-----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, Con6z5LXCRoboUXnjnnVYOBC8tVIJtqFNrhEPe7N9Z1axyE5dBM9s3IxExEZrz73 F1i2zKBF08HQmWs7nN1Bpw== 0000928385-97-000591.txt : 20040405 0000928385-97-000591.hdr.sgml : 20040405 19970331214700 ACCESSION NUMBER: 0000928385-97-000591 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970401 DATE AS OF CHANGE: 19970420 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: 97572179 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 Jose Luis Gomez Pimienta Claudio X. Gonzalez Robert L. Knauss Agustin Santamarina V. Jaime Serra Puche* 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 AND TRUSTEE -- Bancomer, S.A. TRANSFER AGENT AND REGISTRAR -- American Stock Transfer & Trust Company COUNSEL -- Dechert Price & Rhoads Creel, Garcia-Cuellar y Muggenburg, S.C. *Elected on February 28, 1997. 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 THE MEXICO FUND, INC. (Unaudited) ---------------------- Quarterly Report January 31, 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE MEXICO FUND, INC. QUARTERLY REPORT JANUARY 31, 1997 HIGHLIGHTS .. The Fund's first quarter of fiscal 1997 ended January 31, 1997. .. During this first fiscal quarter, the Fund's net asset value (NAV) and price per share increased 14%, to close at $19.73 and $16.125, respectively. .. The Fund's discount between market price and NAV ended January 1997 at a level of 18%, compared with 8% one year earlier. .. Total volume of Fund shares traded on all US consolidated markets during this fiscal quarter amounted to 16.8 million, compared with 49.7 million outstand- ing. .. During calendar 1996, Mexico's gross domestic product (GDP) increased 5.1% in real terms, and reached a level of approximately $324 billion. .. The annual inflation rate in Mexico registered 27.7% at the end of December 1996, compared with 52% one year earlier. .. During calendar 1996, the Mexican current account registered a preliminary deficit of $1.8 billion, compared with a deficit of $1.6 billion one year earlier. .. The rate of exchange of the Mexican peso against the US dollar continued to perform in a stable manner during this fiscal quarter, and ended at a level of Ps. 7.807. .. Interest rates of the 28-day Cetes (Treasury Bills) declined from 29% at the end of October 1996, to 21% at the end of the first fiscal quarter. .. The Mexican Stock Exchange (Bolsa) index increased 16% in US dollar terms during this fiscal quarter, to close at a level of 3,647 points. NO FOLIO - ------------------------------------------------------------------------------- THE MEXICO FUND, INC. TO OUR SHAREHOLDERS: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ECONOMIC COMMENTS. During calendar 1996, the Mexican GDP increased 5.1% in real terms, and reached a level of approximately $324 billion. The three sectors that comprise the GDP, and almost all of its branches, registered positive rates of growth. Industrial production, which represented 22% of total GDP, increased 10.4% and had a significant impact on the GDP performance. The data clearly demonstrate the recovery of the Mexican economy, a trend which is expected to continue during 1997, when the government anticipates a GDP growth of at least 4%. Domestic inflation has continued to decline. At the end of calendar 1996, the annual inflation rate, measured by the increase of the consumer price index (CPI), calculated by Banco de Mexico (central bank), registered a level of 27.7%. Even though this inflation rate was higher than the government's goal of 22%, it is almost half of the 52% inflation level registered one year ear- lier. This declining trend of inflation rates is expected to continue during 1997. As a result of this positive performance of inflation rates and of a reduced country-risk perception of Mexico, domestic interest rates have continued de- clining. The 28-day Cetes ended January 1997 at 21%, compared with 29% at the end of the previous fiscal quarter. Further declines have occurred, and at the end of February 1997, the 28-day Cetes registered a level of 18.7%. However, by mid-March, this interest rate indicator increased to levels of around 21%. During the first quarter, the Mexican peso traded in a stable manner and its relative value