60 Heritage Drive, Pleasantville, NY 10570
(914) 747-5262 // Fax (914) 747-5258
March 30, 2000
Dear Fellow Italy Fund Shareholder:
Since the formation of the European Monetary Union, the rationale for
the existence of a European single-country closed-end fund has been rapidly
disappearing. At least four such funds have already taken steps to eliminate
their discounts from net asset value ("NAV") and I believe that it is now time
for The Italy Fund to also eliminate its discount by converting to an open-end
fund.
As you know, The Italy Fund's shares have traded at a double-digit
discount for years. As of March 24, 2000, they were trading at a discount of
16.5%. I would like to eliminate that discount entirely. That is why I intend to
nominate two shareholders including myself for election as directors at the 2000
Annual Meeting of Shareholders. I also intend to introduce a proposal
recommending that The Italy Fund be open-ended.
If we are elected as directors and the open-ending proposal is
approved, our number one priority will be to promptly eliminate the discount
from NAV. Specifically, we intend to urge the Board to take the steps necessary
to convert the Fund from a closed-end fund to an open-end fund or to merge it
into an existing open-end fund.
If you have already returned the WHITE proxy card sent to you by the
Board and you want to elect directors who are committed to taking action
designed to eliminate the discount, you must return a GREEN proxy card.
Remember, only the last valid proxy card you submit is counted and it supersedes
any previous ones. Therefore, once you submit a GREEN proxy card, please do not
sign and submit a later dated WHITE proxy card, as that will invalidate your
vote. If you have any questions, please call me at (914) 747-5262 or e-mail me
at OPLP@worldnet.att.net.
Yours truly,
Phillip Goldstein
PROXY STATEMENT IN OPPOSITION TO THE SOLICITATION BY THE BOARD OF
DIRECTORS OF THE ITALY FUND INC.
ANNUAL MEETING OF SHAREHOLDERS (To be held on May 10, 2000)
My name is Phillip Goldstein. I have been a shareholder of The Italy
Fund Inc. (the "Fund") since August 1995. I am sending this proxy statement and
the enclosed GREEN proxy card to holders of record on March 9, 2000 (the "Record
Date") of the Fund. I am soliciting a proxy to vote your shares at the 2000
Annual Meeting of Shareholders of the Fund (the "Meeting") and at any and all
adjournments or postponements of the Meeting. Please refer to the Fund's proxy
soliciting material for additional information concerning the Meeting and the
matters to be considered by the shareholders.
This proxy statement and the enclosed GREEN proxy card are first being
sent to shareholders of the Fund on or about March 30, 2000.
INTRODUCTION
There are two matters (or proposals) that the Fund has scheduled to be
voted upon at the Meeting:
1. The election of two persons to serve as Class II directors of the Fund
until 2003;
2. The ratification of the selection of KPMG LLP as the independent
accountants of the Fund for the fiscal year ending January 31, 2001;
In addition, I will present the following proposal at the Meeting:
3. The stockholders urge the Board of Directors to take the steps necessary to
convert the fund to an open-end fund.
With respect to these matters, I am soliciting a proxy to vote your
shares FOR of the election of Glenn Goodstein and me as directors of the Fund
and FOR the open-ending proposal. The open-ending proposal along with my
supporting statement and an opposition statement issued by the Board of
Directors is contained in the Fund's proxy statement. I am making no
recommendation as to how your shares should be voted on the ratification of the
selection of the Fund's independent accountants.
How Proxies Will Be Voted
All of the proposals scheduled by the Fund to be voted on at the
Meeting are included on the enclosed GREEN proxy card. If you wish to vote FOR
the election of my nominees to the Board, you may do so by completing and
returning a GREEN proxy card.
If you return a GREEN proxy card to me or to my agent, your shares will
be voted on each matter as you indicate. If you do not indicate how your shares
are to be voted on a matter, they will be voted FOR my election to the Board and
FOR the open-ending proposal and will ABSTAIN from voting on the ratification of
the selection of the Fund's independent auditor.
If you return a GREEN proxy card, you will be granting the persons
named as proxies discretionary authority to vote on any other matters of which
they are not now aware that may come before the Meeting. These may include,
among other things, matters relating to the conduct of the Meeting.
Voting Requirements
If a quorum is not present at the Meeting, or if 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, consideration of matters of which I am
not aware at this time, or negotiations with the incumbent directors. The
proxies may also propose one or more adjournments for other legal reasons not
currently foreseen. If an adjournment of the Meeting is proposed, the persons
named as proxies on the GREEN proxy card will vote for or against such
adjournment in their discretion. The proxies may also temporarily decline to
attend the Meeting, thereby preventing a quorum to solicit additional proxies or
for other legal reasons not currently foreseen. Please refer to the Fund's proxy
statement for the voting requirements for each proposal.
