The Mexico Equity and Income Fund, Inc.
September 23, 2002
DEAR FUND SHAREHOLDER,
We are pleased to present you with the audited financial statements of The
Mexico Equity and Income Fund, Inc. (the "Fund") for the year ended July 31,
2002.
As you know, the Fund's net assets have been substantially reduced as a result
of the tender offer made to all Fund shareholders earlier this year to enable
them to realize Net Asset Value for their shares. The Fund's net assets were
$21,628,531 on July 31, 2002, as compared to $87,619,808 on July 31, 2001.
Your Board of Directors continues to be focused on action to control the
discount at which Fund shares trade. As we have previously informed you, steps
are being taken to create and issue put warrants to our shareholders. The
purpose of these put warrants is to enable you to receive NAV from time to time,
if you decide to sell your Fund shares. In order to issue the put warrants,
certain approvals must be obtained from the U.S. Securities & Exchange
Commission. While we have been pursuing the necessary approvals, there can be no
assurance when or if such approvals will be obtained. We will keep you informed
on this matter.
After the Board is assured that the discount is under control, it will consider
measures to increase the asset base of the Fund in order to reduce the expense
ratio.
Certainly, this past year has been a difficult one for investors. However, the
Fund's outlook is long-term. The Fund's primary goal is to provide a vehicle for
you to own Mexican securities. Over the past twelve months, the Fund's NAV
decreased from $10.19 to $8.74 or -14.23%. For the same period, The Bolsa Index,
in U.S. dollars, decreased by 14.22% and the Dow Jones Industrials Index
decreased by 15.38%.
On behalf of the Board of Directors, we thank you for your continued support of
the Fund. If you have any questions, please call our toll-free number (866)
700-6104.
Sincerely yours,
/s/ Gerald Hellerman
Gerald Hellerman
President
1
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2
THE MEXICO EQUITY AND INCOME FUND, INC.
Report of the Investment Adviser
FOR THE FISCAL YEAR ENDED JULY 31, 2002
Dear Fund Shareholder,
We are pleased to provide you with the report of the Investment Adviser for The
Mexico Equity and Income Fund, Inc. (the "Fund") for the fiscal year ended July
31, 2002.
--------------------------------------------------------------------------------
THE MEXICAN STOCK MARKET
During the first half of the Fund's fiscal year ended January 31, 2002, the
Bolsa IPC Index (the "Bolsa"), an equity index and the Fund's benchmark, gained
7.2% driven by Mexican Congress' approval of long-awaited tax reform. In
contrast, for the second half of the Fund's fiscal year ended July 31, 2002, the
Bolsa lost 19.4%, which was mainly driven by United States' corporate scandals.
For the year ended July 31, 2002, the Bolsa lost 14.22%, outperforming the U.S.
and Latin American markets. The Dow Jones Industrials Index lost 15.4% and the
NASDAQ Composite Index fell 34.5%, while other markets in the Latin American
region, with the exception of Chile, experienced double digit losses of above
forty percent. Argentina Merval Index lost 69.8%, the Venezuelan Indice Bursatil
de Caracas was down 49.3%, Brazil's Bovespa Index dropped 49.0% and Chile's IGPA
Index lost 14.5%.
--------------------------------------------------------------------------------
THE FUND'S PERFORMANCE
For the year ended July 31, 2002, total return based on the Net Asset Value
(NAV) per share of the Fund was -14.23%, while the Bolsa's return was -14.22%.
Historically, the Fund has achieved its performance due to its thoughtful stock
selection and portfolio composition, as well as, a balanced portfolio, which
includes equity and fixed income allocations.
In addition, according to a sample of 35 worldwide equity closed-end funds,
listed in the U.S. and tracked by Lipper Analytical, Inc., the Fund ranked among
the top ten for the three-year, five-year and ten-year periods ending July 31,
2002.
FUND UPDATES
The Fund's toll-free phone number is (866) 700-6104.
TRACKING THE FUND'S NAV
The Fund's net asset value (NAV) is calculated daily and published in The Wall
Street Journal every Monday under the heading "Closed End Funds." The Fund's net
asset value is also published in Barron's on Saturdays and in The New York Times
on Mondays. The Fund is listed on the New York Stock Exchange under the ticker
symbol MXE.
3
THE MEXICO EQUITY AND INCOME FUND, INC.
--------------------------------------------------------------------------------
PORTFOLIO STRATEGY
Adherence to our strategic principles has proven to be beneficial to the Fund's
shareholders over the long term period. The following are several trends in the
Fund's strategy and structure that began early in the fiscal year ended July 31,
2002:
- For the six months ended January 31, 2002, the Fund was over-weighted in
highly liquid blue-chip stocks that had excess cash generation and little to
no debt. This strategy was modified when the Fund repurchased 6,122,069 shares
tendered by shareholders pursuant to the tender offer which expired on March
20, 2002.
- Beginning January of 2002, the Fund tentatively increased its position in
small to medium market capitalization stocks, some of which have posted
positive returns year-to-date through July 31, 2002.
- For the year ended July 31, 2002, the Fund's daily average fixed income
allocation was approximately 11%. By comparison, for the year ended July 31,
2001, daily average fixed income allocation was 9%. Fixed income allocation
was an appropriate hedge during the period, despite the Mexican Peso's 7.1%
depreciation during the period.
--------------------------------------------------------------------------------
CONCLUSION AND OUTLOOK
In 2002, the correlation between the U.S. and Mexican markets again appears to
be quite strong. U.S. accounting scandals and doubts about the U.S. economic
recovery have unnerved investors, triggering sell-offs in U.S. markets and a
flight towards lower risk instruments. This has also had an unfavorable impact
on Mexican share prices.
