Edgar Filing: MEXICO FUND INC

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The Mexico Fund, Inc.

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Directors:

Juan Gallardo T. -- Chairman
Philip Caldwell
Jose Luis Gomez Pimienta
Claudio X. Gonzalez
Robert L. Knauss
Jaime Serra Puche
Emilio Carrillo Gamboa

Officers:

Jose Luis Gomez Pimienta -- President
Samuel Garcia-Cuellar -- Secretary
Allan S. Mostoff -- Assistant Secretary
Sander M. Bieber -- Assistant Secretary
Carlos H. Woodworth -- Treasurer
Alberto Osorio -- Finance Vice President
Eduardo Solano -- Investor Relations
Vice President

Investment Adviser --

Impulsora del Fondo Mexico, S.A. de C.V.

Custodian --

BBVA Bancomer, S.A.
Comerica Bank

Transfer Agent and Registrar --

American Stock Transfer & Trust Company

Counsel --

Dechert
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.

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[LOGO] FM

The Mexico
Fund, Inc.

(Unaudited)

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Quarterly Report
July 31, 2002

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[LOGO] Mexico Fund logo

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www.themexicofund.com

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The Mexico Fund, Inc.
Third Quarter Report
July 31, 2002

Third Quarter Highlights

. The Fund's fiscal 2002 third quarter ended July 31, 2002.

. At July 31, 2002 the discount between the Fund's market price and its net
asset value (NAV) was 7.4%. This compares with a discount of 10.5% at the
end of the calendar 2001 and 15.2% one year ago.

. The current crisis of confidence, however, among investors has led to
declines in world stock markets during the quarter. Prices of companies
listed on the Bolsa declined as well, with the IFCG Mexico Index, the
Fund's benchmark, falling 24%.

. During this third fiscal quarter, the Fund's market price and NAV
decreased 20.8% and 21.0%/1/, respectively, reflecting the 24% decline in
the Fund's benchmark.

. The Mexican economy began to show signs of recovery, as gross domestic
product (GDP) increased 2.1% during the second calendar quarter of 2002,
the first positive growth in the last twelve months.

. The Mexican currency market has shown some volatility and the Central
Bank continues implementing a restrictive monetary policy to allow
inflation to remain under control.

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/1/ This figure incorporates a positive effect generated by the Fund's first
in-kind repurchase offer, equivalent to $0.43 per share or 2.4% of the NAV
on the expiration date of the repurchase offer.

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The Mexico Fund, Inc.
Third Quarter Report
July 31, 2002

Other Recent Highlights

. Other factors that affected the performance of the Bolsa and most other
international markets after the end of this reporting period were
concerns surrounding a possible U.S. attack on Iraq, the presidential
elections in Brazil and, locally, a potential strike at Pemex, the
Mexican oil government-owned company (which was finally resolved
favorably at the end of September).

. The implementation of the Fund's first in-kind repurchase offer resulted
in a further narrowing of the discount between the market price and the
Fund's NAV, to 3.5% at the beginning of August. This is significantly
lower than the double-digit discount levels that existed previously,
which peaked at 33% two years ago.

. Participation in the Fund's in-kind repurchase offers is not mandatory.
The repurchase offers are not part of a plan to liquidate the Fund. The
Fund's shares continue to be traded on the New York Stock Exchange (NYSE)
during the in-kind repurchase offers.

. The Fund's next in-kind repurchase offer is scheduled to commence on
October 10, 2002. The repurchase offer will expire at 5:00 pm New York
City time on October 31, 2002, the end of the Fund's fourth fiscal
quarter. Future in-kind repurchase offers will be made on a periodic
basis.

The Mexico Fund, Inc. is a non-diversified closed-end management investment
company with the investment objective of long-term capital appreciation
through investments in securities, primarily equity, listed on the Mexican
Stock Exchange. The Fund provides a vehicle to investors who wish to invest
in Mexican companies through a managed non-diversified portfolio as part of
their overall investment program.

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares
of its common stock in the open market.

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The Mexico Fund, Inc.
To Our Shareholders:
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Economic Environment

The GDP of Mexico increased 2.1% during the second quarter of calendar 2002,
when compared with the same period of 2001. This is the first increase
following four consecutive quarters of declining economic activity. The
strongest sectors of the economy were: construction, which grew 5.0%;
financial, up 4.7%; electricity, gas and water, up 4.4%; transportation, up
2.9%; manufacturing, up 2.1%; personal services, up 1.8%; and the primary
sector, composed of agriculture, fishery and livestock, up 1.1%. The only
sector of the economy that contracted during this period was mining, which
decreased 0.3%. The economic rebound continued into the summer, as industrial
production increased 1.9% during July. Economists estimate that positive GDP
growth of 1.58% will be registered during 2002 and approximately 3.84% during
2003.

The currency market has been volatile since late April as a result of the
escalating crisis of confidence in international capital markets, concerns
around the result of the presidential elections in Brazil and the risk of a
strike at Pemex, Mexico's government-owned oil monopoly. Pemex's workers Union
demanded a 15% wage increase and threatened to go on strike on October 2, 2002.
A successful negotiation between the company and the trade union prevented this
strike, which included a 5.5% wage increase plus 1.8% in fringe benefits.

The exchange rate of the Mexican peso against the dollar increased 4.4% during
the Fund's third fiscal quarter, when it ended at a level of Ps. 9.7861. The
events mentioned above have resulted in an even weaker Mexican currency, which
at the end of September traded at a level of Ps. 10.23 per dollar. At the same
time, Mexico's inflation rate reached 4.99% for the twelve months ended
September 15, 2002, and the Central Bank continues implementing a restrictive
monetary policy to mitigate the inflationary impact of a weaker currency, in an
effort to meet an inflation target of 4.5% by the end of this year.

