THE MEXICO FUND, INC.
Offer to Repurchase up to 100% of the
Fund's Issued and Outstanding Shares of Common Stock at
98% of Net Asset Value, in Exchange for
Portfolio Securities of the Fund
SUMMARY TERM SHEET
The Mexico Fund, Inc. (the "Fund") is offering to repurchase up to 100% of
the Fund's issued and outstanding shares of common stock at 98% of the Fund's
per share net asset value at the close of business on the Expiration Date (as
defined below) in exchange for Portfolio Securities (as defined below) of the
Fund (the "Repurchase Offer"). You will be receiving with this term sheet, or
through your broker, various documents regarding the Repurchase Offer.
The Repurchase Offer represents the launch of the Fund's anticipated policy
of making quarterly in-kind share repurchases. The Fund anticipates that future
repurchase offers will be scheduled to occur in conjunction with the Fund's
fiscal quarters with the next such offer occurring during the Fund's fourth
fiscal quarter which ends October 31, 2002.
We would like to take this opportunity to answer in this term sheet some
questions you may have regarding aspects of the Repurchase Offer and the forms
you will need to submit if you decide to redeem your shares in the Repurchase
Offer.
This is only a summary overview of information relating to the Repurchase
Offer. Please read and carefully review the Repurchase Offer Statement dated
May 8, 2002 and related documents which accompany this summary prior to making
a decision regarding the Repurchase Offer. You may also want to consult with
your financial and tax advisors when considering the Repurchase Offer.
The Repurchase Offer expires at 5:00 p.m., New York City time, on June 7,
2002, unless extended (the "Expiration Date").
The Depositary for the Repurchase Offer is American Stock Transfer & Trust
Co. (telephone: 800-937-5449) and the Information Agent for the Repurchase
Offer is Morrow & Co., Inc. (telephone: 800-607-0088).
What is the Repurchase Offer?
The Repurchase Offer is an opportunity to redeem your Fund shares at a price
per share equal to 98% of the per share net asset value in exchange for Mexican
portfolio securities of the Fund.
The main components of the Repurchase Offer include:
a) the repurchase of Fund shares at 98% of the Fund's net asset value per
share determined on the Expiration Date; and
b) the transfer of Portfolio Securities (as defined below) to an account
established by you with a Mexican bank or a Mexican securities broker in
exchange for the repurchase by the Fund of your Fund shares.
Is the Repurchase Offer the only way I can sell my Fund shares?
No. You will continue to be able to sell your shares, or purchase additional
shares, at the current market share price, in cash transactions on the New York
Stock Exchange. In addition, this Repurchase Offer is the first in-kind share
repurchase by the Fund under a policy in which the Fund intends to conduct
quarterly in-kind share repurchases.
What action need I take if I decide not to submit my shares for repurchase in
the Repurchase Offer?
None.
What is the purchase price for Fund shares in the Repurchase Offer and how is
it calculated?
The purchase price is 98% of the Fund's per share net asset value in U.S.
dollars determined as of the close of the regular trading session on the New
York Stock Exchange on the Expiration Date (the "Repurchase Price").
What does 98% of the Fund's net asset value per share mean?
The Fund's net asset value per share is based on the market value of the
Fund's investments (its total assets) minus its total liabilities divided by
the number of Fund shares outstanding. This result is then multiplied by 0.98.
The net asset value per share of the Fund's shares may be more or less than
the market price at which Fund shares trade on the New York Stock Exchange.
On April 30, 2002, the net asset value per share was $20.67 and the last
reported sale price of a Fund share on the New York Stock Exchange was $19.10,
representing a 7.60% discount from the Fund's net asset value per share. See
Section 8 of the Repurchase Offer Statement for additional information
regarding net asset value per share and market prices. During the period of the
Repurchase Offer, daily net asset value and market price quotations can be
obtained from the Information Agent by calling 800-607-0088 or by visiting the
Fund's web site at www.themexicofund.com.
No one can accurately predict the net asset value per share on a future
date. The net asset value on the Expiration Date may be higher or lower than
the net asset value per share on April 30, 2002.
What does it mean to receive Portfolio Securities of the Fund?
Instead of receiving cash (in U.S. dollars) for Fund shares submitted in the
Repurchase Offer, a participating shareholder would receive a pro-rata portion
of each of the securities (other than short-term fixed income securities with
maturities of less than one year, securities with transfer restrictions and
certain illiquid securities), subject to adjustments for fractional shares and
odd lots, and any cash held in the Fund's investment portfolio at the close of
business on the Expiration Date ("Portfolio Securities"), equal to the number
of shares of the Fund submitted by the shareholder for repurchase, multiplied
by 98% of the net asset value per share of the Fund in U.S. dollars determined
at the close of the regular trading session of the New York Stock Exchange on
the Expiration Date. The value of the Portfolio Securities may decrease or
increase between the Expiration Date and the actual receipt of the Portfolio
Securities in the Mexican Account (see below). The Portfolio Securities will be
transferred by the Fund's custodian in Mexico to the Mexican Account (as
defined below).
