Edgar Filing: MEXICO FUND INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

THE MEXICO FUND, INC.
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(Name of Registrant as Specified In Its Charter)

THE MEXICO FUND, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:

THE MEXICO FUND, INC.

1775 Eye Street, N.W.
Washington, DC 20006-2401

Notice of Annual Meeting of Shareholders

[ ], 2002

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting ") of The Mexico Fund, Inc. (the "Fund ") will be held at [ ],
[ ] on [ ], 2002 at 2:00 P.M. for the following
purposes:

(1) To elect two Directors;

(2) To approve adding a performance fee component to the Fund's investment
advisory fee;

(3) To approve adoption of a share repurchase policy requiring the Fund, on
a periodic basis, to offer to repurchase in-kind Fund shares at no less than 98%
of net asset value;

(4) To consider a shareholder proposal that the shareholders of the Fund
recommend that the Board of Directors expedite the process to convert the Fund
to an open-end investment management company; and

(5) To transact such other business as may properly come before the Meeting
or any adjournment thereof.

The Board of Directors fixed December 22, 2001 as the record date for the
determination of shareholders entitled to notice of, and to vote at, the Meeting
or any adjournment thereof, and only holders of record of shares at the close of
business on that date are entitled to notice of, and to vote at, the Meeting and
any adjournment thereof.

You are cordially invited to attend the Meeting. All shareholders are
requested to complete, date and sign the enclosed form of white proxy and return
it promptly in the envelope provided for that purpose. The enclosed white proxy
is being solicited on behalf of the Board of Directors of the Fund.

By Order of the Board of Directors,

Samuel Garcia Cuellar
Secretary

Dated: [ ], 2002

PLEASE RESPOND -- YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND MAIL THE WHITE PROXY CARD IN
THE MANNER PROVIDED. IT IS IMPORTANT THAT YOU RETURN YOUR PROXY AS SOON AS
POSSIBLE TO ASSURE THAT YOUR PROXY WILL BE VOTED AND TO AVOID ANY ADDITIONAL
EXPENSE TO THE FUND OF FURTHER SOLICITATION. FOR MORE INFORMATION, PLEASE
CALL 1-800-654-2468.

PROXY STATEMENT

THE MEXICO FUND, INC.

1775 Eye Street, N.W.
Washington, DC 20006-2401

Annual Meeting of Shareholders

[ ], 2002

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The Mexico Fund, Inc. (the
"Fund"), a Maryland corporation, to be voted at the Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at [ ], [ ], on [ ],
2002 at 2:00 P.M. and at any adjournment thereof. The approximate mailing date
of this Proxy Statement is [ ], 2002. The report for the fiscal year ended
October 31, 2001, including financial statements, was previously mailed to
shareholders. To request a copy of the annual report, please visit the Fund's
web site at www.themexicofund.com or contact the Fund's Information Agent at:
Morrow & Co., Inc., 445 Park Avenue, 5/th/ Floor, New York, NY 10022, (800)
654-2468.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked on the proxies. Unless
instructions to the contrary are marked thereon with respect to each Proposal, a
properly executed proxy will be voted FOR Proposals 1, 2, and 3 and AGAINST
Proposal 4. The appointed proxies will vote in their discretion on any other
business as may properly come before the meeting or any adjournment or
postponements thereof as set forth in "Other Business."

For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker non-votes (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present.

Approval of each of the Proposals requires the affirmative vote of a
majority of the shares cast at the Meeting. Under Maryland law, abstentions do
not constitute a vote "for" or "against" a matter and will be disregarded in
determining the "votes cast" on all proposals. For purposes of Proposals 1, 2, 3
and 4, broker non-votes do not constitute a vote "for" or "against" the Proposal
and will be disregarded in determining the "votes cast" on the Proposal.

Any shareholder giving a proxy has the right to attend the Meeting to vote
his or her shares in person (thereby revoking any prior proxy) and also the
right to revoke the proxy at any time by written notice received by the Fund
prior to its exercise.

In the event that the necessary quorum to transact business at the
Meeting is not obtained or a quorum is present at the Meeting but sufficient
votes to approve any of the proposals are not received, the proxy holders may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any adjournment will require the affirmative vote of a majority of
those shares present at the Meeting in person or by proxy. If the necessary
quorum is not obtained, the persons named as proxies will vote in favor of the
adjournment. If a quorum is present, the proxy holders will vote proxies which
vote for any proposal with respect to which insufficient votes for approval have
been received in favor of such an adjournment, and will vote those proxies
required to be voted against such a proposal, against adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any adjournment if sufficient votes have been received for approval. In the
event any of the proposals are not approved by shareholders, the Board of
Directors of the Fund will consider appropriate action.

The Board of Directors has fixed December 22, 2001 as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
Meeting and at any adjournment thereof. Shareholders on the record date will be
entitled to one vote for each share held. As of October 31, 2001, the Fund had
outstanding 45,456,232 shares of common stock, par value $1.00 per share. To the
best of the Fund's knowledge based on filings made with the U.S. Securities and
Exchange Commission ("SEC"), as of October 31, 2001, the beneficial owners of
more than five percent (5%) of the voting securities of the Fund are the
following:

Number of Shares Percentage (%) of the Fund's
---------------- ----------------------------
Name and Address Beneficially Owned Outstanding Shares
--------------------------- ------------------ ------------------
Presidents and Fellows of 7,190,900 14.2%
Harvard College
600 Atlantic Avenue Boston,
MA 02210

Laxey Partners Limited 2,543,550 5.6%
Stanley House, 7-9 Market Hill
Douglas, Isle of Man
1M1 2BF

PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors of the Fund is divided into three classes of
Directors, as nearly equal in number as possible, each of which serves for three
years with one class being elected each year. Each year the term of office of
one class will expire. The terms of office of Messrs. Juan Gallardo T. and
Agustin Santamarina V. expire this year. Mr. Santamarina has decided not to
stand for reelection and to retire from the Board effective upon the election of
his replacement as proposed at this Annual Meeting. Messrs. Juan Gallardo T. and
Emilio Carrillo Gamboa have been nominated as Class III Directors for a three
year term expiring in 2005. The nominees have indicated an intention to serve if
elected and have consented to be named in this Proxy Statement.

The Board of Directors of the Fund knows of no reason why any of these
nominees would be unable to serve, but in the event of any such unavailability,
the proxies received will be voted for such substituted nominees as the Board of
Directors may recommend. The Fund's Directors and executive officers
beneficially own less than 1% of the Fund's common stock. None of the Directors,
with the exception of Mr. Jose Luis Gomez Pimienta, is an "interested person" of
the Fund as defined in the Investment Company Act of 1940, as amended (the "1940
Act").

-2-

The nominees for election as Class III Directors are as follows:

Class III (Term Expiring in 2005):

Age Director Shares of Common
--- -------- ----------------
Principal Occupation Since Stock Beneficially
-------------------- ----- ------------------
for Past Five Years Owned on
------------------- --------
Name and Address and Other Directorships 10/31/01(1)
---------------- ----------------------- -----------

Juan Gallardo T.++ Mr. Gallardo is Chairman of the Fund's 54 1985 15,000
Monte Caucaso 915 Board of Directors. Over the last decade,
4/th/ Floor he has been extensively involved in the
Lomas de Chapultepec negotiation of the North American Free
11000 Mexico, D.F., Mexico Trade Agreement (NAFTA) among the United
States, Canada and Mexico and free trade
Mexican Business Council for Free Trade
Agreements agreements between Mexico and
Israel and the European Union. Mr. Gallardo
has served as Coordinator of the and Chairman
of the Foreign Policy Committee of the Mexican
Business Roundtable.

Chairman of the Board, Grupo Embotelladoras Unidas, S.A. de C.V. (bottling
company); Vice Chairman, Home Mart de Mexico, S.A. de C.V. (retail trade);
Director, Clevite de Mexico, S.A. de C.V. (auto parts); NADRO, S.A. de C.V.
(pharmaceutical distribution); Grupo Mexico, S.A. de C.V. (mining).
Director, Bombardier Concarrill (manufacturing); Member, International
Advisory Board, Lafarge Coppe (cement and biotechnology) and Textron, Inc.
(aircraft automotive); Director, Caterpillar Inc. (construction equipment);
Intercon, S.A. de C.V. (autoparts, outboard engines). Formerly Chairman of
the Board of Supervisory Directors, The First Mexico Income Fund N.V.;
Chairman of the Board, Fondo Mexico de Deuda de Largo Plazo, S.A. de C.V.;
Fondo Mexico de Deuda de Corto Plazo, S.A. de C.V. and Fondo Mexico de
Capitales, S.A. de C.V. (Mexican investment companies), Chairman of the
Board, Grupo Azucaro Mexico, S.A. de C.V. (filed under Mexican law for
creditor protection May 9, 2000) (sugar production).

Emilio Carrillo Gamboa Mr. Carrillo Gamboa is a former director 64 -- --
Bufete Carrillo Gamboa, of the Fund (from inception of the Fund
S.C. in 1981 to 1987). He resigned as director
Blvd. Manuel in 1987 to become Mexico's ambassador to
Avila Camacho No. 1, Canada. Mr. Carrillo Gamboa is a preeminent
Ste. 609 lawyer in Mexico with extensive business
Mexico, D.F. experience and has served or currently serves
Mexico 011009 on the Board of many prestigious Mexican
businesses and charitable organizations. (2)

Deputy Secretary, Consejo Mexicano de Hombres de Negocios A.C. (Business
Roundtable of Mexico); Senior Partner of Bufete Carrillo Gamboa, S.C. (law
firm); Chairman of the Board of Cementos Apasco, S.A. de C.V. (cement
company); Director, Grupo Modelo, S.A. de C.V. (beer brewing); Director,
Kimberly-Clark de Mexico, S.A. de C.V. (consumer products); Director, San
Luis Corporacion, S.A. de C.V. (mining and automotive parts); Director,
Gasoductos de Chihuahua, S. de R.L. de C.V. (public utility-gas
transportation); Director; Sistemas Automotrices y de Potencia, S.A. de
C.V. (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).