The combination of moderate inflation rates, the upgrading of the credit rating
of Mexico's sovereign debt, the slow Mexican economy and low levels of U.S.
interest rates all contributed to Mexican interest rates reaching historically
low levels during April, when yields of 28-day Cetes (treasury bills) declined
to 5.28%. Since then, however, interest rates have increased to 8.60% at the
end of September, as a result of continued volatility in international markets,
a restrictive monetary policy and the recent depreciation of the Mexican
currency.

Mexico continues to be the second largest trade partner of the United States
only after Canada. Total trade between Mexico

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and the United States amounted to $233 billion during 2001, a modest decrease
from $247.6 billion in 2000. During the first seven months of 2002 total trade
between Mexico and the U. S. was $132.6 billion, with a trade balance surplus
for Mexico of $21.7 billion.

Fund's Performance & Portfolio Strategy

As previously mentioned, the recent negative performance of international stock
markets extended to Mexico as well, resulting in a decline in the Fund's
benchmark, the IFCG Mexico index, of 24.0% in dollar terms during the third
fiscal quarter. The Mexico Fund's market price and NAV also declined by 20.8%
and 21.0%/2/, respectively, during the same period. The Fund's investment
adviser believes that as the improving fundamentals of the Mexican economy gain
momentum, the valuation of the market will improve, resulting in increasing
returns to investors.

The Fund's investment adviser directed portions of the Fund's investments this
third fiscal quarter to Vitro (glass and home appliances producer), Desc, Alfa
and Grupo Carso (conglomerates), Cemex (cement), Kimberly (pulp and paper),
Televisa and TV Azteca (media and broadcasting) and Grupo Financiero BBVA
Bancomer (GFB) (financial group). The expectation of a relatively better
operating performance of domestic companies, rather than export-oriented
companies supported some of these investments, as well as their superior growth
prospects. To satisfy the IRS diversification requirements, the Fund had to
rebalance its holdings of Telmex.

During the second quarter of calendar 2002, companies listed on the Bolsa
reported a slight increase of 2.4% in sales on average, as compared to a year
ago, mostly due to the mild economic recovery. However due to strict cost and
expense controls, operating earnings surpassed analysts' expectations recording
8.8% average growth. Net earnings of the listed companies contracted 79.8% on
average as a 10.1% decline in interest expense was offset by a 10.4%
depreciation of the peso.

The Fund's investment adviser is continuing to research attractive investment
opportunities in listed companies with solid financial fundamentals and
attractive growth potential. This research includes small- and medium-sized
Mexican companies that are listed on the Bolsa, but not easily available to
foreign investors through ADRs or similar instruments traded abroad. Many of
these companies' shares trade at volumes lower than those of shares of the
Fund's current portfolio holdings. Since the end of its third fiscal

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/2/ See footnote 1.

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quarter, the Fund's investment adviser has invested in several of these smaller
and lesser known issuers and intends to continue accumulating positions in
these companies in the near future. These companies will be reflected in the
portfolio listing published during October 2002 on the Fund's web site in
connection with the second in-kind repurchase offer (see below).

This Report includes, for your reference, a summary description of the Fund's
ten largest holdings, which at the end of July 2002 represented approximately
70% of its total net assets. The Fund's investments are categorized according
to the sector classification provided by the Mexican Stock Exchange.

The Fund has adopted a concentration policy that permits it to concentrate its
investments in any industry or group of industries in the IPC Index (or any
successor or comparable index as determined by the Board of Directors to be an
appropriate measure of the Mexican market) if, at the time of investment, such
industry represents 20% or more of the IPC Index, provided, however, that the
Fund will not exceed the IPC Index concentration by more than 5%.

Currently, the only industry group that represents 20% or more of the value of
the securities included in the IPC Index is the communications industry group.
This industry category includes local, long-distance, and cellular telephone
companies, as well as broadcast and media companies. Approximately 85% of this
industry group is comprised of stocks of telecommunications companies. During
the third fiscal quarter, the Fund's investment adviser continued its market
weighting of the communications sector at 31.51%. This is compared with the
communications industry group's weighting of 36.10% of the IPC index. The
Fund's investment adviser will continue to evaluate the concentration in this
industry and may choose not to concentrate in this industry group in the future
or to concentrate in other industries subject to the concentration policy
described above.

Further Restructuring Efforts Taken by the Board of Directors

On March 6, 2002, the Fund announced Board approval of a policy to conduct
quarterly in-kind repurchase offers at no less than 98% of NAV for up to 100%
of the Fund's outstanding shares. This policy is intended to provide additional
liquidity to Fund shares and to reduce the discount at which Fund shares have
been trading on the NYSE.

The implementation of the Fund's in-kind repurchase policy has contributed to a
significant market discount reduction. The discount has fluctuated at levels of
around 7% since the policy was announced, and even reached a level of 3.5%,
significantly lower than the double digit levels pre-

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viously registered, which peaked at 33% two years earlier. Your Fund continues
to provide a convenient professionally managed product for investing in Mexico.

On October 7, 2002, the Securities and Exchange Commission granted the Fund's
exemptive application which allows the Fund to conduct periodic in-kind
repurchase offers for between 1% and 100% of the Fund's outstanding shares
under the Investment Company Act of 1940. Under the terms of the exemptive
application, the Fund's periodic repurchase offers will be less expensive and
complicated than conducting the repurchase offers as tender offers under the
Securities Exchange Act of 1934.