How do I submit shares for redemption if I want to participate in the
Repurchase Offer?
You should review the Repurchase Offer Statement before making your
decision. In order to participate, you will be required to submit information
regarding a securities account with a Mexican securities broker or custodial
account with a Mexican bank which you have established (the "Mexican Account")
where the Portfolio Securities can be transferred. If your shares are
registered in your name, you should obtain and read the related Letter of
Transmittal, complete it (including requested information about the Mexican
Account) and submit any other documents required by the Letter of Transmittal
(including required U.S. tax information). These materials must be received by
the Depositary, in proper form, by the Expiration Date. Alternatively, you
could contact a U.S. broker or dealer and deposit your Fund shares in an
account with it and seek its assistance in submitting the documents necessary
(including the Mexican Account information) for participation in the Repurchase
Offer. This may be less complicated than independently establishing the Mexican
Account. If your shares are held by a U.S. broker, dealer, commercial bank,
trust company or other nominee (e.g., in "street name"), you should contact
that firm to obtain the package of information necessary to make your decision,
and you can only redeem your shares by directing that firm to complete, compile
and deliver the necessary documents for submission to the Depositary by the
Expiration Date. See Section 3 of the Repurchase Offer Statement.
Participating shareholders should carefully ensure all information required
in order to participate in the Repurchase Offer, including information
regarding the Mexican Account and certain U.S. tax information, has been
provided and is accurate. The Fund is under no obligation to notify
shareholders of any errors or incomplete information with their submission. Any
deficiencies in a shareholder's submission will result in the return of the
shareholder's Fund shares following the Expiration Date.
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Shareholders who own more than 5% of the Fund's issued and outstanding
shares of common stock should consider whether the Investment Company Act of
1940, as amended, will permit their participation in the Repurchase Offer, and
are encouraged to consult with their legal advisors regarding participation in
the Repurchase Offer. See Section 13 of the Repurchase Offer Statement.
The Repurchase Offer is for 100% of the Fund's issued and outstanding shares
of common stock meaning that all Fund shares validly submitted in the
Repurchase Offer will be purchased by the Fund.
Will I know the identity of the Portfolio Securities I will be receiving if I
participate in the Repurchase Offer?
On the Expiration Date, the Fund will publish on its web site,
www.themexicofund.com, and via press release, the composition of the Fund's
investment portfolio. The Portfolio Securities to be received by participating
shareholders will be a pro-rata portion of the Fund's investment portfolio
subject to certain adjustments. See "Background and Purpose of the Repurchase
Offer" in the Repurchase Offer Statement.
Why is the Fund making the Repurchase Offer?
The Fund is making the Repurchase Offer so as to provide shareholders with
an alternative source of liquidity for their investment in Fund shares and as
part of the Fund's efforts to provide additional value to shareholders and
narrow the discount to net asset value at which Fund shares trade. Shareholders
can continue to sell their shares for cash through their brokers in market
transactions on the New York Stock Exchange. The Repurchase Price may represent
greater value (before related expenses) than shareholders would receive by
selling Fund shares on the New York Stock Exchange, depending on certain
factors. The Repurchase Offer provides a means for shareholders who want to
redeem their shares in the Fund to do so at close to net asset value per share.
In addition, by giving participating shareholders Portfolio Securities, it is
anticipated that the Fund and those shareholders who do not participate in the
Repurchase Offer will avoid recognition of capital gains which could be
incurred by the Fund in liquidating the Portfolio Securities if the
participating shareholders were to receive cash for their shares of the Fund.
Does management encourage shareholders to participate in the Repurchase
Offer, and will management participate in the Repurchase Offer?
Neither the Fund, its Board of Directors, nor the Fund's investment adviser,
is making any recommendation to participate or not participate in the
Repurchase Offer. The Fund has been advised that no Director or Officer of the
Fund, nor the Fund's investment adviser, intends to participate. See Section 6
of the Repurchase Offer Statement.
What should I consider in making a decision to participate in the Repurchase
Offer?
The following discussion does not incorporate all factors that could impact
your decision and is general in nature. Please consult the Repurchase Offer
Statement for more information.
In determining whether or not to participate, you should keep in mind that
you can always sell your Fund shares in cash transactions on the New York Stock
Exchange. Depending on the costs involved in participating in the Repurchase
Offer and whether or not you desire to receive Portfolio Securities, it may be
easier and less costly for you to sell your shares, if you so desire, on the
New York Stock Exchange for cash than to participate in the Repurchase Offer.