showed signs of strength. At the end of January 1997, the rate of exchange of the peso against the US dollar ended at a level of Ps. 7.807, 2% lower than the exchange rate of Ps. 7.998 recorded three months earlier. Banco de Mexico recently announced, among other currency-related issues, the implementation of a program designed to eliminate currency market volatility. Under this program, the central bank may intervene in the currency market, if the exchange rate between the peso and the dollar increases more than 2% dur- ing one trading day. As of January 31, 1997, gross international reserves at the central bank amounted to approximately $19 billion, and to $9 billion in net terms/1/. As of the writing of this Letter, mid-March 1997, the value of the peso in relation to the US dollar had declined to levels of approximately Ps. 8.00. The Mexican trade balance continued to register surpluses. During calendar 1996, total exports increased 21% to $95.95 billion, while total imports in- creased 24% to $89.53 billion. The result was a trade balance surplus of $6.42 billion, compared with $7.1 billion one year earlier. The Mexican current ac- count registered a preliminary deficit of $1.8 billion during 1996, compared with a deficit of $1.6 billion during 1995. THE BOLSA AND THE FUND PERFORMANCE. The Bolsa Index reached new historical levels and increased 16% in dollar terms during this fiscal quarter, to close at a level of 3,647 points. Im- proved financial results of listed companies, reduced interest rates and the recovery of the economy, were some of the factors that stimulated the perfor- mance of the Bolsa. The price-earnings and price-book value ratios ended Janu- ary 1997 at multiples of 14.41 and 1.86, respectively, while the market capi- talization amounted to $113.5 billion. - ------- /1Net/international reserves are the difference between gross international reserves and the net amount of foreign exchange denominated liabilities of Banco de Mexico, with a term of six months or less. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- The Fund's price and NAV per share increased 14% during this three-month pe- riod. The closing price per share and NAV at the end of January were $16.125 and $19.73, respectively, reflecting a discount of approximately 18%. The Fund continued to register high levels of liquidity. During the first quarter, a total of 16.8 million shares traded on all US consolidated markets, and for the last 12 months, the volume amounted to 63.4 million, equivalent to 1.3 times the total number of outstanding shares. ANNUAL SHAREHOLDERS MEETING. The Annual Shareholders Meeting of the Fund was held on February 28, 1997, in New York City. Approximately 79% of the outstanding shares were present at the meeting in person and by proxy. Messrs. Philip Caldwell and Jaime Serra Puche were elected Class I Directors of the Board for a three year term expiring in 2000. Dr. Serra Puche took the seat left by Mr. Fernandez Hurtado after his resignation effective December 31, 1996, and Mr. Caldwell was reelected to the Board. In addition, the proposal to ratify the selection of Arthur Andersen LLP as independent auditors for the 1997 fiscal year was approved by the shareholders. The specific results of the meeting were as follows:
VOTES VOTES VOTES FOR AGAINST ABSTAINED UNVOTED ---------- --------- --------- ------- 1. Election of Directors Philip Caldwell 38,147,644 1,113,016 -- -- Jaime Serra Puche 38,248,529 1,012,131 -- -- 2. Ratify selection of Arthur Andersen LLP 38,327,891 724,414 208,353 2
The Fund's remaining directors, Messrs. Juan Gallardo T, Jose Luis Gomez Pimienta, Claudio X. Gonzalez, Robert L. Knauss and Agustin Santamarina V. continue to serve as directors of the Fund. 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, quarterly 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: LOGO LOGO JOSE LUIS GOMEZ PIMIENTA JUAN GALLARDO T. President Chairman of the Board March 18, 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GERMAN INVESTORS ARE ADVISED THAT THE FUND HAS A GERMAN DOMESTIC TAX REPRESENTATIVE: degab Gesellschaft fur Anlageberatung mbH Guiollettstr. 48 D-60325 Frankfurt am Main Tel: 069-910-31830 (Herr Symmank) 069-910-31831 (Frau Meilinger-Gresser) Fax: 069-910-31877 SHAREHOLDER INFORMATION Weekly comparative NAV and market price information about 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 Compos- ite 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 also listed and 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 JANUARY 31, 1997 (UNAUDITED) - --------------------------------------------------------------------------------