In regards to Mexican corporate financial reports for the second quarter of
2002, net profits were poor due to the accounting impact of the Peso's
depreciation during the period, while sales and EBITDA showed a modest recovery.
Financial reports recorded revenue and operating margins below the levels of the
second calendar quarter of 2001, with the exception of a few companies such as
America Movil, S.A. de C.V., Alfa, S.A. and Wal-Mart de Mexico, S.A. de C.V.,
which reported "exceptionally favorable" results.
To summarize, the middle months of 2002 have not been very favorable for most
stock markets around the globe.
In the particular case of the Mexican Stock Exchange, companies are trading at
very attractive levels after July's sharp decline in equity prices. Many Mexican
blue chip stocks have fallen 25 to
4
THE MEXICO EQUITY AND INCOME FUND, INC.
40 percent from their 2001 highs. Price/Earnings Ratios are below historical
levels, even though many blue chip stocks continue to generate strong cash
flows.
We believe that positive signals will eventually prevail, which could generate a
revaluation of the Bolsa's multiples, especially for companies with solid
fundamentals. Our Banamex economists' perception is that despite the current
contradictory signals, the Mexican economy could register approximately 1.8%
growth this year and approximately 3.9% growth in 2003. If this is coupled with
productive discussions in Congress that translate into electrical sector reform,
the Bolsa would likely perform better than it has in recent months.
As always, we thank you for your continued confidence in The Mexico Equity and
Income Fund, Inc. We look forward to continuing to provide you with an
investment vehicle that will assist you in achieving your investment goals.
Sincerely,
/s/ Eugenia Pichardo
Eugenia Pichardo
Portfolio Manager
Acci Worldwide, S.A. de C.V.
THE DISCUSSION ABOVE REFLECTS THE OPINIONS OF THE PORTFOLIO MANAGER. THESE
OPINIONS ARE SUBJECT TO CHANGE AND ANY FORECASTS MADE CANNOT BE GUARANTEED.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. SECTOR ALLOCATIONS AND FUND
HOLDINGS ARE SUBJECT TO CHANGE AND ARE NOT RECOMMENDATIONS TO BUY OR SELL ANY
SECURITY. PLEASE REFERENCE THE FOLLOWING ANNUAL REPORT FOR MORE COMPLETE FUND
INFORMATION.
THE RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY
ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
5
THE MEXICO EQUITY AND INCOME FUND, INC.
Schedule of Investments
JULY 31, 2002
MEXICO - 98.67% SHARES VALUE
----------------------------------------------------------------------------------------------
COMMON STOCKS - 87.77%
----------------------------------------------------------------------------------------------
COMMUNICATIONS - 24.00%
America Movil, S.A. de C.V. - Class L................. 1,515,700 $ 965,463
America Telecom, S.A. de C.V. - Class A1*............. 804,551 471,481
Carso Global Telecom, S.A. de C.V. - Class A1*........ 1,163,551 1,209,562
Telefonos de Mexico, S.A. de C.V. - Class L........... 1,230,000 1,785,079
Telefonos de Mexico, S.A. de C.V. - Class L ADR....... 26,300 760,070
------------
5,191,655
------------
CONSTRUCTION - 8.04%
Cemex, S.A. de C.V. CPO............................... 50,000 244,497
Consorcio ARA, S.A. de C.V.*.......................... 473,500 694,904
Corporacion GEO, S.A. de C.V. - Class B*.............. 100,000 209,947
Empresas ICA Sociedad Controladora, S.A. de C.V.*..... 2,964,600 589,173
------------
1,738,521
------------
FINANCIAL GROUPS - 8.45%
Grupo Financiero BBVA Bancomer, S.A. de C.V. - Class
B*.................................................. 1,200,000 960,049
Grupo Financiero GBM Atlantico, S.A. de C.V. - Class
O*+................................................. 742,264 141,463
Grupo Financiero Inbursa, S.A. - Class O.............. 828,000 726,567
------------
1,828,079
------------
FOOD, BEVERAGE, AND TOBACCO - 8.20%
Fomento Economico Mexicano, S.A. de C.V. UBD.......... 296,100 1,121,088
Grupo Continental, S.A................................ 477,600 652,246
------------
1,773,334
------------
INDUSTRIAL CONGLOMERATES - 12.88%
Alfa, S.A. - Class A*................................. 462,300 852,796
Grupo Carso, S.A. de C.V. - Class A1*................. 163,600 439,346
Grupo Industrial Saltillo, S.A. de C.V. - Class B..... 103,100 189,136
Vitro, S.A. de C.V. - Class A......................... 1,195,600 1,303,803
------------
2,785,081
------------
See Notes to the Financial Statements.