-3-

Mr. Carrillo Gamboa also serves on the Board of Directors of many
charitable organizations. Vice-Chairman, Centro Mexicano de Filantropia
(charitable organization); Vice-Chairman, Asosiacion de Amigos del Museo de
Arte Popular, A.C. (charitable organization); Director, Patronato del
Antiguo Colegio de San Ildefonso, A.C. (charitable organization); Director,
Fondo Mexicano para la Naturaleza, A.C. (charitable organization);
Director, Adopte una Obra de Arte A.C. (charitable organization); Director,
Fundacion Comunitaria de Oaxaca, A.C. (charitable organization); Director,
Fundacion Xochitla A.C. (charitable organization); Director, Asociacion
Pro-Mujer de Mexico, A.C. (charitable organization); Director, Casa de la
Amistad para Ninos con Cancer, A.C. (charitable organization).

(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors. All shares listed in this table
are owned with sole voting and investment power and in the aggregate
represent less than 1% of the total shares outstanding of common stock as
of October 31, 2001.

(2) Mr. Carrillo Gamboa would be a new member of the Board of Directors to
replace Mr. Agustin Santamarina V.

++ Audit and Nominating and Corporate Governance Committee member.

Continuing Directors

The balance of the current Directors consists of two Class I and three
Class II Directors, none of whom is a nominee for election at the Meeting and
all of whom will continue in office after the Meeting for the terms shown below.
The Directors are as follows:

Class I (Term Expiring in 2003):

Philip Caldwell++ Mr. Philip Caldwell was Chairman and Chief Executive Officer of 82 1991 5,415
Ford Motor Company Ford Motor Company from 1979 to 1985 suceeding Henry Ford II.
225 High Ridge Road He was the first non-Ford family member to lead the company.
West Building From 1953 to 1990, he served in a wide variety of domestic
Stamford, CT 06905 and international executive positions at Ford and was
Director from 1973 to 1990. From 1985-1998, he was Director
and Senior Managing Director of Lehman Bros. Inc. and its
predecessor, Shearson Lehman Brothers Holdings, Inc.

Director, Mettler-Toledo International, Inc. (scales and
weighing instruments), Waters Corporation (scientific
instruments), and Russell Reynolds Associates, Inc. (executive
recruitment). Formerly, Chariman of the Board of Mettler-Toledo
International, Inc., Director of the Chase Manhattan Bank, N.A.,
the Chase Manhattan Corp., (global banking); CasTech Aluminum
Group Inc. (aluminum products); Digital Equipment Corporation
(computer technology); Federated Department Stores, Inc.,
(department stores); The Kellogg Company (food products);
Specialty Coatings International Inc., (plastics); Zurich
Holding Company of America, Inc., (insurance); and Zurich
Reinsurance Centre Holdings, Inc. (reinsurance). Formerly,
member Business Council, policy committee of Business Roundtable,
Committee for Economic Development, Conference Board, Trilateral
Commission, U.S. Trade Representative Advisory Committee for Trade
Negotiations, President's Export Council, Mexican-US Business
Committee, Advisory Council Japan-US Economic Relations, and
director of the Japan Society. Automotive Hall of Fame; Laureate,
Business Hall of Fame.

-4-

Jaime Serra Puche++ Dr. Serra Puche has a Ph.D. in economics from Yale 51 1997 1,625
Edificio Plaza University and is a former Secretary of Finance for Mexico.
Prolongacion Paseo de la Dr. Serra Puche was the minister in charge of negotiations
Reforma 600-103 for NAFTA and trade agreements between Mexico and Chile,
Santa Fe Bolivia, Venezuela, Colombia and Costa Rica on behalf
01210 Mexico, D.F., Mexico of the Mexican government. He is currently Senior Partner
of the law and economics consulting firm Serra and
Associates International.

Director, Tubos de Acero de Mexico, S.A. de C.V. (steel manufacturing);
Director, Alcatel-Indetel, S.A. de C.V. (telecommunications equipment);
Director, Vitro, S.A. de C.V. (glass manufacturer); Director, Grupo
Ferroviario Mexicano, S.A. de C.V. (railways); Director , Southern Peru
Copper Corporation (copper manufacturer); Director, Princeton Video Image,
Inc. (virtual publicity); Director, Regional Market Makers, Inc.
(procurement company); Director, Bardahl, S.A. de C.V. (oil products);
Co-Chairman, President's Council on International Activities of Yale
University. Formerly, Weinberg Visiting Professor, Princeton University;
Secretary of Trade and Industry (Mexico); Distinguished Visiting Associate,
Carnegie Endowment for International Peace; Trustee, Yale University;
Partner, Centros de Arbitrajes (arbitration).

(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors. All shares listed in this table
are owned with sole voting and investment power, and in the aggregate
represent less than 1% of the total shares outstanding of common stock as
of October 31, 2001.

++ Audit and Nominating and Corporate Governance Committee member.

Class II (Term Expiring in 2004):

Claudio X. Gonzalez++ Mr. Gonzalez is President of the Business 67 1981 20,000
Lagrange 103 Coordinating Council of Mexico. Mr. Gonzalez
11560 Mexico, D.F., Mexico is also Chairman of the Board and Chief
Executive Officer of Kimberly-Clark de Mexico,
S.A. de C.V. He also serves on the Board of
Directors of several prominent U.S. and Mexican
companies including General Electric Co., where he
was a member of the search committee to recommend
Mr. Jack Welch's successor.

-5-

Chairman of the Board and Chief Executive Officer, Kimberly-Clark de
Mexico, S.A. de C.V. (consumer products); Director, General Electric Co.
(industrial and financial products), Home Depot (home improvement);
Kimberly-Clark Corp. (USA) (consumer products); Kellogg Company (food
products); Grupo Televisa, S.A. de C.V. (broadcasting); and America Movil
(telecommunications); Director, Investment Company of America (investment
fund); Advisory Director, Unilever, PLC and Unilever N.V. (consumer
products); Member, International Advisory Council, J. P. Morgan Chase
(financial services). Formerly, Supervisory Director, the First Mexico
Income Fund, N.V.; Director, Fondo Mexico de Deuda de Largo Plazo, S.A. de
C.V.; Fondo Mexico de Deuda de Corto Plazo, S.A. de C.V. and Fondo Mexico
de Capitales, S.A. de C.V. (Mexican investment companies); Director, Banco
Nacional de Mexico, S.A. (bank); Director, Planet Hollywood Int. (theme
entertainment); Director, Telefonos de Mexico, S.A. de
C.V. (telecommunications).

Jose Luis Gomez Pimienta* Mr. Gomez Pimienta has over two decades of experience 62 1989 8,360
Aristoteles 77, 3rd Floor investing in the Mexican securities market. He has been the
Col. Polanco President of the Fund and Director General of the Fund's
11560 Mexico, D.F., Mexico investment adviser since 1981. He has been Chairman of the
Board of the Fund's investment adviser since 1985. He is a
Director and member of the Executive Committee of the Mexican
Stock Exchange.

Formerly President and Supervisory Director, The First Mexico Income Fund
N.V.; Chairman of the Board and Director General, Impulsora del Fondo
Mexico Controladora, S.A. de C.V. (holding company); Chairman of the Board
and Director General, Impulsora Capital Markets, S.A. de C.V. (investment
adviser); Chairman of the Board and Director General, Impulsora de Fondos
Mexicanos, S.A. de C.V. (mutual fund sponsor); Vice Chairman of the
Board of Fondo Mexico de Deuda de Largo Plazo, S.A. de C.V., Fondo
Mexico de Deuda de Corto Plazo, S.A. de C.V. and Fondo Mexico
de Capitales, S.A. de C.V. (Mexican investment companies).

Robert L. Knauss++ Mr. Knauss is the former Dean and Distinguished 70 1985 2,624
5151 San Felipe University Professor, University of Houston Law School.
Suite 1661
Houston, TX 77056
Chairman of the Board and Chief Executive Officer of Baltic International
USA, Inc. (investments); Director of Philips Service Corp. (industrial
services) and Equus Ltd. II (investments). Formerly; Director, Allwaste
Inc. (environmental services); Chairman of the Board, Philips Service Corp.
(industrial services).

(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors. All shares listed in this table
are owned with sole voting and investment power, and in the aggregate
represent less than 1% of the total shares outstanding of common stock as
of October 31, 2001.

++ Audit and Nominating and Corporate Governance Committee member.

- 6 -

* Director is an "interested person" (as defined in the 1940 Act ("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. (the "Adviser").

The Fund has a standing Audit Committee and a Nominating and Corporate
Governance Committee. The Audit Committee is composed entirely of Directors who
are not "interested persons" of the Fund or the Fund's investment adviser within
the meaning of the 1940 Act, and who are "independent" as defined in the New
York Stock Exchange listing standards.

