0000894189-13-006967.txt : 20131224 0000894189-13-006967.hdr.sgml : 20131224 20131224101459 ACCESSION NUMBER: 0000894189-13-006967 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20131031 FILED AS OF DATE: 20131224 DATE AS OF CHANGE: 20131224 EFFECTIVENESS DATE: 20131224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEXICO EQUITY & INCOME FUND INC CENTRAL INDEX KEY: 0000863900 IRS NUMBER: 133576061 STATE OF INCORPORATION: MD FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-06111 FILM NUMBER: 131296638 BUSINESS ADDRESS: STREET 1: U.S. BANCORP FUND SERVICES, LLC STREET 2: 615 EAST MICHIGAN STREET, LC-2 CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4147654499 MAIL ADDRESS: STREET 1: U.S. BANCORP FUND SERVICES, LLC STREET 2: 615 EAST MICHIGAN STREET, LC-2 CITY: MILWAUKEE STATE: WI ZIP: 53202 FORMER COMPANY: FORMER CONFORMED NAME: MEXICO CONVERTIBLE ADVANTAGE FUND INC DATE OF NAME CHANGE: 19900807 FORMER COMPANY: FORMER CONFORMED NAME: MEXICO ADVANTAGE FUND INC DATE OF NAME CHANGE: 19900805 N-Q 1 mexeq_nq.htm QUARTERLY NOTICE OF PORTFOLIO HOLDINGS mexeq_nq.htm
As filed with the Securities and Exchange Commission on December 24, 2013



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, 2014

Date of reporting period:  October 31, 2013
 
 
 
 
 
Item 1. Schedule of Investments.
 
The Mexico Equity and Income Fund, Inc.
            
Schedule of Investments
            
October 31, 2013 (Unaudited)
            
             
MEXICO - 98.91%
  
Shares
    
Value
  
               
COMMON STOCKS - 93.64%
            
               
Airports - 3.32%
            
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.
     1,068,262     $ 3,641,044  
                   
Beverages - 1.35%
                
Fomento Economico Mexicano, S.A.B. de C.V.
     157,957       1,477,603  
                   
Building Materials - 3.65%
                
Cemex, S.A.B. de C.V. CPO (a)
     3,770,898       4,011,578  
                   
Cable & Satellite - 5.62%
                
Megacable Holdings, S.A.B. de C.V.
     1,834,246       6,173,082  
                   
Chemical Products - 2.99%
                
Mexichem, S.A.B. de C.V.
     786,048       3,282,819  
                   
Construction and Infrastructure - 8.84%
                
Impulsora del Desarrollo y el Empleo en America Latina, S.A.B. de C.V. (a)
     1,710,254       3,423,850  
Promotora y Operadora de Infraestructura, S.A.B. de C.V. (a)
     618,921       6,279,696  
                9,703,546  
Consumer Products - 2.13%
                
Kimberly-Clark de Mexico, S.A.B. de C.V.
     770,898       2,343,906  
                   
Energy - 5.16%
                
Infraestructura Energetica Nova, S.A.B. de C.V.
     1,435,897       5,665,560  
                   
Financial Groups - 7.01%
                
Banregio Grupo Financiero, S.A.B. de C.V.
     649,481       3,598,535  
Grupo Financiero Banorte, S.A.B. de C.V. - Class O
     320,008       2,042,596  
Grupo Financiero Inbursa, S.A.B. de C.V. - Class O
     800,000       2,060,817  
                7,701,948  
Food Manufacturing - 7.54%
                
Gruma, S.A.B. de C.V. (a)
     848,221       5,813,326  
Grupo Lala S.A.B. de C.V. (a)
       1,109,613       2,464,626  
                8,277,952  
Holding Companies - 9.48%
                
Alfa, S.A.B. de C.V. - Class A
     2,012,284       5,518,368  
Grupo Carso, S.A.B. de C.V.
     908,351       4,886,636  
              10,405,004  
Hotels, Restaurants, and Recreation - 12.15%
                
Alsea, S.A.B. de C.V. - Class A
     1,507,511       4,688,712  
Grupe, S.A.B. de C.V. (a)
     2,256,027       3,717,609  
Grupo Sanborns, S.A.B. de C.V.
     1,381,454       2,864,077  
Grupo Sports World, S.A.B. de C.V. (a)
     1,432,012       2,071,093  
                13,341,491  
Insurance Services - 5.85%
                
Qualitias Controladora, S.A.B. de C.V.
     2,720,815       6,420,809  
                   
Mining - 5.01%
                
Grupo Mexico, S.A.B. de C.V. - Series B
     1,741,978       5,502,072  
                   
Real Estate Services - 4.01%
                
Corporacion Inmobiliaria Vesta, S.A.B. de C.V.
     2,303,995       4,407,650  
                   
Retail - 5.95%
                
Corporativo Fragua, S.A.B. de C.V.
     51,290       896,290  
El Puerto de Liverpool, S.A.B. de C.V.
     420,951       4,546,261  
Wal-Mart de Mexico, S.A.B. de C.V. - Class V
     419,430       1,090,426  
                6,532,977  
Telecommunication Services - 3.58%
                  