6
Schedule of Investments (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
COMMON STOCKS (CONTINUED) SHARES VALUE
----------------------------------------------------------------------------------------------
MEDIA - 6.80%
Grupo Televisa, S.A. ADR*............................. 2,500 $ 75,625
Grupo Televisa, S.A. CPO*............................. 185,100 285,800
TV Azteca, S.A. de C.V. CPO........................... 2,996,500 1,108,571
------------
1,469,996
------------
MINING - 6.51%
Grupo Mexico, S.A. - Class B.......................... 945,900 1,407,475
------------
RETAILING - 10.25%
Controladora Comercial Mexicana, S.A. de C.V. UBC..... 1,556,600 856,669
Organizacion Soriana, S.A. de C.V. - Class B*......... 79,600 178,475
Wal-Mart de Mexico, S.A. de C.V. - Class C............ 472,525 1,102,815
Wal-Mart de Mexico, S.A. de C.V. - Class V............ 29,200 78,982
------------
2,216,941
------------
STEEL - 2.64%
Tubos de Acero de Mexico, S.A......................... 311,600 571,627
------------
TOTAL COMMON STOCKS (Cost $22,131,829) 18,982,709
------------
PRINCIPAL
AMOUNT
PROMISSORY NOTES - 9.15% (IN MEXICAN PESOS)
----------------------------------------------------------------------------------------------
Grupo Financiero BBVA Bancomer, 5.2022%, 08/01/2002... 8,251,389 841,070
Banco de Comercio Exterior, 6.6367%, 08/05/2002....... 11,158,417 1,138,692
------------
TOTAL PROMISSORY NOTES (Cost $1,998,024) 1,979,762
------------
INVESTMENT COMPANIES - 1.75% SHARES
----------------------------------------------------------------------------------------------
NAFTRAC* (Cost $501,261).............................. 615,000 377,950
------------
TOTAL MEXICO (Cost $24,631,114)....................... 21,340,421
------------
See Notes to the Financial Statements.
7
Schedule of Investments (concluded) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
UNITED STATES - 0.62% SHARES VALUE
----------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 0.62%
----------------------------------------------------------------------------------------------
First American Treasury Obligations Fund - Class S
(Cost $135,256)..................................... 135,256 $ 135,256
------------
TOTAL UNITED STATES (Cost $135,256)................... 135,256
------------
TOTAL INVESTMENTS (COST $24,766,370) - 99.29%......... 21,475,677
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.71%......... 152,854
------------
TOTAL NET ASSETS - 100.00%............................ $ 21,628,531
============
FOOTNOTES AND ABBREVIATIONS
* - Non-income producing security.
+ - At fair value as determined under the supervision of the Board of
Directors.
ADR - American Depository Receipts.
See Notes to the Financial Statements.
8
THE MEXICO EQUITY AND INCOME FUND, INC.
Statement of Assets and Liabilities JULY 31, 2002
ASSETS
Investments, at value (Cost $24,766,370).................... $21,475,677
Foreign currency holdings (Cost $78,118).................... 77,538
Receivables:
Investments sold.......................................... 208,246
Interest.................................................. 135
Prepaid expenses............................................ 13,101
-----------
TOTAL ASSETS.............................. 21,774,697
-----------
LIABILITIES
Advisory fees payable....................................... 14,674
Directors' fees payable..................................... 11,598
Administration fee payable.................................. 14,620
Accrued expenses............................................ 105,274
-----------
TOTAL LIABILITIES......................... 146,166
-----------
NET ASSETS................................ $21,628,531
===========
NET ASSET VALUE PER SHARE
($21,628,531/2,473,504)................ $ 8.74
===========
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 2,473,504 shares
outstanding
(100,000,000 shares authorized)........................... $ 2,474
Paid-in capital............................................. 34,603,415
Accumulated net realized loss on investments................ (9,686,083)
Net unrealized depreciation on investments and foreign
currency.................................................. (3,291,275)
-----------
NET ASSETS................................ $21,628,531
===========
See Notes to the Financial Statements.
9
THE MEXICO EQUITY AND INCOME FUND, INC.
Statement of Operations FOR THE YEAR ENDED
JULY 31, 2002
INVESTMENT INCOME
Interest (Net of foreign taxes withheld of $3,700)........................ $ 535,171
Dividends (Net of foreign taxes withheld of $3,694)....................... 493,116
----------
TOTAL INVESTMENT INCOME................................. 1,028,287
----------
EXPENSES
Advisory fees............................................... $420,176
Legal fees.................................................. 211,519
Reports to shareholders..................................... 112,333
Administration fees......................................... 77,826
Audit fees.................................................. 34,585
Directors' fees and expenses................................ 53,186
Co-Advisory fees............................................ 29,865
Custodian fees.............................................. 28,939
Shareholder servicing fees.................................. 19,694
NYSE fees................................................... 32,860
Other expenses.............................................. 93,149
--------
TOTAL EXPENSES.......................................... 1,114,132
LESS, EXPENSE REIMBURSEMENT BY ADVISER.................. (3,485)
----------
NET EXPENSES............................................ 1,110,647
----------
NET INVESTMENT LOSS..................................... (82,360)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments and foreign currency transactions...... 4,576,182
Net change in unrealized depreciation from investments and foreign
currency transactions................................................... (2,040,371)
----------
Net gain from investments and foreign currency transactions............... 2,535,811
----------
Net increase in net assets resulting from operations...................... $2,453,451
==========
See Notes to the Financial Statements.
10
THE MEXICO EQUITY AND INCOME FUND, INC.
