THE ITALY FUND INC.
TWO WORLD TRADE CENTER, 100TH FLOOR
NEW YORK, NEW YORK 10048

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 18, 1994

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, Two
World Trade Center, 100th Floor, New York, New York at 11:00 a.m., on May
18, 1994, for the following purposes:

1. To elect two (2) Directors of the Fund (PROPOSAL 1).

2. To ratify the selection of Coopers & Lybrand as the independent ac-
countants of the Fund for the year ending January 31, 1995 (PROPOSAL
2).

3. To consider and vote upon such other matters as may come before said
meeting or any adjournment thereof.

The close of business on March 21, 1994, 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 Di-
rectors,
FRANCIS J. MCNAMARA, III
Secretary
April 4, 1994

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.

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 reg-
istration on the proxy card.

2. Joint Accounts: Either party may sign, but the name of the party sign-
ing 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 registra-
tion. For example:

REGISTRATION VALID SIGNATURE

CORPORATE ACCOUNTS
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 Jane B. Doe
u/t/d 12/28/78
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.
TWO WORLD TRADE CENTER, 100TH FLOOR
NEW YORK, NEW YORK 10048

ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1994

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
18, 1994, at the offices of the Fund, Two World Trade Center, 100th Floor,
New York, New York and at any adjournments thereof (the "Meeting"). A No-
tice of Meeting of Shareholders and a proxy card accompany this Proxy
Statement. In addition to solicitations of proxies by mail, officers of
the Fund and officers and regular employees of The Boston Company Advi-
sors, Inc. ("Boston Advisors"), the Fund's administrator, The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation, the Fund's
transfer agent, or other representatives of the Fund may also solicit
proxies by telephone, telegraph or in person. The costs of solicitation
and the expenses incurred in connection with preparing the Proxy Statement
and its enclosures are anticipated to be $6,000, and such costs and ex-
penses will be paid by the Fund. The Fund will reimburse brokerage firms
and others for their expenses in forwarding solicitation materials to the
beneficial owners of shares. The Annual Report of the Fund, which includes
audited financial statements for the fiscal year ended January 31, 1994,
has previously been furnished to all shareholders of the Fund. This proxy
statement is first being mailed to shareholders on or about April 4, 1994.

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 bro-
ker "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 pro-
posals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of prox-
ies. 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 infor-
mation to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a ma-
jority 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. Any such adjournment will re-
quire the affirmative vote of a majority of those Shares represented at
the Meeting in person or by proxy. 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 out-
standing Shares entitled to vote at the Meeting.

The close of business on March 21, 1994, 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 21, 1994, there were 9,503,089 Shares outstanding. Each
shareholder is entitled to one vote for each full Share and a proportion-
ate fraction of a vote for each fractional Share held.

As of March 21, 1994, the United Nations Joint Staff Pension Fund, United
Nations, New York, New York 10017, owned beneficially 1,425,000 or 15.00%
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 21, 1994, Cede & Co., a nominee partnership of Depository
Trust Company, held 9,150,865 Shares, or 96.29% of the Shares, including
the Shares beneficially owned by the United Nations Joint Staff Pension
Fund, which are held by Fiduciary 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 1,011,200 or 10.64%
of the Shares, Brown Brothers Harriman & Co., located at 63 Wall St., New
York, New York 10005, held 803,940 or 8.46% of the Shares, Charles Schwab
& Co., Inc., located c/o ADP Proxy Services, 51 Mercedes Way, Edgewood,
New York 11717, held 558, 798 or 5.88% of the Shares, Chemical Bank/MHT,
located at 270 Park Avenue, New York, New York 10017, held 537,345 or
5.65% of the Shares and Smith Barney Shearson Inc., located c/o ADP Proxy
Services, 51 Mercedes Way, Edgewood, New York 11717, held 490,955 or 5.17%
of the Shares.

As of March 21, 1994, the Fund's officers and Directors beneficially owned
less than 1% of the outstanding Shares.