The Nominating and Corporate Governance Committee recommends
nominations for membership on the Board of Directors. It evaluates candidates'
qualifications for Board membership and, with respect to nominees for positions
as independent directors, their independence from the Fund's investment adviser
and other principal service providers. It periodically reviews director
compensation and will recommend any appropriate changes to the Board as a group.
This Committee also reviews and may make recommendations to the Board relating
to those issues that pertain to the effectiveness of the Board in carrying out
its responsibilities in governing the Fund and overseeing the management of the
Fund. The Nominating and Corporate Governance Committee does not consider
candidates for the Board of Directors suggested by stockholders.

During the Fund's fiscal year ended October 31, 2001, the Board held
four regular meetings, three telephonic special meetings, two Audit Committee
meetings and three Nominating and Corporate Governance Committee meetings. Each
Director then in office attended 75% or more of the aggregate number of regular
and special meetings of the Board.

During the fiscal year ended October 31, 2001, the Fund paid each
Director, with the exception of Mr. Gomez Pimienta (who is not compensated for
his services as Director), an annual retainer of $12,000 and $2,000 per meeting
attended. The Fund also paid a $1,500 per diem fee to each Director for travel
required to attend a Board meeting and reimbursed all Directors and officers of
the Fund for out-of-pocket expenses relating to attendance at meetings. The
aggregate amount of fees paid and expenses reimbursed to the Directors and
officers for the twelve month period ended October 31, 2001 was $333,790.

The following table sets forth the aggregate compensation (not
including per diem fees and expense reimbursement) paid by the Fund to each
Director (other than Mr. Gomez Pimienta, who receives no director fees or other
compensation for services as a director of the Fund) during the fiscal year
ended October 31, 2001, as well as the total compensation paid by the Fund to
each Director.

Aggregate Pension or Retirement Total Compensation
--------- --------------------- ------------------
Compensation Benefits Accrued From Fund
------------ ---------------- ---------
from Fund as Part of Complex Paid
--------- ---------- ------------
Name of Director Fund Expenses to Directors*
---------------- ------------- -------------
Juan Gallardo T. $ 40,000 None $ 40,0000
Philip Caldwell 40,000 None 40,0000
Claudio X. Gonzalez 38,000 None 38,0000
Robert L. Knauss 40,000 None 40,0000
Agustin Santamarina V. 40,000 None 40,0000
Jaime Serra-Puche 40,000 None 40,0000

* There are no other funds in the Fund Complex.

- 7 -

The Fund has adopted a policy that half of the annual retainer paid by
the Fund to its Directors is used by each Director to purchase Fund shares on
the secondary market. All Board members have complied with this policy.

The officers of the Fund and their principal occupations for the past
five years are: Jose Luis Gomez Pimienta (age 62), President (since 1981), who
also serves as Chairman of the Board and Director General of the Adviser, and a
Director of Bolsa Mexicana de Valores, S.A. de C.V. (Mexican Stock Exchange);
Samuel Garcia-Cuellar (age 59), Secretary (since 1981), who is a partner of
Creel, Garcia-Cuellar y Muggenburg, S.C., Mexican counsel to the Fund, Secretary
of the Adviser and a Director of MexDer, Mercado Mexicano de Derivados, S.A. de
C.V. (derivative exchange); and Carlos Woodworth Ortiz (age 58), who is
Treasurer and Compliance Officer of the Fund (since 1981), and a Deputy Director
of the Adviser, and an Alternate Director of the Bolsa Mexicana de Valores, S.A.
de C.V. (Mexican Stock Exchange). Additional officers of the Fund are: Hector
Trigos (age 41), Vice President, Research (since 1999), who also serves as
Director of Research of the Adviser; Alberto Osorio (age 34), Vice President,
Finance (since 1999), who also serves as Director of Finance of the Adviser; and
Eduardo Solano, (age 33), Vice President, Investor Relations (since 1999), who
also serves as Director of Economic Research of the Adviser. These officers have
all served as Officers of the Adviser for the past five years. Allan S. Mostoff
(age 69) and Sander M. Bieber (age 51), partners of Dechert, U.S. counsel to the
Fund, are Assistant Secretaries of the Fund (since 1981 and 1989, respectively).
The officers of the Fund serve at the discretion of the Board of Directors.

Report of the Audit Committee; Information About the Fund's Independent Auditor

The Audit Committee reviews both the audit and non-audit work of the
Fund's independent public accountants, submits recommendations to the Board of
Directors as to the selection of independent public accountants, and reviews
compliance of the Fund with regulations of the SEC and the Internal Revenue
Service, and other related matters. The Fund adopted an Audit Committee Charter
on December 6, 1999 and the Charter has not been amended since attached as part
of the Fund's proxy statement for its 2001 Annual Shareholders Meeting.

The members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Fund's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the Fund's auditors are in fact "independent."

The Audit Committee has received written disclosures and the letter
required by Independence Standards Board No. 1 from Arthur Andersen LLP, the
Fund's independent auditors, and has discussed with Arthur Andersen LLP its
independence. The Audit Committee has also reviewed and discussed the audited
financial statements with Fund management and Arthur Andersen LLP, and discussed
certain matters with Arthur Andersen LLP addressed by Statements on Auditing
Standards No. 61. Based on the foregoing, the Audit Committee recommended to the
Board of Directors that the Fund's audited financial statements be included in
the Fund's Annual Report for the fiscal year ended October 31, 2001.

- 8 -

During the fiscal year ended October 31, 2001, the Fund incurred the
following fees for services provided by Arthur Andersen LLP:

Financial Information Systems All Other Fees
----------------------------- --------------
Audit Fees Design and Implementation Fees
---------- ------------------------------

$ 94,947 None $ 37,931

During the Adviser's last fiscal year (calendar year 2001), Arthur Andersen
LLP provided tax services to the Adviser and was paid an aggregate amount of
$45,400 and audit services which it was paid a total of $33,900.

The Audit Committee has considered whether the provision of the services
covered under the column "All Other Fees" is compatible with maintaining Arthur
Andersen LLP's independence.

The Board of Directors, upon recommendation of the Audit Committee, has
selected Arthur Andersen LLP as independent public accountants to examine the
financial statements of the Fund for the fiscal year ending October 31, 2002.
Audit services performed by Arthur Andersen LLP during the most recent fiscal
year included examination of the financial statements of the Fund, review of
filings with the SEC and preparation of tax returns.

The Fund knows of no direct or indirect interest of such firm in the Fund.
A representative of Arthur Andersen LLP will be present at the Meeting and will
have the opportunity to respond to questions from shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES TO THE FUND'S BOARD OF DIRECTORS.

PROPOSAL 2: AMENDMENT OF INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT TO
ADD PERFORMANCE FEE COMPONENT

About the Investment Advisory and Management Agreement and the Fund's Adviser

Impulsora del Fondo Mexico, S.A. de C.V. has served as the Fund's
investment adviser since the Fund's organization in 1981. The Adviser is a
registered investment adviser under the Investment Advisers Act of 1940, as
amended and is located at 77 Aristoteles Street, 3rd Floor, Polanco, 11560
Mexico D.F., Mexico. The Adviser provides investment advisory and management
services pursuant to an Amended and Restated Investment Advisory and Management
Agreement dated December 1, 1990, as amended and restated June 16, 1998 (the
"Contract"). The Contract was last submitted to shareholders for approval in
1990. In June 2001, the Board unanimously approved the renewal of the Contract
for a one-year term.

As compensation for its management services, the Adviser is paid a fee,
computed at the end of each calendar month based on the average daily value of
the net assets of the Fund translated into dollars at an annual rate of 0.85% of
average daily net assets up to $200 million, 0.70% of such assets between $200
million and $400 million and 0.60% of such assets in excess of $400 million (the
"Base Fee"). The Base Fee is among the lowest fee rates for U.S. closed-end
country funds.

About Adopting a Performance Fee Component to the Adviser's Compensation

The Fund seeks your approval to amend the Contract to add a performance
adjustment component to the advisory fee of the Fund that would reward the
Adviser by increasing advisory fees when the Fund

-9-

outperforms the IFCG Mexico Index, which is calculated by Standard & Poors, and
penalize the Adviser by decreasing advisory fees when the Fund underperforms the
IFCG Mexico Index.

The purpose of a Performance Adjustment to the Adviser's compensation is to
better align the interests of the investment adviser with those of shareholders
by rewarding the Fund's investment adviser for good investment performance and
penalizing the Fund's investment adviser for poor investment performance. The
use of a performance fee component such as the Performance Adjustment is not
uncommon, and the SEC has adopted rules that generally ensure that a performance
fee adjustment results from the adviser's management skills and not from other
factors. These rules require use of a benchmark index such as the IFCG Mexico
Index to calculate any performance-based fees.

The Performance Adjustment would work as follows: For every one percent
difference in the Fund's performance against the IFCG Mexico Index, the Fund's
advisory fee would be adjusted by two and one-half basis points (0.025%), up to
a maximum adjustment of twenty-five basis points (0.25%) up or down, would be
calculated monthly and would be based on the Fund's performance against the IFCG
Mexico Index for the most recent twelve months (the "Performance Adjustment").
If the Fund were to outperform the IFCG Mexico Index during the most recent
twelve months, the Fund's advisory fee would increase by a positive Performance
Adjustment. If the Fund were to underperform the IFCG Mexico Index during the
most recent twelve months, the advisory fee paid to the Fund's investment
adviser would be reduced by the Performance Adjustment.