Revocation of Proxies
You may revoke any proxy you give to management or to me at any time
prior to its exercise by (i) delivering a written revocation of your proxy to
the Fund; (ii) executing and delivering a later dated proxy to me or to the Fund
or to our respective agents; or (iii) voting in person at the Meeting.
(Attendance at the Meeting will not in and of itself revoke a proxy.) There is
no limit on the number of times you may revoke your proxy prior to the Meeting.
Only the latest dated, properly signed proxy card will be counted.
Information Concerning the Soliciting Shareholder
The shareholder making this solicitation is Phillip Goldstein, 60
Heritage Drive, Pleasantville, NY 10570. I am an investment manager who
presently manages investment portfolios having assets in excess of $50 million.
Since December 1, 1992, I have been the president and 50% shareholder of a
company that serves as the general partner of a private investment partnership.
That partnership is a shareholder in the Fund. Since 1996, I have taken an
active role in urging the management of certain registered closed-end investment
companies to take various actions that I believe would benefit those companies
and their shareholders.
As of March 9, 2000, I owned jointly with my wife one share of Common
Stock of the Fund. I am also deemed to be the beneficial owner of 223,301 shares
of Common Stock held in brokerage accounts by my clients and me. Combined, these
personal and client positions total 223,302 shares, representing approximately
2.7% of the Fund's outstanding Common Stock. Exhibit 1 to this proxy statement
contains a schedule showing my purchases and sales of Common Stock within the
past two years.
REASON FOR THE SOLICITATION
I believe that stockholders owning a significant percentage of the
Fund's outstanding shares favor eliminating the Fund's discount from net asset
value. I am conducting this contest in order to give all shareholders an
opportunity to elect directors who will take measures to achieve that objective.
CERTAIN CONSIDERATIONS
In deciding whether to give me your proxy, you should consider the
following:
Implementation of certain Board actions may require shareholder
approval, and no assurance can be given that such approval will be obtained. In
addition, various costs, which would be borne indirectly by shareholders, may be
associated with certain actions, including but not limited to those associated
with holding a special meeting of shareholders. I believe that such costs are
far outweighed by the benefits to most shareholders of these actions. In
addition, certain actions may have adverse tax consequences for some
shareholders that cannot be quantified at this time.
I believe that all shareholders of the Fund will benefit if any actions
taken to reduce or eliminate the discount from NAV are successful. However, my
clients who hold shares of the Fund pay me fees. These fees are based upon a
share of the profits the client earns and will be greater if the value of the
Fund's shares increases.
ELECTION OF DIRECTORS
At the Meeting, I will nominate the following persons for election as
directors for a term expiring in 2003. Each nominee has consented to serve if
elected and to being named in the proxy statement.
Name, Address, Age Principal Business Occupation(s)
- ------------------ --------------------------------
Phillip Goldstein (Age 55) Since 1992, Mr. Goldstein has managed investments for a
60 Heritage Drive limited number of clients and has served as the portfolio
Pleasantville, NY 10570 manager and president of the general partner of Opportunity
Partners, a private investment partnership. Mr.
Goldstein has been an advocate for shareholder
rights since 1996. He was a director of Clemente
Strategic Value Fund from 1998 to 2000 and has been a
director of The Mexico Equity and Income Fund
since February 2000.
Glenn Goodstein (Age 37) Since 1992, Mr. Goodstein has managed investments for a
16830 Adlon Boulevard limited number of clients. Between 1988 and 1996, Mr.
Encino, CA 91436 Goodstein held several executive positions with Automatic
Data Processing.
As of March 9, 2000 Mr. Goldstein and Mr. Goodstein beneficially owned
223,302 and 38,000 shares of the Fund respectively.
Other than fees that may be payable by the Fund to its directors,
neither nominee has any arrangement or understanding with any person with
respect to any future employment by the Fund or by any affiliate of the Fund.
The persons named as proxies on the enclosed GREEN proxy card intend,
in the absence of contrary instructions, to vote all proxies they are entitled
to vote FOR the election of the above persons, each of whom have consented to
stand for election and to serve if elected. If any nominee is unable to serve,
an event not now anticipated, the proxies will be voted for such other person
(who shall be disinterested), if any, as is designated by the persons named as
proxies.
RATIFICATION OF THE INDEPENDENT AUDITOR
The incumbent board of directors has selected KPMG LLP as the independent
accountants of the Fund for the fiscal year ending January 31, 2001. Without
further information, I cannot make any recommendation. Therefore, in the absence
of contrary instructions, the persons named as proxies on the GREEN proxy card
intend to ABSTAIN from voting on this matter.
THE SOLICITATION
I am making this solicitation personally. Persons affiliated with or
employed by the general partner of the investment partnership that I manage may
assist me in the solicitation of proxies. They will not receive any special
compensation for their services. Banks, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward this proxy statement and
the enclosed GREEN proxy card to the beneficial owners of shares of Common Stock
for whom they hold shares of record. I will reimburse these organizations for
their reasonable out-of-pocket expenses.
