mexeq_nq.htm
 
As filed with the Securities and Exchange Commission on December xx, 2011
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


 
FORM N-Q
 
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
 


Investment Company Act file number  811-06111



The Mexico Equity & Income Fund, Inc.
(Exact name of registrant as specified in charter)



615 East Michigan Street
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)



Mr. Gerald Hellerman
C/O U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
(Name and address of agent for service)



877-785-0367
Registrant's telephone number, including area code



Date of fiscal year end: July 31, 2012
 
Date of reporting period:  October 31, 2011
 
 
 
 
 
Item 1. Schedule of Investments.
 
Mexico Equity & Income Fund, Inc.
            
Schedule of Investments
            
October 31, 2011
            
             
   
Shares
    
Value
  
COMMON STOCKS - 87.89%
            
Beverages - 4.83%
            
Emboteladoras Arca, S.A.
     788,289     $ 3,738,266  
Chemicals - 10.86%
                
Mexichem, S.A. de C.V.
     2,442,559       8,405,174  
Commercial Banks - 4.06%
                
Banregio Grupo Financiero S.A. de C.V. (a)
     1,406,200       3,144,351  
Construction & Engineering - 6.28%
                
Carso Infraestructura y Construccion, S.A.B. de C.V. (a)
     2,373,500       1,422,996  
Empresas ICA Sociedad Conroladora, S.A. de C.V. (a)
     744,800       995,898  
Promotora y Operadora de Infraestructura, S.A. de C.V. (a)
     599,900       2,438,852  
              4,857,746  
Consumer Finance - 1.33%
                
Compartamos S.A.B. de C.V.
     665,700       1,028,496  
Diversified Telecommunication Services - 4.78%
                
Telefonos De Mexico S.A.B. de C.V.
     4,715,000       3,697,137  
Food & Staples Retailing - 10.10%
                
Grupo Comercial Chedraui S.A. de C.V.
     585,000       1,407,740  
Wal-Mart de Mexico, S.A.B. de C.V. - Class V
     2,483,400       6,412,080  
              7,819,820  
Food Products - 1.22%
                
Grupo Bimbo, S.A.B. de C.V.
     460,000       946,094  
Health Care Providers & Services - 2.11%
                
Medica Sur S.A.B. de C.V.
     905,000       1,629,774  
                 
Hotels, Restaurants & Leisure - 6.72%
                
Alsea, S.A. de C.V. - Class A
     1,975,800       2,050,373  
Grupo Sports World S.A.B. de C.V.(a)
     325,000       337,510  
Grupe, S.A. de C.V. (a)
     2,878,786       2,805,990  
              5,193,873  
Industrial Conglomerates - 2.01%
                
Grupo Carso, S.A. de C.V.
     602,000       1,554,352  
Insurance - 4.25%
                
Qualitias Compania de Seguros S.A. de C.V.
     4,139,651       3,292,586  
Metals & Mining - 3.93%
                
Industrias Penoles S.A.B. de C.V.
     75,540       3,038,208  
Multiline Retail - 8.36%
                
El Puerto de Liverpool S.A.B. de C.V.
     945,900       6,465,933  
Pharmaceuticals - 5.15%
                
Genomma Lab Internacional S.A.B. de C.V. (a)
     1,914,300       3,988,903  
Wireless Telecommunication Services - 11.90%
                
America Movil, S.A.B de C.V. - Class L
     7,213,998       9,207,632  
TOTAL COMMON STOCKS (Cost $67,986,587)
             68,008,345  
                 
REAL ESTATE INVESTMENT TRUSTS - 4.28%
                
Fibra Uno Administracion S.A. de C.V.
     1,799,500       3,308,153  
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $2,947,016)
             3,308,153  
                 
CAPITAL DEVELOPMENT CERTIFICATES - 2.55%
                
Atlas Discovery Trust II (c)
     300,000       1,969,884  
TOTAL CAPITAL DEVELOPMENT CERTIFICATES (Cost $2,317,515)
             1,969,884  
 
 
 
 
 
         
Principal
        
         
Amount
    
Value
  
CORPORATE BONDS - 0.60%
                  
Urbi Desarrollos Urbanos
                  
    8.500%, 04/19/2016 (e)
         $ 461,300       465,913  
TOTAL CORPORATE BONDS (Cost $397,143)
                   465,913  
                       
FOREIGN GOVERNMENT NOTE/BONDS - 1.64%
                      
Mexico-united Mexican Sts
                      
    8.125%, 12/30/2019
         $ 865,000       1,271,550  
TOTAL FOREIGN GOVERNMENT NOTE/BONDS (Cost $1,144,868)
               1,271,550  
                       
SHORT-TERM INVESTMENTS - 6.13%
                      
Mexican Cete
                      
    0.000% Coupon, 4.47% Effective Yield, 11/10/2011 (b)
            * 1,180,342       884,724  
Mexican INAFIN
                        
    0.000% Coupon, 4.15% Effective Yield, 11/1/2011 (b)
            * 25,714,069       1,929,472  
Mexican INAFIN
                        
    0.000% Coupon, 4.15% Effective Yield, 11/4/2011 (b)
            * 25,750,210       1,932,008  
TOTAL SHORT-TERM INVESTMENTS (Cost $4,814,431)
                     4,746,204  
                         
                         
UNITED STATES - 0.17%
                        
INVESTMENT COMPANIES - 0.17%
                        
First American Treasury Obligation - Class A
             134,224       134,224  
TOTAL INVESTMENT COMPANIES (Cost $134,224)
                     134,224  
TOTAL UNITED STATES (Cost $134,224)
                     134,224  
Total Investments  (Cost $79,741,784) - 103.26%
                     79,904,273  
Liabilities in Excess of Other Assets - (3.26)%
                     (2,523,098 )
TOTAL NET ASSETS - 100.00%
                   $ 77,381,175  
 
Footnotes
            
             
Percentages are stated as a percent of net assets.
        