Statements of Changes in Net Assets
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, 2002 JULY 31, 2001
---------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment loss................................... $ (82,360) $ (155,294)
Net realized gain (loss) on investments and foreign
currency transactions............................... 4,576,182 (9,277,690)
Net change in unrealized appreciation (depreciation)
in value of investments and foreign currency
transactions........................................ (2,040,371) 1,478,315
------------ ------------
Net increase (decrease) in net assets resulting from
operations....................................... 2,453,451 (7,954,669)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ($0.00 and $0.01 per share,
respectively)....................................... -- (56,489)
Net realized gains ($0.00 and $0.60 per share,
respectively)....................................... -- (5,970,812)
Return of capital ($0.00 and $0.01 per share,
respectively)....................................... -- (138,967)
------------ ------------
Decrease in net assets from distributions........... -- (6,166,268)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Shares repurchased under Tender Offer (6,122,069 and
1,272,821 shares, respectively)..................... (68,444,728) (10,667,767)
Shares repurchased under Stock Repurchase Program (0
and 174,000 shares, respectively)................... -- (1,703,552)
------------ ------------
Decrease in net assets from capital share
transactions........................................ (68,444,728) (12,371,319)
------------ ------------
Total decrease in net assets.......................... (65,991,277) (26,492,256)
NET ASSETS
Beginning of period................................... 87,619,808 114,112,064
------------ ------------
End of period......................................... $ 21,628,531 $ 87,619,808
============ ============
See Notes to the Financial Statements.
11
THE MEXICO EQUITY AND INCOME FUND, INC.
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
JULY 31, 2002 JULY 31, 2001 JULY 31, 2000 JULY 31, 1999 JULY 31, 1998
------------- ------------- ------------- ------------- -------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year....... $ 10.19 $ 11.36 $ 8.64 $10.16 $ 16.83
-------- ------- ------ ------ --------
Net investment income (loss)............. (0.03)(1) (0.02) 0.03 0.22 0.23
Net realized and unrealized gains
(losses) on investments and foreign
currency transactions.................. (1.42) (0.64) 2.62 (0.87) (3.34)
-------- ------- ------ ------ --------
Net increase (decrease) from investment
operations............................. (1.45) (0.66) 2.65 (0.65) (3.11)
-------- ------- ------ ------ --------
Less: Distributions
Dividends from net investment income... -- (0.01) (0.12) -- (0.19)
Distributions from net realized
gains............................... -- (0.60) -- (0.93) (3.37)
Return of capital...................... -- (0.01) -- -- --
-------- ------- ------ ------ --------
Total dividends and distributions........ -- (0.62) (0.12) (0.93) (3.56)
-------- ------- ------ ------ --------
Capital share transactions
Anti-dilutive effect of Tender Offer... -- 0.09 -- 0.04 --
Anti-dilutive effect of Share
Repurchase Program.................. -- 0.02 0.19 0.02 --
-------- ------- ------ ------ --------
Total capital share transactions......... -- 0.11 0.19 0.06 --
-------- ------- ------ ------ --------
Net asset value, end of year............. $ 8.74 $ 10.19 $11.36 $ 8.64 $ 10.16
======== ======= ====== ====== ========
Per share market value, end of year...... $ 7.95 $ 9.11 $10.69 $ 7.06 $ 7.75
TOTAL INVESTMENT RETURN BASED ON MARKET
VALUE, END OF YEAR*.................... (12.73)% (8.64)% 53.36% 7.24% (26.23)%
See Notes to the Financial Statements.
12
Financial Highlights (concluded)
THE MEXICO EQUITY AND INCOME FUND, INC.
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
JULY 31, 2002 JULY 31, 2001 JULY 31, 2000 JULY 31, 1999 JULY 31, 1998
------------- ------------- ------------- ------------- -------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)......... $ 21,629 $ 87,620 $114,112 $ 97,150 $120,148
Ratios of expenses to average net assets:
Before expense reimbursement............ 1.81% 1.90% 2.03% 1.88% 1.46%
After expense reimbursement............. 1.81% 1.90% 2.03% 1.88% 1.46%
Ratios of net investment income (loss) to
average net assets:
Before expense reimbursement............ (0.14)% (0.16)% 0.27% 2.72% 1.65%
After expense reimbursement............. (0.14)% (0.16)% 0.27% 2.72% 1.65%
Portfolio turnover........................ 189.05% 220.85% 249.28% 163.23% 88.85%
* Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of each period reported. Dividends and distributions, if
any, are assumed for purposes of this calculation to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment return
does not reflect brokerage commissions.
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.
See Notes to the Financial Statements.
13
THE MEXICO EQUITY AND INCOME FUND, INC.
Notes to Financial Statements JULY 31, 2002
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Mexico Equity and Income Fund, Inc. (the "Fund") was incorporated in
Maryland on May 24, 1990, and commenced operations on August 21, 1990. The Fund
is registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
SIGNIFICANT ACCOUNTING POLICIES ARE AS FOLLOWS:
PORTFOLIO VALUATION. Investments are stated at market value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at the last sales price prior to the time of determination
of net asset value, or, if no sales price is available at that time, at the
closing price last quoted for the securities (but if bid and asked quotations
are available, at the mean between the current bid and asked prices, rather than
the quoted closing price). Securities that are traded over-the-counter are
valued, if bid and asked quotations are available, at the mean between the
current bid and asked prices. Investments in short-term debt securities having a
maturity of 60 days or less are valued at amortized cost if their term to
maturity from the date of purchase was less than 60 days, or by amortizing their
value on the 61st day prior to maturity if their term to maturity from the date
of purchase when acquired by the Fund was more than 60 days. Securities for
which market values are not readily ascertainable, which aggregated $141,463
(0.65% of net assets) at July 31, 2002, are carried at fair value as determined
in good faith by, or under the supervision of, the Board of Directors.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. The cost of investments sold is
determined by use of the specific identification method for both financial
reporting and income tax purposes. Interest income, including the accretion of
discount and amortization of premium on investments, is recorded on an accrual
basis; dividend income is recorded on the ex-dividend date or, using reasonable
diligence, when known to the Fund. The collectibility of income receivable from
foreign securities is evaluated periodically, and any resulting allowances for
uncollectible amounts are reflected currently in the determination of investment
income.