PERCENT SHARES VALUE OF NET INDUSTRIES DIV HELD COMMON STOCK (95.77%) SERIES (NOTE 1) ASSETS - ---------------------------------------------------------------------------------------- CEMENT INDUSTRY 6,800,000 Apasco, S.A. de C.V. ... * $ 49,038,043 5.00% 12,931,958 Cemex, S.A.de C.V. ..... CPO 48,699,829 4.97 ------------ ----- 97,737,872 9.97 - ---------------------------------------------------------------------------------------- Carso Global Telecom, COMMUNICATIONS (a) 10,036,994 S.A. de C.V. .......... A1 29,569,727 3.02 Grupo Televisa, S.A. de (a) 1,268,200 C.V. .................. CPO 16,569,284 1.69 Telefonos de Mexico, 10,000,000 S.A. de C.V. .......... A 18,829,256 1.92 Telefonos de Mexico, 10,000,000 S.A. de C.V. .......... L 18,931,728 1.93 ------------ ----- 83,899,995 8.56 - ---------------------------------------------------------------------------------------- Corporacion Geo, S.A. de CONSTRUCTION (a) 1,900,000 C.V. .................. B 9,369,796 0.96 Empresas ICA, Sociedad Controladora, S.A. de (a) 1,791,332 C.V. .................. * 27,304,792 2.78 ------------ ----- 36,674,588 3.74 - ---------------------------------------------------------------------------------------- Coca-Cola Femsa, S.A. de CONSUMER GOODS 4,430,000 C.V. .................. L 13,448,316 1.37 Fomento Economico Mexicano, S.A. de 8,342,000 C.V. .................. B 29,224,247 2.98 Grupo BAFAR, S.A. de (a) 940,000 C.V. .................. B 1,695,299 0.17 Grupo Continental, 3,053,000 S.A. .................. *CP 16,150,749 1.65 Grupo Industrial Bimbo, 8,103,000 S.A de C.V. ........... A 48,937,678 4.99 Grupo Industrial Maseca, 27,097,000 S.A. de C.V. .......... B 35,749,853 3.64 Grupo Modelo, S.A. de 9,275,000 C.V. .................. C 55,718,906 5.68 Jugos del Valle, S.A. de (a) 818,000 C.V. .................. B 1,242,664 0.13 Sistema Argos, S.A. de 1,275,000 C.V. .................. A 1,368,579 0.14 Sistema Argos, S.A. de 5,000,000 C.V. .................. B 5,379,787 0.55 ------------ ----- 208,916,078 21.30 - ---------------------------------------------------------------------------------------- FINANCIAL Grupo Financiero Banamex GROUPS (a) 7,078,450 Accival, S.A. de C.V. . B 14,579,413 1.49 Grupo Financiero Banamex (a) 470,944 Accival, S.A. de C.V. . L 900,024 0.09 Grupo Financiero (a) 25,000,009 Bancomer, S.A de C.V. . B 9,158,451 0.93 Grupo Financiero (a) 555,556 Bancomer, S.A de C.V. . L 183,596 0.02 Grupo Financiero BBV- Probursa, S.A. de (a) 54,327,000 C.V. .................. B 2,992,265 0.30 Grupo Financiero 3,356,074 Inbursa, S.A. de C.V. . B 12,036,643 1.23 Grupo Financiero Inverlat Recovery (a)(b) -- Trust.................. -- 0.00 Grupo Financiero InverMexico, S.A. de (a) 9,985,554 C.V. .................. BCP 882,545 0.09 Grupo Financiero InverMexico, S.A. de (a) 998,555 C.V. .................. LCP 83,138 0.01 ------------ ----- 40,816,075 4.16 - ---------------------------------------------------------------------------------------- HOLDINGS 10,245,094 Alfa, S.A. de C.V. ..... A 53,541,672 5.46 4,200,000 Cydsa, S.A. ............ A 10,651,979 1.09 (a) 1,789,190 Desc, S.A. de C.V. ..... A 10,542,172 1.07 (a) 6,506,190 Desc, S.A. de C.V. ..... B 38,002,083 3.87 (a) 200,000 Desc, S.A. de C.V. ..... C 1,163,059 0.12 Grupo Carso, S.A. de 7,375,994 C.V. .................. A1 45,019,356 4.59 Grupo Imsa, S.A. de (a) 1,482,000 C.V. .................. UBC 3,625,746 0.37 San Luis Corporacion, 2,666,000 S.A. de C.V. .......... CPO 15,196,234 1.55 3,998,237 Vitro, S.A. ............ * 9,146,729 0.93 ------------ ----- 186,889,030 19.05 - ---------------------------------------------------------------------------------------- IRON & STEEL Altos Hornos de Mexico, INDUSTRY (a) 5,250,000 S.A. de C.V ........... * 10,759,575 1.10 Grupo Simec, S.A. de (a) 4,500,000 C.V. .................. B 962,598 0.10 5,000,000 Hylsamex, S.A. de C.V. . BCP 20,494,428 2.09 Industrias CH, S.A. de (a) 1,540,000 C.V. .................. B 5,266,812 0.54 Tubos de Acero de (a) 889,000 Mexico, S.A. de C.V. .. * 15,532,164 1.58 ------------ ----- 53,015,577 5.41 - ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- THE MEXICO FUND, INC. SCHEDULE OF INVESTMENTS AS OF JANUARY 31, 1997 (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------
