THE ITALY FUND INC.
388 Greenwich Street
New York, New York 10013
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 15, 1996
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To the Shareholders of
THE ITALY FUND INC.:
Notice is hereby given that the Annual Meeting of Shareholders of The Italy
Fund Inc. (the "Fund") will be held at the offices of the Fund, 388 Greenwich
Street, 26th Floor, New York, New York at 10:00 a.m., on May 15, 1996, for the
following purposes:
1. To elect two (2) Directors of the Fund (Proposal 1).
2. To ratify the selection of KPMG Peat Marwick LLP as the independent
accountants of the Fund for the year ending January 31, 1997 (Proposal 2).
Proposals 1 and 2 are discussed in greater detail in the attached Proxy
Statement. The close of business on March 20, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournments thereof.
By Order of the Board of Directors,
CHRISTINA T. SYDOR
April 4, 1996 Secretary
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YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS
FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
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Corporate Accounts
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(1) ABC Corp............................. ABC Corp.
(2) ABC Corp............................. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer............ John Doe
(4) ABC Corp. Profit Sharing Plan........ John Doe, Trustee
Trust Accounts
(1) ABC Trust............................ Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78..................... Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA...... John B. Smith
(2) Estate of John B. Smith.............. John B. Smith, Jr., Executor
THE ITALY FUND INC.
388 Greenwich Street
New York, New York 10013
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ANNUAL MEETING OF SHAREHOLDERS
May 15, 1996
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PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Italy Fund Inc. (the "Fund") for use at
the Annual Meeting of Shareholders of the Fund to be held on May 15, 1996, at
the offices of the Fund, 388 Greenwich Street, 26th Floor, New York, New York
and at any adjournments thereof (the "Meeting"). A Notice of Meeting of
Shareholders and a proxy card accompany this Proxy Statement. Proxy
solicitations will be made primarily by mail, but proxy solicitations also may
be made by telephone, telegraph or personal interviews conducted by officers and
employees of: the Fund; Smith Barney Mutual Funds Management Inc. ("SBMFM"), the
investment advisor and administrator for the Fund; and First Data Investor
Services Group, Inc. (the "Transfer Agent"), the transfer agent of the Fund. The
offices of the Fund and SBMFM are located at 388 Greenwich Street, New York, New
York 10013 and the Transfer Agent is located at Exchange Place, Boston,
Massachusetts 02109. The Fund will bear the cost and expense of the proxy
solicitation and reimburse brokerage firms and others for their expenses in
forwarding solicitation materials to the beneficial owners of shares. This Proxy
Statement is first being mailed to shareholders on or about April 4, 1996.
If the enclosed Proxy is properly executed and returned in time to be voted
at the Meeting, the shares of Common Stock of the Fund ("Shares") represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
matters listed in the accompanying Notice of Annual Meeting of Shareholders. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted. For
this reason abstentions and broker "non-votes" will have the effect of a "no"
vote for purposes of obtaining the requisite approval of each proposal.
In the event that a quorum is not present at the Meeting, or in the event
that a quorum is present but sufficient votes to approve any of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. In
determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the Meeting; the
percentage of votes actually cast; the percentage of negative votes actually
cast; the nature of any further solicitation and the information to be provided
to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of the Shares
represented at the Meeting in person or by proxy. A shareholder vote may be
taken on one or more of the proposals in this Proxy Statement prior to such
adjournment if sufficient votes have been received and it is otherwise
appropriate. If a quorum is present, the persons named as proxies will vote
those proxies which they are entitled to vote FOR any such proposal in favor of
such an adjournment and will vote those proxies required to be voted AGAINST any
such proposal against any such adjournment. Under the Fund's By-laws, a quorum
is constituted by the presence in person or by proxy of the holders of a
majority of the outstanding Shares entitled to vote at the Meeting.
The close of business on March 20, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting and all adjournments thereof.
The Fund has one class of common stock, which has a par value of $0.01 per
share. On March 20, 1996, there were 9,503,089 Shares outstanding. Each
shareholder is entitled to one vote for each full Share and a proportionate
fraction of a vote for each fractional Share held.
As of March 20, 1996, the United Nations Joint Staff Pension Fund, United
Nations, New York, New York 10017, owned beneficially 1,425,000 or 14.99% of the
Shares. Information as to beneficial ownership is based on reports filed with
the Securities and Exchange Commission (the "SEC") by such holder.