TAX STATUS. No provision is made for U.S. Federal income or excise taxes as it
is the Fund's intention to continue to qualify as a regulated investment company
and to make the requisite distributions to its shareholders that will be
sufficient to relieve it from all or substantially all U.S.
14
Notes to Financial Statements (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
Federal income and excise taxes. At July 31, 2002, the Fund had capital loss
carryovers of $5,218,649 expiring in July 31, 2009 and $1,363,046 expiring in
2010, which are available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code.
In accordance with U.S. Treasury regulations, the Fund elected to defer
$1,907,772 of capital losses arising after October 31, 2001. Such losses are
treated for tax purposes as arising on August 1, 2002.
The Fund is subject to the following withholding taxes on income from Mexican
sources:
Dividends distributed by Mexican companies are subject to withholding tax
at an effective rate of 7.69%. Effective January 1, 2002, the effective
rate was reduced to 0.00%.
Interest income on debt issued by the Mexican federal government is
generally not subject to withholding. Withholding tax on interest from
other debt obligations such as publicly traded bonds and loans by banks or
insurance companies is at a rate of 4.9% under the tax treaty between
Mexico and the United States.
Gains realized from the sale or disposition of debt securities may be
subject to a 4.9% withholding tax. Gains realized by the Fund from the sale
or disposition of equity securities that are listed and traded on the
Mexican Stock Exchange ("MSE") are exempt from Mexican withholding tax if
sold through the stock exchange. Gains realized on transactions outside of
the MSE may be subject to withholding at a rate of 20% (25% rate effective
January 1, 2002) of the value of the shares sold or, upon the election of
the Fund, at 40% (35% rate effective January 1, 2002) of the gain. If the
Fund has owned less than 25% of the outstanding stock of the issuer of the
equity securities within the 12 month period preceding the disposition,
then such disposition will not be subject to capital gains taxes as
provided for in the treaty to avoid double taxation between Mexico and the
United States.
RECLASSIFICATION OF CAPITAL ACCOUNTS. The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2; Determination,
Disclosure and Financial Statement Presentation of Income, Capital, and Return
of Capital Distributions by Investment Companies. For the year ended July 31,
2002, the Fund decreased accumulated net realized loss on investments by $29,844
and paid-in capital by $112,204, due to the Fund experiencing a net investment
loss during the year.
15
Notes to Financial Statements (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, assets and liabilities at the
current Mexican peso exchange rate on the valuation date, and
(ii) purchases and sales of investment securities, income and expenses at
the Mexican peso exchange rate prevailing on the respective dates of such
transactions.
The Fund does not generally isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. The Fund does isolate the effect of fluctuations in foreign currency
rates, however, when determining the gain or loss upon the sale of foreign
currency denominated debt obligations pursuant to U.S. Federal income tax
regulations; such amounts are categorized as foreign exchange gain or loss for
income tax reporting purposes.
The Fund reports realized foreign exchange gains and losses on all other foreign
currency related transactions as components of realized gains and losses for
financial reporting purposes, whereas such gains and losses are treated as
ordinary income or loss for Federal income tax purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in the foreign exchange rate. Foreign
security and currency transactions may involve certain considerations and risks
not typically associated with those of domestic origin as a result of, among
other factors, the level of governmental supervision and regulation of foreign
securities markets and the possibilities of political or economic instability.
DISTRIBUTION OF INCOME AND GAINS. The Fund intends to distribute to
shareholders, at least annually, substantially all of its net investment income,
including foreign currency gains. The Fund also intends to normally distribute
annually any net realized capital gains in excess of net realized capital losses
(including any capital loss carryovers), except in circumstances where the
Directors of the Fund determine that the decrease in the size of the Fund's
assets resulting from the distribution of the gains would generally not be in
the interest of the Fund's shareholders. An additional distribution may be made
to the extent necessary to avoid payment of a 4% U.S. Federal excise tax.
Distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with U.S. Federal income tax regulations, which may
differ from accounting principles generally accepted in the United States of
America. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their Federal
tax-basis treatment; temporary
16
Notes to Financial Statements (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income and net realized capital gains, respectively. To the
extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of additional paid-in capital.
DISTRIBUTIONS TO SHAREHOLDERS. The tax character of distributions paid to
shareholders during the years ended July 31, 2002 and July 31, 2001 were as
follows:
DISTRIBUTIONS PAID FROM 7/31/02 7/31/01
----------------------- ------- -------
Ordinary Income............................................ $ -- $ 56,489
Long-Term Capital Gain..................................... -- 5,970,812
Return of Capital.......................................... -- 138,967
------ ----------
Total...................................................... $ -- $6,166,268
====== ==========
As of July 31, 2002, the tax basis components of distributable earnings included
in shareholders equity were as follows:
Undistributed ordinary income.............................. $ --
Undistributed long-term gain............................... --
NOTE B: MANAGEMENT, INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Acci Worldwide, S.A. de C.V. serves as the Fund's Investment Adviser (the
"Investment Adviser") under the terms of the Amended and Restated Investment
Advisory Agreement (the "Advisory Agreement"). Pursuant to the Advisory
Agreement, the Investment Adviser makes investment decisions for the Fund and
supervises the acquisition and disposition of securities by the Fund. For its
services, the Investment Adviser receives a monthly fee at an annual rate of
0.80% of the Fund's average daily net assets. For the year ended July 31, 2002,
these fees amounted to $420,176. The Investment Adviser has voluntarily agreed
to reimburse the Fund for certain fees and expenses on an annual basis. These
expense reimbursements may be terminated at any time. For the year ended July
31, 2002, the total expense reimbursements made by the Investment Adviser
amounted to $3,485.
