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

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