0000894189-19-003875.txt : 20190627 0000894189-19-003875.hdr.sgml : 20190627 20190627152952 ACCESSION NUMBER: 0000894189-19-003875 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190430 FILED AS OF DATE: 20190627 DATE AS OF CHANGE: 20190627 EFFECTIVENESS DATE: 20190627 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: 19925174 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 mxe-nq.htm QUARTERLY NOTICE OF PORTFOLIO HOLDINGS


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. Arnulfo Rodríguez
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, 2019


Date of reporting period:  April 30, 2019


Item 1. Schedule of Investments.

The Mexico Equity and Income Fund, Inc.
        
Schedule of Investments
        
April 30, 2019 (Unaudited)
        
         
MEXICO - 99.41%
Shares
 
  
Value
           
COMMON STOCKS - 92.65%
        
Beverages - 11.87%
        
Arca Continental, S.A.B. de C.V.
729,016
   $
  4,138,118
Coca-Cola Femsa, S.A.B. de CV
49,500
    
315,757
Fomento Economico Mexicano, S.A.B. de C.V. - Series UBD
300,110
    
2,927,528
       
7,381,403
Building Materials - 10.42%
        
Cemex, S.A.B. de C.V. - Series CPO (a)
2,771,600
    
1,282,163
Grupo Cementos de Chihuahua, S.A.B. de C.V.
907,806
    
5,201,829
       
6,483,992
Chemical Products - 5.83%
        
Alpek, S.A.B. de C.V. - Series A
1,809,900
    
2,226,365
Mexichem, S.A.B. de C.V.
602,820
    
1,399,433
       
3,625,798
Construction and Infrastructure - 6.23%
        
Promotora y Operadora de Infraestructura, S.A.B. de C.V.
249,586
    
2,538,812
Promotora y Operadora de Infraestructura, S.A.B. de C.V. - Series L
203,045
    
1,333,337
       
3,872,149
Consumer Financing Services - 1.79%
        
Credito Real, S.A.B. de C.V.
973,212
    
1,110,394
Financial Groups - 19.20%
        
Banco del Bajio, S.A.
1,421,328
    
3,055,918
Grupo Financiero Banorte, S.A.B. de C.V. - Series O
963,448
    
6,089,856
Regional, S.A.B. de C.V.
512,783
    
2,794,404
       
11,940,178
Food - 5.34%
        
Gruma, S.A.B. de C.V. - Series B
218,964
    
2,188,630
Grupo Bimbo, S.A.B. de C.V. - Series A
507,886
    
1,131,091
       
3,319,721
Hotels, Restaurants, and Recreation - 6.29%
        
Alsea, S.A.B. de C.V. - Series A
1,300,161
    
2,906,507
Grupe, S.A.B. de C.V. - Series B (a)(b)
429,607
    
1,008,427
       
3,914,934
Railroads - 1.03%
        
GMexico Transportes S.A.B. de C.V.
525,438
    
643,017
Real Estate Services - 2.61%
        
Corporacion Inmobiliaria Vesta, S.A.B. de C.V.
1,030,325
    
1,624,476
Retail - 7.43%
        
El Puerto de Liverpool, S.A.B. de C.V. - Series C - 1
395,956
    
2,563,159
Grupo Comercial Chedraui, S.A. de C.V.
340,131
    
672,090
La Comer S.A.B. de C.V. - Series UBC (a)
96,027
    
109,664
Wal-Mart de Mexico, S.A.B. de C.V.
435,177
    
1,278,828
       
4,623,741
Telecommunication - 14.61%
        
America Movil, S.A.B. de C.V. - Series L
10,496,155
    
7,817,685
Telesites S.A.B. de C.V. (a)
1,871,027
    
1,271,186
       
9,088,871
TOTAL COMMON STOCKS (Cost $55,494,477)
      
57,628,674
           
CAPITAL DEVELOPMENT CERTIFICATES - 2.55%
 
 
  
 
Atlas Discovery Trust II (b)(c)(d)
300,000
    
1,588,364
TOTAL CAPITAL DEVELOPMENT CERTIFICATES (Cost $1,460,703)
      
1,588,364
           


MEXICAN GOVERNMENT NOTES/BONDS - 2.54%
 
 
  
 
Mexican Bonos de Proteccion al Ahorro
        
8.260%, 12/24/2020
299,904
    
1,579,894
TOTAL MEXICAN GOVERNMENT NOTES/BONDS (Cost $1,549,608)
      
1,579,894
           
MEXICAN MUTUAL FUNDS - 0.00%
 
 
  
 
Scotiabankinverlat - Scotia Gubernamental S.A. de C.V. SIID (a)
13,470
    
2,559
TOTAL MEXICAN MUTUAL FUNDS (Cost $2,549)
      
2,559
           
REAL ESTATE INVESTMENT TRUSTS - 1.67%
 
 
  
 
Concentradora Fibra Danhos S.A. de C.V.
708,389
    
1,036,179
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $884,007)
      
1,036,179
TOTAL MEXICO (Cost $59,391,344)
      
61,835,670
           
UNITED STATES - 0.75%
 
 
  
Value
           
INVESTMENT COMPANIES - 0.75%
 
 
  
 
Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class - 2.328% (e)
465,289
    
465,289
TOTAL INVESTMENT COMPANIES (Cost $465,289)
      
465,289
TOTAL UNITED STATES (Cost $465,289)
      
465,289
           
Total Investments (Cost $59,856,633) - 100.16%
      
62,300,959
Liabilities in Excess of Other Assets - (0.16)%
      
(108,820)
TOTAL NET ASSETS - 100.00%
     $
 62,192,139
           
Percentages are stated as a percent of net assets.
        
