MEXICO FUND INC, N-30D, 2000-07-07

MEXICO FUND INC
N-30D, 2000-07-07

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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
Agustin Santamarina V.
Jaime Serra Puche

Officers:
Jose Luis Gomez Pimienta -- President
Samuel Garcia-Cuellar -- Secretary
Allan S. Mostoff -- Assistant Secretary
Sander M. Bieber -- Assistant Secretary
Carlos H. Woodworth -- Treasurer
Hector Trigos -- Research Vice President
Alberto Osorio -- Finance Vice President
Eduardo Solano -- Investor Relations Vice President
Investment Adviser --
Impulsora del Fondo Mexico, S.A. de C.V.

Custodian --
Bancomer, S.A.
Comerica Bank

Transfer Agent and Registrar --
American Stock Transfer & Trust Company

Counsel --
Dechert Price & Rhoads
Creel, Garcia-Cuellar y Muggenburg, S.C.

This report, including the
financial statements herein, is
transmitted to shareholders of The
Mexico Fund, Inc. for their
information. It is not a
prospectus, circular or
representation intended for use in
the purchase of shares of the Fund
or any securities mentioned in the
report.
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The Mexico
Fund, Inc.
(Unaudited)
----------------------
Semi-Annual Report
April 30, 2000
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www.themexicofund.com
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<PAGE>

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

. The first half of the Fund's fiscal year 2000 ended April 30, 2000.

. On July 2, 2000, Mexico will have Presidential, Congressional and some Guber-
natorial elections. The winning candidates will take office on December 1,
2000.

. Mexico's economic activity continued to grow dynamically as the country's
gross domestic product (GDP) increased 7.9% during the first quarter of cal-
endar 2000.

. During the first quarter of 2000, Mexico's current account deficit totaled
$4.2 billion. Direct foreign investment totaled $3.1 billion, financing the
equivalent of 73% of the current account deficit.

. The rate of exchange of the Mexican peso against the dollar ended April 2000
at Ps. 9.40 per dollar, but increased to around Ps. 10.00 by the end of June
2000.

. Inflation rates have declined to one-digit levels. At the end of the 12-month
period ended May 31, 2000, the inflation rate was 9.5%, compared with 12.3%
at the end of 1999.

. Interest rates on the 28-day Cetes (treasury bills) have experienced a de-
clining trend, but ended June 2000 at 17.0%, compared with 16.3% at the end
of 1999.

. During the second quarter of fiscal 2000, the Fund's market price decreased
4.7% while its net asset value (NAV) per share remained unchanged, compared
with a 3.1% increase for the Mexican Stock Exchange ("Bolsa") index.

. The Fund's discount between its market price and NAV ended April 2000 at a
level of 30.9% and ended May 2000 at 32.5%.

. The Bolsa has been negatively influenced by the volatility of international
stock markets and concerns surrounding the US economy, interest rates, and
worldwide stock markets. The Bolsa index declined almost 30% through the end
of May 2000 since it reached its maximum historical level in early March.

. The Fund's Web site--www.themexicofund.com--provides, among other useful in-
formation, the Fund's daily market price and NAV per share and its portfolio
holdings within the first five business days after the end of each fiscal
quarter.

. The Board of Directors declared a cash dividend of 8.5 cents per share, after
deduction of 0.5 cents for Mexican withholding taxes on dividends received by
the Fund. The dividend is payable on July 31, 2000 to shareholders of record
as of June 30, 2000 and is comprised entirely of net investment income.
<PAGE>

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THE MEXICO FUND, INC.
TO OUR SHAREHOLDERS:
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Economic and Political Environment

On July 2, 2000, Mexico will hold Presidential, Congressional and several Gu-
bernatorial elections. By the time shareholders receive this Report, the elec-
tion process should be over, and certainly the name of the elected President
and other public officials should be well known. The three leading Presiden-
tial Candidates were, in alphabetical order, Cuauhtemoc Cardenas (for the op-
position alliance formed by the PRD and four other political parties), Vicente
Fox (for the opposition alliance formed between the PAN and the PV) and Fran-
cisco Labastida (of the PRI). The winning candidate will take office on Decem-
ber 1, 2000.

As a result of the North American Free Trade Agreement, Mexico continues to be
the second largest trade partner of the United States. According to figures
provided by the US Department of Commerce, total trade between Mexico and the
US amounted to $57.56 billion during the first calendar quarter of 2000, com-
pared with $101.34 billion and $50.54 billion for Canada and Japan, respec-
tively.

Mexico's economic activity continues to show a dynamic performance. During the
first quarter of calendar 2000, the country's GDP increased 7.9% on an
annualized rate, significantly higher than the 3.7% growth achieved during
1999. Double-digit growth rates were reported in the commerce, restaurants and
hotels sector, which registered the most dynamic performance with an increase
of 15.0%, and in the transportation sector which increased 11.9%. The manufac-
turing industry increased 9.4%, the energy sector 7.2%, the construction sec-
tor 6.9%, the mining sector 3.0% and the primary sector 0.9%. Economic ana-
lysts estimate that during year 2000 Mexico's GDP will expand by approximately
5.5%.

