-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A7FXrooBam3tCVdnYOS317fu8g4RdAZoXROl68011kwDEgXJYYoCBz+uVRBbu4MI pApXp2biLsXt8XAXSJN6cg== 0000928385-96-001268.txt : 20040405 0000928385-96-001268.hdr.sgml : 20040405 19960930114900 ACCESSION NUMBER: 0000928385-96-001268 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960930 DATE AS OF CHANGE: 19961002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEXICO FUND INC CENTRAL INDEX KEY: 0000065433 IRS NUMBER: 133069854 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-02409 FILM NUMBER: 96636665 BUSINESS ADDRESS: STREET 1: 1775 EYE STREET NW CITY: WASHINGTON STATE: DC ZIP: 20006-2401 BUSINESS PHONE: 2026263300 MAIL ADDRESS: STREET 1: 77 ARISTOTELES STREET 3RD FLOOR STREET 2: POLANCO D F 11560 CITY: MEXICO N-30B-2 1 QUARTERLY REPORT ================================================================================ THE MEXICO FUND, INC. - -------------------------------------------------------------------------------- DIRECTORS: Juan Gallardo T. -- Chairman Philip Caldwell Ernesto Fernandez Hurtado Jose Luis Gomez Pimienta Claudio X. Gonzalez Robert L. Knauss Agustin Santamarina V. OFFICERS: Jose Luis Gomez Pimienta -- President Samuel Garcia-Cuellar -- Secretary Allan S. Mostoff -- Assistant Secretary Sander M. Bieber -- Assistant Secretary Carlos H. Woodworth -- Treasurer INVESTMENT ADVISER -- Impulsora del Fondo Mexico, S.A. de C.V. CUSTODIAN -- Bancomer, S.A. TRANSFER AGENT AND REGISTRAR -- American Stock Transfer & Trust Company COUNSEL -- Dechert Price & Rhoads Creel, Garcia-Cuellar y Muggenburg, S.C. This report, including the financial statements herein, is transmitted to shareholders of The Mexico Fund, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. ================================================================================ -------------------------------- ----------------------------- --------------------------- [LOGO OF THE MEXICO FUND, INC. APPEARS HERE] THE MEXICO FUND, INC. (Unaudited) --------------------- Quarterly Report July 31, 1996 --------------------------- ----------------------------- -------------------------------- ================================================================================ ================================================================================ THE MEXICO FUND, INC. QUARTERLY REPORT JULY 31, 1996 HIGHLIGHTS - -------------------------------------------------------------------------------- .. The Fund's third 1996 fiscal . The Fund's net asset value (NAV) quarter ended July 31, 1996. and price per share ended this fiscal quarter at $17.15 and $14.50, respectively, reflecting a discount of 15.5%. .. After falling 6.2% in 1995, the Mexican gross domestic product (GDP) increased 7.2% during the second quarter of calendar 1996. . During the first eight months of calendar 1996, a total of 49.8 million Fund shares changed hands on all US consolidated markets. .. At the end of August 1996, the 12-month inflation rate regis- tered 30.6%, compared with 52% at the end of 1995. . The Bolsa index decreased 7.6% in US dollar terms during this fis- cal quarter, while the Fund's NAV decreased 4.7%. .. During the first seven months of 1996, the Mexican trade balance registered a surplus of $4.57 billion, compared with a surplus of $3.86 billion one year earli- er. . A dividend of 17 cents per share is payable on October 31, 1996, to shareholders of record on Sep- tember 30, 1996. .. The 28-day Cetes rates ended this fiscal quarter at 30%, slightly lower than at the end of the pre- vious fiscal quarter. .. At the end of this fiscal quar- ter, the rate of exchange of the peso against the US dollar closed at P7.583, compared with P7.59 at the end of 1995. =============================================================================== THE MEXICO FUND, INC. TO OUR SHAREHOLDERS: - ------------------------------------------------------------------------------- ECONOMIC COMMENTS. After a recession in which the nation's GDP declined 6.2% in 1995, the Mexi- can economy now shows signs of recovery. During the second quarter of 1996, the GDP increased by 7.2% and its three main sectors registered positive vari- ations. The industrial sector of the economy registered the highest increase, almost 12%, and within this sector, manufacturing output grew by almost 14%. Positive GDP growth is expected to continue for the rest of the year and into 1997. Inflation rates, measured by the consumer price index (CPI), have continued declining. At the end of August 1996, the 12-month inflation rate registered 30.6% compared with 52% at the end of 1995. This declining trend is expected to continue and by the end of the year annual inflation is estimated to be around 28%. Domestic interest rates were impacted by the volatile performance of US in- terest rates during July. The interest rate of the 28-day Cetes has been fluc- tuating in recent months around the 30% level. However, at the beginning of September, the 28-day Cetes rate registered 23.5%, its lowest level since the devaluation of the peso at the end of 1994. At the same time, the Mexican peso continues to show stability compared with the US dollar. The rate of exchange of the peso against the US dollar ended this fiscal quarter