The Fund's next in-kind repurchase offer will be conducted from October 10,
2002 to October 31, 2002. The Fund is offering to repurchase its shares in an
amount between 1% and 100% of the Fund's outstanding shares in exchange for a
pro-rata portion of the Fund's portfolio securities. The Fund will repurchase
shares at the Fund's NAV, reduced by a repurchase price adjustment of 2%, for a
repurchase price of 98% of NAV. Shareholders will receive Mexican portfolio
securities held by the Fund in exchange for their shares. The repurchase offer
expires at 5:00 pm New York City time on October 31, 2002. The repurchase offer
is not part of a plan to liquidate the Fund. Shareholder participation in the
repurchase offer is not mandatory as shareholders can continue to purchase and
sell Fund shares in cash transactions on the NYSE.

Investor Relations

The Fund's web site presents the Fund's market price and NAV per share on a
same-day basis and provides a downloadable database containing the most
important historical figures for the Fund. Also available is the complete
history of dividend distributions made by the Fund and additional links to
useful sites of Mexican government agencies, capital markets and listed
companies. Web site visitors may now request online to receive via regular mail
a copy of the Fund's Annual Report, Semi-Annual Report, and the most recent
Quarterly and Monthly Summary Reports. We hope that the Fund's web site is a
useful resource for information and we will continue working to improve it.

The Fund also has a toll-free telephone number that will provide you with the
Fund's current NAV, quarterly reports and other Fund materials:

(800) 224-4134

The Fund also offers shareholders and the general public the ability to contact
the Fund via e-mail with questions or requests for additional information about
the Fund. Please direct your e-mail inquiries to:

Investor Relations Office
investor-relations@themexicofund.com

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In addition to the quarterly reports published by the Fund, the Investment
Adviser distributes a Monthly Summary Report with information about the Fund,
the Mexican economy and the Bolsa. Interested persons may either access this
report on the Fund's web site or receive it via regular mail. Please request
this report through the Fund's web site or write to the Investment Adviser at:

Impulsora del Fondo Mexico, sa de cv.
77 Aristoteles St. 3/rd/ Floor
Polanco
11560 Mexico, D.F.
Mexico

Information on the Fund's NAV and market price per share is also published
weekly in The Wall Street Journal, The New York Times and other newspapers in a
table called "Closed-End Funds". The Fund's NYSE trading symbol is MXF.

The Fund's shares are also listed and traded on the Third Section
("Freiverkehr") of the Stuttgart Stock Exchange. Effective June 27, 2002, the
Fund's German Domestic Tax Representative is:

PricewaterhouseCoopers GmbH
Wirtschaftsprufungsgesellschaft
Marie-Curie-Strasse 24-28
60439 Frankfurt am Main
Postfach 50 06 36 60394
Frankfurt am Main
Germany

The Fund's Dividend Reinvestment Plan and Transfer Agent is:

American Stock Transfer & Trust Company
59 Maiden Lane - Plaza Level
New York, NY 10038
(212) 936-5100

Dividend Reinvestment Plan

The Fund's Dividend Reinvestment Plan (the "Plan") provides a convenient way to
increase your holdings in the Common Stock of the Fund through the reinvestment
of net investment income and capital gain distributions. Under the terms of the
Plan, Fund shareholders are automatically enrolled as participants in the Plan.
If you do not wish to participate in the Plan, please contact the Plan Agent.
Upon any termination of participation under the Plan, the Plan Agent will cause
a share certificate for the appropriate number of full shares to be delivered
to the participant, and a cash adjustment for any fractional shares. At a
shareholder's request, the Plan Agent will sell the participant's shares and
remit any proceeds to the participant, net of brokerage commissions.
Shareholders who do not participate in the Plan will receive all distributions
in cash. The Plan provides a convenient way to increase your holdings in the
Common Stock through the reinvestment of distributions.

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Under the terms of the Plan, whenever the Fund declares a distribution, Plan
participants will receive their distribution entirely in shares of Common Stock
purchased either in the open market or from the Fund. If, on the date a
distribution becomes payable or such other date as may be specified by the
Fund's Board of Directors (the valuation date), the market price of the Common
Stock plus estimated brokerage commissions is equal to or exceeds the NAV per
share of Common Stock, the Plan Agent will invest the distribution in newly
issued shares of Common Stock, which will be priced at NAV. If on the valuation
date, the market price of the Common Stock plus estimated brokerage commissions
is lower than the NAV per share, the Plan Agent will buy Common Stock in the
open market. As a participant in the Plan, you will be charged a pro-rata
portion of brokerage commissions on all open market purchases.

If your shares are registered or will be registered in the name of a
broker-dealer or any other nominee, you must contact the broker-dealer or other
nominee regarding his or her status under the Plan, including whether such
broker-dealer or nominee will participate in the Plan on your behalf.
Generally, shareholders receiving Common Stock under the Plan will be treated
as having received a distribution equal to the amount payable to them in cash
as a distribution had the shareholder not participated in the Plan.

If you have any questions concerning the Plan or would like a copy of the Plan
brochure, please contact the Plan Agent:

American Stock Transfer & Trust Company
Attention: Dividend Reinvestment Department
59 Maiden Lane - Plaza Level
New York, NY 10038
(212) 936-5100

Sincerely yours,

/s/ Jose Luis Gomez /s/ Juan Gallardo

Jose Luis Gomez Juan Gallardo T.
Pimienta Chairman of the
President Board

October 7, 2002.

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Description of the Fund's Ten Largest Holdings as of July 31, 2002

1. Wal-Mart de Mexico ("Walmex") (12.44%)

Walmex is the largest chain of retail stores in Mexico and has the dominant
market position in the commercial sector of the country. The company is a
subsidiary of the U.S. firm Wal-Mart Stores, Inc (NYSE: WMT). At the end of
July 2002, Walmex had a total of 575 units in 54 cities in Mexico, which
include supermarkets, retail stores and restaurants.

2. Telefonos de Mexico ("Telmex") (12.41%)

Telmex is the major telecommunications company in Mexico, and with more than 13
million lines, provides local, domestic and international long-distance
telephone services, internet access, wireless, data, audio and video
transmission services. Telmex also provides telecommunication services in the
United States.