During the first quarter of 2000, Mexico's current account deficit amounted to
$4.2 billion, 20% higher than during the same period of 1999. Within the cur-
rent account deficit, the trade balance deficit contributed with $1.4 billion
and was 9.3% lower than one year earlier. During the same period, Mexico's to-
tal exports increased 26.9% to $38.0 billion while total imports increased
26.2% to $39.3 billion. At the same time, direct foreign investment into Mex-
ico amounted to $3.1 billion and financed 73% of the current account deficit.

Mexico's total international reserves at Banco de Mexico (Central Bank) are
now near their highest historical level and amounted to approximately $32 bil-
lion at the end of June 2000. Although the Mexican currency continued to show
signs of strength during this second fiscal quarter, the exchange rate has re-
flected some deterioration in recent weeks, as it increased from Ps. 9.40 at
the end of April 2000, to around Ps. 10.00 by the end of June 2000.

Mexico's inflation rates have decreased substantially. At the end of May 2000,
the 12-month inflation rate was 9.5%, compared with 12.3% for 1999, anticipat-
ing the target set by the Central Bank of reaching a one-digit inflation rate
by the end of 2000. Strict adherence to the current administration's monetary
policy and the strong performance of the peso con-
<PAGE>

The interest rates paid on 28-day Cetes decreased from 16.3% at the end of
1999 to 15.5% at the end of April 2000. The recent upgrade of Mexico's credit
rating by Moody's and S&P has contributed to this reduction of domestic inter-
est rates. Since then, however, the volatility experienced in international
financial markets and the electoral environment in Mexico have pushed interest
rates to levels of around 17.0% at the end of June 2000.

The price of the Mexican oil mix increased to approximately $27 per barrel by
the end of June 2000, from $22.14 at the end of 1999. Despite the lower volume
of Mexican oil exports that resulted from a multilateral agreement intended to
boost international oil prices, Mexican oil exports increased almost 150% dur-
ing the first quarter of 2000.

The Bolsa and the Fund's Performance

The Mexican Bolsa index registered a volatile performance during the second
quarter of fiscal 2000. After a historical high of 8,320 points was reached on
March 9, which was 19% higher than at the end of 1999, the volatility experi-
enced in international financial markets affected the Mexican market and the
index declined 30% to 5,961 points at the end of May 2000. Some of the factors
that contributed to this volatile performance included the uncertainty sur-
rounding the US economy and interest rates, and the market price decline suf-
fered by several US technology companies. During the Fund's first half of fis-
cal 2000, the Bolsa index increased 24.5%, but increased only 3.1% during the
second fiscal quarter.
This volatile trend of the Bolsa index has also been reflected in the Fund's
performance and market discount. According to figures provided by Lipper Ana-
lytical Services, Inc., during the first half of fiscal 2000, the Fund's mar-
ket price and NAV per share increased 5.8% and 11.8%, respectively, while dur-
ing the second quarter of fiscal 2000, the market price decreased 4.7% and the
NAV per share remained unchanged. The discount between the Fund's market price
and NAV per share ended April 2000 at 31% and remained at similar levels
through the end of June.

It is now a common practice of the investment community to compare the perfor-
mance of funds with that of certain "benchmark" indices. In the case of the
Fund, the most common benchmarks used by investors are the Bolsa's Price and
Quotations Index ("IPC" for its spanish initials), the International Finance
Corporation Mexico Global Index or the Morgan Stanley Capital International
Mexico Index. The IPC, considered the leading index of the Mexican Stock Ex-
change, is comprised of the 35 most actively traded series of securities
listed on the Bolsa. Telmex and its parent company Telecom, because of their
significant market capitalization, represent 29% and 10% of the IPC, respec-
tively. By contrast, consistent with its investment objective, policies and
procedures, the Fund's portfolio is not as heavily weighted to these two is-
suers. Accordingly, the Fund's performance and that of the IPC cannot be com-
pared directly.

During fiscal year 1999 and the first six months of fiscal year 2000, the
Fund's perfor-
<PAGE>

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mance was significantly below that recorded by the IPC. A substantial part of
the discrepancy is due to the extraordinary performance of Telmex and the
telecommunications, media and financial sectors generally. Given their weight-
ing in the IPC, the IPC rose dramatically during fiscal year 1999 by 40%, com-
pared to a less pronounced Fund NAV increase of 29%. Similarly, during the
first half of fiscal year 2000, the IPC increased 3.1% while the Fund's NAV
remained unchanged. The Fund also underperformed the IPC due to the composi-
tion and selection of the Fund's portfolio. Unlike the IPC, or any other in-
dex, the Fund is a managed investment vehicle. Portfolio management involves
judgment with regard to the fundamental financial situation and growth pros-
pects of each portfolio company and market sector. Certain portfolio holdings,
including those considered to belong to the "old economy", were out of favor
at present yet represent attractive opportunities, in the Investment Adviser's
view, consistent with the Fund's long-term investment objective. Finally, any
comparison of the performance of the Fund and the IPC must take into account
the diversification and sector concentration limitations, which are essential
components of the Fund's investment structure.

