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
Alberto Osorio -- Treasurer
Carlos H. Woodworth -- Corporate Governance
Vice President
Eduardo Solano -- Investor Relations
Vice President
Allan S. Mostoff -- Assistant Secretary
Sander M. Bieber -- Assistant Secretary

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.

Independent Accountants --

PricewaterhouseCoopers LLP

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.

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Annual Report
October 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.
Annual Report
October 31, 2002
Highlights

The Fund's fiscal year 2002 ended October 31, 2002.

. After a year of recession, the Mexican economy began to show signs of
recovery, as gross domestic product (GDP) increased 2.1% and 1.8% during
the second and third calendar quarters of 2002, respectively.

. During this fiscal year, some of the most important factors that affected
the performance of international stock markets, including the Mexican
Bolsa, were: the crisis of confidence among investors; the deceleration of
world economies; and concerns surrounding possible terrorist attacks
throughout the world.

. The Fund's market price per share increased 3.5% during the fiscal year
while the IFCG Mexico Index, the Fund's benchmark, fell 4.3% and the
Fund's net asset value (NAV) per share decreased 5.2% during the same
period.

. The Fund's Board of Directors has approved a strategic decision to invest
significant portions of the Fund's resources in attractive small- and
medium-sized Mexican companies not easily available abroad. Accordingly,
beginning in November 2002, the Board has considered the adoption of a a
new benchmark to better measure the Fund's future performance. Please see
inside for details.

. During this fiscal year, the implementation of the Fund's in-kind
repurchase offer policy resulted in a narrowing of the discount between
the Fund's market price and NAV per share. At October 31, 2002 the
discount was 5.7%, compared with a discount of 10.5% at the end of
calendar year 2001 and 12.0% one year ago.

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

. The Fund's Board of Directors has declared a stock dividend of $1.793 per
share, payable on January 28, 2003, to shareholders of record on December
23, 2002. Fund shareholders will receive the dividend in additional shares
of common stock of the Fund unless they elect to receive a cash payment.

. The Fund conducted its second in-kind repurchase offer during October
2002. A total of 4,037,736 shares were repurchased, equivalent to
approximately 20% of the Fund's total outstanding shares.

. 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
December 30, 2002 and to expire on January 22, 2003. The Fund will offer
to repurchase up to 5% of its outstanding shares in exchange for a
pro-rata portion of the Fund's portfolio securities.

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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We are pleased to present to you the Fund's 2002 Annual Report. During this
fiscal year, your Fund took a series of important and creative initiatives to
enhance shareholder value, with favorable results that helped to mitigate the
negative impact from a soft U.S. economy and declining international stock
markets. In this report, among other important issues, we summarize what we
believe to be the period's prevailing economic and market conditions in Mexico,
outline the investment strategy approved by the Fund's Board of Directors,
which is being implemented by the investment adviser, consistent with the
general investment policies and objective of the Fund, and its resulting
performance. We hope you find this report to be useful and informative.

Economic Environment

Mexico's economy has started to show signs of recovery as the gross domestic
product (GDP) increased 1.8% during the third quarter of calendar year 2002
when compared with the same period of 2001. This is the second consecutive
quarterly increase following a year of declining economic activity. The
strongest sectors of the economy were: electricity, gas and water, which grew
4.1%; financial services, up 3.9%; transportation, up 3.5%; commerce,
restaurants and hotels, up 1.9%; construction, up 1.6%; personal services, up
1.6%; manufacturing, up 0.2%; and the primary sector, composed of agriculture,
fishery and livestock, up 1.6%. The only sector of the economy that contracted
during this period was mining, which decreased 0.6%. Although Mexico's economy
continues to be vulnerable to a turndown of the U.S. economy, economists
surveyed by Mexico's Central Bank estimate that positive GDP growth of 1.5%
will be registered during 2002 and approximately 3.4% 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 (which was finally
resolved favorably at the end of September). The exchange rate of the Mexican
peso against the dollar increased 9.7% during the Fund's 2002 fiscal year, when
it ended at a level of Ps. 10.1552. At the same time, Mexico's inflation rate
reached 5.4% for the twelve months ended November 30, 2002, and the Central
Bank continues to implement a restrictive monetary policy to mitigate the
inflationary impact of a weaker Mexican currency, in an effort to meet an
inflation target of 4.5% by the end of this year, which seems difficult to
achieve given the current level and the possibility of higher inflation rates
during the Christmas season. For year 2003, the Central Bank is aiming at
achieving a 3% inflation rate.

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 this fiscal year 2002, when yields of 28-day Cetes (treasury
bills) declined to 5.28% during April. Since then, however, interest rates have
increased to 6.81% at the end of November, 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 and the United States amounted to
$233 billion during 2001, a modest decrease from $247.6 billion in 2000. During
the first nine months of 2002, total trade between Mexico and the U.S. was
$172.8 billion, with a trade balance surplus for Mexico of $28.1 billion.

Fund's Performance & Portfolio Strategy

As previously mentioned, the recent negative performance of international stock
markets extended

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to Mexico as well, resulting in a decline in the Fund's benchmark, the IFCG
Mexico Index, of 4.3% in U.S. dollar terms during the fiscal year. The Fund's
NAV had a decline of 5.2% which was buffeted, in part, by the Fund's repurchase
offer which closed in June 2002. In contrast, the Fund's market price per share
increased 3.5% during the same period. The Fund's investment adviser believes
that as the Mexican economy seems to be returning to an expansion period, the
valuation of the market could improve, resulting in increasing returns to
investors.

The implementation of the Fund's in-kind repurchase offer policy has resulted
in a narrowing of the discount between the Fund's market price and NAV per
share. At October 31, 2002 the discount was 5.7%, compared with a discount of
10.5% at the end of calendar year 2001 and 12.0% one year ago.