See Section 7 of Repurchase Offer Statement.
Before making a decision, you should weigh the advantages and disadvantages
of receiving 98% of the per share net asset value of your Fund shares in the
form of Portfolio Securities and the consequences of holding the Portfolio
Securities or deciding to sell them after you receive them. To participate you
will need to establish the Mexican Account (unless you already have such an
account) which is likely to be subject to different procedures and costs than
are typically associated with a U.S. brokerage account. You should also
consider that the Fund intends to make future in-kind repurchase offers on a
quarterly basis so there would be additional opportunities besides this
Repurchase Offer.
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By participating in the Repurchase Offer, you also would be investing
directly in Mexican securities rather than holding them indirectly through a
U.S. closed-end fund structure which may aggravate the risks of investment
typically associated with a foreign investment. These risks include (1) high
price volatility, lesser liquidity and smaller market capitalization; (2)
currency fluctuation and the cost of converting foreign currency into U.S.
dollars; (3) political, economic and social risks and uncertainties; and (4)
higher rates of inflation, unemployment and interest rates than in the United
States.
The Fund is not providing you with specific information regarding each of
the Portfolio Securities, but encourages you to make your own investigation and
consult your financial advisor, if you are contemplating participation in the
Repurchase Offer. Mexican public companies are subject to less stringent
disclosure standards and regulatory oversight than U.S. companies. Publicly
available information regarding the companies representing the Portfolio
Securities is likely to be in Spanish, less extensive than that of U.S. public
companies, and may not be accurate or current. Shareholders who retain the
Portfolio Securities for investment purposes will need to conduct their own
continuing investment research regarding the Mexican companies comprising the
Portfolio Securities and/or seek assistance from their financial advisors. See
Section 7 of the Repurchase Offer Statement.
Whether you immediately dispose of the Portfolio Securities you receive or
whether you decide to retain them, there will be additional costs beyond those
of participating in the Repurchase Offer that could impact the overall return
you receive for participation in the Repurchase Offer, including additional
brokerage commissions and expenses. You should also consider the tax
consequences of participation in the Repurchase Offer and the disposition or
retention of the Portfolio Securities received. The receipt of the Portfolio
Securities generally is a taxable transaction even though you are not receiving
cash. Subsequently, the sale of the Portfolio Securities will also generally be
a separate taxable transaction. You are encouraged to consult with your tax
advisor regarding the tax implications of participating in the Repurchase Offer
and any subsequent sale by you of your Portfolio Securities. See Section 9 of
the Repurchase Offer Statement.
Whether or not you participate in the Repurchase Offer there is a risk that
the Fund's investments and the Portfolio Securities may experience a decrease
in value following the Repurchase Offer depending on the level of participation
in the Repurchase Offer and whether participating shareholders choose to
dispose of the Portfolio Securities shortly after the Repurchase Offer. Because
of the size of the Fund and the characteristics of the Mexican securities
market, if a large percentage of shareholders participate in the Repurchase
Offer and choose to liquidate the Portfolio Securities shortly after they
receive them, there could be an adverse impact on the Mexican securities market
and the market prices of the Portfolio Securities and the Fund's other
investments, which risk affects both participating and non-participating
shareholders. In addition, the Portfolio Securities may increase or decrease in
value between the Expiration Date and your receipt of the Portfolio Securities
in the Mexican Account as well as during the period you hold the Portfolio
Securities.
The Fund recommends that you consult your financial and tax advisors prior
to making a decision to participate in the Repurchase Offer. The Fund cannot
provide any advice or assistance to shareholders regarding the Repurchase Offer
or the establishment of the Mexican Account necessary for participation in the
Repurchase Offer.
If I decide not to participate in the Repurchase Offer, how will that affect
the Fund shares that I own?
Your percentage ownership interest in the Fund may increase after completion
of the Repurchase Offer, assuming the participation of some shareholders in the
Repurchase Offer. Because the asset size of the Fund may decrease as a result
of the Repurchase Offer, per share expenses of the Fund may increase.
Additionally, a reduced number of Fund shares available for trading may affect
the liquidity of Fund shares and the ability of a holder to obtain accurate
market quotations for Fund shares from the New York Stock Exchange. Moreover,
as discussed above, the value of the Fund's investments may be affected if a
large percentage of Fund shareholders participate in the Repurchase Offer and
then choose to quickly convert their Portfolio Securities to cash by
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selling the Portfolio Securities in the Mexican market. There is also a risk
that, if an overwhelming majority of shares are submitted for repurchase, the
Fund may have to delist its shares from the New York Stock Exchange or
liquidate in its entirety and/or the Fund's current investment adviser may
decide to resign as investment adviser.
Will I have to pay anything to participate in the Repurchase Offer?