at P7.583, slightly lower than the rate of exchange registered at the end of 1995. Mexican exports continue to perform dynamically and to be the main driving force of the economic recovery. During the first seven months of 1996, total exports amounted to $53.52 billion, while total imports amounted to $48.96 billion. For this seven-month period, the Mexican trade balance registered a surplus of $4.57 billion, 18% higher than that registered during the same pe- riod of 1995. On July 26, 1996, the Mexican government issued a record $6 billion eurobond. The bonds will mature in August 2001 and will pay a floating-rate coupon of three-month Libor rate plus 200 basis points. Because the bonds are guaranteed by Mexico's oil revenues, Standard & Poor's Corp. and Moody's Investors Serv- ice, Inc. awarded the bonds an investment grade rating, the first such rating for dollar-denominated Mexican government bonds. Initially, the Mexican gov- ernment intended to sell approximately $3 billion of these bonds. However, the amount was increased in view of the strong demand for the bonds. The proceeds were used to make an early payment to the US Treasury and to the International Monetary Fund (IMF), resulting in a longer-term maturity and lower-interest rate debt for the Mexican government. In political matters, on July 25, 1996, the four main Mexican political par- ties submitted to the Congress an initiative to modify the country's Electoral Law. The bill would invest the Electoral Tribunal with judicial powers, making it an independent body from both the executive and legislative branch. The proposal also defines the referendum as a legal vehicle for changing the Con- stitution, and intends to give residents of Mexico City the right to elect their governor, who previously was appointed by the President. in addition, the proposal deals with campaign financing limits, access to Mexico's media and control of political parties' budgets. At the end of August, a new rebel force attacked several police and army fa- cilities, mostly in the southern states of Tabasco, Guerrero and Michoacan. Recent armed and judicial actions against this group have already resulted in several arrests and further investigations are being conducted. In spite of these violent actions, the regular activities of the country, including the operation =============================================================================== of the Bolsa and economic activity in general, have not been affected. THE BOLSA AND FUND PERFORMANCE. The Fund's NAV and price per share ended this fiscal quarter at $17.15 and $14.50, respectively, reflecting a discount of 15.5%. As of the end of this period, approximately 95% of the Fund's total net assets were invested in eq- uity securities, compared with 77% immediately after the rights offering transaction concluded at the end of October 1995. The volatile performance of US financial markets negatively impacted the per- formance of the Bolsa index during July. However, positive economic and polit- ical news on Mexico, previously discussed in this report, pushed the Bolsa in- dex to reach a new historical level on August 27, 1996. During the first eight months of calendar 1996, the Bolsa index has increased 21% in US dollar terms, while the Fund's NAV has increased 25% over the same period. The Fund continues to register high levels of liquidity. During the third fiscal quarter, a total of 13.2 million shares were traded on all US consoli- dated markets, and for the first eight months of the year, the total trading volume amounted to 49.8 million shares, compared with 49.7 million shares out- standing. The Board of Directors has declared a dividend of 17 cents per share payable on October 31, 1996, to shareholders of record on September 30, 1996. This dividend is comprised entirely of net investment income and is subject to ap- plicable Mexican withholding taxes. Non-US shareholders generally will be sub- ject to a US withholding tax at a maximum rate of 30%. Shareholders are ad- vised to consult with their own tax adviser about this and other taxes. This distribution is reportable by US taxpayers on their US Federal income tax return. DIVIDEND REINVESTMENT PLAN. The Fund's Dividend Reinvestment Plan ("Plan") was amended by the Board of Directors at the December 7, 1994, Board Meeting. This new Plan became effec- tive April 1, 1995. UNDER THE TERMS OF THE AMENDED PLAN, FUND SHAREHOLDERS ARE AUTOMATICALLY ENROLLED AS PARTICIPANTS IN THE PLAN. IF YOU DO NOT WISH TO PAR- TICIPATE IN THE PLAN, PLEASE CONTACT THE PLAN AGENT. The Plan provides a con- venient way to increase your holdings in the Fund's common stock through the reinvestment of net investment income and capital gains distributions. If you have any questions concerning the Plan or would like a copy of the Plan bro- chure, please contact the Plan Agent: American Stock Transfer & Trust Company Attention: Dividend Reinvestment Department 40 Wall Street New York, NY 10005 (212) 936-5100 COMMUNICATIONS WITH SHAREHOLDERS. The Adviser distributes, free of charge, a Monthly Summary Report with infor- mation relating to the Fund, as well as other indicators of the Mexican econ- omy and the Bolsa. If you are interested in receiving a