SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
THE INEFFICIENT-MARKET FUND INC.
(Name of Person(s) Filing Proxy Statement)
Nancy Le Donne
Payment of Filing Fee (Check the appropriate box):
[X]$125 per Exchange Act Rules 0-11 (c) (1)(ii), 14a-6 (i)(1), or 14a-6(j)(2)
or the 1940 Act Rule 20a-1.
[ ]$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
sorrenti\proxy
THE INEFFICIENT-MARKET FUND, INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
To Be Held on June 18, 1996
To the Stockholders of The Inefficient-Market Fund, Inc.:
The Annual Meeting of Stockholders of THE INEFFICIENT-MARKET FUND, INC.
(the "Fund") will be held at the Fund's offices at 388 Greenwich Street, 26th
Floor, New York, New York 10013, on June 18, 1996 at 11:00 a.m. (New York time)
for the following purposes:
1. To elect to the Board one class of directors
consisting of three directors;
2. To consider and act upon the ratification of
the selection of KPMG Peat Marwick LLP as
independent auditors for the Fund; and
3. To transact such other business as may properly
come before the meeting or any adjournments
thereof.
The stock transfer books will not be closed, but in lieu thereof, the Board
of Directors has fixed the close of business on May 3, 1996 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
meeting.
By Order of the Board of Directors
Christina T. Sydor, Secretary
New York, New York
May 22, 1996
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IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE PROVIDED FOR
YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
THE INEFFICIENT-MARKET FUND, INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
------------------------
PROXY STATEMENT
------------------------
FORTHE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 1996
INTRODUCTION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of The Inefficient-Market Fund, Inc. (the
"Fund") of proxies to be voted at the Annual Meeting of Stockholders (the
"Meeting") of the Fund to be held at the Fund's offices at 388 Greenwich Street,
26th Floor, New York, New York 10013, on June 18, 1996 at 11:00 a.m. (New York
time), and at any adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
The cost of soliciting proxies will be borne by the Fund. Proxy
solicitations will be made mainly by mail. In addition, certain officers,
directors and employees of the Fund; Smith Barney Inc. ("Smith Barney"), the
Fund's distributor; Travelers Investment Management Company ("TIMCO"), the
Fund's investment manager; and/or First Data Investor Services Group, Inc.
("First Data"), the Fund's transfer agent may solicit proxies in person or by
telephone, telegraph, or mail. Smith Barney is located at 388 Greenwich Street,
New York, New York, 10013; TIMCO is located at One Tower Square, Hartford, CT
06183; and First Data is located at 53 State Street, Boston, Massachusetts
02109.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended December 31, 1995 has previously been furnished to
shareholders of the Fund. This proxy statement is first being mailed to
shareholders on or about May 22, 1996. The Fund will provide additional copies
of the annual report to any shareholder upon request by calling the Fund at
1-800-224-7523.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, shares
represented by the proxies will be voted "FOR" all the proposals. Proposal 1
requires for approval the affirmative vote of a plurality of the votes cast at
the Meeting with a quorum present, in person or by proxy by the shareholders of
the Fund voting on the matter. Proposal 2 requires for approval the affirmative
vote of a majority of the votes cast at the Meeting with a quorum present, in
person or by proxy by the shareholders of the Fund voting on the matter.
Abstentions and broker non-votes (that is, proxies from brokers or nominees
indicating that such persons have not
<PAGE>
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. Any proxy may be revoked at any time prior to the
exercise thereof by submitting another proxy bearing a later date or by giving
written notice to the Secretary of the Fund at the Fund's address indicated
above or by voting in person at the Meeting.
The Board knows of no business other than that specifically mentioned in
the Notice of Meeting which will be presented for consideration at the Meeting.
If any other matters are properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.
The Board of Directors of the Fund has fixed the close of business on May
3, 1996 as the record date for the determination of stockholders of the Fund
entitled to notice of and to vote at the Meeting or any adjournment thereof.
Stockholders of the Fund on that date will be entitled to one vote on each
matter for each share held and a fractional vote with respect to fractional
shares with no cumulative voting rights. At the close of business on May 3,
1996, the Fund had outstanding 4,384,000 shares of Common Stock, par value $.001
per share, the only authorized class of stock. As of May 3, 1996 the following
single shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934) to the knowledge of the Board of Directors of
the Fund, held in accounts, but did not beneficially own 5% or more of the
Fund's outstanding shares: Cede & Co., P.O. Box 20, Bowling Green Station, New
York, NY 10274 (4,228,092 shares -- 96.44%).