America Movil, S.A.B. de C.V. - Class  L 
       3,660,542       3,927,846  
TOTAL COMMON STOCKS (Cost $85,400,291)
             102,816,887  
                   
REAL ESTATE INVESTMENT TRUSTS - 0.59%
                
TF Administradora Industrial S de R.L. de C.V.
     331,400       647,192  
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $664,054)
             647,192  
                   
CAPITAL DEVELOPMENT CERTIFICATES - 2.31%
                
Atlas Discovery Trust II (b)
     300,000       2,536,206  
TOTAL CAPITAL DEVELOPMENT CERTIFICATES (Cost $2,317,515)
             2,536,206  
                   
ASSET BACKED SECURITIES - 0.39%
                
Nafin (Infonavit - Banamex)
                
4.2000%, 10/21/2041
     11,034       424,457  
TOTAL ASSET BACKED SECURITIES (Cost $417,754)
             424,457  
 
 
 
MORTGAGE BACKED SECURITIES - 1.72%
                
Nafin (Infonavit)
                
4.95%, 03/22/2039
     58,600       1,893,345  
TOTAL MORTGAGE BACKED SECURITIES (Cost $1,856,026)
             1,893,345  
                   
SHORT-TERM INVESTMENTS - 0.26%
                
Mexican INAFIN
                
0.000% Coupon, 3.088% Effective Yield, 11/07/2013 (c)
     1,900,949 *     145,624  
Mexican NAFIN
                
0.000% Coupon, 3.088% Effective Yield, 11/01/2013 (c)
     1,901,886 *     145,769  
TOTAL SHORT-TERM INVESTMENTS (Cost $292,678)
             291,393  
                   
TOTAL MEXICO (Cost $90,948,318)
             108,609,480  
                   
UNITED STATES - 1.12%
  
Shares
    
Value
  
                   
INVESTMENT COMPANIES - 1.12%
                
First American Treasury Obligation - Class A
     1,229,490       1,229,490  
TOTAL INVESTMENT COMPANIES (Cost $1,229,490)
             1,229,490  
                   
TOTAL UNITED STATES (Cost $1,229,490)
             1,229,490  
                   
Total Investments (Cost $92,177,808) - 100.03%
             109,838,970  
Other Assets in Excess of Liabilities - (0.03)%
             (34,381 )
TOTAL NET ASSETS - 100.00%
           $ 109,804,589  
                   
Percentages are stated as a percent of net assets.
                
                   
(a)
Non-income producing security.
                
(b)
The Advisor has determined these securities to be illiquid. The total value of illiquid securities at October 31, 2013 was $2,536,206,
  
 
comprising 2.31% of net assets, while the remainder of the Fund's net assets 97.69% were liquid.
          
(c)
Effective Yield based on the purchase price. The calculation assumes the security is held to maturity.
          
                   
* Principal amount in Mexican Pesos.
                
                   
The cost basis of investments for federal income tax purposes at October 31, 2013 was as follows:
                
                   
Cost of investments**
   $ 92,177,808          
Gross unrealized appreciation
     19,795,875          
Gross unrealized depreciation
     (2,134,713 )        
Net unrealized appreciation
   $ 17,661,162          
                   
**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.
                
                   
Significant accounting policies are as follows:
                
                   
Portfolio Valuation. Investments are stated at value. 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. If there are no such closing prices, the value shall be the most recent bid quotation
          
as of the valuation time. If there is no such bid quotation, the security shall be valued at the most recent asked quotation at the valuation time.
          
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 lessare 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. Other assets and securities for which no quotations are readily available will be valued in good faith at fair
          
value using methods determined by the Board of Directors. These methods include, but are not limited to, the fundamental analytical data relating to
          
the investment; the nature and duration of restrictions in the market in which they are traded (including the time needed to dispose of the security,
          
methods of soliciting offers and mechanics of transfer); the evaluation of the forces which influence the market in which these securities may be
          
purchased or sold, including the economic outlook and the condition of the industry in which the issuer participates. The Fund has a Valuation
          
Committee comprised of independent directors which oversees the valuation of portfolio securities.
                
                   
The Valuation Committee of the Fund shall meet to consider any fair valuations. This consideration includes reviewing various factors set forth
          
in the pricing procedures adopted by the Board of Directors and other factors as warranted. In considering a fair value determination, factors that
          
may be considered, among others include; the type and structure of the security; unusual events or circumstances relating to the security's issuer;
          
general market conditions; prior day's valuation; fundamental analytical data; size of the holding; cost of the security on the date of purchase;
          
 trading activity and prices of similar securities or financial instruments.
                
                   
FAIR VALUE MEASUREMENTS
                
                   
The Fund follows the FASB ASC Topic 820 hierarchy, under which various inputs are used in determining the value of the Fund’s investments.
          
The basis of the hierarchy is dependent upon various “inputs” used to determine the value of the Fund’s investments. These inputs are summarized
          
in the three broad levels listed below:
                
                   
 
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
  
 
Level 2 – Observable inputs other than quoted prices included in level1 that are observable for the asset or liability, either
  
 
directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for
  
 
similar instruments, interest rates, prepayment speeds, credit risks, yield curves, default rates and similar data.
          