During the last quarter of this fiscal year, following approval by the Board of
Directors, the Fund's investment adviser continued reallocating assets of the
Fund from large companies of the communications and cement sectors to small-
and medium-sized firms that, although listed on the Bolsa, are not easily
available to foreign investors through ADRs or similar instruments traded
abroad. These eleven companies, which at the end of this fiscal year
represented 14.56% of the Fund's net assets, were selected because of their
financial strength, including attractive and healthy profitability and leverage
ratios, as well as because of their attractive growth potential. Additionally,
their current valuations, solid management and outlook for coming periods were
considered. Many of these companies' shares trade at volumes lower than those
of shares of the Fund's largest portfolio holdings. The Fund's investment
adviser intends to continue accumulating positions in these companies in the
near future. The companies recently added to the Fund's portfolio are Apasco
(cement), KOF, Arca and Contal (beverages), Imsa and Tamsa (steel), Gsanbor and
Soriana (retail), Vitro (glass), Desc (holding) and Geo (housing). For similar
reasons, the Fund also increased its investments in Ara (housing), Alfa
(holding), Bimbo (food products), CIE (entertainment), Gcarso (holding),
Gfinbur and Gfnorte (financial).

Consistent with the new portfolio composition of the Fund, beginning in
November 2002, the Board has considered the adoption of a new benchmark to
better measure the Fund's future performance. The proposed new benchmark is a
blended and weighted average index of the Fund's current benchmark, the IFCG
Mexico Index, which would comprise 40% of the new benchmark's total value, and
the Bolsa's Index of Medium Capitalization Companies (IMC-30 Index), which
would account for the remaining 60% of the new benchmark. The Board believes
that this composite benchmark will better reflect the anticipated portfolio
composition of the Fund as the Fund continues to reallocate assets consistent
with the above-mentioned portfolio strategy. The Board intends to test this
proposed new benchmark over the next several months while still employing the
IFCG Mexico Index to measure the Fund's performance. The Board intends to adopt
the proposed new benchmark if it determines that this composite index better
reflects the Fund's new portfolio composition.

This Report includes, for your reference, a summary description of the Fund's
recently acquired companies and the Fund's ten largest holdings. 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 cel-

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lular telephone companies, as well as broadcast and media companies.
Approximately 87.5% of this industry group is comprised of stocks of
telecommunications companies. During the fourth fiscal quarter, the Fund's
investment adviser reduced its market weighting of the communications sector
from 31.5% at the end of July 2002 to 24.4% at the end of this fiscal year.
This is compared with the communications industry group's weighting of
approximately 38.3% 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.

Declaration of Dividend

The Fund's Board of Directors has declared a stock dividend of $1.793 per
share, payable on January 28, 2003, to shareholders of record on December 23,
2002. Fund shareholders will receive the dividend in additional shares of
common stock of the Fund unless they elect to receive a cash payment. This
dividend is comprised of $1.340 per share of long-term capital gains, and
$0.453 per share of net investment income. This dividend is the third largest
ever paid by the Fund and is equivalent to approximately 11.3% of the Fund's
net asset value per share on October 31, 2002. No Mexican withholding tax is
applicable to this dividend. A separate notice has been sent to shareholders
with details regarding the stock dividend, which should be reviewed carefully.
As part of their commitment and support to the Fund, all Directors have chosen
to receive their dividend in stock. Shareholders not desiring to receive this
dividend in additional Fund shares must notify the Fund's transfer agent,
American Stock Transfer and Trust Company, no later than 4:00 pm (EST) on
January 13, 2003. Although the Fund has enacted a Dividend Reinvestment Plan,
the terms of this plan do not apply to stock dividends like the one to be paid
on January 28, 2003.

In-kind Repurchase Offers

On March 6, 2002, the Fund announced Board approval of a policy to conduct
periodic 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 previously 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 second in-kind repurchase offer expired on October 31, 2002. A total
of 4,037,736 shares were repurchased, equivalent to approximately 20% of total
Fund outstanding shares. The Fund now has 15,931,321 shares outstanding. The
Fund's next in-kind repurchase offer will expire on January 22, 2003. The Fund
will offer to repurchase up to 5% of its 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. If the amount of Fund shares submitted for
repurchase exceeds 5% of total outstanding shares, the Fund will then
repurchase only a pro-rata portion of each submission. In the event of an
oversubscription, a shareholder may not be able to liquidate some or all of the
shares held. A shareholder may have to

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wait until a subsequent repurchase offer to tender shares that the Fund was
unable to repurchase. Participating shareholders will receive Mexican portfolio
securities held by the Fund in exchange for their shares. Shares received
pursuant to the Fund's stock dividend payable on January 28, 2003 will not be
eligible to be tendered for repurchase during this repurchase offer. The Board
of Directors anticipates that the Fund's next repurchase offer will occur
towards the end of the Fund's third fiscal quarter in July 2003 for an amount
not yet determined.

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

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. 3rd 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

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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.

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.

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

December 30, 2002.

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Description of Recently Acquired Companies/1/

1. Embotelladoras Arca ("Arca") (2.25%)

Arca is the second-largest Coca-Cola bottler in Mexico, after KOF (see below).
Its operations span the Northern region of Mexico, an area with the highest per
capita consumption of Coca-Cola outside the U.S. Arca was formed in October
2001 from the merger of the two oldest Coca-Cola bottlers in Mexico.

2. Corporacion Geo ("Geo") (1.97%)

Geo is a fully integrated homebuilder engaged in the design, development,
construction, marketing, commercialization and delivery of affordable
entry-level and middle-class housing communities in Mexico. Through operating
subsidiaries positioned in the most dynamic cities in the country, Geo is a
diversified homebuilder with operations in 19 of the 32 Mexican states,
consisting of approximately 70% of the country's population.

3. Organizacion Soriana ("Soriana") (1.64%)

Soriana is a retail company organized to provide a wide assortment of
merchandise, from groceries and fresh food to apparel and general merchandise,
in the hypermarket format. The company operates in the 43 most important cities
in Mexico through 108 self-service stores. Soriana has six distribution centers
and its main offices are located in Monterrey.