PERCENT SHARES VALUE OF NET INDUSTRIES DIV HELD COMMON STOCK (CONTINUED) SERIES (NOTE 1) ASSETS - ---------------------------------------------------------------------------------------- MINING Grupo Mexico, S.A. de INDUSTRY (a) 7,950,000 C.V. .................. B $ 26,679,903 2.72% Industrias Penoles, S.A 4,500,000 de C.V. ............... * 19,021,392 1.94 ------------ ------ 45,701,295 4.66 - ---------------------------------------------------------------------------------------- Kimberly-Clark de PAPER 4,357,400 Mexico, S.A. de C.V. .. A 90,418,701 9.22 - ---------------------------------------------------------------------------------------- ACER Computec Latino RETAIL TRADE (a) 1,330,000 America, S.A. de C.V. . * 5,298,194 0.54 (a) 38,698,422 Cifra, S.A. de C.V. .... B 52,146,458 5.32 (a) 16,232,807 Cifra, S.A. de C.V. .... C 21,582,751 2.20 Controladora Comercial Mexicana, S.A. de (a) 14,990,000 C.V. .................. UBC 13,709,312 1.40 Grupo Corvi, S.A. de (a) 3,000,000 C.V. .................. UBL 2,374,792 0.24 ------------ ------ 95,111,507 9.70 - ---------------------------------------------------------------------------------------- TOTAL COMMON STOCK (Identified Cost -- $552,387,832)......... 939,180,718 95.77 - ---------------------------------------------------------------------------------------- PERCENT FACE SHORT- VALUE OF NET SECURITIES VALUE TERM SECURITIES (4.36%) (NOTE 1) ASSETS - ---------------------------------------------------------------------------------------- REPURCHASE $42,807,034 Bancomer, S.A., 21.80%, AGREEMENTS dated 01/31/97, due 02/03/97, repurchase price $42,840,900, collateralized by Ajustabonos............ $ 42,807,034 4.36% - ---------------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Identified Cost -- $42,807,034)... 42,807,034 4.36 - ---------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Identified Cost -- $595,194,866)......... 981,987,752 100.13 LIABILITIES IN EXCESS OF OTHER ASSETS........... (1,281,696) (0.13) ------------ ------ NET ASSETS (Equivalent to $19.73 Per Share on 49,715,907 Shares of Capital Stock Outstanding)........... $980,706,056 100.00% ------------ ------
(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) See Note 8 to Financial Statements. See Notes to Financial Statements. - -------------------------------------------------------------------------------- THE MEXICO FUND, INC. STATEMENT OF ASSETS AND LIABILITIES AS OF JANUARY 31, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments: Mexican securities, at value (Note 1): Common stock (identified cost -- $552,387,832)...... $939,180,718 Short-term securities (identified cost -- $42,807,034) 42,807,034 ------------ Total investments (identified cost -- $595,194,866).................................... $981,987,752 Interest receivable.................................. 25,922 ------------ Total assets....................................... 982,013,674 ------------ LIABILITIES: Payables: Investment adviser (Note 2)......................... 671,281 Trustee (Note 4).................................... 10,157 ------------ Total payables..................................... 681,438 Accrued expenses and other liabilities............... 626,180 ------------ Total liabilities.................................. 1,307,618 ------------ NET ASSETS -- Equivalent to $19.73 Per Share on 49,715,907 shares of capital stock outstanding (Note 6).................................................. $980,706,056 ============