Several fundamental indicators continue to suggest that market prices of Mexi-
can listed companies show modest valuations. At the end of April 2000, the av-
erage price-earnings (PE) and price-book value (PBV) ratios of the Bolsa were
8.71 and 1.28 times, respectively. Although not totally comparable, the aver-
age PE ratios of the Dow Jones Industrial Average and S&P 500 indices in the
US were approximately 22 and 28 times, respectively. More importantly, the
Bolsa's average enterprise value to EBITDA ratio (EV/EBITDA), is currently at
a level of 6.93 times, 60% lower than its historical high of 17 times reached
in February 1994.

Declaration of Dividend.

The Board of Directors has declared a cash dividend of 8.5 cents per share,
payable on July 31, 2000 to shareholders of record on June 30, 2000. In addi-
tion, the Fund will elect to pass through to U.S. shareholders as gross income
for Federal income tax purposes their proportionate share of Mexican income
taxes paid by the Fund, amounting to 0.5 cents per share, resulting in gross
income of 9.0 cents per share. U.S. shareholders may claim a foreign tax
credit or deduction for U.S. federal income tax purposes for the amount of the
Mexican tax. The dividend is comprised entirely of net investment income.

Shareholders enrolled in the Dividend Reinvestment Plan will receive their
distribution in shares of common stock of the Fund. Shareholders whose divi-
dend distributions are additionally subject to withholding of U.S. tax by the
Fund will receive cash or shares, as the case may be, net of the amount of ap-
plicable U.S. withholding tax.

The full amount of the dividend, whether received in cash or in additional
shares of the Fund pursuant to the Fund's Dividend Reinvestment Plan, plus the
amount of the Mexican tax passed through to shareholders, will
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Portfolio Strategy

During the second quarter of fiscal 2000, the Fund continued to reduce some of
its investments in securities with limited liquidity and smaller market capi-
talization in order to increase its exposure to the telecommunications, bank-
ing, retail and media sectors. At the same time, the Fund also reduced its ex-
posure to some issuers in the beverages, cement and consumer goods sectors.
Some of these transactions were made in order to comply with diversification
requirements applicable to the Fund. This Report includes for your reference a
summary description of the Fund's ten largest holdings, which at the end of
April 2000 represented approximately 62% of its total net assets.

The Fund publishes on its Web site, located at www.themexicofund.com, its in-
vestment portfolio as of the end of each fiscal quarter, updated within five
business days after the closing of the fiscal quarter. Accordingly, the Fund's
investment portfolio, as reported on the Web site, is updated during the first
five business days of February, May, August and November. The Fund's invest-
ment portfolio as of April 30, 2000 has been posted on the Web site since
early May 2000.

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 impor-
tant 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 ordinary mail a copy
of the Fund's 1999 Annual Report and the most recent Quarterly and Monthly
Summary Reports. We hope that the Fund's Web site will be a useful resource
for information and we will continue working to improve it.

The Fund continues to offer a convenient e-mail service as another way for
shareholders and potential investors to obtain additional information and to
contact Fund management. Please direct your e-mail inquiries to:

Investor Relations Office
[email protected]

In addition to the quarterly reports published by the Fund, the Adviser dis-
tributes 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 ordinary 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

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The Fund also has a toll free telephone number and an information agent, Mor-
row & Co. Inc. in the United States. Upon request, this office will be pleased
to provide you with the Fund's current NAV, quarterly reports and other Fund
materials. Please refer your information requests to:

Morrow & Co., Inc.
14755 Preston Road--Suite 725
One Signature Place
Dallas, TX 75240
(800) 224-4134

The Fund also has a toll free telephone number and an information agent, Morrow
& Co. Inc., in the United States. Upon request, this office will be pleased to
provide you with the Fund's current NAV, quarterly reports and other Fund mate-
rials. Please refer your information requests to:

ARTHUR ANDERSEN
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft mbH
Mergenthalerallee 10-12
65760 Eschborn/Frankfurt/M.
Postfach 53 23
65728 Eschborn/Frankfurt/M.
Germany
Telefon: 06196-99-6264
Telefax: 06196-99-6419

The Fund's dividend reinvestment plan and transfer agent is:

American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
(212) 936-5100

Securities Lending Program

On March 7, 2000, the Fund re-established a Securities Lending Program (the
"Program"). During the first three months of operation, income generated by the
Program amounted to $94,000, which will be added to the net investment income
to be distributed to shareholders.

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 share. At a share-
holder'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.

Under the terms of the Plan, whenever the Fund declares a distribution, Plan
participants will receive their distribution entirely in shares
<PAGE>

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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 nomi-
nee 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 dis-
tribution 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
40 Wall Street
New York, NY 10005
(212) 936-5100

Sincerely yours,

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

June 27, 2000.
<PAGE>

1. Telefonos de Mexico, S.A. de C.V. (13.13%)

Telmex is the major telecommunications company in Mexico and provides local
telephone, domestic and international long-distance, wireless, data and video
transmission services. Since its privatization in 1990, Telmex has aggressively
modernized and has emerged as a leader in telecommunication services in Latin
America. Starting in 1999, Telmex provides telecommunication services in the
United States and Guatemala.

2. Wal-Mart de Mexico, S.A. de C.V. (10.41%)

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 sub-
sidiary of the US firm Wal-Mart Stores, Inc. Walmex has a total of 460 units in
43 cities in Mexico, which includes supermarkets, retail stores and restau-
rants.