copy of this Report, please request that your name be included on the mailing list by writing to the Adviser at: Impulsora del Fondo Mexico, S.A. de C.V. 77 Aristoteles St., 3rd Floor 11560, Mexico, D.F. MEXICO The Fund has made arrangements to improve communications with the Fund's shareholders and ================================================================================ the investing public through a liaison office in New York City. Upon request, this office will be pleased to provide you with the Fund's current NAV, quar- terly reports and other materials available from the Fund. They will also be able to direct your inquiries regarding other Fund matters to the appropriate firms or individuals. Please refer your information requests to: GEORGESON & COMPANY INC. Wall Street Plaza New York, NY 10005 (800) 224-4134 Sincerely yours: [SIGNATURE OF JOSE LUIS GOMEZ PIMENTA [SIGNATURE OF JUAN GALLARDO T. APPEARS HERE] APPEARS HERE] JOSE LUIS GOMEZ PIMIENTA JUAN GALLARDO T. President Chairman of the Board September 10, 1996 ================================================================================ SHAREHOLDER INFORMATION Weekly comparative NAV and market price information about Mexico Fund shares is published each Monday in The Wall Street Journal, The New York Times, and other newspapers in a table called "Closed-End Funds". Daily market prices for the Fund's shares are published in the New York Stock Exchange Composite Transactions section of newspapers under the designations "MexFd" or "MexicoFd". The Fund's New York Stock Exchange trading symbol is MXF. The Fund's shares are traded on the Third Section ("Freiverkehr") of the Stuttgart Stock Exchange. For current NAV information or copies of reports, call (800) 224-4134. For information about dividends and shareholder accounts, call Shareholder Services (212) 936-5100. - -------------------------------------------------------------------------------- THE MEXICO FUND, INC. SCHEDULE OF INVESTMENTS AS OF JULY 31, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE PERCENT OF INDUSTRIES DIV HELD COMMON STOCK (94.67%) SERIES (NOTE 1) NET ASSETS - -------------------------------------------------------------------------------------------- CEMENT INDUSTRY 6,088,043 Apasco, S.A. de C.V. ... * $ 34,000,873 3.99% 19,016,958 Cemex, S.A. de C.V. .... A 62,696,024 7.35 ------------ ----- 96,696,897 11.34 - -------------------------------------------------------------------------------------------- COMMUNICATIONS (a) Carso Global Telecom, 6,975,994 S.A. de C.V. .......... A1 20,238,938 2.37 (a) Grupo Televisa, S.A. de 1,268,200 C.V. .................. CPO 16,858,046 1.98 Telefonos de Mexico, 10,000,000 S.A. de C.V. .......... *A 15,402,875 1.80 Telefonos de Mexico, 13,095,000 S.A. de C.V. .......... *L 20,100,989 2.36 ------------ ----- 72,600,848 8.51 - -------------------------------------------------------------------------------------------- CONSTRUCTION (a) Corporacion Geo, S.A. de 1,500,000 C.V. .................. B 6,438,745 0.76 (a) Empresas ICA, Sociedad Controladora, S.A. de 1,496,332 C.V. .................. * 20,304,967 2.38 ------------ ----- 26,743,712 3.14 - -------------------------------------------------------------------------------------------- CONSUMER GOODS Coca-Cola Femsa, S.A. de 4,430,000 C.V. .................. L 10,644,151 1.25 Fomento Economico Mexicano, S.A. de 7,842,000 C.V. .................. B 20,372,860 2.39 Grupo Continental, 3,053,000 S.A. .................. *CP 11,474,416 1.35 Grupo Industrial Bimbo, 7,802,474 S.A de C.V. ........... A 36,218,790 4.25 Grupo Industrial Maseca, 27,097,000 S.A. de C.V. .......... B 30,731,135 3.60 Grupo Modelo, S.A. de 9,275,000 C.V. .................. C 42,442,635 4.97 (a) Jugos del Valle, S.A. de 818,000 C.V. .................. B 1,596,519 0.19 Sistema Argos, S.A. de 1,275,000 C.V. .................. A 998,747 0.12 Sistema Argos, S.A. de 5,805,000 C.V. .................. B 4,547,237 0.53 ------------ ----- 159,026,490 18.65 - -------------------------------------------------------------------------------------------- FINANCIAL (a) Grupo Financiero Banamex GROUPS Accival, S.A. de 6,478,450 C.V. .................. B 12,302,477 1.44 (a) Grupo Financiero Banamex Accival, S.A. de 470,944 C.V. .................. L 840,905 0.10 (a) Grupo Financiero Bancomer, S.A de 25,000,009 C.V. .................. B 10,846,635 1.27 (a) Grupo Financiero Bancomer, S.A de 555,556 C.V. .................. L 183,158 0.02 (a) Grupo Financiero GBM Atlantico, S.A. de 366,000 C.V. .................. B 227,332 0.03 Grupo Financiero Inbursa, S.A. de 3,112,675 C.V. .................. B 12,314,420 1.44 (a)(b) Grupo Financiero Inverlat, S.A. de -- C.V. .................. B -- 0.00 (a) Grupo Financiero InverMexico, S.A. de 9,985,554 C.V. .................. BCP 1,461,686 0.17 (a) Grupo Financiero InverMexico, S.A. de 998,555 C.V. .................. LCP 138,268 0.02 (a) Grupo Financiero BBV- 33,500,000 Probursa, S.A. de C.V. B 2,606,488 0.31 (a) Grupo Financiero Serfin, 1,663,283 S.A. de C.V. .......... B4 855,440 0.10 (a) Grupo Financiero Serfin, 2,507,941 S.A. de C.V. .......... BCP 1,289,855 0.15 ------------ ----- 43,066,664 5.05 - -------------------------------------------------------------------------------------------- HOLDINGS 10,752,094 Alfa, S.A. de C.V. ..... A 42,821,210 5.02 5,126,284 Cydsa, S.A. ............ A 11,898,009 1.40 (a) 1,789,190 Desc, S.A. de C.V. ..... A 8,494,111 1.00 (a) 6,393,190 Desc, S.A. de C.V. ..... B 30,351,423 3.56 (a) 348,946 Desc, S.A. de C.V. ..... C 1,675,014 0.20 (a) Grupo Carso, S.A. de 6,975,994 C.V. .................. A1 27,736,545 3.25 (a) Invercorporacion, S.A. 6,975,994 de C.V. ............... A1 1,131,541 0.13 SanLuis Corporacion, 1,513,000 S.A. de C.V. .......... CPO 8,858,921 1.04 3,998,237 Vitro, S.A. ............ * 8,014,401 0.94 ------------ ----- 140,981,175 16.54 - -------------------------------------------------------------------------------------------- IRON & STEEL (a) Altos Hornos de Mexico, INDUSTRY 2,254,826 S.A. de C.V ........... * 16,770,696 1.97 (a) Grupo Simec, S.A. de 4,500,000 C.V. .................. B 985,098 0.12 Hylsamex, S.A. de 6,398,000 C.V. .................. BCP 23,540,050 2.76 (a) Industrias CH, S.A. de 1,540,000 C.V. .................. B 4,012,976 0.47 (a) Tubos de Acero de 696,000 Mexico, S.A. de C.V. .. * 6,948,068 0.81 ------------ ----- 52,256,888 6.13 - --------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- THE MEXICO FUND, INC. SCHEDULE OF INVESTMENTS AS OF JULY 31, 1996 (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------
SHARES COMMON STOCK (94.67%) VALUE PERCENT OF INDUSTRIES DIV HELD (CONTINUED) SERIES (NOTE 1) NET ASSETS - ------------------------------------------------------------------------------------------- MINING (a) Grupo Mexico, S.A. de INDUSTRY 8,700,000 C.V. .................. B $ 28,166,293 3.30% Industrias Penoles, S.A 6,299,000 de C.V. ............... * 26,166,227 3.07 ------------ ------ 54,332,520 6.37 - ------------------------------------------------------------------------------------------- PAPER Kimberly-Clark de 4,258,400 Mexico, S.A. de C.V. .. A 71,656,579 8.40 - ------------------------------------------------------------------------------------------- RETAIL TRADE (a) ACER Computec Latino America, S.A. de 720,000 C.V. .................. * 2,150,600 0.25 (a) 38,698,422 Cifra, S.A. de C.V. .... B 52,462,057 6.15 (a) 16,232,807 Cifra, S.A. de C.V. .... C 22,006,232 2.58 (a) Controladora Comercial Mexicana, S.A. de 13,800,000 C.V. .................. B 12,557,036 1.48 ------------ ------ 89,175,925 10.46 - ------------------------------------------------------------------------------------------- SERVICE (a) Videoprima, S.A. de 256,700 C.V. .................. * 693,947 0.08 - ------------------------------------------------------------------------------------------- TOTAL COMMON STOCK (identified cost -- $527,960,447).......... 807,231,645 94.67 - ------------------------------------------------------------------------------------------- FACE VALUE PERCENT OF SECURITIES VALUE SHORT-TERM SECURITIES (5.50%) (NOTE 1) NET ASSETS - ------------------------------------------------------------------------------------------- TIME DEPOSITS $46,950,868 Bancomer, S.A., 29.70% due 08/01/96....................... 46,950,868 5.50 - ------------------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (identified cost -- $46,950,868).................. 46,950,868 5.50 - ------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (identified cost -- $574,911,315).......... 854,182,513 100.17 LIABILITIES IN EXCESS OF OTHER ASSETS......................... (1,473,908) (0.17) ------------ ------ NET ASSETS (Equivalent to $17.15 Per Share on 49,715,907 Shares of Capital Stock Outstanding)................... $852,708,605 100.00% ------------ ------
(a) Shares of these securities are currently non-income producing. Equity investments that have not paid dividends within the last twelve months are considered to be non-income producing. (b) Grupo Financiero Inverlat, S.A. de C.V. is going through a reorganization and recapitalization program. See Note 7 to Financial Statements. See Notes to Financial Statements. - -------------------------------------------------------------------------------- THE MEXICO FUND, INC. STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED JULY 31, 1996 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME: Income (Note 1): Dividends......................................... $ 7,960,058 Interest and discount earned...................... 19,741,482 ------------ Total income...................................... $ 27,701,540 Expenses: Investment advisory fee (Note 2).................. 4,247,009 Administrative services (Note 3).................. 262,499 Trustee fee (Note 3).............................. 67,992 Value-added taxes (Note 1)........................ 697,769 Printing, distribution and mailing of shareholder reports.......................................... 337,563 Legal fees expense................................ 164,499 Directors' fees................................... 105,554 Directors' expenses............................... 16,671 Accounting and audit fees expense................. 79,300 Custodian fees.................................... 33,750 Transfer agent and dividend disbursing fees....... 15,786 Shareholders' information......................... 69,936 Stock exchange fees............................... 27,023 Miscellaneous..................................... 