Proposal 1 requires for approval the affirmative vote of a plurality of
the votes cast at the Meeting in person or by proxy by the shareholders of
the Fund voting on the matter and Proposal 2 requires for approval the af-
firmative vote of a majority of the votes cast at the meeting in person or
by proxy by the shareholders of the Fund voting on the matter.

PROPOSAL 1: ELECTION OF DIRECTORS.

At the Meeting, two (2) of the six Directors of the Fund are to be elected
for the period of three years or until their successors shall have been
elected and qualified. The Class II Directors' terms shall expire in 1997.
Each year the term of office of one class of Directors will expire.

Each of the nominees currently serves as a Director of the Fund and has
indicated that he will serve if elected, but if any nominee should be un-
able 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 OTHER SERVED AS A BENEFICIALLY OWNED**
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS DIRECTOR SINCE CLASS AS OF MARCH 21, 1994

JAMES J. CRISONA, age 86 1968 II --
Attorney; prior to 1976, a Justice of the Supreme Court of the
State of New York.
PAOLO M. CUCCHI, age 53 1992 II 500
Dean of College of Liberal Arts at Drew University. (less than 1%)

The following Directors of the Fund will continue to serve in such capac-
ity until their terms of office expire and their successors are elected
and qualified:

DR. PAUL HARDIN, age 62 1986 I 500
Chancellor of the University of North Carolina at Chapel Hill; (less than 1%)
a Director of The Summit Bancorporation.
GEORGE M. PAVIA, age 66 1991 I --
Senior Partner, Pavia & Harcourt, Attorneys.
ALESSANDRO C. DI MONTEZEMOLO, age 75 1986 III --
Retired; former Chairman of the Board of Marsh &
McLennan, Inc.; a Director of Offi/Bank.
HEATH B. MCLENDON,* age 60 1986 III 8,048
Executive Vice President of Smith Barney Shearson Inc.; Chairman (less than 1%)
of Smith Barney Shearson Strategy Advisers Inc. Prior to July
1993, Senior Executive Vice President of Shearson Lehman
Brothers Inc. ("Shearson Lehman Brothers") and Vice Chairman
of Shearson Asset Management.

<FN>
* Interested person of the Fund as defined in the Investment Company Act
of 1940 (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 infor-
mation as to beneficial ownership is based upon information furnished
to the Fund by the Directors.

Section 16(a) of the Exchange Act requires the Fund's officers and direc-
tors, and persons who beneficially own more than ten percent of the Fund's
Common Stock, to file reports of ownership with the Securities and Ex-
change 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, 1994, all filing require-
ments applicable to such persons were complied with.

The principal officers of the Fund are listed in the table below, with the
exception of Mr. McLendon, the Fund's Chairman, who was first elected
Chairman in 1986. This table also shows certain additional information.
Each officer of the Fund will hold such office until a successor has been
duly elected by the Board of Directors.

PRINCIPAL OCCUPATIONS
POSITION AND OTHER AFFILIATIONS
NAME (YEAR FIRST ELECTED) DURING THE PAST FIVE YEARS

Mario d'Urso, age 54 President (1986) Formerly, Advisory Director of Shearson
Lehman Brothers; formerly Managing
Director of Shearson Lehman Brothers.
Erich Stock, age 31 Vice President and Director, Equities of Global Asset
Investment Officer (1988) Management Limited ("Global Asset
Management").
Christina Haage, age 37 Treasurer (1991) Assistant Treasurer and Vice President
of Boston Advisors.
Francis J. McNamara, III, age 39 Secretary (1989) Senior Vice President and General
Counsel of Boston Advisors; prior to
June 1989, Vice President and Associate
Counsel of Boston Advisors.

The principal business address of Mr. McNamara and Ms. Haage is One Ex-
change Place, Boston, Massachusetts. The principal business address of Mr.
d'Urso is 4/A Viale di Grazioli, Rome, Italy. The Principal business ad-
dress of Mr. Stock is Two Broadgate, London, England. Neither Mr. Stock
nor Mr. d'Urso has authorized an agent for service of process in the
United States. Consequently, it may be difficult for investors to effect
service of process within the United States upon such persons or to en-
force, in United States courts, judgments against them obtained in such
courts predicated on the civil liability provisions of the United States
securities laws. None of the executive officers of the Fund, with the ex-
ception of Mr. McLendon, as noted above, own any shares of the Fund.