The principal executive offices of the Fund are located at 388 Greenwich
Street, New York, New York 10013.
As of the Record Date, to the knowledge of the Fund, no shares of Smith
Barney's ultimate parent corporation, Travelers Group Inc. ("Travelers"), were
held by Board members who are not interested persons of the Fund (as that term
is used in the Investment Company Act of 1940, as amended (the "1940 Act")).
In the event that sufficient votes in favor of the proposals set forth in
the Notice of Meeting and this Proxy Statement are not received by the time
scheduled for the Meeting, the persons named as proxies may move one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to any such proposals. 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 such adjournment will require the
affirmative vote of a majority of the shares present at the Meeting. The persons
named as proxies will vote in favor of such adjournment those shares which they
are entitled to vote and which have voted in favor of such proposals.
2
<PAGE>
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
The Board of Directors of the Fund is classified into three classes. The
directors serving in Class III have terms expiring at the Annual Meeting; each
Class III director currently serving on the Board has been nominated by the
Board of Directors for re-election at the Meeting to serve until the 1999 Annual
Meeting of Stockholders or until their successors have been duly elected and
qualified.
The Board of Directors of the Fund knows of no reason why any of the Class
III nominees listed below will be unable to serve, but in the event of any such
unavailability, the proxies received will be voted for such substitute nominees
as the Board of Directors may recommend.
Certain information concerning the directors is set forth below. All of the
nominees are currently directors of the Fund. Mr. Foley and Mr. Toolan have
served in such capacity since the Fund commenced operations. Mr. McLendon became
a director in 1995. Except as indicated, each individual has held the office
shown or other offices in the same company for the last five years. Directors
affiliated with Smith Barney and considered an "interested person" as defined in
the "1940 Act" are indicated by an asterisk(*)
Persons Nominated for Election as Directors
Number and
Percentage of Fund
Principal Occupations Shares Beneficially
During Past Five Years, Owned
Name Other Directorships, and Age May 10, 1996
- ---- ---------------------------- -------------------
CLASS III DIRECTORS
Donald R. Foley Retired; Director of ten None
Director since 1989 investment companies associated
with Smith Barney. Formerly
Vice President of Edwin Bird
Wilson, Incorporated
(advertising); 73.
John P. Toolan Retired; Director of ten 2,000
Director since 1989 investment companies associated (less than 1%)
with Smith Barney. Formerly,
Director and Chairman of Smith
Barney Trust Company, Director
of Smith Barney, and Smith
Barney Mutual Funds Management
Inc. ("SBMFM"). Prior to 1992,
Senior Executive Vice
President, Director and Member
of the Executive Committee of
Smith Barney and formerly
President of Loeb Rhodes,
Hornblower & Co. and
predecessor securities firms;
65.
Heath B. McLendon* Managing Director of Smith 2,200
Director since 1995 Barney; Chairman of forty-one (less than 1%)
investment companies associated
with Smith Barney; Chairman of
SBMFM; Chairman of the Board of
Smith Barney Strategy Advisers
Inc.; Director of Travelers
Investment Management Company
("TIMCO"), the Fund's
investment adviser; prior to
July 1993, Senior Executive
Vice President of Shearson
Lehman Brothers; Vice Chairman
of Shearson Asset Management;
62.
The remainder of the Board constitutes the Class I and Class II directors,
none of whom will stand for election at the Meeting, as their terms will expire
in 1997 and 1998, respectively.
3
<PAGE>
Number and
Percentage of Fund
Principal Occupations Shares Beneficially
During Past Five Years, Owned
Name Other Directorships, and Age May 10, 1996
- ---- ---------------------------- -------------------
CLASS I DIRECTORS
Joseph H. Fleiss Retired; Director of ten 2,000(a)
Director since 1989 investment companies associated (less than 1%)
with Smith Barney. Formerly
Senior Vice President of
Citibank, Manager of Citibank's
Bond Investment Portfolio and
Money Desk, and a Director of
Citicorp Securities Co., Inc.;
78.
C. Richard Youngdahl Retired; Director of ten 10,315
Director since 1989 investment companies associated (less than 1%)
with Smith Barney. Formerly
Chairman of the Board of
Pensions Lutheran Church in
America, Chairman of the Board
and Chief Executive Officer of
Aubrey G. Lanston & Co.