As of March 20, 1996, Cede & Co., a nominee partnership of Depository Trust
Company, held 9,307,340 or 97.94% of the Shares, including the Shares
beneficially owned by the United Nations Joint Staff Pension Fund, which are
held by Boston Safe Deposit and Trust Company. Of the Shares included in the
Shares held by Cede & Co., Nomura International Trust Company, c/o ADP, 51
Mercedes Way, Edgewood, New York 11717, held 571,300 or 6.01% of the Shares,
Brown Brothers Harriman & Co., located at 63 Wall St., New York, New York 10005,
held 914,329 or 9.62% of the Shares, Charles Schwab & Co., Inc., located c/o ADP
Proxy Services, 51 Mercedes Way, Edgewood, New York 11717, held 602,315 or 6.33%
of the Shares, Chemical Bank/MHT, located at 270 Park Avenue, New York, New York
10017, held 569,813 or 5.99% of the Shares, Chase Manhattan Bank, N.A., located
at One Chase Manhattan Plaza, New York, New York 10081, held 640,391 or 6.73% of
the Shares and Merrill Lynch, Pierce Fenner and Smith Safekeeping, located c/o
Depository Trust Company, 7 Hanover Square, New York, New York 10004 held
491,064 or 5.16% of the Shares.
As of March 20, 1996, the Fund's officers and directors beneficially owned
less than 1% of the outstanding Shares of the Fund.
2
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be considered at the Meeting is the election of two
(2) of the six (6) Directors (the "Class I Directors") of the Fund for a period
of three years or until their successors shall have been elected and qualified.
The Class I Directors' terms shall expire in 1999. Each year the term of office
of one class of Directors expires.
Each of the nominees currently serves as a Director of the Fund and has
indicated that he will continue to serve if elected, but if any nominee should
be unable to serve, the proxy confers discretionary power on the persons named
therein to vote in favor of a substitute nominee or nominees.
Set forth below are the names of the two nominees for election to the
Fund's Board of Directors, together with certain other information:
Number (and
percentage)of
Fund Shares
Name, Age, Principal Occupation and Served as Beneficially
Other Business Experience During the a Director Owned** as of
Past Five Years Since Class March 20, 1996
- ------------------------------------ ---------- ----- --------------
Dr. Paul Hardin, age 64.......... 1986 I 511.355
Chancellor Emeritus and Professor (less than 1%)
of Law of the University of North
Carolina at Chapel Hill; prior to
July 1995, Chancellor and Professor
of Law.
George M. Pavia, age 68.......... 1991 I --
Senior Partner, Pavia & Harcourt,
Attorneys.
The following Directors of the Fund will continue to serve in such capacity
until their terms of office expire and their successors are elected and
qualified:
Number (and
percentage)of
Fund Shares
Name, Age, Principal Occupation and Served as Beneficially
Other Business Experience During the a Director Owned** as of
Past Five Years Since Class March 20, 1996
- ------------------------------------ ---------- ----- --------------
Paolo M. Cucchi, age 54.......... 1992 II 500
Dean of College of Liberal Arts at (less than 1%)
Drew University.
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** For this purpose, "beneficial ownership" is defined under Section 13(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"). The information
as to beneficial ownership is based upon information furnished to the Fund
by the Directors.
3
Number (and
percentage)of
Fund Shares
Name, Age, Principal Occupation and Served as Beneficially
Other Business Experience During the a Director Owned** as of
Past Five Years Since Class March 20, 1996
- ------------------------------------ ---------- ----- --------------
Mario d'Urso, age 56............. 1995 II --
Under Secretary of State of the
Ministry of Commerce with the Exterior
for Italy; formerly, Advisory Director
of Shearson Lehman Brothers; formerly
Managing Director of Shearson Lehman
Brothers.
Alessandro di Montezemolo, age 77 1986 III --
Retired; former Chairman of the Board
of Marsh & McLennan, Inc.; a Director
of OffitBank.
*Heath B. McLendon, age 62....... 1986 III 8,230.7912
Managing Director of Smith Barney Inc., (less than 1%)
Chairman of Smith Barney Strategy
Advisors Inc. and President of SBMFM;
prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers
Inc., Vice Chairman of Asset Management
Division of Shearson Lehman Brothers Inc.
James Crisona, age 88 (Director emeritus) 1986 ++ --
Retired; formerly a Justice of the
Supreme Court of the State of New York.