Initially, I will personally bear all of the expenses related to this proxy
solicitation. Because I believe that the shareholders will benefit from this
solicitation, I intend to seek reimbursement of these expenses from the Fund.
Shareholders will not be asked to vote on the reimbursement of solicitation
expenses incurred by either the incumbent directors or me. The solicitation
expenses of the incumbents are estimated to be $50,000 and my expenses should be
about $25,000. As of March 30, 2000, I have incurred approximately $10,000 in
expenses. If I am not reimbursed by the Fund, I may seek reimbursement from one
or more of my clients or from the general partner of the investment partnership
that I manage.
I am not and, within the past year, have not been a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Fund. In addition, there is no arrangement or understanding involving either
myself or any affiliate that relates to future employment by the Fund or any
future transaction with the Fund.
ADDITIONAL PROPOSALS
I know of no business that will be presented for consideration at the
Meeting other than that set forth in this proxy statement and in the Fund's
proxy statement. If any other matters are properly presented for consideration
at the Meeting, it is the intention of the persons named as proxies in the
enclosed GREEN proxy card to vote in accordance with their own best judgment on
such matters.
DATED: March 30, 2000
EXHIBIT 1: SECURITIES OF THE FUND PURCHASED OR SOLD
WITHIN THE PAST TWO YEARS BY THE SOLICITING SHAREHOLDER
Except as disclosed in this proxy statement, I have not had any
interest, direct or indirect in the Fund. The following table sets forth certain
information with respect to purchases and sales of shares of Common Stock of the
Fund within the past two years by me and by accounts holding shares as to which
I am deemed to be the beneficial owner (the "Accounts"). Some of the shares are
held in margin accounts, together with other securities. Therefore, a portion of
the purchase price and market value of the shares may from time to time be
represented by margin borrowings, depending upon the net debit balances, if any,
of the margin accounts, which fluctuate daily.
Shares Shares
Date Purchased Date Purchased
(Sold) (Sold)
9/21/98 (12000) 10/5/99 13200
9/30/98 2300 10/11/99 1000
11/30/98 (2300) 10/12/99 3400
1/18/99 3000 10/14/99 11200
1/20/99 40000 11/11/99 27700
1/21/99 5000 11/12/99 13800
1/25/99 1000 11/17/99 13100
2/2/99 6000 11/18/99 13100
7/20/99 13000 11/22/99 3500
7/23/99 2800 11/23/99 26900
9/13/00 8000 12/15/99 400
9/23/00 600 2/24/00 5000
PROXY CARD
PROXY SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF THE ITALY FUND INC.
BY PHILLIP GOLDSTEIN, A SHAREHOLDER
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 10, 2000
The undersigned hereby appoints Steven Samuels, Rajeev Das and Phillip
Goldstein, and each of them, as the undersigned's proxies, with full power of
substitution, to attend the Annual Meeting of Shareholders of The Italy Fund
Inc. (the "Fund") to be held at 10:00 a.m. on May 10, 2000, in the Downtown
Conference Center of 7 World Trade Center, New York, New York, mezzanine level
(the "Meeting"), and any adjournment or postponement thereof, and to vote on all
matters that may come before the Meeting and any such adjournment or
postponement the number of shares that the undersigned would be entitled to
vote, with all the power the undersigned would possess if present in person, as
specified below. The proxies may vote in their discretion with respect to such
other matter or matters as may come before the Meeting and with respect to all
matters incident to the conduct of the Meeting. The proxies may also temporarily
decline to attend the Meeting, thereby preventing a quorum in order to solicit
additional proxies or for any other legal reason.
(INSTRUCTIONS: Mark votes by placing an "x" in the appropriate [ ].)
1. ELECTION OF TWO CLASS II DIRECTORS .
FOR all of the nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the contrary below) to vote for all of the
nominees listed below
PHILLIP GOLDSTEIN, GLENN GOODSTEIN
To withhold authority to vote for one or more nominees, enter the
name(s) of the nominee(s) below.
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2. To ratify the selection by the Board of Directors of KPMG LLP as the Fund's
independent accountants for the fiscal year ending January 31, 2001:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve or disapprove a shareholder proposal to urge the Board of
Directors to take the steps necessary to convert the Fund to an
open-end fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Important - - Please sign and date below. Your shares will be voted as
directed. If no direction is made, this proxy will be voted for the election of
the nominees named above in Proposal 1 and for Proposal 3 and will abstain from
voting on Proposal 2. The undersigned hereby acknowledges receipt of the proxy
statement dated March 30, 2000 of Phillip Goldstein and revokes any proxy
previously executed. (Important - Please be sure to enter date.)
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the President or other duly authorized officer.
If a partnership, please sign in partnership name by authorized person. Please
return promptly in the enclosed envelope.
SIGNATURE(S)______________________________________ Dated: _______________