3. Carso Global Telecom, S.A. de C.V. (9.82%)

This company is dedicated to the telecommunications business and is the con-
trolling company of Telmex (see above), Prodigy Inc. (US) and Mcom Wireless
Inc. (Brazil). The shares of Prodigy Inc., an important Internet service pro-
vider in the United States, have traded on the NASDAQ since February 1999.

4. Grupo Modelo, S.A. de C.V. (5.64%)

Founded in 1925, Grupo Modelo 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 58%. The group owns 10 brand names, including Corona, the most
popular beer imported from Mexico, Victoria and Modelo. The company also im-
ports and distributes in Mexico brand names of beer produced by its partner
Anheuser-Busch, including Budweiser and Bud Light.

5. Kimberly Clark de Mexico, S.A. de C.V. (5.41%)

The company is dedicated to the manufacturing, marketing and sale of paper and
consumer products for personal care. Kimberly has the leading market position
in every product category where it competes. Products sold by the company in-
clude tissue paper, diapers, feminine care products, notebooks, office paper
and specialty products.

6. Grupo Televisa, S.A. (5.39%)

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 tele-
vision programming, direct-to-home satellite services, publishing, music re-
cording, 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
uncosolidated equity stake in Univision, the leading Spanish-language televi-
sion company in the United States, and is about to launch an internet portal.

7. Fomento Economico Mexicano, S.A. de C.V. (5.07%)

Femsa is Latin America's largest beverage company with exports to the United
States, Canada and selected countries in Latin America, Europe and the Far
East. Founded in 1890, Femsa is the largest totally integrated producer of soft
drinks and beer in Mexico. 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 and Coca
Cola, among others.

8. Cemex, S.A. de C.V. (4.94%)

Cemex is the world's third largest cement producer. The company and its subsid-
iaries are dedicated to the production, distribution, commercialization and
sale of cement, concrete, mix, clinker and value added products. Cemex produces
and operates in 30 countries around the world and has commercial relations with
60 countries. Cemex is the leader in the cement markets of Mexico, Spain, Vene-
zuela, Panama and the Dominican Republic and has important market presence in
the Caribbean, Indonesia, the Philippines and the southwest region of the
United States.

9. Apasco (4.28%)

The Apasco Group is an organization founded in 1928, dedicated to the produc-
tion and commercialization of cement, ready-mixed concrete, aggregates and
other related products and services. Apasco is the second largest producer of
cement and ready-mixed concrete in Mexico and the company also has market pres-
ence in Honduras and El Salvador. Holderbank, the world's leading producer of
cement, holds a majority position in Apasco.

10. Grupo Carso, S.A. de C.V. (3.37%)

Carso is a diversified holding company with interests in key sectors of the
Mexican economy such as telecommunications, consumer goods, retail, construc-
tion, autoparts and mining. The company holds large market shares in most of
the businesses in which it participates and its strategy consists of acquiring
controlling interests in undervalued companies to maximize their long-term
growth and value.
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The Mexico Fund, Inc.
Schedule of Investments as of April 30, 2000 (Unaudited)
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<TABLE>
<CAPTION>
Percent
Shares Value of Net
Industries Held Common Stock (96.87%) Series (Note 1) Assets
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<C> <C> <C> <S> <C> <C> <C>
Fomento Economico
Mexicano, S.A. de
Beverages (c) 14,100,000 C.V. .................. UBD $56,013,082 5.07%
Grupo Continental,
9,422,000 S.A. .................. * 11,223,825 1.01
Grupo Modelo, S.A. de
29,492,000 C.V. .................. C 62,296,439 5.64
----------- -----
129,533,346 11.72
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Cement
Industry (c) 7,758,000 Apasco, S.A. de C.V. ... * 47,280,728 4.28
12,478,000 Cemex, S.A. de C.V. .... CPO 54,148,309 4.90
----------- -----
101,429,037 9.18
---------------------------------------------------------------------------------------
Carso Global Telecom,
Communications (a) 40,147,976 S.A. de C.V. .......... A1 108,461,879 9.82
Telefonos de Mexico,
(c) 19,000,000 S.A. de C.V. .......... A 56,583,706 5.12
Telefonos de Mexico,
(c) 30,250,000 S.A. de C.V. .......... L 88,478,515 8.01
----------- -----
253,524,100 22.95
---------------------------------------------------------------------------------------
Conglomerates (c) 11,835,000 Alfa, S.A. de C.V. ..... A 36,693,283 3.32
(a)(c) 41,575,276 Desc, S.A. de C.V. ..... B 29,361,820 2.66
Grupo Carso, S.A. de
(a)(c) 10,990,000 C.V. .................. A1 37,229,472 3.37
Grupo Imsa, S.A. de
3,105,000 C.V. .................. UBC 4,458,360 0.40
(a) 714,000 Savia, S.A. de C.V. .... A 4,131,206 0.38
----------- -----
111,874,141 10.13
---------------------------------------------------------------------------------------
Construction & Consorcio ARA, S.A. de
Housing (a) 6,946,000 C.V. .................. * 8,628,939 0.78
Corporacion Geo, S.A. de
(a) 2,480,000 C.V. .................. B 5,750,266 0.52
Empresas ICA, Sociedad
Controladora, S.A. de
12,600,000 C.V. .................. * 4,824,505 0.44
----------- -----
19,203,710 1.74
---------------------------------------------------------------------------------------
Consumer
Products for Kimberly-Clark de
Personal Care 18,502,000 Mexico, S.A. de C.V. .. A 59,823,527 5.41
---------------------------------------------------------------------------------------
Corporacion
Interamericana de
Entretenimiento, S.A.
Entertainment (a) 5,499,495 de C.V. ............... B 22,431,997 2.03
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Financial Grupo Financiero Banamex
Groups (a) 5,927,000 Accival, S.A. de C.V. . O 21,433,525 1.94
Grupo Financiero
Bancomer, S.A. de
(a)(c) 27,550,000 C.V. .................. O 12,277,654 1.12
Grupo Financiero
(a) 4,227,000 Inbursa, S.A. de C.V. . O 17,174,154 1.55
Grupo Financiero
Inverlat Recovery
(a)(b) -- Trust.................. -- 0.00
----------- -----
50,885,333 4.61
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Grupo Bimbo, S.A. de
Food (a) 26,090,000 C.V. .................. A 33,521,293 3.03
Grupo Industrial Maseca,
(c) 17,000,000 S.A. de C.V. .......... B 7,865.345 0.71
----------- -----
41,386,641 3.74
---------------------------------------------------------------------------------------
</TABLE>
<PAGE>