The Fund pays each Director who is not a director, officer or employee of
the Fund's investment adviser or administrator, a fee of $7,500 per year
plus $750 per regular meeting attended, together with the Director's ac-
tual out-of-pocket expenses relating to attendance at meetings. The aggre-
gate remuneration paid by the Fund to such Directors during the fiscal
year ended January 31, 1994 amounted to $60,345.

During the fiscal year ended January 31, 1994, the Directors of the Fund
met four times. Each Director attended at least 75% of the meetings held
during the period they were in office. The Fund's Audit Committee is com-
prised of those Directors who are not "interested persons" of the Fund as
defined in the 1940 Act. The Audit Committee is responsible for recommend-
ing the selection of the Fund's independent accountants and reviewing all
audit as well as nonaudit accounting services performed for the Fund. Dur-
ing the fiscal year ended January 31, 1994, 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 affirma-
tive vote of a plurality of the votes cast at the Meeting in person or by
proxy.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE "NON-INTERESTED" DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES
TO THE BOARD.

PROPOSAL 2: RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS.

Coopers & Lybrand, One Post Office Square, Boston, Massachusetts 02109,
have served as independent accountants for the Fund since its commencement
of operations on February 28, 1986 and have been selected by the vote of a
majority of those Directors who are not "interested persons" of the Fund
to serve as independent accountants for the Fund's fiscal year ending Jan-
uary 31, 1995. Coopers & Lybrand has informed the Fund that it has no di-
rect or indirect material financial interest in the Fund, Global Asset
Management or Boston Advisors.

Representatives of Coopers & Lybrand are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if they
so desire and will be available by telephone should any matter arise re-
quiring their presence.

REQUIRED VOTE

Ratification of the selection of Coopers & Lybrand as independent accoun-
tants requires the affirmative vote of a majority of the votes cast at the
Meeting in person or by proxy.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE "NON-INTERESTED" DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE SELECTION
OF INDEPENDENT ACCOUNTANTS.

ADDITIONAL INFORMATION

THE INVESTMENT ADVISER

Global Asset Management, located at Two Broadgate, London, EC2M 7HA,
United Kingdom, has served as investment adviser to the Fund since its
commencement of operations on February 28, 1986. Global Asset Management
renders investment advice to institutional clients (including the Fund and
other investment companies) with total assets under management, as of Feb-
ruary 28, 1994, in excess of $5 billion.

Global Asset Management is a wholly owned subsidiary of Lehman Brothers
Holdings Inc. ("Holdings"). American Express Company owns 100% of Hold-
ings' issued and outstanding common stock, which represents approximately
92% of Holdings' voting stock. The remainder of Holdings' voting stock is
owned by Nippon Life Insurance Company.

The name, position with Global Asset Management and principal occupation
of each executive officer and director of Global Asset Management are set
forth in the following table:

POSITION WITH GLOBAL PRINCIPAL
NAME ASSET MANAGEMENT OCCUPATION

Herschel E. Post Director Chief Operating Officer of Lehman
Brothers International
Steven Spiegel Director, President Managing Director of Lehman Brothers
Inc. ("Lehman Brothers");
President of Lehman Brothers
Global Asset Management, Inc.
Clinton Kendrick Director Chief Operating Officer of Global
Asset Management and Global Asset
Management Worldwide.
Pauline Barrett Director, Chief Investment Chief Investment Officer of Global
Officer and Managing Director, Asset Management
Fixed Income
Michael Zelouf Director, Fixed Income Fund Manager
Erich Stock Director, Equities Fund Manager
Michael Lai Investment Manager -- Fund Manager
Equities
Ian King Investment Manager -- Fund Manager
Equities
Catherine Matthews Investment Manager -- Fund Manager
Fixed Income
Paul Wynn Director, Fixed Income Fund Manager
Aisling O'Duffy Investment Manager -- Fund Manager
Equities
Robert Pennells Managing Director, Fund Manager
Equities

The principal business address of Messrs. Post, King, Lai, Pennells,
Stock, Wynn and Zelouf and Mses. Barrett, Matthews and O'Duffy is Two
Broadgate, London EC2M 7HA, United Kingdom. Messrs. Kendrick and Spiegel's
principal business address is 2 World Financial Center, New York, New York
10285, U.S.A.