4. Coca-Cola Femsa ("KOF") (1.49%)

KOF bottles and distributes Coca-Cola products in Mexico City (and surrounding
areas), the Southeast of Mexico and in Buenos Aires, Argentina (and surrounding
areas). KOF currently accounts for approximately 25.0% of Coca-Cola sales in
Mexico and approximately 36.5% of Coca-Cola sales in Argentina. The Coca-Cola
Company owns a 30% equity interest in KOF.

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/1/ In this and the following section, the figures in parentheses indicate the
percentage that each company represents of the Fund's net assets as of
October 31, 2002.

5. Vitro (1.48%)

Vitro is one of the world's leading glass producers and a major participant in
its three principal businesses: flat glass; glass containers; and glassware.
Vitro's subsidiaries serve multiple product markets, including: construction
and automotive glass; fiberglass; food and beverage, wine, liquor, cosmetics
and pharmaceutical glass containers; glassware for commercial, industrial and
retail uses; and plastic and aluminum containers. Vitro has joint ventures with
major world-class partners and industry leaders that provide access to its
subsidiaries to international markets, distribution channels and
state-of-the-art technology. Vitro's subsidiaries have facilities and
distribution centers in seven countries, located in North, Central and South
America, and Europe, and export to more than 70 countries worldwide.

6. Apasco (1.42%)

Apasco is the second largest producer of cement in Mexico, after Cemex (see
below). Apasco produces and distributes cement, mortar, ready-mixed concrete
and other products and services for the construction industry. The company has
six cement plants providing it with a production capacity of 8.9 million metric
tons per year, more than 100 ready-mixed concrete plants, five plants that
produce aggregates, 25 cement distribution centers, four seaport export
terminals and a Concrete Technological Centre. Apasco is part of the Holcim
Swiss Group, a world leader in the production and marketing of cement,
ready-mixed concrete and aggregate products.

7. Grupo Imsa ("Imsa") (1.29%)

Imsa is a holding company that operates in four core businesses: steel
processed products; plastic construction products; automotive batteries; and
aluminum. Imsa has manufacturing facilities in Mexico, the United States and
throughout Central and South America, and exports worldwide.

8. Desc (1.10%)

Desc is a diversified holding company engaged in four principal sectors:
autoparts; chemicals; food; and real estate. The autoparts business
manufactures 41 different types of autoparts products including, among others,

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light, medium and heavy duty manual transmissions and clutches, constant
velocity joints, rear and front traction axles, tappets, pistons and piston
pins, pick-up truck bodies and other stamped metal products. The company's
chemical business produces synthetic rubber, polystyrene, carbon black, methyl
methacrylate, waterproofing additives and sealants, among others. In the food
business, Desc makes branded products including "Del Fuerte" tomato sauce and
canned vegetables, "La Gloria" corn oil, "La Victoria" coffees and "Nair"
canned tuna. The company's real estate business acquires and develops land for
commercial, residential and tourism uses.

9. Grupo Continental ("Contal") (1.08%)

Contal is one of the ten largest Coca-Cola bottling groups in the world. The
company has 17 bottling plants and 73 branches covering approximately 14.5% of
Mexico's territory. Contal serves a market of more than 12 million consumers.

10. Tubos de Acero de Mexico ("Tamsa") (0.55%)

Tamsa is the Mexican unit of the Tenaris Group, an alliance of eight steel pipe
mills with operations in 25 countries that provide services worldwide. In
addition to servicing the Mexican market, Tamsa manufactures much of the
tubular products that Tenaris commercializes in the North American automotive
market. Tamsa and the other Tenaris Group companies belong to the Techint
Group, an international business group operating worldwide in the steel,
energy, infrastructure, engineering, construction and public service sectors.
In December 16, 2002, Tamsa's shares were exchanged for those of Tenaris, in an
effort to unify the companies within the Techint Group. The same process will
also take place in the stock exchange markets of Argentina and Italy with the
local companies that are owned by Tenaris.

11. Grupo Sanborns ("Gsanbor") (0.29%)

Gsanbor is a diversified holding company dedicated to retail activities with an
important presence in the Mexican market. The company was formed by well-
recognized retail formats in Mexico that include: Sanborn Hermanos, S.A., a
chain of unique retail stores, restaurants and bars; Promotora Musical, S.A. de
C.V., music stores including Mixup; Sears Roebuck de Mexico; El Globo, a chain
of bakery stores; and six of the most important shopping malls in Mexico City.

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

1. Wal-Mart de Mexico ("Walmex") (12.17%)

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
October 2002, Walmex had a total of 593 units in 56 cities in Mexico, which
include supermarkets, retail stores and restaurants.

2. Telefonos de Mexico ("Telmex") (9.65%)

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") (7.75%)

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") (6.81%)

AMX is the leading provider of wireless communications services in Latin
America with over 29 million wireless subscribers. In Mexico, AMX provides
services in all re-

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gions of the country, including all major cities, and services approximately
89.6% 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. Fomento Economico Mexicano ("Femsa") (4.98%)

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."

6. Grupo Modelo ("Gmodelo") (4.64%)

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 beers
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.

7. Grupo Financiero BBVA - Bancomer ("GFBB") (4.06%)

Grupo Banco Bilbao Vizcaya Argentaria (BBVA), the largest financial group in
Spain and the second largest bank in the Euro zone in terms of market
capitalization, is GFBB's main stockholder. GFBB -BBVA's main subsidiary- is
the leading financial group in Mexico and the largest privately-owned financial
institution in Latin America in terms of deposits and number of clients. GFBB
operates as a universal banking institution.

8. Alfa ("Alfa") (3.98%)

Alfa is a holding company comprised of the following five business groups:
Alpek, the second largest producer of PTA in the NAFTA region is dedicated to
petrochemical and synthetic fibers; Hylsamex, one of the most competitive steel
companies in North America; Sigma, a leading producer of frozen and
refrigerated foods in Mexico; Versax, a producer of aluminum products; and
Onexa, a company dedicated to telecommunications.