If the Performance Adjustment is approved, the Adviser would continue to
receive the Base Fee it currently receives, subject to adjustment upward or
downward depending on the Fund's performance compared to the IFCG Mexico Index.
For any month, the Base Fee of the Fund will equal the Fund's average net assets
for that month multiplied by the annual rates applicable (as described above,
0.85% of average daily net assets up to $200 million, 0.70% of such assets
between $200 million and $400 million and 0.60% of such assets in excess of $400
million), multiplied by a fraction, the numerator of which is the number of days
in the month and the denominator of which is 365 (366 in leap years). The Base
Fee is then adjusted based upon the Fund's performance during the prior 12 month
period compared to the IFCG Mexico Index over the same time period. To do so,
the Fund determines the amount of the performance adjustment based upon the
extent to which the Fund overperformed or underperformed the IFCG Mexico Index.
The Fund takes the Performance Adjustment rate (0.025% for every 1% difference
in performance against the IFCG Mexico Index) and multiplies it against the
average net assets of the Fund for that month, which is then multiplied by a
fraction, the numerator of which is the number of days in the month and the
denominator of which is 365 (366 in leap years). The resulting amount is then
added to (if overperformance) or subtracted from (if underperformance) the Base
Fee.

If the Performance Adjustment were in place during the fiscal year of the
Fund ended October 31, 2001, the Adviser would have received $6,465,656 or
$100,157 more than the advisory fees received for the 2001 fiscal year, a
difference of 1.57%. The increased fees would have been paid because the Fund's
performance in Fiscal 2001 exceeded the IFCG Mexico Index. The Adviser's
compensation pursuant to the Contract in fiscal 2001 was $6,365,499.

The following is an example of application of the effect of the Performance
Adjustment in a 30 day month based on average net assets of $944 million (the
Fund's average net assets during fiscal 2001). The following example
demonstrates the effect of the performance adjustment in situations where the
Fund has outperformed, underperformed and approximately matched the IFCG Mexico
Index.

-10-

Hypothetical Effect of Proposed Performance Adjustment

-------------------------------------------------------------------------------------------------------------------------------
Return Last Twelve Months Annualized Fees Monthly Fees
-------------------------------------------------------------------------------------------------------------------------------
MXF IFCG Mexico Difference Base Fee (in Performance Total Fees Base Fee (in Performance Total
Index 000s) Adjustment (in 000s) 000s) Adjustment Fees
(in 000s) (in 000s) (in
000s)
-------------------------------------------------------------------------------------------------------------------------------

10.0% 8.0% 2.0% $ 6,364 $ 472 $ 6,836 $ 530 $ 39 $ 570
-------------------------------------------------------------------------------------------------------------------------------
9.0% 8.0% 1.0% $ 6,364 $ 236 $ 6,600 $ 530 $ 20 $ 550
-------------------------------------------------------------------------------------------------------------------------------
8.0% 8.0% 0.0% $ 6,364 $ 0 $ 6,364 $ 530 $ 0 $ 530
-------------------------------------------------------------------------------------------------------------------------------
7.0% 8.0% -1.0% $ 6,364 $ (236) $ 6,128 $ 530 $ (20) $ 511
-------------------------------------------------------------------------------------------------------------------------------
6.0% 8.0% -2.0% $ 6,364 $ (472) $ 5,892 $ 530 $ (39) $ 491
-------------------------------------------------------------------------------------------------------------------------------

Set forth below is a table showing the effect on the Fund's expense ratio
under the Contract if the Performance Adjustment is approved. The figures are
based on the amounts that would have been paid according to the Base Fee and the
maximum and minimum expense ratios taking into account the performance fee
component for the fiscal year ended October 31, 2001 and average daily net
assets of $944 million and the expense ratios effective during fiscal year 2001.

Proforma Expense Ratio Based on Proposed Performance Adjustment

--------------------------------------------------------------------------------------------------------------------
Existing Proposed Contract
--------------------------------------------------------------------------------------------------------------------
Contract Minimum Base Fee Maximum
--------------------------------------------------------------------------------------------------------------------

Amount of Advisory fees paid or that $6,365,499 $4,162,904 $6,365,499 $10,279,823
would have been paid in fiscal 2001
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Percentage difference N/A -34.60% 0.00% 61.49%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Management Fee(1) 0.74% 0.49% 0.74% 0.99%
--------------------------------------------------------------------------------------------------------------------
Other Expenses % 0.33% 0.32% 0.33% 0.35%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Expense Ratio 1.07% 0.81% 1.07% 1.34%
--------------------------------------------------------------------------------------------------------------------

(1) Management fee includes investment advisory and administrative fees paid to
the Adviser.

Below is a table showing hypothetically the expenses you would pay on a
$1,000 investment, assuming a 5% annual return and average net assets of $944
million and the expense ratios effective during fiscal year 2001.

----------------------------------------------------------------------------------------------------------------------
Number of years you own your shares
----------------------------------------------------------------------------------------------------------------------
1 3 5 10
----------------------------------------------------------------------------------------------------------------------

Base Fee $ 11 $ 35 $ 60 $ 132
----------------------------------------------------------------------------------------------------------------------
Maximum $ 14 $ 44 $ 76 $ 169
----------------------------------------------------------------------------------------------------------------------
Minimum $ 8 $ 25 $ 44 $ 95
----------------------------------------------------------------------------------------------------------------------

-11-

About the Board's Support for this Proposal

This proposal is unanimously supported by the Fund's Board of Directors.
The Board is committed to obtaining shareholder approval for adoption of a
performance fee component to the advisory compensation paid by the Fund and will
continue to seek shareholder approval until a performance fee is adopted. Since
2000, the Board has considered the benefits of a performance fee as a further
means to align the management of the Fund with the interests of its
shareholders. During their deliberations the Board was advised by independent
legal counsel and received substantial information about performance fees and
the fee that is the subject of this proposal. The Board was given the
opportunity to ask questions and request additional information from management.

In the course of its deliberations, the Board of Directors considered,
among other things, (a) the importance of investment performance in attracting
investors to the Fund; (b) the importance of the Fund's investment performance
on the discount to Net Asset Value; (c) the impact of the proposed Performance
Adjustment on the total fees to be paid for advisory services and the manner in
which the adjustment may further align the interests of management and the Fund;
(d) the appropriateness of the amount of the proposed Performance Adjustment and
the use of the IFCG Mexico Index as the benchmark to measure the Fund's
performance and calculate the Performance Adjustment; (e) the historical
performance of the Fund and the resources committed by the Adviser to manage the
Fund; (f) the ability of the Adviser to compete in the marketplace to attract
and retain qualified investment professionals; and (g) the effect that the
Performance Adjustment will have on the total expense ratio of the Fund.

The Board also felt that the adoption of the Performance Adjustment is
consistent with the Board's efforts to increase shareholder value. These efforts
have included adoption of the share ownership policy for directors, approval of
an open-market repurchase program for up to ten percent of the Fund's
outstanding shares completed in 2001, and the Fund's current proposal to conduct
periodic in-kind repurchases at no less than 98% of net asset value pursuant to
a policy under consideration by regulatory authorities.

While no one factor was controlling, the Board concluded that the proposed
Performance Adjustment to the advisory fee will benefit shareholders by further
aligning the interests of management with the interests of shareholders while
permitting the Adviser to continue to provide the quality of service to the Fund
it has in the past and compensate its staff at competitive levels. The Board of
Directors considered the impact of the performance adjustment on the overall
expenses of the Fund and concluded that the total expense ratio of the Fund
would continue to be competitive in the industry. The Board voted unanimously to
approve the Performance Adjustment finding that it is fair and reasonable to all
shareholders.

More About the Adviser

The Adviser is a Mexican corporation. The president and chief executive
officer is Jose Luis Gomez Pimienta. The directors of the Adviser are Jose Luis
Gomez Pimienta, Chairman and Chief Executive Officer, Impulsora del Fondo
Mexico, S.A. de C.V., Aristoteles 77- 3/rd/ Floor, 11560 Mexico, D.F.; Enrique
Trigueros-Legarreta, Chairman's Advisor, Casa de Bolsa BBV-Probursa, Montes
Urales 424-3/rd/ Floor, Col. Lomas de Chapultepec, 11000 Mexico, D.F.; Ernesto
Ortega-Arellano, Director, Capital Markets, Inversora Bursatil, S.A. de C.V.,
Av. de las Palmas 736, 11000 Mexico, D.F.; Edgardo Cantu-Delgado, Investment
Funds and Money Market Director, Vector Casa de Bolsa, S.A. de C.V., Presidente
Masarik 29-1/st/ Floor, 11550 Mexico, D.F.; Sadi Lara-Reyes, Director of Capital
Markets, Casa de Bolsa Bital, S.A. de C.V., Paseo de la Reforma 156-18/th/
Floor, 06600 Mexico, D.F.; Jorge Alegria-Formoso, Director General, ABN AMRO
Bank (Mexico), SA, Paseo de la Reforma #600-320, Col. Sta.

-12-

Fe, 01210 Mexico, D.F.; Gabriel Kuri-Labarthe, Director General, Casa de Bolsa
Santander Mexicano, Reforma 213-9/th/ Floor, 06500 Mexico, D.F.; and Jose
Antonio Orvananos, Deputy Director, Casa de Bolsa Inverlat, S.A. de C.V., Bosque
de Ciruelos 120, 11700 Mexico, D.F. The officers of the Adviser are Carlos H.
Woodworth Ortiz, Deputy Director, Impulsora del Fondo Mexico, S.A. de C.V.,
Aristoteles 77-3/rd/ Floor, 11560 Mexico, D.F.; Alberto Osorio Morales, Director
of Finance, Impulsora del Fondo Mexico, S.A. de C.V., Aristoteles 77-3/rd/
Floor, 11560 Mexico, D.F., Hector Trigos del Rio, Director of Analysis,
Impulsora del Fondo Mexico, S.A. de C.V., Aristoteles 77-3/rd/ Floor, 11560
Mexico, D.F.; Eduardo Solano Arroyo, Director of Economic Research, Impulsora
del Fondo Mexico, S.A. de C.V., Aristoteles 77-3/rd/ Floor, 11560 Mexico, D.F.
Messrs. Gomez Pimienta, Woodworth, Trigos, Osorio and Solano are also officers
of the Fund. Mr. Gomez Pimienta, 77 Aristoteles Street, 3rd Floor, Polanco,
11560 Mexico D.F., Mexico also owns greater than ten percent of the Adviser's
equity interests.