3. Cemex ("Cemex") (11.58%)

Cemex is the world's third largest cement producer, the largest trader of
cement and the leading producer of white cement. The company also produces
concrete mix, clinker and value added products. Cemex produces and operates in
more than 30 countries around the world and has commercial relations with over
60 countries. Cemex is the leader in the cement markets of Mexico, Spain,
Venezuela, Panama, Costa Rica, the Dominican Republic, Egypt and Colombia, and
has an important market presence in the Caribbean, Indonesia, the Philippines
and the southwest region of the United States.

4. America Movil ("AMX") (8.85%)

AMX is the leading provider of wireless communications services in Latin
America with over 27 million wireless subscribers. In Mexico AMX provides
services in all regions of the country, including all major cities, and
services approximately 85.5% of Mexico's population. The company has
subsidiaries and joint ventures in the telecommunications sector in Guatemala,
Ecuador, Argentina, Brazil, Colombia, Venezuela, the United States, Puerto
Rico, Mexico and Spain. In addition, it has formed a new joint venture company
with Bell Canada International Inc. and SBC International, Inc. that will serve
as the principal vehicle for expansion in Latin America.

5. Grupo Financiero BBVA -
Bancomer ("GFBB") (4.86%)

Grupo Banco Bilbao Vizcaya Argentaria (BBVA), the largest financial group in
Spain and the second bank in the Euro zone in terms of market capitalization,
is GFBB's main stockholder. GFBB-BBVA's main subsidiary- is the leading
financial

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group in Mexico and the largest privately-owned financial institution in Latin
America in terms of deposits and number of clients. GFBB operates as an
universal banking institution.

6. Fomento Economico Mexicano ("Femsa") (4.73%)

Femsa is Latin America's largest beverage company with exports to the United
States, Canada, Latin America, Europe and the Far East. Founded in 1890, Femsa
is the largest totally integrated producer of soft drinks and beer in Mexico
and is the controlling company of Coca-Cola Femsa (KOF), one of the leading
bottlers in Latin America. Femsa also operates the largest chain of convenience
stores in Mexico (Oxxo), produces packaging materials and is an important
bottler in Argentina. Brand names produced by Femsa include "Sol" beer,
"Coca-Cola" and "Sidral Mundet".

7. Grupo Televisa ("Televisa") (4.44%)

Televisa is the largest media company in the Spanish-speaking world and a major
participant in the international entertainment industry. Televisa has interests
in television production and broadcasting, international distribution of
television programming, direct-to-home satellite services, publishing, cable
television, radio production and broadcasting, professional sports and show
business promotion, paging services, feature film production and distribution
and special events promotion and dubbing. Televisa also has an unconsolidated
equity stake in Univision (NYSE: UVN), the leading Spanish-language television
company in the United States, and owns the "esmas.com" internet portal.

8. Grupo Modelo ("Gmodelo") (4.00%)

Founded in 1925, GModelo is the leader in the production, distribution and sale
of beer in Mexico with a market share in the domestic and export markets of
approximately 60%. The group exports its products to 150 countries and owns 10
brand names, including Victoria, Modelo and Corona, the most popular beer
imported in the United States. The company also imports and distributes in
Mexico brand names of beer produced by its partner Anheuser-Busch, including
Budweiser and Bud Light.

9. Kimberly Clark de Mexico ("Kimber") (3.26%)

Kimberly Clark de Mexico S.A. de C.V. (KCM) manufactures and markets a wide
array of paper-based products for the Mexican population including, disposable
diapers, feminine-care pads, bathroom and facial tissue, napkins, kitchen
towels, hand towels, school notebooks and office products. KCM also exports
writing and printing papers to 14 countries.

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10. Grupo Bimbo ("Bimbo") (3.16%)

Established in 1945, Bimbo today is one of the most important baking company in
terms of brand and trademark positioning, sales and production volume around
the world. Bimbo is a leader in its area, with a presence in the United States
and 16 countries in Latin America and Europe, offering over 750 products and 90
prestigious brands.

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The Mexico Fund, Inc.
Schedule of Investments as of July 31, 2002 (Unaudited)

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Percent of
Value Net
Industries Shares Held Common Stock (90.65%) Series (Note 1) Assets