9. Grupo Carso ("Gcarso") (3.90%)

Gcarso is one of the largest conglomerates in Latin America. It controls and
operates a diversified group of companies related to the retail, industrial and
consumer businesses. On the retail side, the group participates through Grupo
Sanborns, Sears, Mixup, El Globo and Cuicuilco and Plaza Loreto shopping
centers. On the industrial side, Carso integrates companies including:
Condumex, a global manufacturer of products for the telecommunications,
construction, energy and automotive industries; Nacobre, which produces copper,
aluminum and PVC products; and Frisco, which holds railroad, chemical and a
mining divisions. Finally, consumer-oriented businesses include Porcelanite,
the Mexican leader in the ceramic tile industry; and Cigatam, which together
with Philip Morris, is the most important player in the tobacco industry,
producing and marketing important brands including Marlboro, Benson and Hedges
and Delicados.

10. Grupo Bimbo ("Bimbo") (3.78%)

Established in 1945, Bimbo today is one of the most important baking companies
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.

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

Directors' and Officers' Biographical Data*

Interested Directors

Term of
Office
and
Position(s) Length
Held With of Time Principal Occupation for Past Other Directorships Held by
Name, Address and Age the Fund Served Five Years Director
--------------------- ------------ -------- ---------------------------------- ---------------------------

Jose Luis Gomez Pimienta(degrees) President of Term Mr. Gomez Pimienta has over two Director and member of the
Aristoteles 77, 3rd Floor the Fund; expires decades of experience investing in Executive Committee of the
Col. Polanco Class II 2004; the Mexican securities market. He Bolsa Mexicana de Valores
11560 Mexico, D.F. Director Director has been the President of the Fund (Mexican Stock Exchange)
Mexico since since its inception and has also (since 1997).
Age: 63 1989 served as a Director since 1989.
Mr. Gomez Pimienta has been
Chairman of the Board of the
Fund's investment adviser,
Impulsora del Fondo Mexico, S.A.
de C.V., since 1987 and CEO since
1981.

--------
(degrees) Director is an "interested director" (as defined in the Investment
Company Act of 1940 ("interested director")). Mr. Gomez Pimienta is
deemed to be an interested director by reason of his affiliation with
the Fund's investment adviser, Impulsora del Fondo Mexico, S.A. de
C.V.

Independent Directors

Term of
Office
and
Position(s) Length
Held With of Time Principal Occupation for Past Other Directorships Held by
Name, Address and Age the Fund Served Five Years Director
--------------------- ----------- -------- ----------------------------------- --------------------------------

Juan Gallardo Thurlow Chairman Term Mr. Gallardo is Chairman of the Nadro, S.A. de C.V.
Monte Caucaso 915 of the expires Fund's Board of Directors. Over the (pharmaceutical retail); Grupo
4th Floor Board; 2005; last decade, he has been Mexico, S.A. de C.V.
Col. Lomas de Chapultepec Class III Director extensively involved in the (mining); Director, Caterpillar,
11000 Mexico, D.F. Director since negotiation of the North American Inc. (construction equipment);
Mexico 1985 Free Trade Agreement (NAFTA) Intercon, S.A. de C.V.
Age: 55 among the United States, Canada (diversifying holding
and Mexico, and free trade company); Member of the
agreements between Mexico and International Advisory Board
Israel and the European Union. of Lafarge (French cement
Mr. Gallardo also serves as company); Member of the
Chairman of the Board of Grupo International Advisory Board
Embotelladoras Unidas, S.A. de of Textron, Inc.; Member of
C.V., a bottling company, since the Mexican Business
1985 and Vice Chairman of Home Roundtable.
Mart de Mexico, S.A. de C.V., a
retailer, since 1995.

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

Term of
Office
and
Position(s) Length of
Held With Time Principal Occupation for Other Directorships Held by
Name, Address and Age the Fund Served Past Five Years Director
--------------------- ----------- --------- ------------------------------------ -------------------------------

Philip Caldwell Class I Term Mr. Philip Caldwell was Chairman Director, Mettler-Toledo
Ford Motor Company Director expires and Chief Executive Officer of International, Inc. (scales and
225 High Ridge Road 2003; Ford Motor Company from 1979 to weighing instruments);
West Building Director 1985 succeeding Henry Ford II. Director, Waters Corporation
Stamford, CT 06905 since He was the first non-Ford family (scientific instruments);
Age: 82 1991 member to lead the company. Director, Russell Reynolds
From 1953 to 1990, he served in a Associates, Inc. (executive
wide variety of domestic and recruitment).
international executive positions at
Ford and was Director from 1973
to 1990. From 1985 until 1998, Mr.
Caldwell was a Director and
Senior Managing Director of
Lehman Bros. Inc. and its
predecessor, Shearson Lehman
Brothers Holdings, Inc.

Emilio Carrillo Gamboa Class III Term Mr. Carrillo Gamboa is a former Secretary, Consejo Mexicano
Blvd. Manuel Avila Camacho Director expires director of the Fund (from de Hombres de Negocios A.C.
No. 1, Ste. 609 2005; inception of the Fund in 1981 to (Business Roundtable of
011009 Mexico, D.F. Director 1987). He resigned as director in Mexico); Chairman of the
Mexico since 1987 to become Mexico's Board, Cementos Apasco,
Age: 65 2002 Ambassador to Canada. Mr. S.A. de C.V. (cement
Carrillo Gamboa was reelected as company); Director, Grupo
a Director of the Fund in 2002. Modelo, S.A. de C.V. (beer
Mr. Carrillo Gamboa is a brewing); Director, Kimberly-
prominent lawyer in Mexico with Clark de Mexico, S.A. de C.V.
extensive business experience (consumer products); Director,
and has been a partner of Bufete San Luis Corporacion, S.A. de
Carrillo Gamboa, S.C. since 1989. C.V. (mining and automotive
He has also served or currently parts); Director, Gasoductos
serves on the boards of many de Chihuahua, S. de R.L. de
prestigious Mexican businesses C.V. (public utility-gas
and charitable organizations. transportation); Director,
Sistemas Automotrices y de
Potencia, S.A. de CV. (power
equipment distribution);
Secretary and Alternate
Director, Innova, S. de R.L. de
C.V. (DTH television);
Secretary and Alternate
Director, Servicios Novasa,
S.A.(Innova subsidiary-

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

services and administration);
Secretary and Alternate
Director, Corporacion de
Radio y Television del Norte
de Mexico, S.A. de C.V.
(Innova subsidiary-DTH
concession holder);
Corporacion Novaimagen, S.
de R.L. (Innova subsidiary-
marketing); Corporacion
Novavision, S. de R.L. (Innova
subsidiary-personnel);
Director, Empresas ICA;
Director, Banco of Tokio
Mitsubishi (Mexico); Director,
Industrias Lubrizol; Director,
Inmobiliaria Costa Baja.

