Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
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Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
The Italy Fund Inc.
(Name of Registrant as Specified in its Charter)
Robert Nelson
(Name of Person Filing Proxy Statement, if other
that the Registrant)
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[X] No fee required
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THE ITALY FUND INC.
388 Greenwich Street, New York, NY 10013
April 19, 2000
To Our Fellow Shareholders:
The Board of Directors of The Italy Fund Inc. ("the
Fund") recently sent you proxy materials for its
Annual Meeting of Stockholders to be held on May
10, 2000. In these materials your Board is asking
you to use the White Proxy Card to:
? Vote "FOR" the reelection of two experienced
directors, Paolo M. Cucchi and Mario d'Urso;
? Vote "FOR" the ratification of the selection of
the Fund's independent auditors;
? Vote "AGAINST" the non-binding shareholder
proposal submitted by Opportunity Partners L.P.
to convert the Fund to an open-end structure.
It has come to our attention that Mr. Phillip
Goldstein of Opportunity Partners L.P. has mailed
his own proxy solicitation material in an attempt
to replace Mr. Cucchi and Mr. d'Urso with his own
board members and to pursue his proposed goal of
converting the Fund to an open-end structure.
Your Board of Directors unanimously opposes both
Mr. Goldstein's attempt to place himself and a
colleague on your Fund's Board and the costly
proposal to convert the Fund to an open-end
structure. We urge you to voice your opposition to
these two proposals by signing and dating the
enclosed WHITE proxy card or voting form and
mailing it in the enclosed postage-paid envelope.
Do not sign or return any GREEN card you may
receive from Phillip Goldstein, even as a protest
vote against Mr. Goldstein. If you have already
returned a GREEN card, you may revoke that proxy by
signing, dating, and returning the enclosed WHITE
card.
Frankly, we are puzzled by Mr. Goldstein's actions.
Consider these facts about The Italy Fund:
? Strong Performance: For the fiscal year ended
January 31, 2000, the Fund provided stockholders
with a return of 35.61% on their investment
(based on market value). This performance was
achieved in a market that did not readily offer
high returns-as evidenced by a total return of
2.92% for the BCI General Index , 3.05% for the
Milan MIBtel 30 Index and -0.16 for the Morgan
Stanley Capital International Index ("MCSI Italy
Index"). All three indices are widely accepted
measures of the performance of the Italian stock
market. Since the fiscal year ended January 31,
2000, the Fund has continued to outperform its
relevant indices.
? Exceptional Long-Term Performance: The Fund's
average annual returns for the three- and five-
year periods ended January 31, 2000 were 27.89%
and 20.07%, respectively, based on market value.
In comparison, the MCSI Italy Index returned
20.91% and 15.81%, respectively, for the same
time periods.
? The Fund's Closed-End Structure Contributes to
its Performance: The Fund's closed-end structure
contributes to the Fund's security selection
process by providing it with greater investment
flexibility to invest in less liquid securities
which offer potentially greater returns, and
allows it to maintain a longer investment
horizon. Since, in contrast to how a fund with
an open-end structure must operate, the Fund
does not have to keep a meaningful portion of
its assets in cash to satisfy redemptions on
demand, the Fund is never forced to invest or
sell securities at an inopportune time in the
market and its assets can be more fully
invested.
Mr. Goldstein's proxy materials offer little by way
of solutions to enhance the value of your Fund's
shares other than his standard approach, which is
to eliminate the discount to net asset value by
converting to an open-end fund. Mr. Goldstein
fails to acknowledge the constraints this
conversion would place on the Fund's investment
process, not to mention the significant cost to the
Fund and its shareholders.
Your Board of Directors recognizes shareholders'
concerns regarding the discount and is taking steps
to address it. Since October of 1998, the Fund has
instituted a share repurchase program that has
resulted in a measurable benefit to shareholders.
Not only has our repurchase program provided
liquidity to those who wish to sell their shares,
it has also increased the net asset value ("NAV")
of the portfolio for those who have chosen to
remain.
From October 1998 to March 31, 2000, the Fund has
repurchased and retired 1,348,975 shares at a cost
of over $21 million. This represents approximately
14% of the shares originally issued and has
increased the portfolio's NAV by 45.4 cents per
share. In an effort to substantially decrease the
discount to NAV, it is the Fund's current intention
to continue its active share repurchase program.
As we continue to seek to reduce the discount and
make investment choices aimed at maximizing
shareholder returns, we remain committed to the
closed-end structure that has helped your Fund
achieve its exceptional results. As stated
previously, your Board of Directors believes the
Fund's current structure allows for greater
investment flexibility while maintaining a longer
investment horizon. We believe that there are
significant adverse features and consequences for
the Fund associated with an open-end structure. As
discussed above, one example of an adverse feature
is that the Fund could be forced to sell securities
at an inopportune time to meet redemption requests;
consequently, a portion of the Fund's assets--
possibly a large portion--would have to remain in
cash, thereby decreasing the growth potential of
the portfolio. The resulting sale of securities
would expose stockholders to significant taxable
capital gains distributions. In addition, if heavy
withdrawals were experienced, the size of the
portfolio could be dramatically reduced and the
Fund's fixed expenses would have to be spread over
a smaller asset base. Moreover, these fixed
expenses currently do not take into account the new
and ongoing expenses associated with establishing
and maintaining an open-end fund and a distribution
network for the Fund's shares.
Your Fund's Board will continue to assess the
benefits of its current structure, and will
continue its efforts to enhance shareholder values.
In the meantime, we believe your current directors
have shown the expertise and judgement necessary to
best represent the interests of all shareholders.
We urge you to vote AGAINST Mr. Goldstein and his
proposal and to vote FOR your Board's nominees.
Please sign, date and return the enclosed WHITE
proxy card in the postage-paid return envelope.
Should you need another copy of our proxy
materials, or if you have any questions, please
call the Fund or its proxy solicitor, Georgeson
Shareholder Communications, Inc., toll-free at
(800) 223-2064.
Thank you for your time and consideration.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
G:\Fund Accounting\Legal\FUNDS\#ITA\2000\Secdocs\shareholderletter.doc
? Please mark
votes as in
this example
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 AND AGAINST PROPOSAL 3.
1. To elect Paolo M. Cucchi and Mario * FOR * WITHHELD
d'Urso as Class II Directors of the Fund.
*
______________________
For
all nominees except as
noted
above
2. To ratify the selection of KPMG LLP * FOR * AGAINST * ABSTAIN
as the independent auditors of the Fund for the
fiscal year ending January 31, 2001.
3. To consider a non-binding shareholder * FOR * AGAINST * ABSTAIN
recommendation that the Board of Directors
take steps to convert the Fund to an open-end
structure.
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
___________________________
PROXY
THE ITALY FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting on May 10, 2000
The undersigned holder of shares of The Italy
Fund Inc. (the "Fund"), a Maryland corporation, hereby
appoints Heath B. McLendon, Christina T. Sydor and
Robert M. Nelson 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 in the Downtown Conference Center on the
mezzanine level at 7 World Trade Center, 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 March 30, 2000, 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.
CONTINUED AND TO
BE SIGNED
ON REVERSE SIDE
SEE REVERSE SIDE