The Repurchase Price accommodates some of the costs and expenses of the
Repurchase Offer likely to be incurred by the Fund. Although no fee or
commission is payable by you to the Fund in order to participate in the
Repurchase Offer, you may incur costs in establishing the Mexican Account and
costs associated with either the retention or liquidation of the Portfolio
Securities. Additionally, your U.S. broker, dealer or other institution may
charge you a fee for processing your paperwork to participate in the Repurchase
Offer and sending it to the Depositary.
May I withdraw my shares after I have submitted them for repurchase and, if
so, by when?
Yes, you may withdraw your shares at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. A notice of withdrawal of shares submitted
in the Repurchase Offer must be timely received by the Depositary and the
notice must specify the name of the shareholder who submitted the shares in the
Repurchase Offer, the number of shares being withdrawn and, with respect to
share certificates representing shares submitted in the Repurchase Offer that
have been delivered or otherwise identified to the Depositary, the name of the
registered owner if different from the person who submitted the shares in the
Repurchase Offer. Withdrawn shares can be again submitted in the Repurchase
Offer by following the procedures of the Repurchase Offer before the Expiration
Date (including any extension period). See Section 4 of the Repurchase Offer
Statement.
May I place conditions on my participation in the Repurchase Offer?
No.
Is there a limit on the number of shares I submit in the Repurchase Offer?
No.
When will the Portfolio Securities be transferred in exchange for Fund shares
submitted in the Repurchase Offer?
Assuming compliance with all applicable procedures of the Repurchase Offer
including establishment of the Mexican Account, the Portfolio Securities will
be transferred to participating shareholders' Mexican Accounts as promptly as
practicable after the Expiration Date.
Is my participation in the Repurchase Offer a taxable transaction for U.S.
federal income tax purposes?
For most shareholders, yes. The participation in the Repurchase Offer by
U.S. shareholders, other than those who are tax exempt, will generally be a
taxable transaction for U.S. federal income tax purposes, either as a sale or
exchange, or, under certain circumstances, as a dividend. There may also be
federal tax withholding. See Section 9 of the Repurchase Offer Statement for
details, including the nature of any income or loss and the differing rules for
U.S. and non-U.S. shareholders. Please consult your tax advisor as well.
May the Repurchase Offer be extended?
The Expiration Date is at 5:00 p.m., New York City time, on June 7, 2002,
unless extended. The Fund may extend the period of time the Repurchase Offer is
open by issuing a press release or making some other public announcement by no
later than the next business day after the Repurchase Offer otherwise would
have expired. See Section 1 of the Repurchase Offer Statement.
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Is the Fund required to complete the Repurchase Offer and redeem all shares
validly submitted in the Repurchase Offer up to the maximum of the amount of
the Repurchase Offer?
Under most circumstances, yes. There are certain circumstances, however, in
which the Fund will not be required to redeem any shares properly submitted for
repurchase as described in Section 14 of the Repurchase Offer Statement. Also,
if 100% or close to 100% of the Fund's shares are submitted for repurchase in
the Repurchase Offer, the Fund will likely be liquidated in its entirety.
Is there any reason shares submitted in the Repurchase Offer would not be
accepted?
In addition to those circumstances described in Section 14 of the Repurchase
Offer Statement in which the Fund is not required to accept shares submitted
for repurchase, the Fund has reserved the right to reject any and all requests
to participate in the Repurchase Offer determined by it not to be in
appropriate form. The Repurchase Offer is not conditioned upon submission of a
minimum number of Fund shares.
How will shares submitted in the Repurchase Offer be accepted for repurchase?
Shares properly submitted in the Repurchase Offer will be accepted for
repurchase by the determination of the Fund. These submitted shares will
thereafter be cancelled by the Fund's transfer agent. The Fund's custodian will
transfer the Portfolio Securities to the Mexican Accounts designated by
participating shareholders as soon as practicable following the Expiration Date.
How do I obtain additional information?
Questions and requests for assistance should be directed to the Information
Agent, at 800-607-0088. Requests for additional copies of the Repurchase Offer
Statement, the Letter of Transmittal and all other related documents should
also be directed to the Information Agent. If you do not hold certificates for
your shares or if you are not the record holder of your shares, you should
obtain this information and the documents from your broker, commercial bank,
trust company or other nominee, as appropriate.
The Depositary for the Repurchase Offer is:
American Stock Transfer & Trust Co.
59 Maiden Lane, Plaza Level
New York, NY 10038
800-937-5449
The Information Agent for the Repurchase Offer is:
Morrow & Co., Inc.
445 Park Avenue, 5/th Floor /
New York, NY 10022
E-mail: mxf.info@morrowco.com
Call Collect: 212-754-8000
Shareholders, Call Toll Free: 800-607-0088
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