The Adviser also provides administrative services to the Fund pursuant to
an Amended and Restated Administrative Services Agreement dated June 30, 2001
including assisting the Fund with preparation of financial statements and
regulatory filings, calculation of the Fund's net asset value, and maintenance
of the Fund's web site. For these services, the Adviser is paid a monthly fee of
0.07% of the Fund's average daily net assets. The Adviser was paid $463,398
pursuant to this contract during fiscal 2001.

The Fund paid $3,303.21 or 0.32% of total brokerage commissions paid by the
Fund to an affiliated broker. The affiliated broker is ACCIVAL, S.A. de C.V. and
is affiliated to the Adviser by virtue of one of the Fund's directors being a
director of the broker.

Effect of Approval/Absence of Approval

If this proposal is approved, the Performance Adjustment will take effect
on the first day of the first month following approval by shareholders of the
Fund. Beginning with the month in which the proposal is approved, the Fund would
calculate the Performance Adjustment based on the prior twelve month period. If
the proposal is not approved, the Base Fee will remain in effect as the advisory
fee paid by the Fund and no Performance Adjustment will be made. However, the
Board is committed to approval of a performance fee component for the Fund's
compensation paid to the Adviser and intends to solicit shareholder approval
again in the future should the proposal not be approved at the Annual Meeting.

Percentage of Votes Required for Approval

Approval of the amendment to the Contract incorporating the Performance
Adjustment requires the "yes" vote of a majority of the Fund's outstanding
voting securities as provided in the 1940 Act. For this purpose, this means the
"yes" vote of the lesser of (a) more than 50% of the outstanding shares of the
Fund, or (b) 67% or more of the shares present at the meeting, if more than 50%
of the outstanding shares are present at the meeting in person or by proxy.
Because abstentions and broker non-votes are treated as shares present but not
voting, any abstentions and broker non-votes will have the effect of votes
against this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT OF THE FUND'S INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT TO INCLUDE
A PERFORMANCE FEE COMPONENT.

-13-

PROPOSAL 3: ADOPTION OF FUNDAMENTAL POLICY REQUIRING PERIODIC IN-KIND
REPURCHASE OFFERS OF FUND SHARES

Background of the Proposal

As the Fund has disclosed in recent periodic shareholder reports, in a
letter dated March 5, 2001 and in a press release issued the same day, the Board
of Directors has approved a policy whereby the Fund would offer to repurchase a
previously disclosed percentage of Fund shares from shareholders at least once
each fiscal year and as frequently as quarterly.

A regulatory filing for exemptive authority to conduct the in-kind share
repurchases has been pending with the SEC since March 2, 2001. The Fund has
pursued SEC approval aggressively since the filing. In November 2001, the staff
of the SEC informally advised the Fund it intended to provide the Fund with
additional comments on the Fund's application. As of the date of this Proxy
Statement, the Fund has not received those comments. While the Fund continues
its dialogue with the staff of the SEC, the Board of Directors has determined to
seek the requisite shareholder approval to adopt the repurchase policy prior to
the anticipated receipt of SEC approval.

At the Meeting, shareholders are being asked to approve adoption of a
policy requiring the Fund to conduct periodic in-kind repurchase offers of its
shares at no less than 98% of net asset value at least once each fiscal year.
Under the repurchase policy, the Fund is committed to offer to repurchase a
minimum of five percent of its outstanding shares each fiscal year. For each
repurchase offer, the Fund would offer to repurchase between one and twenty-five
percent of the Fund's outstanding shares. Participating shareholders would
generally receive a pro-rata distribution or "slice" of the Fund's portfolio
securities in return for their repurchased shares as further described below. In
other words, in exchange for shares of the Fund, shareholders would receive
actual shares of Mexican companies from the Fund's portfolio, generally in
proportion to the interest represented by the shares accepted for repurchase.
Implementation of the repurchase policy would not occur prior to the Fund's
receipt of certain regulatory relief from the SEC.

The repurchase policy would be a "fundamental policy" of the Fund. To
change a fundamental policy requires shareholder approval. Accordingly, once
shareholders approve the repurchase policy, the Board would be unable to change
or terminate it without shareholder approval. With adoption of this policy,
shareholders would be assured an annual opportunity to liquidate a portion of
their shares of the Fund at no less than 98% of net asset value in return for a
pro-rata "slice" of the Fund's investments. The policy is designed, in part, to
seek to provide shareholders with additional liquidity for their Fund shares and
to possibly reduce the discount to net asset value at which shares of the Fund
have historically traded on the New York Stock Exchange. There can be no
assurance, however, that adoption of the policy will result in the Fund's shares
trading at a price that equals or approximates net asset value. Moreover, while
the policy is designed, in part, to promote stable portfolio management and
maintain the Fund for its long-term shareholders as a viable investment vehicle,
there can be no assurance that the policy will lead to such results.

Rule 23c-3 of the 1940 Act permits closed-end funds to periodically
repurchase their shares at net asset value minus a repurchase fee. Pursuant to
the repurchase policy proposed, repurchases could be made as often as quarterly
for amounts between one and twenty-five percent of the Fund's outstanding
shares. Furthermore, the Fund would be obligated to offer to repurchase not less
than five percent of its outstanding shares each fiscal year. The percentage of
shares that the Fund would offer to repurchase would be established by the Board
of Directors prior to commencement of the offer. The Board may

-14-

change the percentage of shares to be repurchased and the intervals at which the
repurchase offers are conducted to occur as frequently as quarterly or
semi-annually; but there would be at least one repurchase offer each fiscal year
and the Fund would offer to repurchase at least 5% of its outstanding shares
each fiscal year.

Shareholders submitting shares to be repurchased pursuant to an offer under
the fundamental policy would receive an in-kind pro-rata distribution of equity
portfolio securities except for (a) securities which, if distributed, would be
required to register under the Securities Act of 1933; (b) securities issued by
entities in countries which restrict or prohibit the holding of securities by
non-nationals other than through qualified investment vehicles; and (c) certain
portfolio assets (such as forward currency exchange contracts, futures and
options contracts, and repurchase agreements) that, although they may be liquid
and marketable, include the assumption of contractual obligations, require
special trading facilities or can only be traded with the counterparty to the
transaction in order to effect a change in beneficial ownership. Additionally,
the Fund may pay cash for fractional shares and/or odd lots of securities and/or
amounts attributable to any cash positions (including short-term non-equity
securities); distribute odd lots, fractional shares and any cash position to
shareholders; round off (up or down) odd lots or fractional shares so as to
eliminate them prior to distribution; or pay a higher pro-rata percentage of
equity securities to represent those items.

In order to participate in the repurchase offers, shareholders will need to
arrange for appropriate custodial arrangements with Mexican custodians. This
requires that accounts be established by participating shareholders with a bank
or broker in the Mexican market. Shareholders may be able to do this through
their U.S. broker. Requests for repurchase which fail to provide this
information will be voided.

Participation in a repurchase is optional and the Fund anticipates that the
repurchase offers will not alter the Fund's investment strategy.

Repurchases in Excess of Amount Offered for Repurchase

The Fund may, but is not obligated to, purchase up to an additional 2% of
the Fund shares outstanding on the deadline for submitting repurchase requests
during an offer period if the amount submitted for repurchase is greater than
the percentage of shares offered to be repurchased by the Fund. If the Fund
determines not to repurchase more than the repurchase offer amount, or if Fund
shareholders participating in an offer tender shares in an amount exceeding the
repurchase offer amount of the offer plus 2% of the shares outstanding on the
repurchase request deadline, the Fund shall repurchase the shares submitted for
repurchase on a pro-rata basis. Payment for any shares repurchased must be made
by seven days after the repurchase pricing date.

Determination of Price at which Shares are Repurchased; Notification of Offers

Repurchases pursuant to the fundamental policy will be made at no less than
98% of the net asset value of the Fund determined on the "repurchase pricing
date" which will be no later than the fourteenth day after the deadline for
submitting shares for repurchase, the repurchase request deadline (or the next
business day if that is not a business day).

Shareholders will be sent notification containing specified information at
least 21 days, and no more than 42 days, before a repurchase request deadline.
The information provided will include the repurchase offer amount, the
repurchase request deadline date, the repurchase pricing date, the repurchase
payment deadline date, and whether repurchases will be at net asset value or
less (but not any less than 98% of net asset value). Notification will also
include the procedures for shareholders to submit their

-15-

shares for repurchase, procedures for modifying or withdrawing their requests
for repurchase, procedures under which the Fund may repurchase such shares on a
pro-rata basis, and the circumstances under which the Fund may suspend or
postpone a repurchase offer under the fundamental policy. The Fund will provide
shareholders with the net asset value of the shares, which will be computed no
more than seven days before the date of notification, the market price of the
shares on the date on which the net asset value was computed, and the means by
which shareholders may ascertain the net asset value and market price
thereafter.