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The Mexico Fund, Inc.
Schedule of Investments as of April 30, 2000 (Unaudited) -- (Continued)
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<TABLE>
<CAPTION>
Percent
Value of Net
Industries Shares Held Common Stock (Continued) Series (Note 1) Assets
--------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C> <C>
Iron & Steel
Industry (a) 1,000,000 Hylsamex, S.A. de C.V. . BCP 1,837,907 0.17%
Tubos de Acero de
1,000,000 Mexico, S.A. .......... * 14,358,647 1.30
-------------- ------
16,196,554 1.47
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Media (a) 19,000,000 Grupo Televisa, S.A. ... CPO 59,513,933 5.39
TV Azteca, S.A. de
(a) 13,000,000 C.V. .................. CPO 8,932,142 0.81
-------------- ------
68,446,075 6.20
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Mining Grupo Mexico, S.A. de
Industry 7,750,000 C.V. .................. B 31,652,840 2.87
Industrias Penoles, S.A.
1,852,000 de C.V. ............... * 3,821,400 0.34
-------------- ------
35,474,240 3.21
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Controladora Comercial
Mexicana, S.A. de
Retail Trade 11,770,000 C.V. .................. UBC 12,343,352 1.12
Grupo Elektra, S.A. de
7,000,000 C.V. .................. CPO 6,819,826 0.62
Grupo Sanborns, S.A. de
(a) 4,250,000 C.V. .................. B-1 7,340,991 0.66
Organizacion Soriana,
(a) 4,650,000 S.A. de C.V. .......... B 18,472,399 1.67
Wal-Mart de Mexico, S.A.
(a)(c) 16,232,807 de C.V. ............... C 34,703,193 3.14
Wal-Mart de Mexico, S.A.
(a)(c) 34,696,784 de C.V. ............... V 80,265,375 7.27
-------------- ------
159,945,136 14.48
--------------------------------------------------------------------------------------------
Total Common Stock
(Identified Cost--
$568,768,688).......... $1,070,153,837 96.87
--------------------------------------------------------------------------------------------
<CAPTION>
Percent
Short-Term Securities Value of Net
Securities Face Value (9.61%) (Note 1) Assets
--------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C> <C>
$36,430,051 Bancomer, S.A., 13.00%,
dated 04/28/00, due
05/02/00, repurchase
price $36,482,672,
Repurchase collateralized by
Agreements Udibonos............... $ 36,430,051 3.30%
69,690,750 Lehman Brothers, Inc.,
5.80%, dated 04/28/00,
due 05/01/00,
repurchase price
$69,724,434,
collateralized by U.S.
Government Agency
Securities............. 69,690,750 6.31
-------------- ------
106,120,801 9.61
--------------------------------------------------------------------------------------------
Total Short-Term
Securities (Identified
cost--$106,120,801).... 106,120,801 9.61
Total Investments
(Identified cost--
$674,889,489).......... 1,176,274,638 106.48
Liabilities in Excess of
Other Assets........... (71,490,337) (6.48)
-------------- ------
Net Assets Equivalent to
$21.87 per share on
50,506,925 shares of
capital stock
outstanding (Note 7)... $1,104,784,301 100.00%
-------------- ------
</TABLE>

(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.
(c) Securities are partially on loan.