An audited balance sheet of Global Asset Management as of December 31,
1993 is set forth as Exhibit A to this Proxy Statement.

THE ADVISORY AGREEMENT

Global Asset Management currently serves as investment adviser to the Fund
pursuant to an investment advisory agreement (the "Advisory Agreement")
dated February 26, 1986, which was last approved by the Directors, includ-
ing a majority of the Directors who are not "interested persons" of the
Fund, at a meeting held on November 17, 1993 and by shareholders on August
11, 1987.

Under the terms of the Advisory Agreement, Global Asset Management manages
the portfolio of the Fund in accordance with the Fund's stated investment
objectives and policies, makes investment decisions for the Fund, places
orders to purchase and sell securities on behalf of the Fund and manages
the other business and affairs of the Fund, all subject to the supervision
and direction of the Directors. For services rendered to the Fund, the
Fund pays Global Asset Management a fee computed and paid monthly, at the
annual rate of 0.75% of the value of the average monthly net assets of the
Fund. For the fiscal year ended January 31, 1994, the Fund paid advisory
fees to Global Asset Management amounting to $444,604.

The Advisory Agreement provides that in the absence of willful misfea-
sance, bad faith, gross negligence or reckless disregard of its obliga-
tions and duties thereunder, Global Asset Management is not liable for any
error of judgement or mistake of law or for any loss suffered by the Fund.

Pursuant to its terms, the Advisory Agreement will remain in effect until
February 26, 1995, and from year to year thereafter if approved annually
(i) by the Board of Directors of the Fund or by the holders of a majority
of the Fund's outstanding voting securities and (ii) by a majority of the
Directors who are not parties to the Advisory Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Advisory
Agreement terminates on its assignment and may be terminated without pen-
alty on 60 days' written notice by the Fund's Board of Directors or by the
vote of the shareholders of the Fund, or upon 90 days' written notice by
Global Asset Management.

THE ADMINISTRATION AGREEMENT

Boston Advisors was organized in 1978 and is a wholly owned subsidiary of
The Boston Company, Inc. ("TBC"). Both Boston Advisors and TBC are located
at One Boston Place, Boston, Massachusetts 02108. TBC is a wholly owned
subsidiary of Mellon Bank Corporation.

Boston Advisors currently serves as administrator of the Fund pursuant to
an administration agreement (the "Administration Agreement") dated May 21,
1993, which was last approved by the Directors, including a majority of
the Directors who are not "interested persons" of the Fund, at a meeting
held on November 17, 1993.

Under the Administration Agreement, Boston Advisors provides assistance in
all aspects of the Fund's administration including accounting and book-
keeping services and preparation of certain reports and filings, and fur-
nishes to Global Asset Management statistical and other research data.
Boston Advisors does not make recommendations with regard to the selection
of the Fund's investments.

For the services rendered to the Fund, the Fund pays Boston Advisors a fee
computed and paid monthly at an annual rate of 0.20% of the value of the
Fund's average monthly net assets. For the fiscal year ended January 31,
1994, the Fund paid administration fees to Boston Advisors amounting to
$118,537.

The Administration Agreement provides that in the absence of willful mis-
feasance, bad faith, gross negligence or reckless disregard for its obli-
gations and duties thereunder, Boston Advisors is not liable for any error
of judgment or mistake of law or for any loss suffered by the Fund.

ADVISORY BOARD

The Fund's Board of Directors has established a board of advisors, the ma-
jority of whose members are outside, independent advisors (the "Advisory
Board") with which Global Asset Management and the Board of Directors con-
sult regarding economic and political trends and developments affecting
Italy. The Advisory Board currently is composed of three Italian citizens,
one United States citizen and one Swiss citizen selected on the basis of
their wide-ranging experience and accomplishments in the Italian financial
or business community. The Advisory Board, which sits at the discretion of
the Board of Directors, possesses no authority or responsibility with re-
spect to the Fund's investments, management or operation and will make no
recommendations as to particular investments made or contemplated by the
Fund.