Claudio X. Gonzalez Class II Term Mr. Gonzalez was President of the Chairman of the Board, Chief
Lagrange 103 Director expires Business Coordinating Council of Executive Officer and
Piso 3 2004; Mexico. He has served as Director, Kimberly-Clark de
Colonia Los Morales Director Chairman of the Board and Chief Mexico, S.A. de C.V.
11510 Mexico, D.F. since Executive Officer of Kimberly- (consumer products);
Mexico 1981 Clark de Mexico, S.A. de C.V. Director, General Electric Co.;
Age: 68 since 1966. Mr. Gonzalez is also Director, Investment
on the Boards of Directors of Company of America;
several prominent U.S. and Director, Kellogg Co.;
Mexican companies including, Director, Home Depot;
General Electric Co. Director, Grupo Alfa; Director,
Grupo Carso; Director, Grupo
Mexico; Director, America
Movil; Director, Grupo
Inbursa; Director, Televisa;
Director, Banco Inbursa.

Robert L. Knauss Class II Term Mr. Knauss currently serves as Director, Equus Ltd. II
5151 San Felipe Director expires Chairman of the Board and Principal (investments); Director,
Suite 1661 2004; Executive Officer of Philips Services Seitel, Inc. (oil services).
Houston, TX 77056 Director Corp. (industrial services) and is
Age: 71 since also Chairman of the Board and
1985 Chief Executive Officer of Baltic
International USA, Inc.
(investments). Mr. Knauss was the
former Dean and Distinguished
University Professor of University of
Houston Law School and was also
Dean of Vanderbilt Law School.

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

Jaime Serra Puche Class I Term Dr. Serra is a former Secretary of Director, Tubos de Acero de
Edificio Plaza Director expires Finance for Mexico and he was Mexico, S.A. de C.V. (steel
Prolongacion Paseo de la 2003; the minister in charge of manufacturing); Director,
Reforma 600-103 Director negotiations for NAFTA and trade Vitro, S.A. de C.V. (glass
Santa Fe Pena Blanca since agreements between Mexico and manufacturer); Director,
01210 Mexico, D.F. 1997 Chile, Bolivia, Venezuela, Grupo Ferroviario Mexicano,
Mexico Colombia and Costa Rica on S.A. de C.V. (railways);
Age: 52 behalf of the Mexican government. Director, Southern Peru
Formerly, Dr. Serra was a Copper Corporation (copper
Weinberg Visiting Professor at manufacturer); Director,
Princeton University, Secretary of Regional Market Makers, Inc.
Trade and Industry (Mexico) and a (procurement company);
Distinguished Visiting Associate at Director, Bardahl, S.A. de
the Carnegie Endowment for C.V. (oil products); Director,
International Peace. He has a Tenaris (holding company);
Ph.D. in economics from Yale Co-Chairman, President's
University and is currently Senior Council on International
Partner of the law and economics Activities of Yale University;
consulting firm Serra and Trustee, Yale University.
Associates International.

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

Principal Executive Officers of the Fund

Term of
Office
and
Position(s) Length of
Held With Time
Name, Address and Age the Fund Served Principal Occupation(s) During Past Five Years
--------------------- -------------- --------- -------------------------------------------------

Jose Luis Gomez Pimienta President of Term Chairman of the Board and Director General of
Aristoteles 77, 3rd Floor the Fund; expires the Fund's investment adviser, Impulsora del
Col. Polanco Class II 2004; Fondo Mexico, S.A. de C.V., and a Director and
11560 Mexico, D.F. Director Director Member of the Executive Committee of the Bolsa
Mexico since Mexicana de Valores, S.A. de C.V. (Mexican
Age: 63 1989 Stock Exchange).

Samuel Garcia-Cuellar Secretary Since Mr. Garcia-Cuellar is a partner of Creel, Garcia-
Creel, Garcia-Cuellar y 1981 Cuellar y Muggenburg, S.C., Mexican counsel to
Muggenburg, S.C., the Fund; Director, El Aguila Compania de
Paseo de los Tamarindos 60 Seguros, S.A. de C.V. (insurance) (since 1994);
Bosques de las Lomas Director, Mercado Mexicano de Derivados
05120 Mexico, D.F. (futures and options) (since 2001); Director, GE
Mexico Capital Bank, S.A. Institucion de Banca Multiple,
Age: 60 GE Capital Grupo Financiero (bank) (since
2002); Director, GE Capital Grupo Financiero
(financial group) (since 2002).

Alberto Osorio Morales Treasurer Since Mr. Osorio currently serves as Director of
Aristoteles 77, 3rd Floor (formerly, Vice 2002 Finance of the Fund's investment adviser,
Col. Polanco President of From Impulsora del Fondo Mexico, S.A. de C.V.
11560 Mexico, D.F. Finance) 1999 to
Mexico 2002
Age: 35

Carlos H. Woodworth Ortiz Vice-President Since Mr. Woodworth has served on the Board of
Aristoteles 77, 3rd Floor of Corporate 2002 Directors of the Fund's investment adviser,
Col. Polanco Governance From Impulsora del Fondo Mexico, S.A. de C.V., as
11560 Mexico, D.F. and 1992 to well as Deputy Director of the Adviser since
Mexico Compliance 2002 1981. Mr. Woodworth also serves as an Alternate
Age: 59 Officer Director of the Bolsa Mexicana de Valores, S.A.
(formerly, de C.V. (Mexican Stock Exchange).
Treasurer)

Eduardo Solano Arroyo Investor Since Mr. Solano has served as Director of Economic
Aristoteles 77, 3rd Floor Relations Vice 1997 Research of the Fund's investment adviser,
Col. Polanco President Impulsora del Fondo Mexico, S.A. de C.V, since
11560 Mexico, DF, 1997.
Mexico
Age: 34

--------
* There are no other funds in the Fund Complex.