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* Interested person of the Fund as defined in the Investment Company Act of
1940, as amended (the "1940 Act").
** For this purpose, "beneficial ownership" is defined under Section 13(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"). The information
as to beneficial ownership is based upon information furnished to the Fund
by the Directors.
++ Director emeritus may attend meetings but has no voting rights.
Section 16(a) of the Exchange Act requires the Fund's officers and
directors, and persons who beneficially own more than ten percent of the Fund's
Common Stock, to file reports of ownership with the Securities and Exchange
Commission, the New York Stock Exchange, Inc. and the Fund. Based solely upon
its review of the copies of such forms received by it and written
representations from certain of such persons, the Fund believes that during its
fiscal year ended January 31, 1996, all filing requirements applicable to such
persons were complied with.
The names of the principal officers of the Fund, with the exception of Mr.
d'Urso and Mr. McLendon, are listed in the table below together with certain
additional information. Mr. d'Urso was elected President of the Fund in 1986.
Mr. McLendon was first elected Chairman of the Board and Investment Officer in
1986. Each officer of the Fund holds such office until a successor has been
elected by the Board of Directors.
4
Principal Occupations and Other
Position Affiliations During the
Name (year first elected) Past Five Years
- ---- -------------------- -------------------------------
Lewis E. Daidone, age 38 Senior Vice Managing Director of Smith
President and Barney Inc.; Chief Financial
Treasurer (1994) Officer of each of the Smith
Barney Mutual Funds; Director
and Senior Vice President
of SBMFM.
Rein Van der Does, age 56 Investment Managing Director of Smith
Officer (1996) Barney Inc.; Vice President of
Fenimore International
Management Corporation.
Christina T. Sydor, age 45 Secretary (1994) Managing Director of Smith
Barney Inc.; General Counsel
and Secretary of SBMFM.
The principal business address of Ms. Sydor, Mr. Van der Does and Mr.
Daidone is 388 Greenwich Street, New York, New York 10013. The principal
business address of Mr. d'Urso is 4/A Viale di Grazioli, Rome, Italy. None of
the executive officers of the Fund, with the exception of Mr. McLendon, as noted
above, owns any shares of the Fund.
No officer, director or employee of the Fund's investment adviser and
administrator receives any compensation from the Fund for serving as an officer
or director of the Fund. The Fund pays each Director who is not a director,
officer or employee of the Fund's investment adviser and administrator a fee of
$7,500 per year plus $750 per in-person meeting and $100 per telephonic meeting.
Each Director emeritus who is not a director, officer or employee of the Fund's
investment adviser and administrator, is paid a fee of $3,750 per year plus $375
per in-person meeting and $50 per telephonic meeting. All directors are
reimbursed for actual out-of-pocket expenses relating to attendance at meetings.
The aggregate compensation paid by the Fund to such Directors during the fiscal
year ended January 31, 1996 amounted to $47,700.
5
The table below shows the compensation the incumbent Directors received
during the Fund's last fiscal year.
Compensation Table
Aggregate
Aggregate Compensation
Compensation From Fund
Name of Person,(+) Position From Fund Complex
- --------------------------- ------------ ------------
Paolo M. Cucchi (2)................... $10,600 $17,700
Director
Allessandro di Montezemolo (2)........ 10,600 17,700
Director
Mario d'Urso* (1)..................... -- --
Director
Paul Hardin (12)...................... 10,600 68,200
Director
Heath B. McLendon (41)................ -- --
Chairman of the Board
George M. Pavia (2)................... 10,600 17,700
Director
James J. Crisona (9).................. 5,300 26,400
Director emeritus
- ----------
* Mr. d'Urso was elected to the Board on November 7, 1995.
+ Indicates number of Smith Barney Mutual Funds for which each Director
serves as a Director/Trustee.
During the fiscal year ended January 31, 1996, the Directors of the Fund met
in person four times. Each Director attended at least 75% of the meetings held
during the period he was in office. The Fund's Audit Committee is comprised of
those Directors who are not "interested persons" of the Fund as defined in the
1940 Act ("Independent Directors"). The Audit Committee is responsible for
recommending the selection of the Fund's independent accountants and reviewing
all audit as well as nonaudit accounting services performed for the Fund. During
the fiscal year ended January 31, 1996, the Audit Committee met once. All of the
members of the Audit Committee attended the meeting.