205,969 ------------ Operating expenses................................ 6,331,320 ------------ Net investment income (Note 1).................... 21,370,220 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVEST- MENTS AND FOREIGN CURRENCY: Realized gain (loss) on investments and foreign currency transactions (Notes 1 and 4): Proceeds from sales............................... 29,727,230 Cost of securities sold........................... 48,346,380 ------------ Net realized gain (loss) on investments........... (18,619,150) Net realized gain (loss) from foreign currency transactions...................................... 147,184 ------------ Net realized gain (loss) on investments and for- eign currency transactions....................... (18,471,966) Unrealized gain (loss) on investments and transla- tion of assets and liabilities in foreign curren- cy: End of period (Note 4)............................ 279,271,198 Beginning of period............................... 102,222,345 ------------ Net increase (decrease) in unrealized gain on in- vestments........................................ 177,048,853 Net unrealized gain (loss) on translation of assets and liabilities in foreign currency............... (243,836) ------------ Net unrealized gain (loss) on investments and translation of assets and liabilities in foreign currency......................................... 176,805,017 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERA- TIONS............................................. $179,703,271 ============
See Notes to Financial Statements. - ------------------------------------------------------------------------------- THE MEXICO FUND, INC. STATEMENT OF ASSETS AND LIABILITIES AS OF JULY 31,1996 (UNAUDITED) - ------------------------------------------------------------------------------- ASSETS: Investments: Mexican securities, at value (Note 1): Common stock (identified cost $527,960,447)......... $807,231,645 Short-term securities (identified cost $46,950,868)....................................... 46,950,868 ------------ Total investments (identified cost $574,911,315)... $854,182,513 Interest receivable.................................. 38,735 ------------ Total assets........................................ 854,221,248 ------------ LIABILITIES: Payables: Investment adviser (Note 2)......................... 647,073 Trustee (Note 3).................................... 9,441 ------------ Total payables.................................... 656,514 Accrued expenses and other liabilities............... 718,472 Payables for offering expenses....................... 137,657 ------------ Total liabilities................................. 1,512,643 ------------ NET ASSETS -- Equivalent to $17.15 Per Share on 49,715,907 shares of capital stock outstanding (Note 5)............................................ $852,708,605 ============
See Notes to Financial Statements. - -------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDED FOR THE THE MEXICO FUND, INC. JULY 31, 1996 YEAR ENDED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) OCTOBER 31, 1995 - --------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS Net investment income....................... $ 21,370,220 $ 21,970,230 Net realized gain (loss) on investments and foreign currency transactions.............. (18,471,966) (45,716,330) Net unrealized gain (loss) on investments and translation of assets and liabilities in foreign currency............ 176,805,017 (670,000,040) ------------ -------------- Net increase (decrease) in net assets re- sulting from operations.................... 179,703,271 (693,746,140) Dividends to shareholders from net invest- ment income................................ (12,890,974) (257,221) Dividends to shareholders from net realized gain on investments........................ -- (517,898) Tax return of capital (Note 1).............. -- (1,726,529) Net increase in capital stock (Note 5)...... -- 134,050,437 ------------ -------------- Total increase (decrease) in net assets.... 166,812,297 (562,197,351) NET ASSETS: Beginning of period......................... 685,896,308 1,248,093,659 ------------ -------------- End of period............................... $852,708,605(A) $ 685,896,308(A) ============ ==============
See Notes to Financial Statements. (A) Including undistributed net investment income and net realized gain on investments of $6,495,802 and $0 (B), respectively, as of July 31, 1996 and undistributed net investment income and net realized gain on investments of $0 and $0(B), respectively, as of October 31, 1995. (B) Including $4,143,234 of capital gains, net of income taxes paid in 1991, which will not be distributed. - --------------------------------------------------------------------------------