See Notes to Financial Statements.
<PAGE>

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Statement of Assets and Liabilities as of April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets:
Investments:
Securities, at value (Note 1):
Common stock (identified cost -- $568,768,688).. $1,070,153,837
Short term securities (identified cost --
$106,120,801)................................. 106,120,801
--------------
Total investments (identified cost --
$674,889,489)................................ $1,176,274,638
Cash............................................. 23,888
Dividends receivable............................. 1,830,653
Receivables from securities sold................. 412,484
Interest receivable.............................. 73,150
Prepaid Mexican withholding taxes (Note 1)....... 253,071
Other............................................ 8,625
--------------
Total assets................................... 1,178,876,509
--------------
Liabilities:
Payable upon return of securities loaned (Note
1).............................................. 69,690,750
Payables for securities purchased................ 3,413,217
Investment adviser (Notes 2 and 3)............... 750,013
Accrued expenses and other liabilities........... 238,228
--------------
Total liabilities.............................. 74,092,208
--------------
Net Assets -- Equivalent to $21.87 per share on
50,506,925 shares of capital stock outstanding
(Note 7)........................................ $1,104,784,301
==============
</TABLE>

See Notes to Financial Statements.
<PAGE>

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Statement of Operations (Unaudited) For the Six Months Ended April 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Net Investment Income:
Income (Note 1):
Dividends........................................... $ 6,524,335
Interest and discounts earned....................... 3,132,700
Income from securities loaned, net.................. 57,571
-----------
Total income........................................ $ 9,714,606
Expenses:
Investment advisory fee (Note 2).................... 3,923,820
Administrative services (Note 3).................... 175,000
Value-added taxes (Note 1).......................... 633,252
Printing, distribution and mailing of shareholder
reports............................................ 105,638
Legal fees.......................................... 161,432
Directors' fees..................................... 75,574
Directors' and Officers' expenses................... 27,745
Accounting and audit fees........................... 50,943
Custodian fees (Note 5)............................. 49,863
Transfer agent and dividend disbursement fees....... 10,500
Shareholders' information........................... 111,257
Stock exchange fees................................. 24,073
Insurance........................................... 37,714
Miscellaneous....................................... 62,151
-----------
Operating expenses.................................. 5,448,962
------------
Net investment income (Note 1)...................... 4,265,644
------------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions:
Net realized gain on investments and foreign currency
transactions (Notes 1 and 6):
Proceeds from sales................................. 81,245,451
Cost of securities sold............................. 51,258,186
-----------
Net realized gain on investments.................... 29,987,265
Net realized gain from foreign currency 1,374,403
transactions.......................................
-----------
Net realized gain on investments and foreign
currency transactions.............................. 31,361,668
Increase in net unrealized gain (loss) on investments
and translation of assets and liabilities
in foreign currency:
Investments:
End of period (Note 6).............................. 501,385,149
Beginning of period................................. 419,910,947
-----------
Increase in net unrealized gain on investments...... 81,474,202
Translation of assets and liabilities in foreign
currency:
End of period....................................... (273,235)
Beginning of period................................. (304,016)
-----------
Decrease in net unrealized loss on translation of
assets and liabilities in foreign currency......... 30,781
-----------
Increase in net unrealized gain on investments and
translation of assets and liabilities in foreign
currency........................................... 81,504,983
------------
Net Increase in Net Assets Resulting from Operations. $117,132,295
============
</TABLE>

See Notes to Financial Statements.
<PAGE>

--------------------------------------------------------------------------------
The Mexico Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Six Months Ended For the
April 30, 2000 Year Ended
(Unaudited) October 31, 1999
--------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations
Net investment income................... $ 4,265,644 $ 20,388,489
Net realized gain on investments and
foreign currency transactions.......... 31,361,668 1,107,534
Increase in net unrealized gain on
investments and translation of assets
and liabilities in foreign currency.... 81,504,983 206,280,504
-------------- ------------
Net increase in net assets resulting
from operations........................ 117,132,295 227,776,527
Dividends to shareholders from net
investment income...................... (974,784) (22,925,093)
-------------- ------------
Total increase in net assets........... 116,157,511 204,851,434
Net Assets:
Beginning of period..................... 988,626,790 783,775,356
-------------- ------------
End of period........................... $1,104,784,301 (A) $988,626,790 (A)
============== ============
</TABLE>

See Notes to Financial Statements.
(A) Including accumulated net investment loss of $(6,221,282) as of April 30,
2000 and $(10,886,545) as of October 31, 1999.
<PAGE>

