mexeq_nq.htm
As filed with the Securities and Exchange Commission on June 25, 2012



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:  April 30, 2012
 
 
 
 
 
 
Item 1. Schedule of Investments.
 
Mexico Equity & Income Fund
            
Schedule of Investments
            
April 30, 2012 (Unaudited)
            
             
   
Shares
    
Value
  
             
COMMON STOCKS - 89.69%
            
Beverages - 2.34%
            
Arca Continental S.A.B. de C.V. 
     396,600   $ 2,019,848  
               
Chemical Products - 8.69%
              
Alpek S.A. de C.V. (a)
     1,673,636     3,693,937  
Mexichem, S.A.B. de C.V. 
     1,026,859     3,818,612  
            7,512,549  
               
Construction and Infrastructure - 6.07%
              
Empresas ICA Sociedad  Conroladora, S.A. de C.V. (a)
     240,000     434,272  
Impulsora del Desarrollo y el Empleo en America Latina, S.A.B. de  C.V. (a)
     898,800     1,713,978  
Promotora y Operadora de Infraestructura, S.A.B. de C.V. (a)
     639,900     3,097,823  
            5,246,073  
Consumer Products - 2.95%
              
Kimberly-Clark de Mexico S.A.B. de  C.V. 
     1,250,300     2,549,370  
               
Financial Groups - 5.90%
              
Banregio Grupo Financiero S.A.B. de  C.V. 
     933,881     2,651,957  
Grupo Financiero Banorte, S.A. de  C.V. - Class O 
     505,000     2,446,697  
            5,098,654  
               
Food - 1.78%
              
Grupo Bimbo, S.A.B. de C.V. 
     645,000     1,536,993  
               
Health Care - 4.67%
              
Genomma Lab Internacional S.A.B.  de C.V. (a)
     2,289,311     4,038,736  
               
Holding Companies - 8.07%
              
Alfa, S.A.B. de C.V. - Class A 
     211,057     3,012,912  
Grupo Carso, S.A.B. de C.V. 
     1,185,174     3,957,874  
            6,970,786  
Hotels and Recreation - 3.02%
              
Grupe, S.A.B. de C.V. (a)
     2,333,477     2,257,172  
Grupo Sports World S.A.B. de  C.V. (a)
     315,000     349,679  
            2,606,851  
Housing - 1.73%
              
Corporativo Geo S.A. de C.V. (a)
     565,000     753,423  
Urbi Desarrollos Urbanos S.A.B. de  C.V (a)
     710,000     747,830  
            1,501,253  
Insurance Services - 4.16%
              
Qualita Compania de Seguros S.A.  de C.V. 
     3,250,465     3,593,342  
               
Mining - 5.31%
              
Grupo Mexico, S.A.B. de C.V. -  Series B 
     1,107,800     3,417,984  
Industrias Penoles, S.A.B. de C.V. 
     25,093     1,173,188  
            4,591,172  
               
Retail - 11.67%
              
Corporativo Fragua S.A.B. de C.V. 
     142,000     2,191,164  
El Puerto de Liverpool S.A.B. de  C.V. 
     493,097     3,908,148  
First Cash Financial Services, Inc. (a)
     9,500     389,120  
 
 
 
 
 
Grupo Comercial Chedraui S.A. de  C.V. 
     1,387,608     3,597,398  
            10,085,830  
Steel - 1.78%
              
Industrias CH, S.A.B. de C.V. - Class  B (a)
     339,631     1,540,157  
               
Telecommunication Services - 21.55%
              
America Movil, S.A.B de C.V. - Class  L 
     13,971,898     18,631,414  
TOTAL COMMON STOCKS  (Cost $71,887,353)
           18,631,414  
               
REAL ESTATE INVESTMENT TRUSTS - 4.98%
              
Fibra Uno Administracion S.A. de  C.V. (a)
     2,194,550     4,307,912  
TOTAL REAL ESTATE  INVESTMENT TRUSTS  (Cost $3,845,818)
           4,307,912  
               
CAPITAL DEVELOPMENT CERTIFICATES - 2.33%
              
Atlas Discovery Trust II (c)
     300,000     2,012,356  
TOTAL CAPITAL DEVELOPMENT CERTIFICATES  (Cost $2,317,515)
           2,012,356  
               
   
Principal
        
   
Amount
        
CORPORATE BONDS - 0.00%
              
Urbi Desarrollos Urbanos S.A.B. de C.V.
              