 
(a) 
Non-income producing security.
        
(b) 
Illiquid securities. The total market value of these securities were $2,596,791, representing 4.18% of net assets.
      
(c) 
Fair valued security. The total market value of this security was $1,588,364, representing 2.55% of net assets.
      
(d) 
Level 3 security. Value determined using significant unobservable inputs.
        
(e) 
The rate shown represents the 7-day yield at April 30, 2019.
        



Significant accounting policies are as follows:
 
Portfolio Valuation:  Investments are stated at value. Listed equity securities are valued at the closing price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the valuation time. If the security did not trade on the Primary Market, it shall be valued at the closing price on another comparable exchange where it trades at the valuation time. If there are no such closing prices,  the security shall be valued at the mean between the most recent highest bid and lowest ask prices at the valuation time.

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. 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 level 1 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 April 30, 2019:

      
Level 1
    
Level 2
    
Level 3
    
Total
  
Equity
                          
Beverages
    
$
7,381,403
    
$
-
    
$
-
    
$
7,381,403
  
Building Materials
      
6,483,992
      
-
      
-
      
6,483,992
  
Capital Development Certificates
    
-
      
-
      
1,588,364
      
1,588,364
  
Chemical Products
      
3,625,798
      
-
      
-
      
3,625,798
  
Construction and Infrastructure
    
3,872,149
      
-
      
-
      
3,872,149
  
Consumer Financing Services
    
1,110,394
                      
1,110,394
  
Financial Groups
      
11,940,178
      
-
      
-
      
11,940,178
  
Food
      
3,319,721
      
-
      
-
      
3,319,721
  
Hotels, Restaurants, and Recreation
    
3,914,934
      
-
      
-
      
3,914,934
  
Railroads
      
643,017
      
-
      
-
      
643,017
  
Real Estate Services
      
1,624,476
      
-
      
-
      
1,624,476
  
Retail
      
4,623,741
              
-
      
4,623,741
  
Telecommunication
      
9,088,871
      
-
      
-
      
9,088,871
  
Total Equity
    
$
57,628,674
    
$
-
    
$
1,588,364
    
$
59,217,038
  
                                   
Mexican Government Notes/Bonds
  
$
-
    
$
1,579,894
    
$
-
    
$
1,579,894
  
                                   
Mexican Mutual Funds
  
$
2,559
    
$
-
    
$
-
    
$
2,559
  
                                   
Real Estate Investment Trusts
  
$
1,036,179
    
$
-
    
$
-
    
$
1,036,179
  
                                   
Short-Term Investments
  
$
465,289
    
$
-
    
$
-
    
$
465,289
  
Total Investments in Securities
  
$
59,132,701
    
$
1,579,894
    
$
1,588,364
    
$
62,300,959
  


Disclosures about Derivative Instruments and Hedging Activities
                          
                                   
The Fund did not invest in derivative securities or engage in hedging activities during the period ended April 30, 2019.
          
                                   
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, 2018
                  
$
1,695,905
  
Acquisitions
                      
-
  
Dispositions
                      
-
  
Transfer in and/or out of Level 3
                    
-
  
Realized gain (loss)
                      
-
  
Change in unrealized depreciation
                    
(107,541
)
Balance as of April 30, 2019
                  
$
1,588,364
  
                           
Change in unrealized depreciation during the period for Level 3 investments held at April 30, 2019
    
$
(107,541
)

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 April 30, 2019:
  

                   

Fair Value
April 30, 2019
 
Valuation
Methodologies
  
Unobservable
Input (1)
  
Range
  
Capital Development
Certificates
 $1,588,364
  
Market Comparables/
Sum of the Parts
Valuation
  
Liquidity
Discount
  
$4.911 - $5.667
  
                       
(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.


Item 2. Controls and Procedures.
(a)
The Registrant’s President and Treasurer 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      6/19/2019                                                                                            



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      6/19/2019                                                                                              


By (Signature and Title)*        /s/ Arnulfo Rodríguez                                        
  Arnulfo Rodríguez, Chief Financial Officer

Date      6/19/2019                                                                                              

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


 EX-99.CERT 2 certs.htm OFFICER CERTIFICATIONS


Exhibit 99.CERT
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:        6/19/2019         
/s/ Maria Eugenia Pichardo              
 
Maria Eugenia Pichardo
President

Exhibit 99.CERT
CERTIFICATION
I, Arnulfo Rodriguez 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:        6/19/2019         
/s/ Arnulfo Rodríguez                    
 
Arnulfo Rodríguez
Chief Financial Officer