Source of Proceeds

Since participating shareholders will receive their pro-rata share of the
Fund's portfolio securities, the Fund will not need to generate cash for the
repurchase offers nor will the Fund be required to maintain a liquidity reserve
to fund the repurchase offers. In addition, conducting the repurchase offers
will not result in the realization by the Fund of gains or losses since the Fund
will not need to liquidate any portfolio holdings to fund the repurchase offers.
Therefore, shareholders not participating in the offers do not experience a
taxable event at the Fund level.

Withdrawal Rights

Repurchase requests submitted pursuant to an offer under the fundamental
policy will be irrevocable after the repurchase request deadline. However,
shareholders may modify the numbers of shares submitted for repurchase or
withdraw shares submitted for repurchase at any time up to the repurchase
request deadline.

Tax Consequences of Participation in Repurchase Offers

The following discussion summarizes the federal tax consequences of
submitting shares for repurchase pursuant to a repurchase offer. You should
consult your own tax adviser regarding specific tax consequences, including
local and state tax consequences, of participation.

Submitting shares for repurchase will be a taxable transaction for federal
income tax purposes.

A request for repurchase of shares pursuant to an offer will be treated as
a taxable sale or exchange of the shares if the tender (i) completely terminates
the shareholder's interest in the Fund, (ii) is treated as a distribution that
is "substantially disproportionate" or (iii) is treated as a distribution that
is "not essentially equivalent to a dividend." A "substantially
disproportionate" distribution generally requires a reduction of at least 20% in
the shareholder's proportionate interest in the Fund after all shares are
tendered. A distribution "not essentially equivalent to a dividend" requires
that there be a "meaningful reduction" in the shareholder's interest, which
should be the case if the shareholder has a minimal interest in the Fund,
exercises no control over Fund affairs and suffers a reduction in his or her
proportionate interest.

Under these rules, if a shareholder submits for repurchase all shares that
he or she owns or is considered to own and all the shares are accepted for
repurchase, the shareholder will realize a taxable sale or exchange. If the
transaction is treated as a sale or exchange for tax purposes, any gain or loss
recognized will be treated as a capital gain or loss by shareholders who hold
their shares as a capital asset and as a long-term capital gain or loss if such
shares have been held for more than one year. If a shareholder submits for
repurchase less than all of the shares that he or she owns or is considered to
own, the repurchase may not qualify as an exchange, and the proceeds received
may be treated as a dividend, return of capital or capital gain, depending on
the Fund's earnings and profits and the shareholder's basis in the repurchased
shares.

-16-

Suspension and Postponement of Offers

The Fund may suspend or postpone an offer by vote of a majority of the
Board of Directors (including a majority of the Directors who are not
"interested persons," as that term is defined in the 1940 Act, of the Fund), but
only (1) if repurchases pursuant to the offer would impair the Fund's status as
a regulated investment company under the Internal Revenue Code; (2) if the IRS
or changes in the Internal Revenue Code alters or revokes the private letter
ruling granted to the Fund regarding the tax treatment of the in-kind
repurchases; (3) if repurchases pursuant to the offer would cause the shares to
be neither listed on any national securities exchange nor quoted on any
inter-dealer quotation system of a national securities association; (4) for any
period during which the NYSE or any other market in which the securities owned
by the Fund are principally traded is closed, other than customary weekend and
holiday closings, or during which trading in such market is restricted; (5) for
any period during which an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable, or during which it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets; or (6) for such other periods as the SEC may by order permit for the
protection of shareholders of the Fund.

If an offer is suspended or postponed, the Fund will provide notice thereof
to shareholders. If the Fund renews a suspended offer or reinstitutes a
postponed offer, the Fund will send a new notification to all shareholders.

Special Risk Considerations

Shareholders should be aware of the following special risk
considerations associated with periodic interval repurchases:

. In the event of an oversubscription to the offer, all of the shares
submitted by shareholders may not be accepted for repurchase by the Fund.
. There is a risk of decline in net asset value as a result of the delay
between the repurchase request deadline and the repurchase pricing date,
due to declines, among other things, in prices of securities held by the
Fund and fluctuations in the Mexican peso relative to the U.S. dollar.
There is an additional risk of decline in the value of the proceeds
received between the repurchase pricing date and the repurchase payment
deadline because participating shareholders are receiving portfolio
securities of the Fund whose values are subject to change based on market
activity.
. By receiving and holding portfolio securities of the Fund, participating
shareholders are subject to the risks associated with investing in foreign
equity securities, including market-, currency-, and country-related risks.
. Liquidation of portfolio securities received as proceeds from a repurchase
may cause downward pricing pressure on those securities.

Fundamental Repurchase Policy

If this proposal is approved and the regulatory relief requested from the
SEC is obtained, the Fund shall adopt the following fundamental policy regarding
periodic repurchases:

(a) The Fund will make offers to repurchase its shares at least once each
fiscal year based on the number of outstanding shares at the beginning of the
fiscal year.

(b) The Fund will offer to repurchase no less than five percent of its
outstanding shares each fiscal year.

-17-

(c) Repurchase request deadlines shall be disclosed in the notification
provided to shareholders of a repurchase offer. Repurchase request deadlines
shall be determined by the Board consistent with the 1940 Act, applicable SEC
regulations and the terms of any exemptive order issued to the Fund by the SEC.

(d) The date on which the repurchase price for shares is to be determined
shall occur no later than the fourteenth day after a repurchase request
deadline, or the next business day if such day is not a business day.

Necessary Regulatory Relief for Repurchase Offers

In order to conduct the repurchase offers in the manner proposed by the
Fund, the Fund applied in March 2001 to the SEC and the Internal Revenue Service
(the "IRS") to obtain necessary interpretations and exemptive relief to conduct
the periodic in-kind repurchase offers. The IRS has provided the Fund with a
private letter ruling as to the tax treatment of the periodic in-kind repurchase
offers which agrees with the Fund that the repurchase offers will not result in
the realization of gains or losses at the Fund level. The Fund has been working
with the SEC to obtain the exemptive relief necessary to conduct periodic
in-kind repurchase offers on the terms described herein and to permit
shareholders of the Fund owning more than 5% of the Fund's outstanding shares to
participate. However, the Fund has not obtained the necessary relief from the
SEC as of this date. Implementation of the fundamental policy that is the
subject of this proposal is dependent on the SEC's approval of various aspects
of the proposed in-kind repurchase offers. The Fund cannot implement the
proposed periodic in-kind repurchase offers without the necessary regulatory
relief from the SEC. Accordingly, implementation of this proposal is contingent
upon both shareholder approval and obtaining the necessary exemptive relief from
the SEC to effectuate the proposal.

About the Board's Support for this Proposal

This proposal is unanimously supported by the Board as a means to increase
shareholder value without jeopardizing the management of the Fund consistent
with its investment objective. The Board believes that this proposal will
provide shareholders with additional liquidity for their investment in the Fund
at the same time that it takes into account the market in which the Fund invests
and the interests of all of its shareholders. In approving this proposal, the
Board has considered other alternatives such as open-ending, tender offers, and
open market repurchases. The Board finds that this proposal gives shareholders
the choice to periodically receive close to net asset value for their shares
without penalizing those shareholders (such as, for example, in the form of
taxable capital gains or losses realized by the Fund if it had to liquidate
securities to conduct a tender offer, open market repurchases or open-end and
the consequent effect on portfolio management) who choose to remain invested in
the Fund. In addition, the Board considered the effect of other alternatives on
the Mexican securities market and continued management of the Fund. The Board
believes that this proposal represents the least possible disruption of the
Mexican securities market while preserving the objectives of the Fund.

Effect of Approval/Absence of Approval

Approval of the proposal as a fundamental policy (see "Fundamental
Repurchase Policy") of the Fund includes recognition by shareholders that the
requisite approval by the SEC may not have been received, and that modifications
to the repurchase policy may be made by the Board to bring the policy into
compliance with an SEC order, if issued. The Fund anticipates that it would
commence periodic in-kind repurchase offers as soon as practicable after it has
obtained shareholder approval and the regulatory relief it has requested from
---
the SEC. If the proposal is not approved by shareholders or the SEC, or not
approved by the SEC in a manner satisfactory to the Board, the Board will
continue to work with the SEC

-18-

to obtain the relief it has requested and, if necessary, solicit shareholder
approval again in the future after it has obtained the requested relief from the
SEC.

Percentage of Votes Required for Approval

Approval of adoption of the repurchase policy that is the subject of this
proposal requires the "yes" vote of a majority of the Fund's outstanding voting
securities as provided in the 1940 Act. For this purpose, this means the "yes"
vote of the lesser of (a) more than 50% of the outstanding shares of the Fund,
or (b) 67% or more of the shares present at the meeting, if more than 50% of the
outstanding shares are present at the meeting in person or by proxy. Because
abstentions and broker non-votes are treated as shares present but not voting,
any abstentions and broker non-votes will have the effect of votes against this
proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ADOPTION OF
THE REPURCHASE POLICY REQUIRING THE FUND TO CONDUCT PERIODIC IN-KIND REPURCHASE
OFFERS AT LEAST ONCE EACH FISCAL YEAR.

PROPOSAL 4: SHAREHOLDER PROPOSAL

Statement of Receipt of Shareholder Proposal

Advantage Partners, L.P., The Victor Building, Suite 110, 326 West
Lancaster Avenue, Ardmore, PA 19003, have submitted the following proposal for
inclusion in this Proxy Statement. Advantage Partners, L.P. claims that it has
owned shares of the Fund with a market value of at least $2,000 continuously for
the preceding year and intends to maintain the required ownership through the
date of the next shareholders' meeting. The Board of Directors and the Fund
accept no responsibility for the accuracy of either the proposal or of Advantage
Partners, L.P.'s supporting statement.