The Advisory Board meets upon the request of the Fund's Board of Directors
or Global Asset Management. When the Board of Directors deems it appropri-
ate, Advisory Board meetings are held in conjunction with a meeting of the
Fund's Board of Directors. Each member of the Advisory Board receives from
the Fund an annual fee of $8,000 plus $250 for each Advisory Board meeting
attended. The Fund also reimburses Advisory Board members for travel and
out-of-pocket expenses incurred in connection with Advisory Board meet-
ings. For the fiscal year ended January 31, 1994, the Advisory Board met
twice and the aggregate remuneration paid to the Advisory Board totalled
$37,235.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the Fund are made by Global Asset
Management, subject to the overall review of the Fund's Board of Direc-
tors. Portfolio securities transactions for the Fund are placed on behalf
of the Fund by Global Asset Management.

Brokerage commissions for transactions effected on Italian securities ex-
changes are subject to fixed minimum rates. Transactions effected in Italy
off the securities exchanges are effected at negotiated commissions.
Transactions on United States and some foreign stock exchanges involve
payment of negotiated brokerage commissions, which may vary among differ-
ent brokers. No stated commission generally applies to securities traded
in the over-the-counter markets, but the price of those securities in-
cludes an undisclosed commission or mark-up. The cost of securities pur-
chased from underwriters includes an underwriter's commission or conces-
sion, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. The Fund may, from time
to time, in accordance with an exemptive order granted by the SEC, enter
into principal transactions involving certain money market instruments
with dealers affiliated with Lehman Brothers.

In selecting brokers or dealers to execute portfolio transactions on be-
half of the Fund, Global Asset Management seeks the best overall terms
available. Global Asset Management's Advisory Agreement with the Fund pro-
vides that, in assessing the best overall terms available for any transac-
tion, Global Asset Management must consider the factors it deems relevant,
including the breadth of the market in the security, the price of the se-
curity, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, the Advisory Agreement
authorizes Global Asset Management, in selecting brokers or dealers to ex-
ecute a particular transaction, and in evaluating the best overall terms
available, to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Exchange Act) provided to the Fund
and/or other accounts over which Global Asset Management or an affiliate
exercises investment discretion. Global Asset Management's fee under the
Advisory Agreement is not reduced by reason of its receiving such broker-
age and research services.

The Fund's Board of Directors periodically reviews the commissions paid by
the Fund to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits inuring to the Fund.
For the fiscal year ended January 31, 1994, the Fund paid $58,678 in bro-
kerage fees, of which $1,717, or 2.93%, was paid to Lehman Brothers. For
the same period, 3.21% of the Fund's transactions involving the payment of
commissions were effected through Lehman Brothers.

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 Board Member 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 re-
quested 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 pre-
sented at the Fund's next Annual Meeting of Shareholders to be held in
1995 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, 1994.

April 4, 1994

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.

EXHIBIT A

REPORT OF THE AUDITORS
to the Members of LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT LIMITED

We have examined the balance sheet and accompanying notes of Lehman Broth-
ers Global Asset Management Limited as at 31 December 1993 as presented on
pages 2 to 4. This balance sheet has been drawn up from the draft statu-
tory accounts legally required in the United Kingdom. Our examination of
these statutory accounts, which is substantially complete, has been made
in accordance with the generally accepted auditing standards and, accord-
ingly, included such tests of the accounting records and such other audit-
ing procedures as we considered necessary.

Based on our procedures to date, we know of no reason why the balance
sheet referred to on page 2 does not present fairly the financial position
of Lehman Brothers Global Asset Management Limited at 31 December 1993.