See Notes to Financial Statements. - -------------------------------------------------------------------------------- THE MEXICO FUND, INC. STATEMENT OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED JANUARY 31, 1997 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME: Income (Note 1): Dividends.......................................... $ 927,249 Interest and discount earned....................... 2,858,023 ------------ Total income....................................... $ 3,785,272 Expenses: Investment advisory fee (Note 2)................... 1,580,774 Administrative services (Note 3)................... 87,500 Trustee fee (Note 4)............................... 25,669 Value-added taxes (Note 1)......................... 259,453 Printing, distribution and mailing of shareholder reports........................................... 103,342 Legal fees......................................... 60,494 Directors' fees.................................... 35,288 Directors' expenses................................ 6,153 Accounting and audit fees.......................... 25,962 Custodian fees..................................... 8,967 Transfer agent and dividend disbursing fees........ 5,250 Shareholders' information.......................... 13,107 Stock exchange fees................................ 10,081 Miscellaneous...................................... 50,517 ------------ Operating expenses................................. 2,272,557 ------------ Net investment income (Note 1)..................... 1,512,715 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Realized gain (loss) on investments and foreign currency transactions (Notes 1 and 5): Proceeds from sales................................ 13,568,717 Cost of securities sold............................ 5,691,252 ------------ Net realized gain (loss) on investments............ 7,877,465 Net realized gain (loss) from foreign currency transactions...................................... 1,006,113 ------------ Net realized gain (loss) on investments and foreign currency transactions............................. 8,883,578 Unrealized gain (loss) on investments and translation of assets and liabilities in foreign currency: End of period (Note 5)............................. 386,792,886 Beginning of period................................ 276,165,119 ------------ Net increase (decrease) in unrealized gain on investments....................................... 110,627,767 Net unrealized gain (loss) on translation of assets and liabilities in foreign currency............... (79,020) ------------ Net unrealized gain (loss) on investments and translation of assets and liabilities in foreign currency.......................................... 110,548,747 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................................... $120,945,040 ============
See Notes to Financial Statements. - ------------------------------------------------------------------------------- THE MEXICO FUND, INC. STATEMENT OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED FOR THE JANUARY 31, 1997 YEAR ENDED (UNAUDITED) OCTOBER 31, 1996 - ------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS Net investment income................... $ 1,512,715 $ 24,968,180 Net realized gain (loss) on investments and foreign currency transactions...... 8,883,578 (722,805) Net unrealized gain (loss) on investments and translation of assets and liabilities in foreign currency.... 110,548,747 172,950,648 ------------ ------------ Net increase in net assets resulting from operations........................ 120,945,040 197,196,023 Dividends to shareholders from net investment income...................... (1,988,636) (21,342,679) ------------ ------------ Total increase in net assets........... 118,956,404 175,853,344 NET ASSETS: Beginning of period..................... 861,749,652 685,896,308 ------------ ------------ End of period........................... $980,706,056 (A) $861,749,652 (A) ============ ============
