THE MEXICO FUND, INC. DECLARES DISTRIBUTION
- None.
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Insights
The announcement by The Mexico Fund, Inc. regarding its distribution of $0.22 per share is a significant event for shareholders. This distribution reflects a portion of the Fund's earnings allocated to be returned to investors. The continuation of the Fund's Managed Distribution Plan (MDP) suggests a stable or growing income stream, which can be an indicator of the Fund's operational success. The critical factor here is the composition of the distribution, which includes net investment income, capital gains and a return of capital. The return of capital component, although small, can sometimes imply that not all the distribution is sourced from earnings, which could be a concern if it were a larger percentage.
When analyzing the distribution breakdown, the majority comes from net investment income and realized capital gains, which is generally seen as a positive sign of the Fund's investment performance. The Fund's Average Annual Total Return over the past five years and the Current Annualized Distribution Rate provide investors with a measure of the Fund's historical performance and the yield on their investment, respectively. The Current Fiscal Year Cumulative Total Return offers a glimpse into the Fund's short-term performance, which appears robust.
It's essential to note that distributions are not guaranteed and may be modified based on the Fund's earnings. Investors typically view consistent and predictable distributions favorably, as they provide a regular income stream. However, the Board's discretion to amend or terminate the MDP without prior notice introduces an element of uncertainty.
From a taxation perspective, the nature of the distributions is a critical element for shareholders. The Fund's requirement to indicate the source of each distribution is in compliance with the Investment Company Act of 1940. Investors must understand the tax implications of each component of the distribution. For example, net investment income is typically taxed at ordinary income rates, while capital gains may be subject to lower tax rates if held for more than a year. The return of capital is not taxed immediately but reduces the shareholder's cost basis, which could affect capital gains taxes when the shares are sold.
Investors should be aware that the Fund's estimate of the source of distributions is subject to change and the actual amounts could differ once the fiscal year concludes. Accurate tax planning requires understanding these estimates and preparing for potential adjustments.
The Fund's distribution announcement can impact investor sentiment and market behavior. The distribution yield, compared to the industry benchmarks, can influence the attractiveness of the Fund to income-focused investors. The Fund's performance metrics, such as the Average Annual Total Return and the Current Fiscal Year Cumulative Total Return, are essential indicators of the Fund's competitiveness in the market.
Investors often compare these returns against peer funds and broader market indices to gauge performance. A higher-than-average return can attract new investors, while a lower return might raise concerns about the Fund's investment strategy and asset management. Furthermore, the market will likely monitor the Fund's ability to maintain its distribution levels, as any changes could signal shifts in the Fund's operational efficiency or financial stability.
The Board has approved the continuation of the Fund's MDP during 2024. The Board may amend or terminate the MDP at any time without prior notice to stockholders. Since the implementation of the MDP in September 2008, the Fund has paid a total of
The amount of distributable income for each fiscal period depends on the aggregate gains and losses realized by the Fund during the entire year. Distributions may consist of net investment income, capital gains and return of capital, but the character of these distributions cannot be determined until after the end of the Fund's fiscal year. However, under the Investment Company Act of 1940, the Fund is required to indicate the source of each distribution to stockholders. The following table sets forth (A) an estimate of the source of the April 2024 distribution and (B) an estimate of the source of distributions for the current fiscal year:
Distribution Estimates | April 2024 | Fiscal Year-to-date ( YTD)1 | ||
Source | Per Share Amount | Percent of Current Distribution | Per Share Amount | Percent of Fiscal Year Distributions |
Net Investment Income | 56.82 % | 56.82 % | ||
Net Realized Short-Term Capital Gains | 7.64 % | 7.64 % | ||
Net Realized Long-Term Capital Gains | 30.54 % | 30.54 % | ||
Return of Capital | 5.00 % | 5.00 % | ||
Total Distribution | 100.00 % | 100.00 % | ||
Information regarding the Fund's performance and distribution rates is set forth below:
Average Annual Total Return for the 5-year period ended on February 29, 20242 | 11.47 % |
Current Annualized Distribution Rate (current fiscal year)3 | 3.00 % |
Current Fiscal Year Cumulative Total Return4 | 18.04 % |
Cumulative Distribution Rate (current fiscal year)5 | 0.99 % |
1 The Fund's current fiscal year began on November 1, 2023.
2 Average Annual Total Return represents the simple arithmetic average of the Annual NAV Total Returns of the Fund for the last five years. Annual NAV Total Return is the percentage change in the Fund's NAV over a year including distributions paid and assuming reinvestment of those distributions.
3 The Current Annualized Distribution Rate is the Cumulative Distribution Rate as of February 29, 2024, annualized as a percentage of the Fund's NAV at the same date.
4 Current Fiscal Year Cumulative Total Return is the percentage change in the Fund's NAV from November 1, 2023, through February 29, 2024, including distributions paid and assuming reinvestment of those distributions.
5 Cumulative Distribution Rate for the Fund's current fiscal period (November 1, 2023, through February 29, 2024) measured on the dollar value of distributions in the period as a percentage of the Fund's NAV as of February 29, 2024.
You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's MDP.
The amounts and sources of distributions reported above are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report the distribution for federal income tax purposes.
CONTACT:
Tofi Dayan
+5255-9138-3350
Email: investor-relations@themexicofund.com
About The Mexico Fund, Inc.
The Mexico Fund, Inc. is a non-diversified closed-end management investment company with the investment objective of long-term capital appreciation through investments in securities, primarily equity, listed on the Mexican Stock Exchange. The Fund provides a vehicle to investors who wish to invest in Mexican companies through a managed non-diversified portfolio as part of their overall investment program.
This release may contain certain forward-looking statements regarding future circumstances. These forward-looking statements are based upon the Fund's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements including, in particular, the risks and uncertainties described in the Fund's filings with the Securities and Exchange Commission. Actual results, events, and performance may differ. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Fund undertakes no obligation to release publicly any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by The Mexico Fund or any other person that the events or circumstances described in such statement are material.
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SOURCE The Mexico Fund, Inc.
FAQ
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