ERNST & YOUNG
Chartered Accountants
Registered Auditor
London

24 March 1994

LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT LIMITED
BALANCE SHEET
AT 31 DECEMBER 1993

1993
US$

ASSETS
Current Assets
Cash 11,289,115
Trade accounts receivable 1,729,125
Other debtors 114,780
Amounts owned by other group undertakings 254,300
Prepaid expenses and other assets 97,904
Total current assets 13,485,224
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable 140,553
Due to affiliated companies 706,825
Accrued expenses and other liabilities 1,332,066
Total current liabilities 2,179,444
Provisions for liabilities and charges
Deferred pension costs 321,653
Shareholders' equity
Capital 1,000,010
Retained earnings 9,984,117
Total shareholders' equity 10,984,127
Total liabilities and shareholders' equity 13,485,224

LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT LIMITED
NOTES
AT 31 DECEMBER 1993

1. GENERAL

Lehman Brothers Global Asset Management Limited, a wholly owned subsidiary
of Lehman Brothers Holdings plc, is an investment advisor operating in
London. The parent company is a subsidiary of the Lehman Brothers Group
which, in turn, is a subsidiary of the American Express Company.

The company is a full member of the Investment Management Regulatory Or-
ganisation ("IMRO").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The accounts have been prepared under the historical cost convention and
in accordance with applicable accounting standards.

(b) Fees receivable

Fees receivable in respect of asset management services are recognised in
the accounts when earned.

The functional and reporting currency of the company is US Dollars. For-
eign currency assets and liabilities are translated to US Dollars at rates
of exchange ruling at the balance sheet date. Transactions during the pe-
riod expressed in foreign currencies are converted into US Dollars at the
month end rate of exchange of the month in which they occur. Any differ-
ences arising from translation and conversion are dealt with in the profit
and loss account.

(d) Pension costs

The cost of providing pension benefits is charged to the profit and loss
account over the period benefitting from employees' services.

(e) Soft Commission

In the ordinary course of its business, the Company transacts with a wide
range of brokers. With certain of these brokers, the Company has entered
into soft commission arrangements, whereby the Company agrees to provide
the broker with a certain amount of commission in return for the payment
of certain research related goods and services invoiced to the Company by
external suppliers. All such transactions are done on an arm's length
basis with a view to obtaining best execution. The accounts do not reflect
the value of the goods or services received by the Company under such ar-
rangements, with the exception that, where the value of services received
exceeds commission provided to the broker at the balance sheet date, pro-
vision is made for the deficit.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Turnover

Turnover, which is stated net of value added tax, represents the amounts,
receivable for the management of clients' investment portfolios. $66,818
of the Company's turnover arose from the United Kingdom, $5,668,588 from
the U.S.A. and $6,195,826 from the rest of the world.

3. AMOUNTS DUE TO AFFILIATED COMPANIES

Represented by unsettled balance of expenses, paid on behalf of LBGAM Lim-
ited.

1993
US$

Lehman Brothers Limited (London) 706,825

4. CAPITAL

Capital is represented by 900,000 redeemable preference shares and 100,010
ordinary shares, fully paid up.

VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS

(Please Detach at Perforation Before Mailing)

Please indicate your vote by an "X" in the appropriate box below.
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. Please refer to the Proxy Statement for a discussion
of the Proposals.

1. To elect Paulo M. Cucchi and * FOR both * WITHHOLD
James J. Crisona as nominees AUTHORITY
Class II Directors of the listed (except to vote for both
Fund as marked nominees)
below)

(Instuctions: To withhold authority to vote for any nominee for Class II
Director, write the appropriate name on the line provided below:)

2. To ratify the selection FOR * AGAINST * ABSTAIN *
of Coopers & Lybrand
as the independent
accountants of the Fund
for the fiscal year ending
January 31, 1995.

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(Please Detach at Perforation Before Mailing)

THE ITALY FUND INC. - PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting on May 18, 1994

The undersigned holder of shares of The Italy Fund Inc. (the "Fund"), a
Maryland corporation, hereby appoints Heath B. McLendon and Francis J.
McNamara, III 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, Two World Trade Center,
100th 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,
1994 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.

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.

DATE: ________________________________
________________________________
________________________________
Signature(s) (Title(s), if applicable)

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