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a plurality of the votes cast at the Meeting in person or by
proxy.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES TO THE
BOARD.
6
PROPOSAL 2: RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The second proposal to be considered at the Meeting is the ratification of
the selection of KPMG Peat Marwick LLP ("KPMG") as the independent public
accountants for the Fund for the fiscal year ending January 31, 1997.
On February 14, 1996, based upon the recommendation of the Audit Committee
of the Fund's Board of Directors, and in accordance with Section 32 of the 1940
Act, and the rules thereunder, the Board voted to appoint KPMG as the Fund's
independent accountants for the fiscal year ending January 31, 1997. KPMG also
serves as independent auditor for SBMFM, other investment companies associated
with SBMFM and for SBMFM's ultimate parent corporation, Travelers Group Inc.
("Travelers"). KPMG has no direct or material indirect financial interest in the
Fund, SBMFM, Travelers or any other investment company sponsored by SBMFM or its
affiliates.
Coopers & Lybrand L.L.P. ("Coopers & Lybrand") served as the Fund's
independent accountants for the fiscal year ended January 31, 1995. On February
15, 1995, based upon the recommendation of the Audit Committee of the Fund's
Board of Directors, and in accordance with Section 32 of the 1940 Act, and the
rules thereunder, the Board voted to appoint KPMG as the Fund's independent
accountants for the fiscal year ended January 31, 1996. During the fiscal year
ended January 31, 1995, Coopers & Lybrand's reports on the Fund's financial
statements contained no adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the same period, there were no disagreements with Coopers & Lybrand on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Coopers & Lybrand, would have caused it to make reference
to the subject matter of the disagreement in connection with its report. During
this period, there were no "reportable events" as such term is described in Item
304(a)(1)(v) of Regulation S-K with respect to Coopers & Lybrand.
If the Fund receives a written request from any stockholder at least five
days prior to the meeting stating that the stockholder will be present in person
at the meeting and desires to ask questions of the auditor concerning the Fund's
financial statements, the Fund will arrange to have a representative of KPMG
present at the meeting who will respond to appropriate questions and have an
opportunity to make a statement.
Required Vote
Ratification of the selection of KPMG as independent accountants requires
the affirmative vote of a majority of the votes cast at the Meeting in person or
by proxy.
7
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE SELECTION OF
KPMG.
OTHER MATTERS TO COME BEFORE THE MEETING
The Directors do not intend to present any other business at the Meeting,
nor are they aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their judgment.
SHAREHOLDER'S REQUEST FOR SPECIAL MEETING
Shareholders entitled to cast at least 25% of all votes entitled to be cast
at a meeting may require the calling of a meeting of shareholders for the
purpose of voting on the removal of any Director of the Fund. Meetings of
shareholders for any other purpose also shall be called by the Chairman of the
Board, the President or the Secretary of the Fund when requested in writing by
shareholders entitled to cast at least 25% of all votes entitled to be cast at
the Meeting.
SUBMISSION OF SHAREHOLDER PROPOSALS
All proposals by shareholders of the Fund which are intended to be presented
at the Fund's next Annual Meeting of Shareholders to be held in 1997 must be
received by the Fund for consideration for inclusion in the Fund's proxy
statement and proxy relating to that meeting no later than December 14, 1996.
April 4, 1996
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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8
THE ITALY FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of May 15, 1996
The undersigned holder of shares of the Italy fund Inc. (The "Fund"), a
Maryland corporation, hereby appoints Heath B. McLendon, Christina T.
Sydor and Caren Cunningham as attorneys and proxies for the undersigned,
with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Fund
that the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of the
Fund, 388 Greenwich Street, 26th Floor, New York, New York on the
date indicated above, and any adjournment or adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated April 4, 1996 and hereby instructs
said attorneys and proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the
proxies present and acting at the Meeting in person or by substitute
(or, if only one shall be so present, then that one) shall have and may
exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner directed
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
1. To elect Paul Hardin and George Pavia as Class1
Directors of the Fund.
FOR WITHHOLD
[ ] [ ]
[ ]
For all nominee except as noted above.
2. To ratify the selection of KPMG Peat Marwick LLP as the
independent accountant of the Fund for the fiscal year ending
January 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name appears on this Proxy. If joint
owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian or corporate officer, please give
your full title.
Signature Date Signature Date
______________ ____ ______________ ____