             
(a)
Non-income producing security.
        
(b)
Effective yield based on the purchase price.  The calculation assumes the security is held to maturity.
(c)
Fair Valued Security
          
             
* Principal amount in Mexican Pesos
          
 
The cost basis of investments for federal income tax purposes at October 31, 2011 was as follows:
      
       
Cost of investments**
   $ 79,741,784  
Gross unrealized appreciation
     4,776,380  
Gross unrealized depreciation
     (4,613,891 )
Net unrealized appreciation
   $ 162,489  
         
**Because tax adjustments are calculated annually, the above table does not reflect tax adjustments.
        
For the previous fiscal year's federal income tax information, please refer to the Notes to Financial
        
Statements section of the Fund's most recent semi-annual or annual report.
        
 
 
 
 
 
Summary of Fair Value Exposure at October 31, 2011
      
           
Various inputs are used in determining the value of the Fund’s investments. These inputs are
summarized in the three broad levels listed below:
      
           
 
Level 1 - Quoted prices in active markets for identical securities.
  
 
Level 2 - Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
 
Level 3 - Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments.)
 
  
    
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
           
The following is a summary of the inputs used, as of October 31, 2011, in valuing the Fund’s investments carried at fair value:
           
           
   
                           Level 1
                     Level 2
                   Level 3
                             Total
Common Stock
          
Beverages
  
 $          3,738,266
 $                   -
 $                   -
 $     3,738,266
Capital Development Certificates
                            -
                      -
        1,969,884
        1,969,884
Chemicals
  
             8,405,174
                      -
                      -
        8,405,174
Commercial Banks
             3,144,351
                      -
                      -
        3,144,351
Construction & Engineering
             4,857,746
                      -
                      -
        4,857,746
Consumer Finance
             1,028,496
                      -
                      -
        1,028,496
Diversified Telecommunication Services
             3,697,137
                      -
                      -
        3,697,137
Food & Staples Retailing
             7,819,820
                      -
                      -
        7,819,820
Food Products
  
                946,094
                      -
                      -
           946,094
Health Care Providers & Services
             1,629,774
    
        1,629,774
Hotels, Restaurants & Leisure
             5,193,873
  
                      -
        5,193,873
Industrial Conglomerates
             1,554,352
                      -
                      -
        1,554,352
Insurance
  
             3,292,586
                      -
                      -
        3,292,586
Metals & Mining
             3,038,208
                      -
                      -
        3,038,208
Multiline Retail
             6,465,933
                      -
                      -
        6,465,933
Pharmaceuticals
             3,988,903
                      -
                      -
        3,988,903
Wireless Telecommunication Services
             9,207,632
                      -
                      -
        9,207,632
Total Common Stock
           68,008,345
                      -
        1,969,884
      69,978,229
           
Real Estate Investment Trusts
             3,308,153
                      -
                      -
        3,308,153
           
Mexican Government Bonds
                            -
        1,271,550
                      -
        1,271,550
           
Corporate Bonds
        
Housing
  
                            -
           465,913
                      -
           465,913
           
Short-Term Investments
                134,224
        4,746,204
                      -
        4,880,428
Total Investments in Securities
 $        71,450,722
 $     6,483,667
 $     1,969,884
 $   79,904,273
           
Disclosures about Derivative Instruments and Hedging Activities
    
           
The fund did not invest in derivative securities or engaged in hedging activities during the period ended October 31, 2011.
 
 
 
 

Level 3 Reconciliation Disclosure
        
         
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to 
  
determine fair value.
        
         
Description
   Investments in Securities
Balance as of July 31, 2011
     $ 2,686,760  
Acquisition/Purchase
         
Sales
      -  
Realized gain
       -  
Change in unrealized appreciation (depreciation)
       (716,876 )
Balance as of October 31, 2011
     $ 1,969,884  

 
 
 
 
Item 2. Controls and Procedures.
 
(a)  
The Registrant’s President and Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) (17 CFR 270.30a-3(c)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(d)).

(b)  
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
 
Item 3. Exhibits.
 
Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)).  Filed herewith.
 
 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)  The Mexico Equity & Income Fund, Inc.                                                                                                                                                                                  

By (Signature and Title) /s/ Maria Eugenia Pichardo                                                                                                                                                                                    
                                                       Maria Eugenia Pichardo, President

Date      December 15, 2011                                                                                                    

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /s/ Maria Eugenia Pichardo                                                                                                                                                                                  
                                                          Maria Eugenia Pichardo, President

Date     December 15, 2011                                                                                                      


By (Signature and Title)* /s/ Gerald Hellerman                                                                                                                                                                                    
                                                          Gerald Hellerman,  Chief Financial Officer

Date     December 13, 2011                                                                                                     


* Print the name and title of each signing officer under his or her signature.