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Schedule of Investments as of October 31, 2002
--------------------------------------------------------------------------------

Percent
Shares Value of Net
Held Common Stock (98.10%) Series (Note 1) Assets
----------------------------------------------------------------------------------------------------------------------------
Cement Industry (a) 760,900 Apasco, S.A. de C.V......................................... * $ 4,390,730 1.42%
5,895,391 Cemex, S.A. de C.V.......................................... CPO 23,941,028 7.75
------------ -------
28,331,758 9.17
----------------------------------------------------------------------------------------------------------------------------
Communications 8,560,300 America Movil, S.A. de C.V.................................. A 5,647,748 1.83
22,643,700 America Movil, S.A. de C.V.................................. L 15,385,372 4.98
(a) 8,605,900 America Telecom, S.A. de C.V................................ A1 5,254,114 1.70
(a) 8,605,100 Carso Global Telecom, S.A. de C.V........................... A1 9,168,424 2.97
(a) 8,838,500 Grupo Iusacell, S.A. de C.V................................. V 642,313 0.21
(a) 6,674,314 Grupo Televisa, S.A......................................... CPO 9,431,267 3.06
8,560,200 Telefonos de Mexico, S.A. de C.V............................ A 13,073,962 4.23
10,901,100 Telefonos de Mexico, S.A. de C.V............................ L 16,735,086 5.42
------------ -------
75,338,286 24.40
----------------------------------------------------------------------------------------------------------------------------
Financial Groups (a) 16,020,109 Grupo Financiero BBVA-Bancomer, S.A. de C.V................. B 12,525,570 4.06
4,151,200 Grupo Financiero Banorte, S.A. de C.V....................... O 9,242,421 2.99
(a) 8,917,500 Grupo Financiero Inbursa, S.A. de C.V....................... O 7,551,845 2.45
(a)(b) -- Grupo Financiero Scotiabank Inverlat Recovery Trust......... -- 0.00
------------ -------
29,319,836 9.50
----------------------------------------------------------------------------------------------------------------------------
Food and (a) 2,150,000 Coca-Cola Femsa, S.A. de C.V................................ L 4,602,667 1.49
Beverages (a) 3,650,000 Embotelladoras Arca, S.A. de C.V............................ * 6,936,840 2.25
4,233,199 Fomento Economico Mexicano, S.A. de C.V..................... UBD 15,385,948 4.98
7,753,800 Grupo Bimbo, S.A. de C.V.................................... A 11,659,103 3.78
(a) 2,255,700 Grupo Continental, S.A...................................... * 3,331,840 1.08
5,675,500 Grupo Modelo, S.A. de C.V................................... C 14,329,587 4.64
------------ -------
56,245,985 18.22
----------------------------------------------------------------------------------------------------------------------------
Holding 7,445,000 Alfa, S.A. de C.V.......................................... A 12,294,455 3.98
Companies (a) 2,686,300 Corporacion Interamericana de Entretenimiento, S.A. de C.V.. B 4,076,324 1.32
8,023,400 Desc, S.A. de C.V........................................... B 3,397,335 1.10
(a) 4,900,000 Grupo Carso, S.A. de C.V.................................... A1 12,053,135 3.90
(a) 2,923,900 Grupo Imsa, S.A. de C.V..................................... UBC 3,970,437 1.29
(a) 736,600 Grupo Sanborns, S.A. de C.V................................. B1 904,502 0.29
5,743,800 Vitro, S.A.................................................. A 4,570,063 1.48
------------ -------
41,266,251 13.36
----------------------------------------------------------------------------------------------------------------------------
Housing (a) 4,878,300 Consorcio ARA, S.A. de C.V.................................. * 7,215,226 2.34
(a) 3,091,500 Corporacion Geo, S.A. de C.V................................ B 6,076,329 1.97
------------ -------
13,291,555 4.31
----------------------------------------------------------------------------------------------------------------------------
Pulp and Paper 4,415,080 Kimberly-Clark de Mexico, S.A. de C.V....................... A 10,612,504 3.44
----------------------------------------------------------------------------------------------------------------------------
Retail Stores 2,893,400 Controladora Comercial Mexicana, S.A. de C.V ............... UBC 1,649,676 0.53
865,420 Grupo Elektra, S.A. de C.V.................................. * 2,499,485 0.81
(a) 2,520,300 Organizacion Soriana, S.A. de C.V........................... B 5,065,319 1.64
6,106,093 Wal-Mart de Mexico, S.A. de C.V............................. C 13,113,862 4.25
9,743,600 Wal-Mart de Mexico, S.A. de C.V............................. V 24,466,461 7.92
------------ -------
46,794,803 15.15
----------------------------------------------------------------------------------------------------------------------------
Steel (a) 931,300 Tubos de Acero de Mexico, S.A............................... * 1,690,155 0.55
----------------------------------------------------------------------------------------------------------------------------
Total Common Stock (Identified Cost--$270,139,071).......... $302,891,133 98.10%
----------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Schedule of Investments as of October 31, 2002 -- (Continued)
--------------------------------------------------------------------------------

Percent
Value of Net
Securities Short-Term Securities (1.38%) (Note 1) Assets
-----------------------------------------------------------------------------------------------------------------------
Repurchase BBVA Bancomer, S.A., 7.40%, dated 10/31/02, due 11/01/02, repurchase price $3,758,849
Agreements collateralized by Bonos de Regulacion Monetaria. Value of collateral $3,758,077..... $ 3,758,077 1.22%
Comerica Bank 1.56%, dated 10/31/02, due 11/01/02, repurchase price $489,588,
collateralized by U.S. Government Agency Securities. Value of collateral $489,567... 489,567 0.16
-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Identified cost--$4,247,644)............................ 4,247,644 1.38
Total Investments (Identified cost--$274,386,715).................................... 307,138,777 99.48
Other Assets in Excess of Liabilities................................................ 1,624,663 0.52
------ -------
Net Assets Equivalent to $15.46 per share on 19,969,057 shares of capital stock
outstanding (Note 6)................................................................ $ 308,763,440 100.00%
============= =======

(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 9 to Financial Statements.