    8.500%, 04/19/2016 
   $ 300     299  
TOTAL CORPORATE BONDS  (Cost $288)
           299  
               
MEXICAN GOVERNMENT NOTE/BONDS - 1.38%
              
Mexican Government International Bond
              
    8.125%, 12/30/2019 
     865,000     1,191,538  
TOTAL FOREIGN GOVERNMENT  NOTE/BONDS (Cost $1,130,002)
           1,191,538  
               
SHORT TERM INVESTMENTS - 0.98%
              
First American Treasury Obligation - Class  A
     386,780     386,780  
               
Mexican INAFIN
              
0.000% Coupon, 4.138% effective yield, 5/2/2012 (b)
     *5,961,324     457,599  
TOTAL SHORT TERM  INVESTMENTS (Cost $845,645)
           844,379  
               
Total Investments  (Cost $80,026,621) - 99.36%
           85,879,512  
Other Assets in Excess of Liabilities - 0.64%
           554,000  
TOTAL NET ASSETS - 100.00%
         $ 86,433,512  
               
 
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)
The Advisor has determined these securities to be illiquid.  The total value of illiquid securities at
 
April 30, 2012 was $2,012,356 comprising 2.33% of net assets, while the remainder of the Fund's net assets (97.03%)
 
were liquid.
        
           
* Principal amount in Mexican Pesos
        
           
 
 
 
 
 
The cost basis of investments for federal income tax purposes at April 30, 2012 was as follows:
 
Cost of investments**
        
$80,026,621
Gross unrealized appreciation
        
8,131,775
Gross unrealized depreciation
        
(2,278,884)
Net unrealized appreciation
        
$5,852,891
             
**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 April 30, 2012
      
           
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 associatedwith investing in those securities.
           
The following is a summary of the inputs used, as of April 30, 2012, in valuing the Fund’s investments carried at fair value:
 
   
Level 1*
    
Level 2*
    
Level 3
    
Total
  
Common Stock
                        
Beverages
   $ 2,019,848     $ -     $ -     $ 2,019,848  
Chemical Products
     7,512,549       -       -       7,512,549  
Construction and Infrastructure
     5,246,073       -       -       5,246,073  
Consumer Products
     2,549,370       -       -       2,549,370  
Financial Groups
     5,098,654       -       -       5,098,654  
Food
     1,536,993       -       -       1,536,993  
Health Care
     4,038,736       -       -       4,038,736  
Holding Companies
     6,970,786       -       -       6,970,786  
Hotels and Recreation
     349,679       2,257,172       -       2,606,851  
Housing
     1,501,253       -       -       1,501,253  
Insurance Services
     3,593,342       -       -       3,593,342  
Mining
     4,591,172       -       -       4,591,172  
Retail
     10,085,830       -       -       10,085,830  
Steel
     1,540,157       -       -       1,540,157  
Telecommunication Services
     18,631,414       -       -       18,631,414  
Total Common Stock
     75,265,856       2,257,172       -       77,523,028  
                                 
Real Estate Investment Trusts
     4,307,912       -       -       4,307,912  
                                 
Mexican Government Bonds
     -       1,191,538       -       1,191,538  
                                 
Capital Development Certificates
     -       -       2,012,356       2,012,356  
                                 
Corporate Bonds
                                
Housing
     -       299       -       299  
                                 
Short-Term Investments
     386,780       457,599       -       844,379  
Total Investments in Securities
   $ 79,960,548     $ 3,906,608     $ 2,012,356     $ 85,879,512  
                                 
 
 
 
 
 
Disclosures about Derivative Instruments and Hedging Activities
    
           
The Fund did not invest in derivative securities or engaged in hedging activities during the period ended April 30, 2012.
           
*The Fund recognizes transfers between levels as of the beginning of the fiscal year. There were no transfers between Level 1 and Level 2 as of April 30, 2012.
 
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)
     (674,404 )
Balance as of April 30, 2012
   $ 2,012,356  

 
 
 
 
 
 
 
 
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      June 21, 2012                                                                                             

 

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     June 21, 2012                                                                                           


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

Date     May 31, 2012                                                                                            
 
 
* Print the name and title of each signing officer under his or her signature.