August 7, 2000 Dear Shareholder: The Italy Fund Inc. (the "Fund") is offering to purchase 2,012,879 of its issued and outstanding shares of common stock at a price equal to 98% of the net asset value per share determined as of the close of the regular trading session of the New York Stock Exchange on the date after the offer expires (the "Offer"). The Offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender your shares, instructions on how to tender shares are provided in the enclosed materials. I encourage you to read these materials carefully before making any decision with respect to the Offer. Neither the Fund nor its Board of Directors makes any recommendation to any shareholder whether to tender any or all shares. Please note that the Offer is scheduled to expire at 12:00 Midnight Eastern Time on September 5, 2000, unless extended by the Fund. Questions regarding the Offer should be directed to Georgeson Shareholder Communications Inc. at (800) 223-2064. Sincerely, /s/ Heath B. McLendon Heath B. McLendon Chairman of the Board of Directors 1