 
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing
  
 
the company's own assumptions about the assumptions a market participant would use in valuing the asset or
          
 
liability , and would be based on the best information available.
                
                   
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example,
          
the type of security, whether the security is new and not yet established in the marketplace, the liquidity of the markets, and other characteristics
          
particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market
          
the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest
          
for instruments categorized in level 3.
                
                   
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the
          
fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant on
          
the lowest level input that is significant to the fair value measurement in its entirety.
                
                   
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 to value the Fund's investments carried at fair value as of October 31, 2013:
                    
                             
       
Level 1*
    
Level 2*
    
Level 3
    
Total
  
Equity
                            
Airports
       $ 3,641,044     $ -     $ -     $ 3,641,044  
Beverages
         1,477,603       -       -       1,477,603  
Building Materials
         4,011,578       -               4,011,578  
Capital Development Certificates
       -       -       2,536,206       2,536,206  
Cable & Satellite
         6,173,082       -       -       6,173,082  
Chemical Products
         3,282,819       -       -       3,282,819  
Construction and Infrastructure
       9,703,546       -       -       9,703,546  
Consumer Products
         2,343,906       -       -       2,343,906  
Energy
         5,665,560       -       -       5,665,560  
Financial Groups
         7,701,948       -       -       7,701,948  
Food Manufacturing
         8,277,952       -       -       8,277,952  
Holding Companies
         10,405,004       -       -       10,405,004  
Hotels, Restaurants, and Recreation
     13,341,491       -       -       13,341,491  
Insurance Services
         6,420,809       -       -       6,420,809  
Mining
         5,502,072       -       -       5,502,072  
Real Estate Services
         4,407,650       -       -       4,407,650  
Real Estate Investment Trusts
         647,192       -       -       647,192  
Retail
         6,532,977       -       -       6,532,977  
Telecommunication Services
         3,927,846       -       -       3,927,846  
Total Equity
       $ 103,464,079     $ -     $ 2,536,206     $ 106,000,285  
                                     
Asset Backed Securities
       $ -     $ 424,457     $ -     $ 424,457  
                                     
Mortgage Backed Securities
       $ -     $ 1,893,345     $ -     $ 1,893,345  
                                     
                                     
Short-Term Investments
       $ -     $ 1,520,883     $ -     $ 1,520,883  
Total Investments in Securities
     $ 103,464,079     $ 3,838,685     $ 2,536,206     $ 109,838,970  
                                     
Disclosures about Derivative Instruments and Hedging Activities
                                
                                     
The Fund did not invest in derivative securities or engage in hedging activities during the period ended October 31, 2013.
                          
                                     
*There were no transfers between levels 1 and 2 during the period. Transfers between levels are recognized at the end
                          
of the reporting period.
                                    
                                     
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, 2013
                               $ 2,171,017  
Acquisition/Purchase
                                 -  
Sales
                                 -  
Realized gain
                                 -  
Change in unrealized appreciation (depreciation)
                             365,189  
Balance as of October 31, 2013
                               $ 2,536,206  
                                     
                                     
                                     
The following table presents additional information about valuation methodologies and inputs used for investments that are measured
          
at fair value and categorized within Level 3 as of October 31, 2013:
                                
   
Fair Value October 31, 2013
          
Valuation Methodologies
    
Unobservable
Input (1)
    
Impact to Valuation from an Increase in Input (2)
  
Capital Development Certificates
  
 $                                                                            2,536,206
          
Market Comparables/
Sum of the Parts Valuation
    
Liquidity
Discount
    
Decrease
  
                                     
 
1  
In determining certain of these inputs, management evaluates a variety of factors including economic conditions, foreign exchange rates, industry and market developments, market valuations of comparable companies and
company specific developments includi
          
                                     
 
2  
This column represents the directional change in the fair value of the Level 3 investment that would result from increases to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect.
          
 
 
 
 
 
 
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   12/19/2013                                                                                           


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  12/19/2013                                                                                              
 

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

Date  12/10/2013                                                                                            


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

 
EX-99.CERT 2 certs.htm OFFICER CERTIFICATIONS certs.htm
 
CERTIFICATION
 
I, Maria Eugenia Pichardo, certify that:

1.  
I have reviewed this report on Form N-Q of The Mexico Equity & Income Fund, Inc;

2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  
Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4.  
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)for the registrant and have:

 
(a)  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)  
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation;  

 
(d)  
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  
The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

 
(b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:        12/19/2013   
/s/ Maria Eugenia Pichardo         ­­­
 
Maria Eugenia Pichardo
President
 
 
 
 
 
CERTIFICATION
 
I, Gerald Hellerman, certify that:

1.  
I have reviewed this report on Form N-Q of The Mexico Equity & Income Fund, Inc;

2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  
Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4.  
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)for the registrant and have:

 
(a)  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)  
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation;

 
(d)  
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  
The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

 
(b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:        12/10/2013    ­­
/s/ Gerald Hellerman                      ­­
 
Gerald Hellerman
Chief Financial Officer