Advantage Advisers, Inc., a subsidiary of CIBC World Markets Corp. ("CIBC WM")
served as the Fund's U.S. Co-Adviser ("Co-Adviser") under the terms of the U.S.
Co-Advisory Agreement (the "Co-Advisory Agreement"). The Co-Advisory Agreement
was terminated by mutual consent, as approved by the Board of Directors of the
Fund, as of September 1, 2001. Prior to the mutual termination of the
Co-Advisory Agreement, the Co-Adviser made investment decisions regarding the
17
Notes to Financial Statements (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
Fund's convertible debt securities jointly with the Investment Adviser and
provided advice and consultation to the Investment Adviser on investment
decisions for the Fund. For its services, the Co-Adviser received a monthly fee
at an annual rate of 0.40% of the Fund's average weekly net assets. For the one
month ended August 31, 2001, these fees amounted to $29,865.
Effective September 1, 2001, CIBC WM, an indirect wholly-owned subsidiary of
Canadian Imperial Bank of Commerce, resigned as the Administrator of the Fund
(the "Former Administrator") and U.S. Bancorp Fund Services, LLC ("USBFS"),
began to serve as the Fund's Administrator (the "Administrator") and Fund
Accountant ("Fund Accounting") to the Fund. For the one month ended August 31,
2001, prior to the mutual termination of the contract, the Former Administrator
received fees in the amount of $14,932.
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Adviser, the Administrator or any affiliate thereof an annual
fee of $5,000 plus $700 for each Board of Directors meeting attended in person
and $100 for each special telephonic meeting attended. In addition, the Fund
pays the Audit Committee, comprised of Mr. Phillip Goldstein, Mr. Gerald
Hellerman and Mr. Rajeev Das, $100 per meeting attended. The Fund's Pricing
Committee members, consisting of all of the independent directors of the Fund,
are paid $100 each for each pricing committee meeting that does not occur in
conjunction with a regularly scheduled Board meeting. At the Board of Directors
meeting held on December 13, 2001, Mr. Gerald Hellerman, a non-interested
director, was appointed President of the Fund. For serving the Fund as
President, in addition to the aforementioned Directors' fees, Mr. Hellerman will
receive annual compensation in the amount of $6,000, which is reimbursed to the
Fund by the Investment Adviser. In addition, the Fund reimburses the directors
for travel and out-of-pocket expenses incurred in connection with Board of
Directors' meetings.
NOTE C: TRANSACTIONS WITH AFFILIATES
Acciones y Valores de Mexico, S.A. de C.V., the parent company of the Investment
Adviser, received total brokerage commissions from the Fund of $195,487 during
the year ended July 31, 2002.
NOTE D: PORTFOLIO ACTIVITY
Purchases and sales of securities other than short-term obligations, aggregated
$102,927,508 and $166,833,755 respectively, for the year ended July 31, 2002.
18
Notes to Financial Statements (continued) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
At July 31, 2002, unrealized depreciation on investment securities and foreign
currency, for federal income tax purposes was as follows:
Appreciation................................................ $ 422,468
(Depreciation).............................................. (4,910,358)
-----------
Net unrealized depreciation on investments.................. $(4,487,890)
===========
At July 31, 2002, the cost of investments and foreign currency for federal
income tax purposes was $26,041,105. Differences between the Fund's cost basis
of investments and foreign currency at July 31, 2002, for book and tax purposes,
relate primarily to the deferral of losses related to wash sales.
At July 31, 2002, substantially all of the Fund's assets were invested in
Mexican securities. The Mexican securities markets are substantially smaller,
less liquid, and more volatile than the major securities markets in the United
States. Consequently, acquisitions and dispositions of securities by the Fund
may be limited.
NOTE E: CAPITAL STOCK
At a meeting of the Board of Directors held on December 13, 2001, the Board of
Directors approved a tender offer (the "Tender").
The Tender allowed the Fund to purchase up to 100% of each shareholder's shares
of common stock, not to exceed 80% of the total outstanding shares of common
stock of the Fund, for cash at a price equal to 100% of the Fund's net asset
value per share as of the closing date. The Tender commenced on February 19,
2002 and expired on March 20, 2002. In connection with the Tender, the Fund
purchased 6,122,069 shares of capital stock at a total cost of $68,444,728.
There were no gains or losses to the Fund because the repurchase of tendered
shares was executed at 100% of the Fund's NAV as calculated on the expiration
date.
At a special meeting of the Board of Directors held on October 11, 1999, the
Board of Directors approved a share repurchase program. Pursuant to the share
repurchase program, the Fund was authorized to commence a two phase share
repurchase program for up to 2,800,000 shares, or approximately 25% of the
Fund's then outstanding shares of common stock, through a combination of share
purchases and tender offers.
During the year ended July 31, 2002, the Fund made no repurchases pursuant to
the program. Pursuant to the share repurchase program, during the year ended
July 31, 2001, the Fund purchased 174,000 shares of capital stock in the open
market at a total cost of $1,703,552. The weighted average discount of these
purchases comparing the purchase price to the net asset value at the time of
19
Notes to Financial Statements (concluded) JULY 31, 2002
THE MEXICO EQUITY AND INCOME FUND, INC.
purchase was 9.01%. During the fiscal year ended July 31, 2000, the Fund
purchased 1,199,700 shares of capital stock in the open market at a total cost
of $10,573,159. The weighted average discount of these purchases comparing the
purchase prices to the net asset value at the time of purchase was 16.40%.