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Cement Industry 7,745,691 Cemex, S.A. de C.V......................................... CPO $ 37,746,600 11.58%
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Communications 8,560,300 America Movil, S.A. de C.V................................. A 5,423,392 1.66
36,632,900 America Movil, S.A. de C.V................................. L 23,433,437 7.19
(a) 8,605,900 America Telecom, S.A. de C.V............................... A1 5,056,552 1.55
(a) 8,605,100 Carso Global Telecom, S.A. de C.V.......................... A1 8,995,430 2.76
(a) 11,263,700 Grupo Iusacell, S.A. de C.V................................ V 850,581 0.27
(a) 9,416,314 Grupo Televisa, S.A........................................ CPO 14,490,930 4.44
(a) 10,812,700 TV Azteca, S.A. de C.V..................................... CPO 4,021,850 1.23
8,560,200 Telefonos de Mexico, S.A. de C.V........................... A 12,377,436 3.80
19,328,800 Telefonos de Mexico, S.A. de C.V........................... L 28,086,320 8.61
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102,735,928 31.51
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Financial Groups (a) 20,020,109 Grupo Financiero BBVA Bancomer, S.A. de C.V................ B 15,834,259 4.86
(a) 2,835,500 Grupo Financiero Banorte, S.A. de C.V...................... O 6,884,405 2.11
(a) 6,525,100 Grupo Financiero Inbursa, S.A. de C.V...................... O 5,740,909 1.76
(a)(b) -- Grupo Financiero Scotiabank Inverlat Recovery
Trust...................................................... -- 0.00
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28,459,573 8.73
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Food, Beverages 4,070,599 Fomento Economico Mexicano, S.A. de C.V.................... UBD 15,432,013 4.73
and Tobacco 5,636,000 Grupo Bimbo, S.A. de C.V................................... A 10,303,189 3.16
5,675,500 Grupo Modelo, S.A. de C.V.................................. C 13,025,795 4.00
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38,760,997 11.89
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Holding Companies (a) 3,830,700 Alfa, S.A. de C.V.......................................... A 7,085,118 2.17
(a) 2,686,300 Corporacion Interamericana de Entretenimiento, S.A. de C.V. B 4,254,775 1.31
4,182,800 Desc, S.A. de C.V.......................................... B 2,393,566 0.73
(a) 2,821,200 Grupo Carso, S.A. de C.V................................... A1 7,596,348 2.33
2,487,800 Vitro, S.A................................................. A 2,720,130 0.83
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24,049,937 7.37
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Construction and (a) 3,139,800 Consorcio ARA, S.A. de C.V................................. * 4,597,678 1.41
Housing (a) 4,055,400 Empresas ICA, Sociedad Controladora, S.A. de C.V........... * 803,944 0.25
------------ -----
5,401,622 1.66
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Pulp and Paper 4,415,080 Kimberly-Clark de Mexico, S.A. de C.V...................... A 10,615,754 3.26
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Retail Stores 2,893,400 Controladora Comercial Mexicana, S.A. de C.V............... UBC 1,611,370 0.49
6,441,600 Grupo Elektra, S.A. de C.V................................. CPO 5,608,203 1.72
6,106,093 Wal-Mart de Mexico, S.A. de C.V............................ C 14,213,711 4.36
9,743,600 Wal-Mart de Mexico, S.A. de C.V............................ V 26,355,044 8.08
------------ -----
47,788,328 14.65
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Total Common Stock (Identified Cost--$257,704,255)......... $295,558,739 90.65%
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The Mexico Fund, Inc.
Schedule of Investments as of July 31, 2002 (Unaudited) -- (Continued)

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Percent
Value of Net
Securities Short-Term Securities (7.67%) (Note 1) Assets

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Repurchase BBVA Bancomer, S.A., 5.25%, dated 07/31/02, due
Agreements 08/01/02, repurchase price $9,184,139,
collateralized by Bonos de Regulacion Monetaria.. $ 9,182,799 2.82%
Comerica Bank, 1.70%, dated 07/31/02, due
08/01/02, repurchase price $487,620,
collateralized by U.S. Government Agency
Securities....................................... 487,598 0.15
Mexican Nacional Financiera, S.N.C., 6.30% due 08/01/02... 12,264,436 3.76
Government Banco Nacional de Comercio Exterior, S.N.C.,
Securities 5.00% due 08/01/02............................... 3,066,168 0.94
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Total Short-Term Securities (Identified
cost--$25,001,001)............................... 25,001,001 7.67
Total Investments (Identified cost--$282,705,256). 320,559,740 98.32
Other Assets in Excess of Liabilities............. 5,485,612 1.68
Net Assets Equivalent to $16.33 per share on
19,969,057 shares of capital stock outstanding
(Note 6)......................................... $326,045,352 100.00%
============ ======

(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 10 to Financial Statements.

See Notes to Financial Statements.

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The Mexico Fund, Inc.
Statement of Assets and Liabilities as of July 31, 2002 (Unaudited)

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Assets:
Investments:
Securities, at value (Note 1):
Common stock (identified cost--$257,704,255)............................................. $295,558,739
Short term securities (identified cost--$25,001,001)..................................... 25,001,001
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Total investments (identified cost--$282,705,256)....................................... $320,559,740
Receivables from securities sold............................................................ 6,066,935
Interest receivable......................................................................... 3,934
Prepaid Mexican withholding taxes (Note 1).................................................. 3,962
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Total assets............................................................................ 326,634,571
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Liabilities:
Payable to Investment Advisor (Notes 2 and 3)............................................... 296,481
Accrued expenses and other liabilities...................................................... 292,738
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Total liabilities....................................................................... 589,219
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Net Assets--Equivalent to $16.33 per share on 19,969,057 shares of capital stock outstanding
(Note 7)................................................................................... $326,045,352
============

See Notes to Financial Statements.

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The Mexico Fund, Inc.
Statement of Operations (Unaudited) For the Nine Months Ended July 31, 2002

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Net Investment Income:
Income (Note 1):
Dividends........................................................................................ $ 10,861,255
Interest and discounts earned.................................................................... 2,289,619
-------------
Total income.................................................................................... $ 13,150,874
Expenses:
Investment advisory fee (Note 2)................................................................. 4,017,217
Administrative services (Note 3)................................................................. 437,446
Value-added taxes (Note 1)....................................................................... 698,601
Printing, distribution and mailing of shareholder reports........................................ 436,502
Legal fees....................................................................................... 1,247,739
Directors' fees.................................................................................. 238,550
Directors' and Officers' expenses................................................................ 109,772
Audit and tax fees............................................................................... 130,596
Custodian fees (Note 5).......................................................................... 67,299
Transfer agent and dividend disbursement fees.................................................... 15,750
Shareholders' information........................................................................ 624,685
Stock exchange fees.............................................................................. 36,208
Insurance........................................................................................ 116,486
Miscellaneous.................................................................................... 145,934
-------------
Operating expenses.............................................................................. 8,322,785
-------------
Net investment income (Note 1).................................................................. 4,828,089
-------------
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Transactions:
Net realized gain (loss) on investments and foreign currency transactions (Notes 1 and 6):
Proceeds from sales.............................................................................. 657,394,498
Cost of securities sold.......................................................................... 457,391,681
-------------
Net realized gain on investments............................................................... 200,002,817
Net realized gain from foreign currency transactions........................................... (2,884,266)
-------------
Net realized gain on investments and foreign currency transactions............................. 197,118,551