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

<TABLE>
<CAPTION>
For the
Six Months
Ended April For the Year Ended October 31,
The Mexico Fund, Inc. 30, 2000 ----------------------------------------------------
Financial Highlights (Unaudited) 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period.... $ 19.57 $ 15.52 $ 23.49 $ 17.33 $ 13.80 $ 33.48
---------- -------- -------- ---------- -------- --------
Net investment income
(Note 1).............. 0.08 0.40 0.39** 0.40 0.50 0.59**
Net gain (loss) on
investments and
translation of foreign
currency (Note1)...... 2.24 4.10 (7.48)** 6.16 3.46 (19.21)**
---------- -------- -------- ---------- -------- --------
Total from investment
operations............. 2.32 4.50 (7.09)** 6.56 3.96 (18.62)**
---------- -------- -------- ---------- -------- --------
Less Dividends and
Distributions:
Dividends to
shareholders from net
investment income..... (0.02) (0.45) (0.23) (0.38) (0.43) --
Distributions to
shareholders from net
capital gains......... -- -- (0.60) (0.02) -- (0.01)
---------- -------- -------- ---------- -------- --------
Total dividends and
distributions.......... (0.02) (0.45) (0.83) (0.40) (0.43) (0.01)
---------- -------- -------- ---------- -------- --------
Tax return of capital.. -- -- -- -- -- (0.05)
---------- -------- -------- ---------- -------- --------
Capital charge
resulting from
issuance of fund
shares................ -- -- (0.05) -- -- (1.00)
---------- -------- -------- ---------- -------- --------
Net asset value, end of
period................ $ 21.87 $ 19.57 $ 15.52 $ 23.49 $ 17.33 $ 13.80
========== ======== ======== ========== ======== ========
Market value per share,
end of period......... $ 15.13 $ 14.31 $ 11.25 $ 18.69 $ 14.13 $ 12.25
========== ======== ======== ========== ======== ========
Total investment return
based on market value
per share.............. 5.81% 31.92% (36.70%) 35.03% 18.77% (60.79%)
Ratios to Average Net
Assets:
Expenses............... 0.92%* 0.98% 0.93% 0.91% 1.00% 1.14%
Net investment income.. 0.72%* 2.14% 1.87% 1.80% 2.93% 3.24%
Supplemental Data:
Net assets at end of
period (in 000's)..... $1,104,784 $988,627 $783,775 $1,167,893 $861,750 $685,896
Portfolio turnover
rate.................. 7.37% 6.40% 3.69% 7.58% 9.57% 10.61%
</TABLE>
--------
*Annualized
**Amounts were computed based on average shares outstanding during the period.

See Notes to Financial Statements.
--------------------------------------------------------------------------------
Selected Quarterly Financial Data (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Amounts in thousands,
except per share amounts)
-------------------------------------------
Quarter Ended Quarter Ended
April 30, 2000 January 31, 2000
--------------------- ---------------------
Total Per Share Total Per Share
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Investment Income.................. $ 6,420 $ 0.13 $ 3,295 $ 0.07
Net Investment Income.............. $ 3,651 $ 0.07 $ 615 $ 0.01
Net realized gain on investments... $ 17,040 $ 0.34 $ 12,947 $ 0.26
Net realized gain from foreign
currency transactions............. $ 846 $ 0.02 $ 528 $ 0.01
(Decrease) increase in net
unrealized gain on investments.... $ (21,816) $(0.43) $ 103,290 $ 2.05
Decrease (increase) in net
unrealized loss on translation of
assets and liabilities in foreign
currency.......................... $ 65 $ 0.00 $ (34) $ 0.00
Net assets......................... $1,104,784 $21.87 $1,104,998 $21.88
</TABLE>
--------
See Notes to Financial Statements.
<PAGE>

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

The Mexico Fund, Inc.
Notes to Financial Statements--
April 30, 2000 (Unaudited)
-------------------------------------------------------------------------------

1. Operations and Significant Accounting Policies:

The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company. The investment ob-
jective of the Fund is to seek long term capital appreciation through invest-
ment in securities, primarily equity, listed on the Mexican Stock Exchange.

The preparation of financial statements in conformity with accounting princi-
ples generally accepted in the United States requires management to make esti-
mates and assumptions that affect the reported amounts of assets and liabili-
ties at the date of the financial statements and the reported amounts of reve-
nues and expenses for the period. Actual results could differ from those esti-
mates. 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 op-
erations 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 rea-
sonably 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 re-
flects fair value.

Security transactions and investment income --Security transactions are re-
corded on the date which the transactions are entered into (the trade date).
Dividend income is recorded on the ex-dividend date and interest income is re-
corded as it is earned.

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 translation 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 April 30, 2000 was Ps.9.402 to $1.00.

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

Since the net assets of the Fund are determined based on the currency ex-
change rate and market values at the close of each business day, it is not
practicable to isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the year. Accordingly,
the net realized and unrealized gain on investments presented in the accompa-
nying financial statements include the effects of both such changes.

Reported net realized foreign exchange gains or losses arise from sales of
short-term securities in exchange of property, payment of services or func-
tional currency denominated assets, currency gains or losses realized between
the trade and settlement dates on securities transactions, the difference be-
tween the amounts of dividends, interest, and foreign withholding taxes re-
corded by the Fund, and the U.S. dollar equivalent of the amount actually re-
ceived or paid.
<PAGE>

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

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

Repurchase Agreements -- The Fund enters into repurchase agreements with ap-
proved 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 exceeds
the principal amount of the repurchase transaction, including accrued inter-
est, 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 in-
vestments are determined on the identified cost basis.

Taxes -- No provision has been made for U.S. income taxes for the six months
ended April 30, 2000, 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 in-
come to its shareholders.

The Fund is subject to Mexican withholding taxes in accordance with the Mexi-
can 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 with-
holding taxes.

Lending of portfolio securities -- During fiscal year 1998, the Board of Di-
rectors 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.