20
THE MEXICO EQUITY AND INCOME FUND, INC.
Report of Independent Certified Public Accountants
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THE MEXICO EQUITY AND INCOME FUND, INC.
MILWAUKEE, WISCONSIN
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Mexico Equity and Income Fund, Inc. (the
"Fund"), as of July 31, 2002, and the related statement of operations and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. For all years
ending prior to August 1, 2001, the statements of changes in net assets and
financial highlights were audited by other auditors whose report dated September
20, 2001, expressed an unqualified opinion.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
investments owned as of July 31, 2002, by correspondence with the custodian and
brokers. Where brokers have not replied to our confirmation requests, we carried
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Mexico Equity and Income Fund, Inc. as of July 31, 2002, the results of their
operations, the changes in their net assets and their financial highlights for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
September 5, 2002
21
THE MEXICO EQUITY AND INCOME FUND, INC.
Dividends and Distributions (unaudited)
DIVIDEND REINVESTMENT PLAN
The Fund intends to distribute to shareholders substantially all of its net
investment company taxable income at least annually. Investment company taxable
income, as defined in section 852 of the Internal Revenue Service Code of 1986,
includes all of the Fund's taxable income minus the excess, if any, of its net
realized long-term capital gains over its net realized short-term capital losses
(including any capital loss carryovers), plus or minus certain other required
adjustments. The Fund also expects to distribute annually substantially all of
its net realized long-term capital gains in excess of net realized short-term
capital losses (including any capital loss carryovers), except in circumstances
where the Fund realizes very large capital gains and where the Directors of the
Fund determine that the decrease in the size of the Fund's assets resulting from
the distribution of the gains would not be in the interest of the Fund's
shareholders generally.
Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"), each shareholder
will be deemed to have elected, unless the Plan Agent (as defined below) is
otherwise instructed by the shareholder in writing, to have all distributions,
net of any applicable U.S. withholding tax, automatically reinvested in
additional shares of the Fund by The Fifth Third Bank, the Fund's transfer
agent, as the Plan Agent (the "Plan Agent"). Shareholders who do not participate
in the Plan will receive all dividends and distributions in cash, net of any
applicable U.S. withholding tax, paid in U.S. dollars by check mailed directly
to the shareholder by the Plan Agent, as dividend-paying agent. Shareholders who
do not wish to have dividends and distributions automatically reinvested should
notify the Plan Agent for The Mexico Equity and Income Fund, Inc., c/o The Fifth
Third Bank, Stock Transfer Department MD#10AT60, 38 Fountain Square Plaza,
Cincinnati, Ohio 45202. Dividends and distributions with respect to shares of
the Fund's Common Stock registered in the name of a broker-dealer or other
nominee (i.e., in "street name") will be reinvested under the Plan unless the
service is not provided by the broker or nominee or the shareholder elects to
receive dividends and distributions in cash. A shareholder whose shares are held
by a broker or nominee that does not provide a dividend reinvestment program may
be required to have his shares registered in his own name to participate in the
Plan. Investors who own shares of the Fund's Common Stock registered in street
name should contact the broker or nominee for details.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash, as
shareholders may have elected, nonparticipants in the Plan will receive cash and
participants in the Plan will receive Common Stock, to be issued by the Fund. If
the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
net asset value; or, if the net asset value is less than
22
Dividends and Distributions (unaudited) (continued)
THE MEXICO EQUITY AND INCOME FUND, INC.
95% of the market price on the valuation date, then such shares will be issued
at 95% of the market price.
If net asset value per share on the valuation date exceeds the market price per
share on that date, participants in the Plan will receive shares of Common Stock
from the Fund valued at market price. The valuation date is the dividend or
distribution payment date or, if that date is not a New York Stock Exchange
trading day, the next preceding trading day. If the Fund should declare an
income dividend or capital gains distribution payable only in cash, the Plan
Agent will, as agent for the participants, buy Fund shares in the open market on
the New York Stock Exchange or elsewhere, for the participants' accounts on, or
shortly after, the payment date.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in noncertified form in the
name of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.
In the case of shareholders such as banks, brokers or nominees that hold shares
for others who are beneficial owners, the Plan Agent will administer the Plan on
the basis of the number of shares certified from time to time by the
shareholders as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who participate in the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either Common Stock or cash. The Plan Agent's fees for
the handling or reinvestment of such dividends and capital gains distributions
will be paid by the Fund. There will be no brokerage charges with respect to
shares issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
or capital gains distributions payable in cash.
Brokerage charges for purchasing small amounts of Common Stock for individual
accounts through the Plan are expected to be less than usual brokerage charges
for such transactions because the Plan Agent will be purchasing stock for all
participants in blocks and prorating the lower commissions thus attainable.
Brokerage commissions will vary based on, among other things, the broker
selected to effect a particular purchase and the number of participants on whose
behalf such purchase is being made.
23
Dividends and Distributions (unaudited) (concluded)
THE MEXICO EQUITY AND INCOME FUND, INC.
The receipt of dividends and distributions in Common Stock under the Plan will
not relieve participants of any income tax (including withholding tax) that may
be payable on such dividends or distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any dividend or distribution paid subsequent to notice of the
termination sent to participants at least 30 days before the record date for
such dividend or distribution. The Plan also may be amended by the Fund or the
Plan Agent, but (except when necessary or appropriate to comply with applicable
law, or rules or policies of a regulatory authority) only upon at least 30 days'
written notice to participants. All correspondence concerning the Plan should be
directed to the Plan Agent at the address above.