Increase (decrease) in net unrealized gain on investments and translation of assets and liabilities
in foreign currency:
Investments:
End of period (Note 6)........................................................................... 37,854,484
Beginning of period.............................................................................. 190,922,373
-------------
Decrease in net unrealized gain on investments.................................................. (153,067,889)
Translation of assets and liabilities in foreign currency:
End of period.................................................................................... (44,015)
Beginning of period.............................................................................. 414,597
-------------
Increase in net unrealized loss on translation of assets and liabilities in foreign currency....... (458,612)
-------------
Decrease in net unrealized gain on investments and translation of assets and liabilities in foreign
currency.......................................................................................... (153,526,501)
-------------
Net Increase in Net Assets Resulting from Operations............................................... $ 48,420,139
=============

See Notes to Financial Statements.

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For the
Nine Months Ended For the
The Mexico Fund, Inc. July 31, 2002 Year Ended
Statements of Changes in Net Assets (Unaudited) October 31, 2001
----------------------------------------------------------------------------------------------------------------------

Increase (Decrease) in Net Assets:
From Operations
Net investment income.............................................................. $ 4,828,089 $ 10,553,272
Net realized gain on investments and foreign currency transactions................. 197,118,551 121,890,520
Increase (decrease) in net unrealized gain on investments and translation of assets
and liabilities in foreign currency............................................... (153,526,501) (225,335,608)
------------- --------------
Net increase (decrease) in net assets resulting from operations.................... 48,420,139 (92,891,816)
Dividends to shareholders from net investment income............................... (6,086,589) (5,901,512)
Dividends to shareholders from net realized gain on investments.................... (121,218,134) (2,363,322)
------------- --------------
(78,884,584) (101,156,650)
From Capital Share Transactions (Note 8)
Repurchase of stock, at cost....................................................... (458,047,473) (58,001,876)
------------- --------------
Total decrease in net assets.................................................... (536,932,057) (159,158,526)

Net Assets:
Beginning of period................................................................ 862,977,409 1,022,135,935
------------- --------------
End of period...................................................................... $ 326,045,352 $ 862,977,409
============= ==============

See Notes to Financial Statements.

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For the For the Year Ended October 31,
Nine Months ---------------------------------------------------------
Ended
The Mexico Fund, Inc. July 31, 2002
Financial Highlights (Unaudited) 2001 2000 1999 1998 1997
- - ----------------------------------------------------------

Per Share Operating Performance:
Net asset value, beginning of period................... $ 18.98 $ 20.84 $ 19.57 $ 15.52 $ 23.49 $ 17.33
-------- -------- ---------- -------- -------- ----------
Net investment income (Note1)........................ 0.12 0.23** 0.18** 0.40 0.39** 0.40
Net (loss) gain on investments and translation of
foreign currency (Note 1)........................... (0.40) (2.31)** 1.10** 4.10 (7.48)** 6.16
-------- -------- ---------- -------- -------- ----------
Total from investment operations....................... (0.28) (2.08)** 1.28** 4.50 (7.09)** 6.56
-------- -------- ---------- -------- -------- ----------
Less Dividends:
Dividends to shareholders from net investment
income.............................................. (0.13) (0.13) (0.19) (0.45) (0.23) (0.38)
Dividends to shareholders from net realized gains on
investments......................................... (2.67) (0.05) -- -- (0.60) (0.02)
-------- -------- ---------- -------- -------- ----------
Total dividends........................................ (2.80) (0.18) (0.19) (0.45) (0.83) (0.40)
-------- -------- ---------- -------- -------- ----------
Capital Share Transactions:
Effect on NAV of stock repurchased................... 0.43 0.40 0.18 -- -- --
Capital charge resulting from issuance of
fund shares......................................... -- -- -- -- (0.05) --
-------- -------- ---------- -------- -------- ----------
Net asset value, end of period....................... $ 16.33 $ 18.98 $ 20.84 $ 19.57 $ 15.52 $ 23.49
======== ======== ========== ======== ======== ==========
Market value per share, end of period................ $ 15.12 $ 16.70 $ 15.81 $ 14.31 $ 11.25 $ 18.69
======== ======== ========== ======== ======== ==========
Total investment return based on market value per
share................................................. 5.80% 6.64% 11.82% 31.92% (36.70%) 35.03%
Ratios to Average Net Assets:
Expenses............................................. 1.43%* 1.07% 0.96% 0.98% 0.93% 0.91%
Net investment income................................ 0.83%* 1.12% 0.78% 2.14% 1.87% 1.80%
Supplemental Data:
Net assets at end of period (in 000's)............... $326,045 $862,977 $1,022,136 $988,627 $783,775 $1,167,893
Portfolio turnover rate.............................. 28.22% 29.69% 22.27% 6.40% 3.69% 7.58%

--------
* Annualized
** Amounts were computed based on average shares outstanding during the period.

See Notes to Financial Statements.

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The Mexico Fund, Inc.
Selected Quarterly Financial Data (Unaudited)

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Investment income...................................................................................
Net investment income (loss)........................................................................
Net realized gain on investments....................................................................
Net realized (loss) gain from foreign currency transactions.........................................
(Decrease) increase in net unrealized gain on investments...........................................
Increase (decrease) in net unrealized gain on translation
of assets and liabilities in foreign currency......................................................
Net assets..........................................................................................

