. 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.
Effective February 1, 1999, The Chase Manhattan Bank began serving as
custodian of the Fund's assets held outside of Ireland. Prior to February 1,
1999, BankBoston served as the Fund's custodian for such assets. Bank of Ireland
serves as the Fund's custodian of the Fund's assets held in Ireland. During the
year ended October 31, 1999, the Fund paid U.S. $48,534 in custodian fees to
Bank of Ireland.
For the year ended October 31, 1999, the Fund incurred total brokerage
commissions of U.S. $45,375, of which U.S. $5,017 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. $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 an additional U.S. $3,500 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 year
ended October 31, 1999, excluding U.S. government and short-term investments,
aggregated U.S. $13,648,329 and U.S. $17,526,001, respectively.
At October 31, 1999, 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. $41,114,220 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. $5,087,909. Also on
this date, the tax cost of securities for Federal Income tax purpose is
$61,865,938.
E. COMMON STOCK:
On December 14, 1989, 9,000 shares of the Fund's common stock were issued
to Bank of Ireland Asset Management. On October 31, 1999, Bank of Ireland held
9,000 shares representing 0.18% of the Fund's total issued shares.
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 EVENT:
Effective December 1, 1999, First Data Investor Services Group, Inc.
("Investor Services Group") became a majority-owned subsidiary of PNC Bank
Corp. As a result of this transaction, Investor Services Group is now known as
PFPC Inc.
H. 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 Board of Directors and
upon such terms as the Directors shall determine.
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THE IRISH INVESTMENT FUND, INC.
Report of Independent Accountants
---------------------------------
To the Board of Directors and Shareholders
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, 1999, and the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
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
audit 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 audit, which included confirmation of securities at October 31, 1999 by
correspondence with custodians, provides a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 10, 1999
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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, 1999, the amount of long term capital gains
distributed to stockholders by the Fund was $5,720,278.
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 issue 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
- ------------------------------- INVESTMENT ADVISOR -----------------------------
Bank of Ireland Asset Management (U.S.) Limited
20 Horseneck Lane
Greenwich, Connecticut 06830
- ----------------------------------- CONSULTANT ---------------------------------
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
- --------------------------------- 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
- -------------------------- 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
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
- -------------------------------- CORRESPONDENCE --------------------------------
ALL CORRESPONDENCE SHOULD BE ADDRESSED TO:
The Irish Investment Fund, Inc.
c/o 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)
- --------------------------------------------------------------------------------