See Notes to Financial Statements.

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Statement of Assets and Liabilities as of October 31, 2002
--------------------------------------------------------------------------------

Assets:
Investments:
Securities, at value (Note 1):
Common stock (identified cost -- $270,139,071)................................................... $302,891,133
Short term securities (identified cost -- $4,247,644)............................................ 4,247,644
------------
Total investments (identified cost -- $274,386,715)............................................. $307,138,777
Receivables from securities sold.................................................................... 3,274,746
Interest receivable................................................................................. 793
Prepaid Mexican withholding taxes (Note 1).......................................................... 4,061
------------
Total assets.................................................................................... $310,418,377
------------
Liabilities:
Payable to Investment Adviser (Notes 2 and 3)....................................................... 273,825
Accrued expenses and other liabilities.............................................................. 431,898
Payables for securities purchased................................................................... 949,214
------------
Total liabilities............................................................................... 1,654,937
------------
Net Assets -- Equivalent to $15.46 per share on 19,969,057 shares of capital stock outstanding...... $308,763,440
============
Composition of Net Assets:
Common stock........................................................................................ $ 19,969,057
Additional paid in capital.......................................................................... 235,567,796
Undistributed net investment income................................................................. 7,216,590
Undistributed net realized gain on investments...................................................... 13,266,212
Unrealized appreciation of investments and translation of assets and liabilities in foreign currency 32,743,785
------------
$308,763,440
============

See Notes to Financial Statements.

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Statement of Operations For the Year Ended October 31, 2002
--------------------------------------------------------------------------------

Net Investment Income:
Income:
Dividends....................................................................... $ 12,103,733
Interest........................................................................ 2,447,479
-------------
Total income.................................................................. $ 14,551,212
Expenses:
Investment advisory fee......................................................... 4,650,434
Administrative services......................................................... 529,441
Value-added taxes............................................................... 811,527
Printing, distribution and mailing of shareholder reports....................... 480,667
Legal fees...................................................................... 1,514,693
Directors' fees................................................................. 286,000
Directors' and Officers' expenses............................................... 113,814
Audit and tax fees.............................................................. 163,251
Custodian fees.................................................................. 79,621
Transfer agent and dividend disbursement fees................................... 21,000
Shareholders' information....................................................... 628,725
Stock exchange fees............................................................. 48,410
Insurance....................................................................... 164,041
Miscellaneous................................................................... 171,820
-------------
Total expenses................................................................ 9,663,444
Reimbursement of expenses....................................................... (600,000)
-------------
Net operating expenses........................................................ 9,063,444
-------------
Net investment income......................................................... 5,487,768
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Transactions:
Net realized gain (loss) on investments and foreign currency transactions:
Net realized gain on investments.............................................. 187,395,006
Net realized loss from foreign currency transactions.......................... (3,151,356)
-------------
Net realized gain on investments and foreign currency transactions............ 184,243,650
Increase (decrease) in net unrealized gain on investments and translation of
assets and liabilities in foreign currency:
Decrease in net unrealized gain on investments................................ (158,170,312)
Increase in net unrealized loss on translation of assets and liabilities in
foreign currency............................................................. (422,879)
-------------
Decrease in net unrealized gain on investments and translation of assets and
liabilities in foreign currency................................................. (158,593,191)
-------------
Net Increase in Net Assets Resulting from Operations............................. $ 31,138,227
=============

See Notes to Financial Statements.

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

For the For the
The Mexico Fund, Inc. Year Ended Year Ended
Statements of Changes in Net Assets October 31, 2002 October 31, 2001
-----------------------------------------------------------------------------------------------------------------------------

Increase (Decrease) in Net Assets:
From Operations
Net investment income...................................................................... $ 5,487,768 $ 10,553,272
Net realized gain on investments and foreign currency transactions......................... 184,243,650 121,890,520
Decrease in net unrealized gain on investments and translation of assets and liabilities in
foreign currency.......................................................................... (158,593,191) (225,335,608)
------------- --------------
Net increase (decrease) in net assets resulting from operations............................ 31,138,227 (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)
------------- --------------
(96,166,496) (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............................................................ (554,213,969) (159,158,526)
Net Assets:
Beginning of year.......................................................................... 862,977,409 1,022,135,935
------------- --------------
End of year................................................................................ $ 308,763,440 $ 862,977,409
============= ==============

See Notes to Financial Statements.

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

The Mexico Fund, Inc. For the Year Ended October 31,
Financial Highlights 2002 2001 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------------