(Amounts in thousands, except per share amounts)
-----------------------------------------------------------
Quarter Ended Quarter Ended Quarter Ended
July 31, 2002 April 30, 2002 January 31, 2002
------------------- ------------------ ------------------
Total Per Share Total Per Share Total Per Share
--------- --------- -------- --------- -------- ---------

Investment income................................................. $ 6,899 $ 0.35 $ 3,387 $ 0.07 $ 2,865 $ 0.06
Net investment income (loss)...................................... $ 4,926 $ 0.25 $ (323) $(0.01) $ 225 $ 0.01
Net realized gain on investments.................................. $ 108,737 $ 5.45 $ 39,475 $ 0.87 $ 51,791 $ 1.14
Net realized (loss) gain from foreign currency transactions....... $ (3,537) $ (0.18) $ (300) $(0.01) $ 953 $ 0.02
(Decrease) increase in net unrealized gain on investments......... $(266,998) $(13.37) $ 6,778 $ 0.15 $107,152 $ 2.36
Increase (decrease) in net unrealized gain on translation
of assets and liabilities in foreign currency.................... $ 1,247 $ 0.06 $ (1,308) $(0.03) $ (398) $(0.01)
Net assets........................................................ $ 326,045 $ 16.33 $939,718 $20.67 $895,395 $19.70

--------
See Notes to Financial Statements.

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The Mexico Fund, Inc.
Notes to Financial Statements--
July 31, 2002 (Unaudited)

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1. Operations and Significant Accounting Policies:

The Fund is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a closed-end management investment company. On October 16,
2000, the Fund received shareholder approval to convert from a diversified to a
non-diversified investment company under the 1940 Act. The investment objective
of the Fund is to seek long term capital appreciation through investment in
securities, primarily equity, listed on the Mexican Stock Exchange.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 closing price reported by the Mexican Stock Exchange. The
closing price represents the weighted average for the last ten minutes of
operations in any business day. Short-term securities are carried at cost, plus
accrued interest, which approximates market value. All other securities are
valued in accordance with methods determined by the Board of Directors. If the
Board of Directors believes that the price of a security obtained under the
Fund's valuation procedures does not represent the amount that the Fund
reasonably expects to receive on a current sale of the security, the Fund will
value the security based on a method that the Board believes accurately
reflects fair value.

Security transactions and investment income -- Security transactions are
recorded 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
recorded as earned.

Foreign Currency -- The market value of Mexican securities, currency holdings
and other assets and liabilities denominated in Pesos ("Ps.") was recorded in
the financial statements after being translated 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, 2002 was Ps. 9.7861 to $1.00.

The identified cost of portfolio holdings is translated at approximate rates
prevailing when acquired. Income and expense amounts are translated at
approximate rates prevailing when earned or incurred.

Since the net assets of the Fund are determined based on the currency
exchange 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 statements include the effects of both such changes.

Reported net realized foreign exchange gains or losses arise from sales of
short-term securities in exchange of property, payment of services or
functional currency denominated assets, currency gains or losses realized
between the trade and settlement dates on securities transactions, the

--------------------------------------------------------------------------------

difference between the amounts of dividends, interest, and foreign withholding
taxes recorded by the Fund, and the U.S. dollar equivalent of the amount
actually received or paid.

Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in common stocks,
resulting from changes in the exchange rate.

Repurchase Agreements -- The Fund enters into repurchase agreements with
approved institutions. The Fund's repurchase agreements are fully
collateralized by Mexican or U.S. Government securities. The Fund takes
possession of the collateral and the Fund's investment advisor monitors the
credit standing of repurchase agreement counterparties. The fair value of the
collateral is at least equal to the principal amount of the repurchase
transaction, including accrued interest, at all times. If the counterparty
defaults, and the fair value of the collateral declines, realization of the
collateral by the Fund may be delayed or limited. As of July 31, 2002, the
Company has received collateral of $9,670,397 related to these repurchase
agreements.

Realized gains and losses on investments -- Realized gains and losses on
investments 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, 2002, 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 subject to Mexican withholding taxes in accordance with the
Mexican Income Tax Law and with the provisions included in the treaty to avoid
double taxation signed between Mexico and the United States, on specific
sources of income. Such taxes will be applied to the shareholders upon payment
of dividends by the Fund.

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
withholding taxes.

Lending of portfolio securities -- During fiscal year 1998, the Board of
Directors approved a securities lending program for the Fund. Merrill Lynch
Portfolio Services, Inc. served as the lending agent for the Fund from August
1998 through August 1999.

Cantor Fitzgerald & Co. served as the lending agent for the Fund from March
7, 2000 through September 29, 2000.

Since September 29, 2000, the Fund has not been actively lending portfolio
securities under this Program.

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.
Investment Advisers Act of 1940. The Adviser furnishes investment research and
portfolio management services consistent with the Fund's stated investment
policies. 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 million.

--------------------------------------------------------------------------------

On August 29, 2002, the Adviser paid to the Fund the amount of US $604,122.
This amount represents a restoration to the Fund of the expenses explained in
note 10, plus interest.

3. Administrative Services Agreement:

Effective April 1, 1994, the Fund entered into an Administrative Services
Agreement with the Adviser, which provides for certain services to be performed
by the Adviser, including among other administrative activities, the
determination and publication of the net asset value of the Fund, the
maintenance of the Fund's books and records in accordance with applicable U.S.
and Mexican Laws and assistance in the preparation and filing of annual reports
and tax returns. The term of this agreement was renewed by the Board of
Directors through August 31, 2002. The annual fee payable to the Adviser by the
Fund under this agreement until June 30, 2001 was $350,000. Effective July 1,
2001, the Fund pays to the Adviser a monthly fee at the annual rate of 0.07% of
average daily net assets, with a minimun amount of $350,000.

4. Mandate Agreement and Mandatory Party:

On March 31, 1998, the Fund signed a Mandate Agreement with Bancomer. Under
this Agreement, Bancomer acts as the Mandatory Party, performing certain
activities related to the custody of the Fund's securities, that were
previously performed under the trust agreement.

