mexeq_nq.htm



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 and 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)



866-700-6104
Registrant's telephone number, including area code



Date of fiscal year end: July 31, 2009



Date of reporting period:  10/31/2008

Item 1. Schedule of Investments.
THE MEXICO EQUITY AND INCOME FUND, INC.
            
             
Schedule of Investments
        
October 31, 2008
  
         
(Unaudited)
  
MEXICO - 97.87%
  
Shares
    
Value
  
             
COMMON STOCKS - 82.91%
            
             
Cement - 2.36%
            
Corporacion Moctezuma, S.A. de C.V.
     375,608       599,280  
Grupo Cementos de Chihuahua, S.A. de C.V.
     364,867       963,810  
              1,563,090  
                 
Communications - 10.41%
                
America Movil, S.A. de C.V. - Class L
     3,411,900       5,273,961  
America Movil, S.A. de C.V. - Class L ADR
     52,738       1,631,714  
              6,905,675  
                 
Financial Groups - 0.87%
                
Corporativo GBM SAB de CV
     4,958,522       578,029  
              578,029  
                 
Food, Beverage, and Tobacco - 5.40%
                
Embotelladoras Arca S.A.
     372,192       809,320  
Fomento Economico Mexicano, S.A. de C.V.
     1,081,708       2,771,627  
              3,580,947  
                 
Housing - 10.65%
                
Corp GEO S.A. de C.V.
     250,000       340,198  
Desarrolladora Homex, S.A. de C.V. (a)
     867,881       3,350,793  
Urbi, Desarrollos Urbanos, S.A. de C.V.
     2,364,752       3,370,472  
              7,061,463  
                 
Industrial Conglomerates - 5.34%
                
Industrias CH, S.A. - Class B (a)
     1,111,842       2,307,067  
Mexichem, S.A. de C.V.
     1,246,803       1,233,480  
              3,540,547  
                 
Infrastructure - 19.42%
                
Empresas ICA Sociedad Conroladora, S.A. de C.V. (a)
     2,437,293       3,462,500  
Grupo Mexicano de Desarrollo, S.A. (a)
     1,857,742       3,319,175  
Promotora y Operadora de Infraestructura, S.A. de C.V. (a)
     4,132,594       6,102,140  
              12,883,815  
                 
Media - 1.76%
                
Grupo Televisa, S.A. - ADR
     66,283       1,170,558  
              1,170,558  
                 
Mining - 7.84%
                
Grupo Mexico, S.A. - Series B
     5,628,571       4,785,433  
Industrias Penoles, S.A.
     46,029       413,340  
              5,198,773  
                 
Real Estate Developer - 11.47%
                
GMD Resorts SAB de CV
    1,582,712       676,504  
Grupe, S.A. de C.V. (a)(b)
     3,849,668       6,931,945  
              7,608,449  
                 
Retailing - 4.84%
                
Wal-Mart de Mexico, S.A. de C.V. - Class V
     1,197,000       3,213,086  
              3,213,086  
                 
Waste Management - 2.55%
                
Promotora Ambiental, S.A. de C.V. (a)
     1,932,942       1,689,963  
              1,689,963  
                 
TOTAL COMMON STOCKS (Cost $79,383,313)
           $ 54,994,395  
                 
                 
Schedule of Investments (continued)
          
October 31, 2008
  
                 
SHORT-TERM INVESTMENTS - 14.96%
  
Principal
    
Value
  
                 
Mexican BI CETES
     1,578,054     $ 1,214,406  
0.000% Coupon, 7.752% Effective Yield, 12/18/2008 (c)
                
Mexican BANOBRA
     37,404,724 *     2,905,088  
0.000% Coupon, 7.951% Effective Yield, 11/04/2008 (c)
                
Mexican INAFIN
     36,128,794 *     2,802,498  
0.000% Coupon, 7.117% Effective Yield, 11/10/2008 (c)
                
United Mexican States Sovereign Note
     3,000,000       3,000,000  
5.519% Floating Rate Coupon, 01/13/2009
                
                 
TOTAL SHORT-TERM INVESTMENTS (Cost $9,809,760)
             9,921,992  
                 
TOTAL MEXICO (Cost $89,193,073)
           $ 64,916,387  
                 
UNITED STATES - 0.40%
  
Shares
          
                 
INVESTMENT COMPANIES - 0.40%
                
                 
First American Treasury Obligation - Class A, 2.132%
     262,598     $ 262,598  
                 
                 
TOTAL INVESTMENT COMPANIES (Cost $262,598)
             262,598  
                 
TOTAL UNITED STATES (Cost $262,598)
             262,598  
                 
TOTAL INVESTMENTS - 98.27% (Cost $89,455,671)
             65,178,985  
                 
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.73%
             1,139,375  
                 
TOTAL NET ASSETS - 100.00%
           $ 66,318,360  
                 
Footnotes and Abbreviations
      
ADR - American Depository Receipts.
    
(a)  Non-income producing security.
    
(b)  Affiliated company.
      
(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, 2008 was as follows:
  
       
Cost of investments**
   $ 89,455,671  
Gross unrealized appreciation
     4,696,181  
Gross unrealized depreciation
     (28,972,868 )
Net unrealized appreciation
   $ (24,276,686 )

**Because tax adjustments are calculated annually, the above table reflects the tax adjustments outstanding at the Fund's previous
   fiscal year end. For the previous fiscal year's federal income tax information, please refer to the Notes to Financial Statements
   section in the Fund's most recent semi-annual or annual report.
 
 

TRANSACTIONS WITH AFFILIATES
      
The following issuer is affiliated with the Fund; that is, the Fund held 5% or more of the outstanding voting shares during the period
  
from August 1, 2008 through October 31, 2008, as defined in Section (2)(a)(3) of the Investment Company Act of 1940.
  
       
Issuer Name
  
Grupe, S.A.de C.V.
  
       
August 1, 2008
      
    Shares
     3,849,668  
    Cost
   $ 5,374,063  
         
Gross Additions
        
    Shares
     —  
    Cost
   $ —  
         
Gross Deductions
        
    Shares
     —  
    Cost
   $ —  
         
October 31, 2008
        
    Shares
     3,849,668  
    Cost
   $ 5,374,063  
    Market Value
   $ 6,931,945  
Realized gain (loss)
   $ —  
Investment income
   $ —  
         
 
FAS 157 – Summary of Fair Value Exposure at October 31, 2008
    
           
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, 2008, in valuing the Fund’s investments
carried at fair value:
        
           
Description
Level 1
Level 2
Level 3
  
           
Invesments in Securities
        
    Unaffiliated Issuers
$48,062,450
                                  9,921,992
                       —
  
    Affiliated Issuers
                                  6,931,945
                                                   —
                                                    —
  
Total
  
$54,994,395
$9,921,992
$0
  
 
 
Item 2. Controls and Procedures.
 
(a)  
The Registrant’s President/Chief Executive Officer and Treasurer/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”)) 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 and Rules 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)  
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the Registrant's last fiscal quarter that has materially affected, or is 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 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 and Income Fund, Inc.       

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

Date   December 23, 2008                                                              



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 23, 2008                                                              


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

Date   December 23, 2008