Per Share Operating Performance:
Net asset value, beginning of period................................. $ 18.98 $ 20.84 $ 19.57 $ 15.52 $ 23.49
-------- -------- ---------- -------- --------
Net investment income (Note 1)..................................... 0.15** 0.23** 0.18** 0.40 0.39**
Net (loss) gain on investments and translation of foreign currency
(Note 1).......................................................... (1.30)** (2.31)** 1.10** 4.10 (7.48)**
-------- -------- ---------- -------- --------
Total from investment operations..................................... (1.15)** (2.08)** 1.28** 4.50 (7.09)**
-------- -------- ---------- -------- --------
Less Dividends:
Dividends to shareholders from net investment
income............................................................ (0.13) (0.13) (0.19) (0.45) (0.23)
Dividends to shareholders from net realized gains on investments... (2.67) (0.05) -- -- (0.60)
-------- -------- ---------- -------- --------
Total dividends...................................................... (2.80) (0.18) (0.19) (0.45) (0.83)
-------- -------- ---------- -------- --------
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)
-------- -------- ---------- -------- --------
Total capital share transactions..................................... 0.43 0.40 0.18 -- (0.05)
-------- -------- ---------- -------- --------
Net asset value, end of period..................................... $ 15.46 $ 18.98 $ 20.84 $ 19.57 $ 15.52
======== ======== ========== ======== ========
Market value per share, end of period.............................. $ 14.58 $ 16.70 $ 15.81 $ 14.31 $ 11.25
======== ======== ========== ======== ========
Total investment return based on market value per
share............................................................... 2.14 % 6.64 % 11.82 % 31.92% (36.70 %)
Ratios to Average Net Assets:
Gross Expenses..................................................... 1.46 % 1.07 % 0.96 % 0.98 % 0.93 %
Expenses, net of reimbursement..................................... 1.37 % 1.07 % 0.96 % 0.98 % 0.93 %
Net investment income, net of expense reimbursement................ 0.83% 1.12% 0.78% 2.14% 1.87%
Supplemental Data:
Net assets at end of period (in 000's)............................. $308,763 $862,977 $1,022,136 $988,627 $783,775
Portfolio turnover rate............................................ 43.36 % 29.69 % 22.27 % 6.40 % 3.69 %

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

See Notes to Financial Statements.

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

The Mexico Fund, Inc.
Notes to Financial Statements--
October 31, 2002
--------------------------------------------------------------------------------
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 of America 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 October 31, 2002 was Ps. 10.1552 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 cash, 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 adviser monitors the credit standing of repurchase agreement
counterparties. It is the Fund's policy that 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.

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 or excise taxes for the
year ended October 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.

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.
Net realized gains from security transactions, are distributed annually to
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.

Risks of Investment in Mexican Securities -- Investing in Mexican securities
involves certain considerations not typically associated with investing in
securities of U.S. issuers, including (1) lesser liquidity and smaller market
capitalization of the Mexican securities markets; (2) currency fluctuations;
(3) higher rates of inflation and domestic interest rates; and (4) less
stringent disclosure requirements, less available information regarding Mexican
public companies and less active regulatory oversight of Mexican public
companies.

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 $600,000,
plus interest. This amount represents a restoration to the Fund of the expenses
explained in note 10.

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, 2003. 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 minimum amount of $350,000.

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

Beginning with the Stock Repurchase Program that commenced on October 10, 2002,
the Adviser will receive a fee of $75,000 per every repurchase made by the Fund.

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. The annual fee
payable to Bancomer under this Agreement is denominated in Mexican pesos, which
currently translates to approximately $49,746. 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
year ended October 31, 2002 were as follows:

Purchases
-------------------------------------------
Common Stock.................. $270,088,354
------------
Total Purchases............ $270,088,354
============
Proceeds from Investments Sold
-------------------------------------------
Common Stock.................. $699,980,363
------------
Total Sales................ $699,980,363
============

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. Pursuant to a ruling order from the Internal
Revenue Service, obtained by the Fund, these gains are not recognized by the
Fund for tax purposes. 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.

6. Capital Stock:

At October 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.

7. Distributions to Shareholders:

The tax character of distributions paid during the fiscal year ended October
31, 2002 and October 31, 2001 were as follows:

2002 2001
------------ ----------

Distributions paid from:
Ordinary income........ $ 17,069,724 $5,901,512
Long term capital gains 110,234,999 2,363,322
------------ ----------
Total distributions paid $127,304,723 $8,264,834
============ ==========

As of October 31, 2002, the components of accumulated earnings (deficit) on a
tax basis were as follows:

Accumulated capital gains.... $21,337,616
Undistributed ordinary income 7,216,590
Unrealized appreciation...... 24,672,381
-----------
Total accumulated earnings... $53,226,587
===========

At October 31, 2002, the cost of investments for Federal income tax purposes
was $282,458,119. Gross unrealized appreciation of investments was $74,259,976
and gross unrealized depreciation of investments was $49,579,318 resulting in
net unrealized appreciation on investments of $24,680,658, excluding foreign
currency transactions. The difference between book-basis and tax basis
unrealized appreciation/(depreciation) is attributable primarily to different
book and tax treatment on corporate reorganizations to securities held by the
Fund.

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. During fiscal 2000 the Fund repurchased
1,454,800 shares at a cost of $22,737,569, and during fiscal 2001 the Fund
repurchased 3,595,893, shares at a cost of $58,001,876. In this manner, 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 "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 and undistributed net
investment income. Accordingly, the Fund reclassified such amounts from
undistributed net realized gains and undistributed net investment income to
additional paid in capital.

The second offer commenced on October 10, 2002 and expired on October 31,
2002. The amount paid for redeemed shares was 98% of the Fund's net asset value
on November 14, 2002, was paid on November 19, 2002 and was recorded in
November for financial statement purposes. A total of 4,037,736 shares
participated in the offer equivalent to a total repurchase price of
$60,478,026, including $250,000 of expenses related to the offer.

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 October 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.

Certain members of the Board of Directors of the Fund are also members of
Boards of Directors of certain companies held in the Fund's portfolio.

10. Reimbursement of Expenses:

As a result of the Fund's commitment to the stock 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
========

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
The Mexico Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of The Mexico Fund, Inc. (the
"Fund") at October 31, 2002, and the results of its operations, the changes in
its net assets, and the financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these financial
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at October 31, 2002 by
correspondence with the custodian and brokers, provides a reasonable basis for
our opinion. The financial statements for the year ended October 31, 2001,
including the financial highlights for each of the four years in the period
then ended, were audited by other independent accountants who have ceased
operations. Those independent accountants expressed an unqualified opinion on
those financial statements in their report dated November 16, 2001.

PRICEWATERHOUSECOOPERS LLP

New York, New York
December 4, 2002

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

TAX INFORMATION (Unaudited)

In order to meet certain requirements of the Internal Revenue Code, we are
advising you that the Fund designated $166,847,026 as long term capital gain
distributions made during the fiscal year ended October 31, 2002, subject to
the maximum tax rate 20%. Of this amount, $110,234,999 was attributable to
gains from the fiscal year ended October 31, 2001.