FOR THE NINE MONTHS FOR THE ENDED FIVE MONTHS JULY 31, FOR THE YEAR ENDED OCTOBER 31, ENDED THE MEXICO FUND, INC. 1996 ------------------------------------------ OCTOBER 31, FINANCIAL HIGHLIGHTS (UNAUDITED) 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------- PER SHARE OPERATING PER- FORMANCE: Net asset value, begin- ning of period......... $ 13.80 $ 33.48** $ 28.88** $ 24.91** $ 25.60** $ 24.07 -------- ------- --------- --------- ------- -------- Net investment income (loss) (Note 1)....... 0.17 0.59** 0.21** 0.58** 0.50** (0.02) Net gain (loss) on investments and translation of foreign currency (Note1)...... 3.44 (19.21)** 4.89** 8.77** 3.85** 1.81 -------- ------- --------- --------- ------- -------- Total from investments operations............. 3.61 (18.62)** 5.10** 9.35** 4.35** 1.79 -------- ------- --------- --------- ------- -------- Less dividends and dis- tributions: Dividends to common shareholders from net investment income..... (0.26) -- (0.27) (0.49) (0.48) (0.26) Distributions to common shareholders from net capital gains......... -- (0.01) (0.23) (2.48) (1.03) -- -------- ------- --------- --------- ------- -------- Total dividends and dis- tributions............. (0.26) (0.01) (0.50) (2.97) (1.51) (0.26) -------- ------- --------- --------- ------- -------- Tax return of capital.. -- (0.05) -- -- -- -- -------- ------- --------- --------- ------- -------- Capital charge result- ing from issuance of fund shares........... -- (1.00) -- (2.41) (3.53) -- -------- ------- --------- --------- ------- -------- Net asset value, end of period................ $ 17.15 $ 13.80 $ 33.48 $ 28.88 $ 24.91 $ 25.60 ======== ======= ========= ========= ======= ======== Market value per share, end of period......... $ 14.50 $ 12.25 $ 31.38 $ 27.00 $ 23.25 $ 22.88 ======== ======= ========= ========= ======= ======== TOTAL INVESTMENT RETURN BASED ON MARKET VALUE PER SHARE.............. 20.48% (60.79%) 15.39% 27.41% 8.12% (1.52%) RATIOS TO AVERAGE NET ASSETS Expenses............... 1.02%* 1.14% 0.92% 1.08% 1.08% 1.25%* Net investment income (loss)................ 3.46%* 3.24% 0.63% 2.27% 1.89% (0.23%)* SUPPLEMENTAL DATA: Net assets at end of period (in 000's)..... $852,709 $685,896 $1,248,094 $1,075,948 $654,917 $504,849 Portfolio turnover rate.................. 4.00% 10.61% 3.89% 5.14% 15.59% 3.34%*
- -------- *Annualized **Amounts were computed based on average shares outsanding during the period. See Notes to Financial Statements. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) - -------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ----------------------------------------------------------- QUARTER ENDED QUARTER ENDED QUARTER ENDED 07/31/1996 04/30/1996 01/31/1996 ------------------- ------------------- ------------------- TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE -------- --------- -------- --------- -------- --------- Investment Income....... $ 6,983 $ 0.14 $ 11,757 $ 0.24 $ 8,962 $ 0.18 Net Investment Income... $ 4,838 $ 0.10 $ 9,586 $ 0.19 $ 6,946 $ 0.14 Net realized gain (loss) on investments......... $ (1,174) $(0.02) $ (1,273) $(0.03) $(16,172) $(0.33) Net realized gain (loss) from foreign currency transactions........... $ 136 $ 0.00 $ (18) $(0.00) $ 29 $ 0.00 Net increase (decrease) in unrealized gain on investments............ $(44,745) $(0.90) $ 61,273 $ 1.23 $160,521 $ 3.23 Net unrealized gain (loss) on translation of assets and liabilities in foreign currency............... $ (1,387) $(0.03) $ (190) $(0.00) $ 1,333 $ 0.03 Net asset value......... $852,709 $17.15 $902,497 $18.15 $837,097 $16.84
- ------- See Notes to Financial Statements. THE MEXICO FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JULY 31, 1996 (UNAUDITED) - ------------------------------------------------------------------------------- 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: The Fund is registered under the Investment Company Act of 1940 as a diversi- fied, closed-end management investment company. The investment objective of the Fund is to seek long term capital appreciation through investment in secu- rities, primarily equity but also fixed income securities, listed on the Mexi- can Stock Exchange. On July 17, 1991, the Board of Directors voted to change the year-end of the Fund from May 31 to October 31. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund. Valuation of investments -- Investments traded on the Mexican Stock Exchange are valued at the last sale price. Short-term securities are carried at cost, plus accrued interest, which approximates market value. Foreign Currency -- The Fund has adopted the provisions of Statement of Posi- tion 93-4, Foreign Currency Accounting and Financial Statement Presentation for Investment Companies ("SOP") effective for the period ended October 31, 1995. The Fund has elected not to restate prior periods. The adoption of this SOP results in the reclassification of net realized gain (loss) from foreign currency transactions, previously included as a component of net investment income, to net realized gain (loss) on investments and foreign currency trans- actions, and the inclusion of unrealized gain (loss) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- on translation of currency into unrealized appreciation (depreciation) of in- vestments and translation of assets and liabilities in foreign currencies. Effective January 1, 1996, the name of the Mexican currency unit is "Peso (P)", which prior to 1996 was referred to as "New Peso (NP)". The market value of Mexican securities, currency holdings and other assets and liabilities de- nominated in "Peso (P)" were recorded in the financial statements