(dealers in U. S. Government
Securities) and President of
the Association of Primary
Dealers in U.S. Government
Securities; 80.
Paul Hardin Professor of Law at the None
Director since 1994 University of North Carolina at
Chapel Hill; Director of twelve
investment companies associated
with Smith Barney; Director of
The Summit Bancorporation.
Formerly, Chancellor of the
University of North Carolina at
Chapel Hill; 64.
Jessica Bibliowicz* Executive Vice President of None
Director since 1995 Smith Barney; Director of
twelve investment companies
associated with Smith Barney,
President of thirty-nine
investment companies associated
with Smith Barney; President
and Chief Executive Officer of
SBMFM. Prior to January 1994,
Director of Sales and Marketing
for Prudential Mutual Funds;
prior to September 1991,
Director, Salomon Brothers
Inc.; 36.
CLASS II DIRECTORS
Francis P. Martin Practicing physician; Director None
Director since 1989 of ten investment companies
associated with Smith Barney.
Formerly President of the
Nassau Physicians' Fund; 71.
Roderick C. Rasmussen Investment Counselor; Director None
Director since 1989 of ten investment companies
associated with Smith Barney.
Formerly Vice President of
Dresdner and Company Inc.
(investment counselors); 69.
Bruce D. Sargent* Managing Director of Smith 729(a)
Director since 1991 Barney, and Vice President and (less than 1%)
Director of SBMFM, Smith Barney
Funds, Inc., and Smith Barney
World Funds, Inc.; 52.
(a) Represents shares owned by members of this director's family.
4
<PAGE>
As of May 10, 1996 all directors and officers as a group (17 persons)
beneficially owned less than 1% of the shares outstanding of the Fund.
Section 16(a) of the Securities Exchange Act of 1934 and Section 30(f) of
the Investment Company Act of 1940 each requires the Fund's officers and
directors, persons who beneficially own more than ten percent of a registered
class of the Fund's equity securities and certain other entities to file reports
of ownership with the Securities and Exchange Commission, the American Stock
Exchange and the Fund. Based solely upon its review of the copies of such forms
received by it, except for a late filing of a Statement of Changes in Beneficial
Ownership for Travelers Group Inc. and of an Initial Statement of Beneficial
Ownership of Securities for Paul Hardin, the Fund believes that, during fiscal
year 1995, all filing requirements applicable to such persons were complied
with.
The Fund has no compensation or nominating committee of the Board of
Directors, or any committee performing similar functions. The Fund has an audit
committee composed of all the directors who are not interested persons of the
Fund or Smith Barney (the "independent directors") which is charged with
recommending a firm of independent auditors to the Fund and reviewing accounting
matters with the auditors. The audit committee met once during the fiscal year
ended December 31, 1995. Six meetings of the Board of Directors of the Fund were
held during the last fiscal year, four of which were regular meetings. No
director attended less than 75% of these meetings.
The following table shows the compensation paid by the Fund to each
incumbent director during the Fund's last fiscal year. Only the independent
directors receive remuneration from the Fund for acting as a director. Aggregate
fees (including reimbursement for travel and out-of-pocket expenses) of $21,991
were paid to such directors by the Fund during the fiscal year ended December
31, 1995. Fees for independent directors who are directors of a group of funds
sponsored by Smith Barney are set at $40,000 per annum plus $100 per fund or
portfolio for each day of Board meetings attended. The annual retainer fee is
allocated among the funds based on the relative net assets of each individual
fund or portfolio. The Board meeting fees and out-of-pocket expenses are borne
equally by each individual fund or portfolio in the group. None of the officers
of the Fund received any compensation from the Fund for such period. Officers
and interested directors of the Fund are compensated by Smith Barney or by
TIMCO.
The following table shows the compensation paid by the Fund to each
incumbent director during the Fund's last fiscal year.