Shareholder Proposal and Supporting Statement of Advantage Partners, L.P.

As of the shareholder proposal submission deadline in October 2001, the
Fund's proposed periodic in-kind repurchase plan suffers from a shortage of
concrete details regarding the timing and frequency of implementation, as well
as the amount of shares that shareholders can redeem at any redemption date.
Therefore, be it RESOLVED that shareholders of the Fund recommend the Board of
Directors expedite the process to convert the Fund to an open-end investment
company so Fund shares can trade at net asset value (NAV) daily.

Without a firm commitment from the Fund to provide the opportunity for
shareholders to have redeemed a minimum of 50% of shares by September 2002, and
at least 25% of shares in each successive year thereafter, as part of the Fund's
proposed plan to conduct periodic in-kind repurchases at no less than 98% of
NAV, we believe promptly open-ending the Fund is a better alternative for the
majority of Fund shareholders.

Smaller and/or infrequent tenders will not achieve meaningful narrowing,
let along eradication, of the discount to NAV -- open-ending can only succeed.
The Fund's proposal was initially announced way back on March 5, 2001, and lack
of clarity should be viewed as a bad sign for shareholder interests.

Without a definite timetable, it is quite conceivable that it may take far
longer for shareholders to have any meaningful opportunity for shares to be
worth NAV, than by open-ending the Fund promptly, which would provide for NAV
every day -- a level not seen since 1995! For over 6 years, the stock has
---------
perpetually traded at a discount to NAV, at times greater than 30%.

-19-

If the Fund proceeds with the bare minimum, 1% annual tender offer that its
current plan allows for, or some other insufficient effort, the entire process
should be construed as an extraordinary waste of shareholder assets in
comparison to the value-added that would occur through converting the Fund to an
open-end fund. Voting FOR this proposal will send that vital message to the
---
Board.

The Fund no longer requires the closed-end format to effectively manage
shareholder money. The persistently wide and unacceptable discount to NAV in
recent years has caused shareholder returns to underperform NAV returns over the
long haul. To add salt to the wounds, NAV returns on a long-term basis have
underperformed the Fund's benchmark. By our calculations, the Fund has been one
of the worst closed-end fund performers vs. its applicable benchmark over the 5
year period ending September 30, 2001. What then do shareholders have to show
for maintaining the closed-end fund structure?

The Fund traded at greater than a 30% in 2000, and even with shareholders
anticipating some possibility for achieving NAV, the shares have settled into
the 14%-18% discount range. A 15% discount represents an economic cost to
shareholders of nearly $131 million as of October 12, 2001. Shareholders should
------------
vote their own best interests, not the best interest of Fund management, which
gets paid based on assets under management.

Statement of Position of the Board of Directors in Opposition to the Shareholder
Proposal

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL AND
BELIEVES THAT THE PROPOSED PERIODIC IN-KIND SHARE REPURCHASE OFFER POLICY IS IN
THE BEST INTERESTS OF ALL FUND SHAREHOLDERS.

The Board of Directors opposes Advantage Partners, L.P.'s ("AP") proposal
because it feels open-ending is not the most effective means to deliver
long-term added value to the majority of shareholders. Open-ending provides only
short-term benefits, which are outweighed by long-term negative ramifications to
shareholders who remain invested in the Fund. Moreover, AP's proposal does not
accurately reflect the potential benefits to all Fund shareholders offered by
the Fund's proposed periodic in-kind share repurchases.

As further described below, the Board of Directors opposes AP's proposal
because:

. An open-end fund structure limits the Fund's ability to provide you with
optimal returns in less liquid markets such as Mexico.
. Conversion to an open-end structure is likely to result in an increased
expense ratio, realization of significant taxable capital gains, and
fundamental changes in the Fund's investment objective, policies and
strategy.
. It reflects a misunderstanding of the periodic in-kind repurchases proposed
by the Fund currently under consideration by regulatory authorities.

Contrary to AP's opinion, a closed-end fund remains the most advantageous
structure for fulfilling your Fund's investment objective: investing in the
Mexican securities market to produce long-term capital appreciation. This is
especially the case given the characteristics of the market in which your Fund
invests. The Mexican Stock Exchange continues to be relatively small and less
liquid compared to other major world markets. For example, the dollar value of
the daily average trading volume of the Mexican Stock Exchange thus far this
year has been $154.8 million dollars compared to $42.6 billion dollars of the
New York Stock Exchange. The Mexican Stock Exchange is also small in relation to
the size of the Mexican economy, as its total market value at the end of 2000
represented only 22% of Mexico's gross domestic product, compared with 171% in
the case of the New York Stock Exchange, with 86% in the case of Chile and 38%
in the case of Brazil. Open-end funds are constrained in their ability to invest
in

-20-

markets like Mexico due to the need to have readily available cash to pay to
redeeming shareholders on short notice. Conversely, closed-end funds allow
investment in less liquid markets like Mexico without the need for cash reserves
and readily disposable investments to meet redemptions.

In addition, a closed-end fund is not restricted by the SEC rule that
limits investment in illiquid securities to only 15% of the fund's portfolio. A
security is deemed "illiquid" when it cannot be sold in an orderly manner in
less than seven days. The Fund would have difficulty disposing of a significant
portion of its portfolio positions in an orderly basis.

Furthermore, any elimination of the Fund's market discount preceding
open-ending may be counteracted by the decreased returns and consequent effect
on performance resulting from the premature sale of the Fund's portfolio
securities to meet shareholder demand. The AP proposal does not assess the
economic cost to shareholders of this aspect of open-ending. Nor does the AP
Proposal assess the potential cost to Fund performance of maintaining cash
reserves to meet redemptions in an open-end fund.

Because of the market in which the Fund invests, open-ending may also
require the Fund to change its investment objectives, policies and strategy to
accommodate the effect of needing to invest in more liquid securities. Having to
anticipate cash redemptions on a daily basis and perhaps large-scale initial
redemptions upon conversion would restrict the flexibility of the Fund to invest
in many positions in a less liquid market such as Mexico's. As mentioned below,
the Fund has recently benefited in the form of improved performance partly due
to increased investment flexibility granted to the Fund's investment adviser
through shareholder approval of a non-diversified structure and a concentration
policy. Open-ending would curtail the range of possible investment for the Fund
in the primary market in which it invests.

In considering AP's proposal, you should also assess the effect that
open-ending may have on the Fund's expense ratios based on the decrease in asset
size typically accompanying an open-ending and the increased transactional costs
of maintaining a more liquid portfolio and operating an open-end fund. The Fund
currently has one of the lowest expense ratios of any closed-end country fund.
Closed-end funds do not need the same marketing, distribution and communication
activities of open-end funds, and therefore, all costs can be kept to a minimum.

The Board also believes that it would be helpful to provide you with some
empirical data on the long-term effects of open-ending closed-end country funds.
A 1998 study by a mutual fund tracking service found that conversion from a
closed-end to open-end structure is generally not in the best long-term interest
of shareholders in the fund. Eight of nine funds it studied saw a decrease in
asset size as a result of open-ending as well as an increase in expense ratio
for all nine funds in the study.

Open-ending the Fund would also result in untimely liquidation of a large
portion of the Fund's portfolio since open-end fund conversions typically
produce large scale shareholder redemptions. The disposition of Fund assets to
satisfy the large-scale redemptions that typically accompany open-ending
generates realization of long-term capital gains. As of October 31, 2001, 22% of
the Fund's total net assets pertain to unrealized capital gains.

Moreover, as is demonstrated in the chart below, the Fund's returns on
market price have generally been better than on net asset value. Had the Fund
been an open-end fund, shareholders would generally have received less return
than they did from the Fund in the closed-end structure in which it currently
operates.

-21-

----------------------------------------------------------------------------------------------------------------------
THE MEXICO FUND, INC. PERFORMANCE RETURN
AS OF OCTOBER 31, 2001

----------------------------------------------------------------------------------------------------------------------
Time Period Market Price Returns* NAV Returns* Excess of Market Returns
over NAV
----------------------------------------------------------------------------------------------------------------------

1 year 6.71% -8.15% 14.86%
----------------------------------------------------------------------------------------------------------------------
3 years 55.80% 26.82% 28.98%
----------------------------------------------------------------------------------------------------------------------
5 years 32.67% 19.70% 12.97%
----------------------------------------------------------------------------------------------------------------------
10 years 30.18% 31.70% -1.52%
----------------------------------------------------------------------------------------------------------------------

*Source: Lipper Inc.

AP's proposal reflects a misunderstanding of the facts concerning the
Fund's proposed in-kind share repurchases. In its press release dated October
16, 2001, three days prior to submission of AP's proposal to the Fund, the Fund
reiterated that on March 5, 2001, it filed documents with the SEC seeking
regulatory approval to conduct periodic in-kind repurchases and stated that
through its proposed in-kind periodic repurchases it will repurchase no less
than five percent of the Fund's outstanding shares each fiscal year. During any
one periodic repurchase offer, the Fund may repurchase between one and
twenty-five percent of its outstanding shares. This is substantially different
from the one percent that AP incorrectly states in its proposal.