24
THE MEXICO EQUITY AND INCOME FUND, INC.
Results of Annual Stockholders Meeting (unaudited)
The Fund's Annual Stockholders meeting was held on November 27, 2001, at 405
Park Avenue, New York, New York 10022. As of November 1, 2001, the record date,
outstanding shares of common stock ("shares") of the Fund were 8,595,573.
Holders of 8,024,538 shares of the Fund were present at the meeting either in
person or by proxy. These holders, as being holders of a majority of the
outstanding shares of the Fund, constituted a quorum. The stockholders voted on
three proposals.
The stockholders elected four Directors to the Board of Directors, approved the
amended and restated Investment Advisory agreement between Acci Worldwide, S.A.
de C.V. and the Fund, and adopted a proposal to pursue the creation and
registration of put warrants, which are designed to afford stockholders an
opportunity to realize net asset value for their shares.
The following table provides information concerning the matters voted on at the
meeting:
I. ELECTION OF DIRECTORS
NOMINEE FOR WITHHELD
------- --- --------
Glenn Goodstein 7,926,145 98,393
Rajeev Das 7,934,582 89,956
Andrew Dakos 7,915,816 108,722
Gerald Hellerman 7,918,078 106,460
II. APPROVAL OF THE AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT BETWEEN
ACCI WORLDWIDE, S.A. DE C.V. AND THE FUND
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
5,701,568 115,671 46,674 2,160,625
III. ADOPTION OF A PROPOSAL TO PURSUE THE CREATION AND REGISTRATION OF PUT
WARRANTS WHICH ARE DESIGNED TO AFFORD STOCKHOLDERS AN OPPORTUNITY TO
REALIZE NET ASSET VALUE FOR THEIR SHARES
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
5,734,315 88,030 41,568 2,160,625
25
THE MEXICO EQUITY AND INCOME FUND, INC.
Privacy Policy (unaudited)
The Mexico Equity and Income Fund, Inc. (the "Fund") has adopted the following
privacy policy in order to safeguard the personal information of its consumers
and customers in accordance with SEC Regulation S-P, 17 CFR 284.30:
COMMITMENT TO CONSUMER PRIVACY. The Fund recognizes and respects the privacy
expectations of each of our customers and believes that the confidentiality and
protection of consumer information is one of our fundamental responsibilities.
The Fund is committed to maintaining the confidentiality, integrity and security
of the customers' personal information and will handle personal consumer and
customer information only in accordance with Regulation S-P and any other
applicable laws, rules and regulations. The Fund will ensure: (a) the security
and confidentiality of customer records and information; (b) that customer
records and information are protected from any anticipated threats and hazards;
and (c) that unauthorized access to, or use of, customer records or information
is protected against.
COLLECTION AND DISCLOSURE OF SHAREHOLDER INFORMATION. Consumer information
collected by, or on behalf of, the Fund, generally consists of the following:
- Information received from consumers or customers on or in applications or
other forms, correspondence, or conversations, including, but not limited to,
their name, address, phone number, social security number, assets, income and
date of birth; and
- Information about transactions with us, our affiliates, or others, including,
but not limited to, shareholder account numbers and balance, payments history,
parties to transactions, cost basis information, and other financial
information.
The Fund does not disclose any nonpublic personal information about our current
or former consumers or customers to nonaffiliated third parties, except as
permitted by law. For example, as the Fund has no employees, it conducts its
business affairs through third parties that provide services pursuant to
agreements with the Fund (as well as through its officers and directors).
SECURITY OF CONSUMER AND CUSTOMER INFORMATION. The Fund will determine whether
the policies and procedures of its affiliates and service providers are
reasonably designed to safeguard customer information and require only
appropriate and authorized access to, and use of, customer information through
the application of appropriate administrative, technical, physical, and
procedural safeguards that comply with applicable federal standards and
regulations. The Fund directs each of its service providers to adhere to the
Fund's privacy policy and to their respective privacy policies with respect to
all customer information of the Fund and to take all actions reasonably
necessary so that the Fund is in compliance with the provisions of 17 CFR
248.30, including, as applicable, the development
26
Privacy Policy (unaudited) (concluded)
THE MEXICO EQUITY AND INCOME FUND, INC.
and delivery of initial and annual privacy notices and maintenance of
appropriate and adequate records. The Fund will require its service providers to
confirm to the Fund, in writing, that they are restricting access to nonpublic
personal information about customers to those employees who need to know that
information to provide products or services to customers.
The Fund requires its service providers to provide periodic reports, no less
frequently than annually, to the Board of Directors outlining their privacy
policies and implementation and promptly report to the Fund any material changes
to their privacy policy before, or promptly after, their adoption.
27
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THE MEXICO EQUITY
AND INCOME FUND, INC.
INVESTMENT ADVISER:
ACCI Worldwide, S.A. de C.V.
Paseo de la Reforma 398
Mexico City, D.F.
Mexico 06600
INDEPENDENT AUDITOR:
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
ADMINISTRATOR AND FUND ACCOUNTANT:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
TRANSFER AGENT AND REGISTRAR:
The Fifth Third Bank
ATTN: Corporate Trust Services
38 Fountain Square Plaza
Cincinnati, OH 45202
CUSTODIAN:
U.S. Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
The Mexico Equity
and Income Fund, Inc.
Annual Report
July 31, 2002