Compensation Table
<TABLE>
<CAPTION>
TotalCompensation Number of
Aggregate Pension or Retirement from Fund and Funds for Which
Compensation Benefits Accrued as part Fund Complex Director Serves
Name of Person from Fund of Fund Expenses Paid to Directors Within Fund Complex
--------------- --------- ---------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Jessica Bibliowicz* $ 0 $ 0 $ 0 12
Joseph H. Fleiss 362 0 53,300 10
Donald R. Foley 462 0 56,100 10
Paul Hardin 362 0 68,200 12
Heath B. McLendon* 0 0 0 41
Francis P. Martin 462 0 56,100 10
Roderick C. Rasmussen 462 0 56,100 10
Bruce D. Sargent* 0 0 0 3
John P. Toolan 462 0 56,100 10
C. Richard Youngdahl 362 0 53,300 10
</TABLE>
5
<PAGE>
The following is a list of the current executive officers of the Fund, all
of whom have been elected by the directors to serve until their respective
successors are elected:
<TABLE>
<CAPTION>
Offices and Positions Period Principal Occupations During
Name Held with Fund Offices Held Past Five Years and Age
- ---- -------------- ------------ -----------------------
<S> <C> <C> <C>
Heath McLendon Chairman and 1995 to date (see table of directors above)
Chief Executive
Officer
Jessica Bibliowicz President 1995 to date (see table of directors above)
Lewis E. Daidone Senior Vice 1990 to date Managing Director of Smith
President and Barney; Director and Senior
Treasurer Vice President of SBMFM; and
Senior Vice President and
Treasurer of the other
investment companies associated
with Smith Barney; 38.
Kent A. Kelley Vice President 1995 to date Chief Executive Officer and
Director of TIMCO; 45.
Sandip A. Bhagat Vice President 1995 to date President and Director of
TIMCO; 36.
Christina T. Sydor Secretary 1989 to date Managing Director of Smith
Barney; General Counsel and
Secretary of SBMFM and
Secretary of the other
investment companies associated
with Smith Barney; 45.
Thomas M. Reynolds Controller and 1991 to date Director of Smith Barney in the
Assistant Asset Management Division; and
Secretary Controller and Assistant
Secretary of certain other
investment companies associated
with Smith Barney. Prior to
September 1991, Assistant
Treasurer of Aquila Management
Corporation and its associated
investment companies; 36.
</TABLE>
6
<PAGE>
The Board of Directors recommends that you vote "FOR" the nominees.
PROPOSAL NO. 2.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("KPMG") have been selected as the independent
auditors to audit the accounts of the Fund for and during the fiscal year ending
December 31, 1996 by a majority of the independent directors by a vote cast in
person subject to ratification by the stockholders at the Meeting (the entire
Board concurred in the selection). KPMG also serves as the independent auditors
for other investment companies associated with Smith Barney and for Travelers.
KPMG has no direct or material indirect financial interest in the Fund, Smith
Barney, Travelers or any other investment company sponsored by Smith Barney or
its affiliates.
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 auditors 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.
The affirmative vote of a majority of shares present and voting at the
meeting is required to ratify the selection of KPMG. The Board of Directors
recommends that the stockholders vote "FOR" the ratification of the selection of
independent auditors.
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual Meeting
of the Stockholders of the Fund must be received by February 4, 1997 to be
included in the proxy statement and the form of proxy relating to that meeting.
OTHER MATTERS
The management knows of no other matters which are to be brought before the
Meeting. However, if any other matters not now known or determined properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote such proxy in accordance with their judgment on such
matters.
All proxies received will be voted in favor of all the proposals, unless
otherwise directed therein.
By Order of the Board of Directors,
Christina T. Sydor
Secretary
May 22, 1996
THE INEFFICIENT-MARKET FUND INC. This Proxy is Solicited on Behalf of the
Directors of the Fund.
388 Greenwich Street
New York, New York 10013
The undersigned hereby appoints CHRISTINA T. SYDOR and
LEWIS E. DAIDONE, and each of them acting in the absence of
the other, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to
vote, as designated herein, all the shares of common stock of
The Inefficient-Market Fund, Inc. held of record by the
undersigned on May 3, 1996 at a Meeting of Stockholders
to be held on June 18, 1996 or any adjournment thereof.
PROXY
ELECTION OF DIRECTORS
FOR OR FOR OR WITH-
ALL ALL HOLD
EXCEPT
1. ELECTION OF DIRECTORS
D.R. Foley, H.B. McLendon,
and J.P. Toolan
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided above and check center box to
the right.)
PROPOSALS
The Board of Directors recommends a vote "FOR" the following proposals:
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE FUND.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign on the reverse side.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR each nominee for director and for each proposal.
Please sign exactly as name appears
to the left. When shares are held
by joint tenants, both should sign,
or if one signs, that stockholder's
vote binds both stockholders. When
signing as attorney, executor,
administrator, agent, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Signature
Signature if held jointly
Dated: ,1996
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