The annual fee payable to Bancomer under this Agreement is denominated in
Mexican pesos, which currently translates to approximately $50,119. Due to the
nature of this Agreement, the fees paid to Bancomer are consolidated with the
Fund's custodian fees.

5. Purchases and Sales of Investments:

Purchases and sales of investments, excluding short-term securities, for the
nine months ended July 31, 2002 were as follows:

Purchases
-------------------------------------------
Common Stock.................. $202,459,865
------------
Total Purchases.............. $202,459,865
============
Proceeds from Investments Sold
-------------------------------------------
Common Stock.................. $657,394,498
------------
Total Sales.................. $657,394,498
============

Included in proceeds from investments sold, is $438,349,498 representing the
value of securities disposed of in payment of redemptions in-kind, resulting in
realized gains of $109,699,482. As a result, net realized gains differ for
financial statements and tax purposes. These realized gains have been reclassed
from undistributed realized gains on investments to additional paid in capital
in the accompanying financial statements.

As of July 31, 2002, net unrealized gains on investments in common stocks for
Federal income tax purposes aggregated to approximately $39 million, of which
approximately $89 million related to appreciated securities and approximately
$50 million related to depreciated securities. The aggregate cost of
investments in common stocks at July 31, 2002 for Federal income tax purposes
was approximately $257 million.

6. Capital Stock:

At July 31, 2002, there were 150,000,000 shares of $1.00 par value common
stock authorized, of which 19,969,057 shares were outstanding.

The Fund offers a Dividend Reinvestment Plan ("Plan") to its shareholders.
Fund shareholders are automatically enrolled as participants in the Plan unless
they notify the Fund's transfer agent otherwise.

--------------------------------------------------------------------------------

On December 10, 1997, the Board of Directors declared a stock dividend of
$29,625,602. This dividend was paid in shares of common stock of the Fund, and
in cash by specific election. Some shareholders selected the stock dividend,
therefore, on January 31, 1998 the Company issued 791,018 shares, which
amounted to $15,078,787.

As of July 31, 2002, net assets were comprised of the following:

Common stock....................... $ 19,969,057
Additional paid-in capital......... 233,675,693
Accumulated net investment
loss............................. (10,169,696)
Undistributed net realized gain on
investments...................... 44,759,823 (A)
Unrealized appreciation of
investments and translation of
assets and liabilities in foreign
currency......................... 37,810,475
------------
$326,045,352
============

--------
(A) $39,333,908 for Federal Income Taxes

Dividends to shareholders from net investment income are determined based on
Federal income tax regulations, whereas the corresponding net investment income
as reflected in the accompanying financial statements, is presented in
accordance with accounting principles generally accepted in the United States.

On November 14, 2001, and December 18, 2001, the Fund declared a total of
$2.8006 per share in gross cash dividends, the tax character of the dividend
included $2.4251 of long term of capital gains and $0.3755 of ordinary income.
Ordinary income includes short term capital gains and net investment income.
Those dividends correspond to the fiscal year ended October 31, 2001 and were
paid on January 2002.

There were no significant differences between the book basis and tax basis of
distributable earnings as of October 31, 2001.

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 tax code.

7. Capital Gains:

Net realized gains from security transactions, are distributed annually to
shareholders. Capital loss carryforwards, if any, will be used to offset future
capital gains available for distribution.

8. Stock Repurchase Programs:

On July 31, 2000, the Board of Directors announced a Stock Repurchase Program
pursuant to which the Fund may purchase in the open market up to 5,050,693
shares of its stock at prevailing market prices. The Program started on August
7, 2000 and was completed on May 29, 2001. The Fund repurchased the authorized
5,050,693 shares at a cost of $80,739,445.

On March 6, 2002, the Board of Directors of the Fund announced a policy
contemplating quarterly "in-kind" repurchase offers at 98% of net asset value
for up to 100% of the Fund's outstanding shares. The first such offer commenced
on May 8, 2002 and expired on June 7, 2002. A total of 25,487,175 shares
participated in the offer, equivalent to a total repurchase price of
$458,047,473, including $700,000 of expenses related to the offer. These
expenses were charged to capital. The Fund used a tax accounting practice to
treat a portion of the price of capital shares redeemed during the year as
distributions from realized capital gains. Accordingly the Fund reclassed
$55,758,387 from undistributed net realized gain to additional paid in capital.

--------------------------------------------------------------------------------

9. Investments:

As a result of significant losses incurred by Grupo Financiero Scotiabank
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 capital stock, shareholders of Inverlat approved a cash
contribution by FOBAPROA (Banking Fund for Savings Protection) to cover such
losses. As a consequence, all shares outstanding prior to July 23, 1996, were
cancelled. The Fund has received an interest in a Recovery Trust set up to
manage the recovery 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 Fund's holdings in
the Recovery Trust at $0 as of July 31, 2002, due to the uncertainty regarding
its ultimate realization.

According to the Bank Savings Protection Law, which was enacted on January
20, 1999, all assets of FOBAPROA have been transfered to a new entity called
IPAB (Bank Savings Protection Institute). This transfer will not modify the
market value assigned to the Recovery Trust.

10. Reimbursement of Expenses:

As a result of the Fund's commitment to the repurchase program explained in
note 8, Laxey Partners Limited ("Laxey") and Advantage Partners, L.P. withdrew
proposals that had been presented for consideration at the Fund's annual
shareholders meeting. The Fund agreed to reimburse Laxey for its fees and
expenses in connection to its proxy solicitation, in the amount of $600,000.
Such amount is included in the Statement of Operations as follows:

Legal fees........................... $345,000
Shareholders' information............ 210,000
Miscellaneous........................ 30,000
Printing, distribution and mailing of
shareholder reports................ 15,000
--------
$600,000
========