after trans- lation into U.S. dollars based on the open market exchange rate prevailing in Mexico City at the end of the period. The open market exchange rate at July 31, 1996 was P 7.583 to $1.00. The identified cost of portfolio holdings is translated at approximate rates prevailing when acquired. Income and expense amounts are translated at approx- imate rates prevailing when earned or incurred. As a consequence of the exchange rate policy modification adopted by Banco de Mexico as of December 20, 1994, which resulted in a significant devaluation during 1995, there has been significant volatility in the interest rates and portfolio value. The accompanying financial statements reflect the financial condition of the Fund at July 31, 1996 and the results of operations for the nine months then ended. Given the aforementioned conditions, the finan- cial condition and results of operations of the Fund during 1996 could vary significantly from that in 1995. Reported net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference be- tween the amounts of dividends, interest, and foreign withholding taxes re- corded on the Fund's books, and the U.S. dollar equivalent of the amount actu- ally received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Since the net assets of the Fund are determined based on the currency ex- change rate and market values at the close of each business day, it is not practicable to isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities during the year. Accordingly, the net realized and unrealized gain on investments presented in the accompa- nying financial statements include the effects of both such changes. Security transactions and investment income --Security transactions are re- corded on the date which the transactions are entered into (the trade date). Dividend income is recorded on the ex-dividend date and interest income is re- corded as it is earned. Realized gains and losses on investments -- Realized gains and losses on in- vestments are determined on the identified cost basis. Taxes -- No provision has been made for U.S. income taxes for the nine months ended July 31, - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1996 on net investment company taxable income or net long-term capital gains as defined by the Internal Revenue Code (the "Code"), since the Fund intends to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of such income to its sharehold- ers. The Fund is not subject to Mexican income taxes. The provision for value- added taxes represents Mexican value-added tax on certain services rendered by Mexican corporations to the Fund. Dividends to shareholders -- Cash dividends are recorded by the Fund on the ex-dividend date. Dividends paid to shareholders are subject to Mexican with- holding taxes if applicable. A tax return of capital generally occurs when distributions exceed current and accumulated tax earnings and profits. The Fund had no current earnings and profits for the year ended October 31, 1995. This has had the effect of recharacterizing a portion of the Fund's prior year distributions as a tax re- turn of capital. 2. INVESTMENT ADVISORY AGREEMENT: The Fund has a management contract with Impulsora del Fondo Mexico, S.A. de C.V. (the "Adviser"), a Mexican corporation registered under the U.S. Invest- ment Advisers Act of 1940. The Adviser furnishes investment research and port- folio management services consistent with the Fund's stated investment poli- cies. The Fund pays to the Adviser a monthly fee at the annual rate of 0.85% on the first $200 million of average daily net assets, 0.70% on the excess over $200 million up to $400 million and 0.60% on the excess over $400 mil- lion. 3. TRUST AGREEMENT AND TRUSTEE: Pursuant to a Trust Agreement which provides for the Fund's assets to be held, invested and reinvested for the benefit of the Fund, a trust was created be- tween the Fiduciary Department of Nacional Financiera, S.N.C. ("NAFIN") and the Series A stockholders of the Adviser. At the closing of the initial offer- ing of the Fund, in June 1981, NAFIN reimbursed the Series A stockholders of the Adviser the amounts each one had contributed to the creation of the trust and they ceased to be parties thereto. Effective April 1, 1994, the Fund entered into an Administrative Services Agreement with the Adviser, which provides for certain administrative services previously performed by NAFIN to be performed by the Adviser, including the determination and publication of the net asset value of the Fund, the mainte- nance of the Fund's books and records in accordance with applicable U.S. and Mexican Laws and the provision of assistance to the Fund's auditors in the preparation and filing of annual reports and tax returns. The initial term of this agreement runs until August 31, 1996. The annual fee payable to the Ad- viser under this agreement is $350,000. Effective May 1, 1994, the Fund amended its agreement with NAFIN, establish- ing a fixed annual fee of $350,000 for the remaining services to be provided by NAFIN. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- At its June 7, 1995 meeting, the Board of Directors approved the appointment of Bancomer, S.A. ("Bancomer") as the trustee for the Mexican Trust through which the Fund invests. The Fund also obtained the approval of the Comision Nacional Bancaria y de Valores and the Mexican Foreign Investment Commission to permit Bancomer to become the trustee. Under this new arrangement, effec- tive October 5, 1995, Bancomer receives P 600,000 (aproximately $79,000) per year for three years, subject to a monthly increase linked to the Mexican Con- sumer Price Index, monthly cumulative basis. This fee arrangement will result in significantly lower trustee fees to the Fund. In this regard, the Fund en- tered into a definitive arrangement on October 5, 1995 with Bancomer and NAFIN, the previous trustee, which provided for the succession of Bancomer as the trustee. 4. PURCHASES AND SALES OF INVESTMENTS: Purchases and sales of investments, excluding short-term securities, for the nine months ended July 31, 1996 were as follows: Purchases - ------------------------------------------------------------------------------- Common Stock...................................................... $148,340,594 Fixed Income Securities........................................... -- ------------ Total Purchases................................................. $148,340,594 ============ Proceeds from Investments Sold.................................... - ------------------------------------------------------------------------------- Common Stock...................................................... $ 29,727,230 Fixed Income Securities........................................... -- ------------ Total Sales..................................................... $ 29,727,230 ============
As of July 31, 1996, net unrealized gain on investments for Federal income tax purposes aggregated to approximately $279 million, of which approximately $359 million related to appreciated securities and approximately $80 million related to depreciated securities. The aggregate cost of investments at July 31, 1996 for Federal income tax pur- poses was approximately $575 million. 5. CAPITAL STOCK: On January 27, 1995, the Annual Shareholders Meeting of the Fund approved an increase in the number of authorized shares from 50,000,000 to 150,000,000. At July 31, 1996, there were 150,000,000 shares of $1.00 par value common stock authorized, of which 49,967,732 shares were issued, 49,715,907 shares were outstanding and 251,825 shares were held in treasury. Starting with the distribution made to shareholders on July 30, 1993, the Fund offered a Dividend Reinvestment Plan ("Plan"). Under this Plan, the Com- pany sold, in fiscal year 1995, 4,571 shares of common stock held in treasury which amounted to $89,706. The Plan was amended by the Board of Directors at the December 7, 1994 Board Meeting. The new Plan became effective April 1, 1995. Under the terms of the amended Plan, Fund shareholders automatically will be enrolled as participants in the Plan unless they notify the Fund otherwise. On October 13, 1995, the Company issued rights to suscribe to an aggregate of 12,428,977 shares of common stock. The Company issued all of the common stock offered, and received net proceeds of $133,960,731. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- As of July 31, 1996, net assets were comprised of the following: Common Stock..................................................... $ 49,715,907 Additional paid-in capital....................................... 562,178,531 Undistributed net investment income.............................. 6,495,802 Accumulated net realized loss on investments..................... (36,348,609) Unrealized appreciation of investments and depreciation on translation of assets and liabilities in foreign currency....... 270,666,974 ------------ $852,708,605 ============
Accumulated net realized losses from foreign currency transactions have been netted against undistributed net investment income to be consistent with the tax treatment for distributions from net investment income per the Code. 6. CAPITAL GAINS: Net realized gains from security transactions, if any, are distributed annu- ally to shareholders. Capi- tal loss carryforwards will be used to offset fu- ture capital gains available for distribution. The Fund had net capital loss carryforwards at July 31, 1996 of approximately $40,489,000 of which $21,870,000 and $18,619,000 expire in 2003 and 2004, respectively. 7. INVESTMENTS: As a result of significant losses incurred by Grupo Financiero Inverlat, S.A. de C.V. ("Inverlat"), certain significant shareholders, together with the fi- nancial authorities, developed a recapitalization program. On July 23, 1996 after the absorption of accumulated losses through the total reduction of cap- ital stock, the shareholders of Inverlat approved a cash contribution by FOBAPROA (Banking Fund for Savings Protection) to cover such losses. As a con- sequence, all shares outstanding prior to July 23, 1996 were cancelled and some eligible shareholders may receive shares equal to 9% and up to 36% of their ownership interest as of that date, through a trust agreement. Manage- ment has assigned the market value of the Company's holdings in Inverlat at $0 as of July 31, 1996 due to the uncertainty regarding its ultimate realization. -----END PRIVACY-ENHANCED MESSAGE-----