The Fund believes that these periodic in-kind repurchases will be
beneficial to all Fund shareholders, not simply short-term holders who would
liquidate their position in the Fund upon its conversion to an open-end
structure. First, shareholders who do not participate in the in-kind repurchase
offers will not incur capital gains as the result of a favorable and unique
ruling the Fund has received from the IRS regarding the treatment of the in-kind
distributions. This means that the Fund can repurchase its shares in-kind
periodically without the sale of portfolio securities that may generate
long-term capital gains and result in taxable events to shareholders who do not
participate. With this favorable tax ruling, the in-kind repurchases represent a
taxable event only for shareholders who have shares repurchased by the Fund
during the periodic repurchases. Second, the Fund's investments need not be
liquidated to conduct the repurchase offers and the Fund can continue its
current investment strategies and policies. Third, shareholders benefit from a
constant fundamental policy that the Fund will repurchase its shares at no less
than 98% of net asset value at least once a year, rather than a one-time event
such as open-ending that dramatically alters the cost structure and management
of the Fund. This type of periodic repurchase may benefit loyal long-term
shareholders by reducing the number of shares available for sale at a discount
thereby creating price pressure and by increasing net asset value without any
additional risk. Shareholders who view the Fund as a long-term, tax efficient
investment may be better off in a closed-end structure at a nominal or moderate
discount which fluctuates.

Finally, AP's supporting statement fails to give you a complete picture of
the Fund's performance and efforts to achieve shareholder value. The Fund, like
virtually all closed-end country funds, tends to trade at a market discount.
However, the Fund's market discount has been halved in the last year to 12.0% as
of October 31, 2001 and reflects a consistent narrowing trend, which has
extended beyond completion of the Fund's open-market repurchases in May 2001.
AP's statement that the Fund underperformed against its benchmark in the last
five years omits the unusual circumstance that two issuers represented 35% of
the benchmark in 1999 (a benchmark which the Fund had not yet adopted for
performance purposes) and those issuers' performance increased 126.5% and 177.9%
in 1999. The Fund was precluded by law from investing to a comparable degree in
those issuers at that time. In addition, AP fails to point out that the Fund has
outperformed its benchmark and provided a positive investment return in the last
year since it restructured its portfolio following shareholder approval
permitting it to become a non-diversified fund and concentrate in certain
industries. Lastly, the Board has listened to its

-22-

shareholders and approved a performance fee component to the Fund's advisory
contract which adjusts adviser compensation based on Fund performance and not
simply assets under management.

In conclusion, attempts to deliver net asset value immediately to a portion
of the shareholders who wish to exit the Fund may well destroy or diminish the
advantages otherwise enjoyed by the remaining shareholders. The Board remains
unanimously committed to realizing the potential of the Fund without changing
its fundamental nature and for that reason:

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE PROPOSAL.

OTHER BUSINESS

The Board of Directors is aware of two potential proposals which may be
brought before the Meeting other than those set forth above. The first proposal
pertains to alternative nominees for director other than the nominees named in
Proposal 1. The second proposal relates to the Fund's investment advisory and
management agreement and recommends its termination. The Board has reviewed the
potential proposals and is unanimously opposed to both proposals. Should the
persons named on the enclosed proxy card have discretion to vote on such
matters, those persons intend to vote AGAINST such matters. The Board of
Directors knows of no other business to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is the intention
of the persons named on the enclosed proxy card to vote such proxies on such
matters in accordance with their best judgment.

ADDITIONAL INFORMATION

Investment Advisory and Administrative Services

The Adviser and Administrator. Impulsora del Fondo Mexico, S.A. de C.V.
(the "Adviser"), 77 Aristoteles Street, 3rd Floor, Polanco, 11560 Mexico D.F.,
Mexico, has served as the investment adviser of the Fund from the time the Fund
was established in 1981. Pursuant to the Investment Advisory and Management
Agreement between the Fund and the Adviser, the Adviser receives an advisory fee
at the rate of 0.85% of the Fund's average daily net assets up to $200 million,
0.70% of such assets between $200 million and $400 million, and 0.60% of such
assets in excess of $400 million. For the fiscal year ended October 31, 2001,
total advisory fees paid by the Fund to the Adviser aggregated $6,365,499 based
on average net assets for the fiscal year of approximately $943,969,059. The
Adviser is a Mexican corporation incorporated in 1980.

Pursuant to an Administrative Services Agreement, effective April 1, 1994,
which was amended and restated as of June 30, 2001, the Adviser also provides
certain administrative services to the Fund which were previously performed by
the Fund's Trustee, including the determination and publication of the net asset
value of the Fund, the provision of assistance to the Fund to enable the Fund to
maintain its books and records in accordance with applicable United States and
Mexican law and the provision of assistance to the Fund's auditors in the
preparation and filing of tax reports and returns. The Fund pays the Adviser an
annual fee of 0.07% of average daily net assets of the Fund as compensation for
services provided under the Administrative Services Agreement.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, and
Section 30(h) of the 1940 Act require the Fund's officers and Directors,
Adviser, affiliates of the Adviser, and persons who beneficially own more than
ten percent of a registered class of the Fund's securities ("Reporting

-23-

Persons"), to file reports of ownership of the Fund's securities and changes in
ownership with the SEC and the New York Stock Exchange. Reporting Persons are
also required by such regulations to furnish the Fund with copies of all Section
16(a) forms they file.

Based solely on its review of the copies of such forms received by it and
written representations of certain Reporting Persons, the Fund believes that
during fiscal year 2001, its Reporting Persons complied with all applicable
filing requirements.

SOLICITATION OF PROXIES; EXPENSES

The solicitation of proxies will be primarily by mail. In order to obtain
the necessary quorum and shareholder participation at the Meeting, supplementary
solicitation may be made by mail, telephone, telegraph, or personal interview by
officers or agents of the Fund.

The expense of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. Morrow & Co., Inc. has been engaged by the Fund to assist in the
distribution, tabulation and solicitation of proxies. The anticipated cost of
Morrow & Co., Inc.'s services is $___________.

VOTE REQUIRED

The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Fund is required to constitute a quorum at the
Meeting. Election of Directors (Proposal 1), and the shareholder proposal
(Proposal 4) will require the approval of the majority of votes validly cast at
the Meeting. The adoption of an amendment to the Fund's investment advisory and
management contract adopting a performance fee component and approval of a
fundamental policy requiring periodic in-kind repurchases will require the
approval of the lesser of: (i) 67% of the Fund's outstanding shares present at a
meeting at which holders of more than 50% of the outstanding shares are present
in person or by proxy; or (ii) more than 50% of the Fund's outstanding shares.

SHAREHOLDER PROPOSALS

If a shareholder intends to present a proposal at the 2003 Annual Meeting
of Shareholders of the Fund and desires to have the proposal included in the
Fund's Proxy Statement and form of proxy for that meeting, the shareholder must
deliver the proposal to the offices of the Fund by [ ] for consideration
by the Fund.

Shareholders wishing to present proposals at the 2003 Annual Meeting of
Shareholders of the Fund not to be included in the Fund's proxy materials should
send written notice to the Secretary of the Fund of such proposals by [ ]
but no earlier than [ ] in the form prescribed in the Fund's By-Laws.

-24-

SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED WHITE PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.

By Order of the Board of Directors,

Samuel Garcia Cuellar
Secretary

Dated: [ ]

-25-

--------------------------------------------------------------------------------
WHITE PROXY CARD

THE MEXICO FUND, INC.

Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting of Shareholders

The undersigned shareholder of The Mexico Fund, Inc., a Maryland
corporation (the "Fund"), hereby appoints Jose Luis Gomez Pimienta and Sander M.
Bieber and each of them proxies of the undersigned, with full power of
substitution, to vote and act in the name and stead of the undersigned at the
Annual Meeting of Shareholders of the Fund, to be held at ______________________
_____________, _________, on [ ], 2002 at 2:00 P.M., New York City time, and
at any and all adjournments thereof, according to the number of votes the
undersigned would be entitled to cast if personally present.

The shares represented by this proxy will be voted in accordance with
instructions given by the shareholder, but if no instructions are given, this
proxy will be voted in favor of proposals 1, 2 and 3 against proposal 4 as set
forth in this proxy.

The undersigned hereby revokes any and all proxies with respect to such
shares heretofore given by the undersigned. The undersigned acknowledges receipt
of the Proxy Statement dated ________________, 2002.

(Continued on reverse side)

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

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Shareholders
THE MEXICO FUND, INC.

[ ], 2002

Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example

This proxy/voting instruction card will be voted FOR proposals 1, 2 and 3 if no choice is specified.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.

FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of the [_] [_] Nominees: 2. Approval of addition of a [_] [_] [_]
nominees listed Juan Gallardo T. performance fee component
at right to serve Emilio Carrillo Gamboa to the Fund's investment
as members of advisory fee.
the Fund's Board of Directors, as Class II
Directors, for a term expiring in 2005 and until 3. Approval of adoption of a [_] [_] [_]
their successors are elected and qualified: share repurchase policy
requiring the Fund, on a
For, except as marked to the contrary below: periodic basis, to offer
to repurchase in-kind Fund
______________________________________________ shares at no less than 98%
of net asset value.

This proxy/voting instruction card will be voted AGAINST
proposal 4 if no choice is specified.

The Board of Directors recommends a vote AGAINST Proposal 4.

FOR AGAINST ABSTAIN
4. To consider a shareholder [_] [_] [_]
proposal that the shareholders
of the Fund recommend that the
Board of Directors expedite the
process to convert the Fund to
an open-end investment management
company.

5. In the discretion of the above named proxies, such other
business as may properly come before the Meeting or any
adjournment thereof.

SIGNATURE(s)________________________________________ DATED_________________

TITLE:__________________________________________

NOTE: Please sign, date and return promptly. Signature(s) should be exactly as
name or names appear on proxy. If shares are held jointly, each holder
should sign. If signing as attorney, executor, administrator, trustee or
guardian, please give full name.
--------------------------------------------------------------------------------