In March 2000, the Board approved Cantor Fitzgerald & Co. ("Cantor"), as the
lending agent for the Fund. Since March 7, 2000, the Fund has been lending
part of its portfolio securities to approved financial institutions, provided
that the market value of securities loaned will not at any time exceed one-
third of the Fund's total assets. The Fund continues to receive dividends on
the securities loaned. The gain or loss in the fair value of the securities
loaned that may occur during the term of the loan will be accounted for by the
Fund. The Fund earns interest on the investment of the collateral received for
the securities loaned. The Fund may rebate a portion of the interest earned on
the investment of collateral to the borrower, and may pay a commission to the
lending agent. Under the agreement, Cantor also reimburses to the Fund the
custodian fees. In order to protect against the risk of failure by the bor-
rower to return the securities loaned or any delay in the delivery of such se-
curities, each loan is collateralized by U.S. dollars (cash), securities is-
sued or guaranteed by the U.S. government or its agencies or instrumentali-
ties, or irrevocable stand-by letters of credit issued by U.S. banks. The col-
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
lateral is maintained at all times in an amount equal to at least 105 percent
of the current market value of the loaned securities. At April 30, 2000, the
value of securities loaned and collateral received thereon were as follows:

<TABLE>
<S> <C>
Value of Securities Loaned......................................... $ 63,362,638
============
Value of Collateral Received....................................... $ 69,690,750
============
</TABLE>

2. Investment Advisory Agreement:

The Fund has a management contract with Impulsora del Fondo Mexico, S.A. de
C.V. (the "Adviser"), a Mexican corporation registered under the U.S. Invest-
ment Advisers Act of 1940. The Adviser furnishes investment research and port-
folio management services consistent with the Fund's stated investment poli-
cies. The Fund pays to the Adviser a monthly fee at the annual rate of 0.85% on
the first $200 million of average daily net assets, 0.70% on the excess over
$200 million up to $400 million and 0.60% on the excess over $400 million.

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 the determination and publication of the net asset
value of the Fund, the maintenance of the Fund's books and records in accor-
dance 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, 2001. The
annual fee payable to the Adviser by the Fund under this agreement is $350,000.

4. Trust Agreement and Trustee:

Bancomer, S.A. ("Bancomer") was the trustee for the Mexican Trust through
which the Fund invested. During 1997 and 1998, the Mexican governmental author-
ities gave approval to the Trustee for the transfer of the total assets and li-
abilities of the Trust to the Fund. On February 27, 1998, the Funds sharehold-
ers approved matters in connection with the termination of the Trust Agreement
with Bancomer. The termination was effective on March 31, 1998.

5. Mandate Agreement and Mandatory Party:

In connection with the termination of the Trust Agreement discussed in the
preceding note, on March 31, 1998, the Fund signed a Mandate Agreement with
Bancomer. Under this Agreement, Bancomer acts as the Mandatory Party, perform-
ing 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 Mex-
ican pesos, which currently translates to approximately $50,457. Due to the na-
ture of this Agreement, the fees paid to Bancomer are consolidated with the
Fund's custodian fees.
<PAGE>

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

6. Purchases and Sales of Investments:

Purchases and sales of investments, excluding short-term securities, for the
six months ended April 30, 2000 were as follows:

<TABLE>
<S> <C>
Purchases
-------------------------------------------------------------------------------
Common Stock...................................................... $107,953,405
------------
Total Purchases................................................. $107,953,405
============
Proceeds from Investments Sold
-------------------------------------------------------------------------------
Common Stock...................................................... $ 81,245,451
------------
Total Sales..................................................... $ 81,245,451
============
</TABLE>

As of April 30, 2000, net unrealized gains on investments in common stocks
for Federal income tax purposes aggregated to approximately $501 million, of
which approximately $558 million related to appreciated securities and approx-
imately $57 million related to depreciated securities. The aggregate cost of
investments in common stocks at April 30, 2000 for Federal income tax purposes
was approximately $569 million.

7. Capital Stock:

At April 30, 2000, there were 150,000,000 shares of $1.00 par value common
stock authorized, of which 50,758,750 shares were issued, 50,506,925 shares
were outstanding and 251,825 shares were held in treasury.

The Fund offers a Dividend Reinvestment Plan ("Plan") to its shareholders.
Fund shareholders are automatically enrolled as participants in the Plan un-
less 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 April 30, 2000, net assets were comprised of the following:

<TABLE>
<S> <C>
Common stock................................................ $ 50,506,925
Additional paid-in capital.................................. 576,466,300
Accumulated net investment loss............................. (6,221,282)
Accumulated net realized loss on investments................ (17,079,556)(A)
Unrealized appreciation of investments and translation of
assets and liabilities in foreign currency................. 501,111,914
--------------
$1,104,784,301
==============
</TABLE>
-------
(A) ($26,797,013) for Federal Income Taxes.

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

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.

8. Capital Gains:

Net realized gains from security transactions, if any, are distributed annu-
ally to shareholders. Capital loss carryforwards will be used to offset future
capital gains available for distribution. The Fund has net capital loss
carryforwards at April 30, 2000 of approximately $26,797,000 expiring in 2007.
<PAGE>

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

9. Investments:

As a result of significant losses incurred by Grupo Financiero Inverlat, S.A.
de C.V. ("Inverlat"), certain significant shareholders, together with the fi-
nancial authorities, developed a recapitalization program. On July 23, 1996,
after the absorption of accumulated losses through the total reduction of capi-
tal 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 April 30,
2000, 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.