See Notes to Financial Statements. (A) Including undistributed net investment income and net realized gain on investments of $379,833 and $0(B), respectively, as of January 31, 1997 and accumulated net investment loss and net realized gain on investments of $(150,359) and $0(B), respectively, as of October 31,1996. (B) Including $4,143,234 of capital gains, net of income taxes paid in 1991, which will not be distributed. - --------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED JANUARY 31, FOR THE YEAR ENDED OCTOBER 31, THE MEXICO FUND, INC. 1997 --------------------------------------------------------- FINANCIAL HIGHLIGHTS (UNAUDITED) 1996 1995 1994 1993 1992 - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.... $ 17.33 $ 13.80 $ 33.48** $ 28.88** $ 24.91** $ 25.60** -------- -------- --------- ---------- ---------- -------- Net investment income (loss) (Note 1)....... 0.03 0.50 0.59** 0.21** 0.58** 0.50** Net gain (loss) on investments and translation of foreign currency (Note1)...... 2.41 3.46 (19.21)** 4.89** 8.77** 3.85** -------- -------- --------- ---------- ---------- -------- Total from investments operations............. 2.44 3.96 (18.62)** 5.10** 9.35** 4.35** Less dividends and distributions: Dividends to common shareholders from net investment income..... (0.04) (0.43) -- (0.27) (0.49) (0.48) Distributions to common shareholders from net capital gains......... -- -- (0.01) (0.23) (2.48) (1.03) -------- -------- --------- ---------- ---------- -------- Total dividends and distributions......... (0.04) (0.43) (0.01) (0.50) (2.97) (1.51) -------- -------- --------- ---------- ---------- -------- Tax return of capital.. -- -- (0.05) -- -- -- -------- -------- --------- ---------- ---------- -------- Capital charge resulting from issuance of fund shares................ -- -- (1.00) -- (2.41) (3.53) -------- -------- --------- ---------- ---------- -------- Net asset value, end of period................ $ 19.73 $ 17.33 $ 13.80 $ 33.48 $ 28.88 $ 24.91 ======== ======== ========= ========== ========== ======== Market value per share, end of period......... $ 16.13 $ 14.13 $ 12.25 $ 31.38 $ 27.00 $ 23.25 ======== ======== ========= ========== ========== ======== TOTAL INVESTMENT RETURN BASED ON MARKET VALUE PER SHARE.............. 14.44% 18.77% (60.79%) 15.39% 27.41% 8.12% RATIOS TO AVERAGE NET ASSETS Expenses............... 0.97%* 1.00% 1.14% 0.92% 1.08% 1.08% Net investment income (loss)................ 0.65%* 2.93% 3.24% 0.63% 2.27% 1.89% SUPPLEMENTAL DATA: Net assets at end of period (in 000's)..... $980,706 $861,750 $ 685,896 $1,248,094 $1,075,948 $654,917 Portfolio turnover rate.................. 1.00% 9.57% 10.61% 3.89% 5.14% 15.59% Average Commission Rate Paid.................. $ 0.0034 $ 0.0026
- -------- *Annualized **Amounts were computed based on average shares outstanding during the period. See Notes to Financial Statements. - -------------------------------------------------------------------------------- SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) - --------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) QUARTER ENDED 01/31/1997 ------------------------------------------- TOTAL PER SHARE -------- --------- Investment Income....... $ 3,785 $ 0.08 Net Investment Income... $ 1,513 $ 0.03 Net realized gain (loss) on investments......... $ 7,877 $ 0.16 Net realized gain (loss) from foreign currency transactions........... $ 1,006 $ 0.02 Net increase (decrease) in unrealized gain on investments............ $110,628 $ 2.23 Net unrealized gain (loss) on translation of assets and liabilities in foreign currency............... $ (79) $ 0.00 Net asset value......... $980,706 $19.73
- -------- See Notes to Financial Statements. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- THE MEXICO FUND, INC. NOTES TO FINANCIAL STATEMENTS-- JANUARY 31, 1997 (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 cur- rency into unrealized appreciation (depreciation) of investments and transla- tion of assets and liabilities in foreign currencies. The market value of Mexican securities, currency holdings and other assets and liabilities denominated in "Peso (P)" were recorded in the financial statements after translation into U.S. dollars based on the open market ex- change rate prevailing in Mexico City at the end of the period. The open mar- ket exchange rate at January 31, 1997 was P 7.807 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. 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 accompanying financial state- ments 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. Repurchase Agreements -- The repurchase agreements are traded with approved institutions, and are collateralized by Mexican Government securities. The Fund takes possession of the collateral and monitors the credit standing of counterparties with whom it enters repurchase agreements. 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 three months ended January 31, 1997 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 shareholders. 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. 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. ADMINISTRATIVE SERVICES AGREEMENT: Effective April 1, 1994, the Fund entered into an Administrative Services Agreement with the Adviser, which provides for certain administrative services to be performed by the Adviser, including the determination and publication of the net asset value of the Fund, the maintenance of the Fund's books and rec- ords 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 re- ports and tax returns. The term of this agreement was renewed until August 31, 1997. The annual fee payable to the Adviser under this agreement is $350,000. 4. TRUST AGREEMENT AND TRUSTEE: 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, effective October 5, 1995, Bancomer receives an amount denominated in Mexican pesos per year for three years, subject to a monthly increase linked to the Mexican Consumer Price Index, monthly cumulative basis, which for the three months ended Janu- ary 31, 1997 amounted to $25,669. 5. PURCHASES AND SALES OF INVESTMENTS: Purchases and sales of investments, excluding short-term securities, for the three months ended January 31, 1997 were as follows: Purchases - ------------------------------------------------------------------------------- Common Stock....................................................... $ 8,789,583 Fixed Income Securities............................................ -- ----------- Total Purchases.................................................. $ 8,789,583 =========== Proceeds from Investments Sold - ------------------------------------------------------------------------------- Common Stock....................................................... $13,568,717 Fixed Income Securities............................................ -- ----------- Total Sales...................................................... $13,568,717 ===========
As of January 31, 1997, net unrealized gain on investments for Federal income tax purposes aggregated to approximately $ 387 million, of which approximately $ 456 million related to appreciated securities and approximately $ 69 million related to depreciated securities. The aggregate cost of investments at Janu- ary 31, 1997 for Federal income tax purposes was approximately $ 595 million. 6. CAPITAL STOCK: At January 31, 1997, 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. As of January 31, 1997, net assets were comprised of the following: Common Stock..................................................... $ 49,715,907 Additional paid-in capital....................................... 562,178,531 Undistributed net investment income.............................. 379,833 Accumulated net realized loss on investments..................... (8,929,567) Unrealized appreciation of investments and depreciation on translation of assets and liabilities in foreign currency....... 377,361,352 ------------ $980,706,056 ============
Accumulated net realized gains (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. 7. CAPITAL GAINS: Net realized gains from security transactions, if any, are distributed annu- ally to shareholders. Capital loss carryforwards will be used to offset future capital gains available for distribution. The Fund had net capital loss carryforwards at January 31, - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1997 of approximately $13,075,000 expiring in 2003. 8. INVESTMENTS: As a result of significant losses incurred by Grupo Financiero Inverlat, S.A .. de C.V. ("Inverlat"), certain significant shareholders, together with the financial 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 . The company has received an interest in a Recovery Trust set up to manage the re- covery assets of Inverlat. Through the trust agreement the Company may receive shares equal to 9% and up to 36% of their ownership interest. Management has assigned the market value of the Company's holdings in the Recovery Trust at $0 as of January 31, 1997 due to the uncertainty regarding its ultimate reali- zation. -----END PRIVACY-ENHANCED MESSAGE-----