As filed with the Securities and Exchange Commission on June 20, 2018



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, 2018



Date of reporting period:  April 30, 2018
 
Item 1. Schedule of Investments.
 
The Mexico Equity and Income Fund, Inc.
            
Schedule of Investments
            
April 30, 2018 (Unaudited)
            
             
MEXICO - 100.19%
  
Shares
    
Value
  
             
COMMON STOCKS - 96.34%
            
Airports - 1.71%
            
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. - Series B
    
244,100
    
$
1,292,674
  
Grupo Aeroportuario del Pacifico, S.A.B. de C.V. - Series B
    
21,640
      
225,101
  
             
1,517,775
  
Auto Parts and Equipment - 2.14%
                
Rassini, S.A.B. de C.V.
    
449,998
      
1,899,409
  
Beverages - 12.52%
                
Arca Continental, S.A.B. de C.V.
    
465,516
      
3,217,433
  
Coca-Cola Femsa, S.A.B. de C.V. - Series L
    
151,000
      
980,423
  
Fomento Economico Mexicano, S.A.B. de C.V. - Series UBD
    
715,315
      
6,914,464
  
             
11,112,320
  
Building Materials - 8.58%
                
Cemex, S.A.B. de C.V. - Series CPO (a)
    
7,854,449
      
4,913,742
  
Grupo Cementos de Chihuahua, S.A.B. de C.V.
    
463,600
      
2,698,253
  
             
7,611,995
  
Chemical Products - 6.44%
                
Mexichem, S.A.B. de C.V.
    
1,830,725
      
5,718,675
  
Construction and Infrastructure - 5.19%
                
Promotora y Operadora de Infraestructura, S.A.B. de C.V.
    
311,326
      
3,190,159
  
Promotora y Operadora de Infraestructura, S.A.B. de C.V. - Series L
    
203,045
      
1,417,577
  
             
4,607,736
  
Consumer Financing Services - 2.20%
                
Credito Real, S.A.B. de C.V.
    
1,327,030
      
1,947,043
  
Energy - 7.08%
                
Infraestructura Energetica Nova, S.A.B. de C.V.
    
1,427,392
      
6,283,653
  
Financial Groups - 16.17%
                
Banco del Bajio, S.A.
    
1,456,212
      
3,105,986
  
Grupo Financiero Banorte, S.A.B. de C.V. - Series O
    
1,226,288
      
7,672,967
  
Regional S.A.B. de C.V.
    
559,398
      
3,573,773
  
             
14,352,726
  
Food - 4.98%
                
Gruma, S.A.B. de C.V. - Series B
    
362,014
      
4,421,700
  
Holding Companies - 2.63%
                
Alfa, S.A.B. de C.V. - Series A
    
1,392,944
      
1,788,284
  
Grupo Carso, S.A.B. de C.V. - Series A - 1
    
151,676
      
545,001
  
             
2,333,285
  
Hotels, Restaurants, and Recreation - 2.15%
                
Alsea, S.A.B. de C.V. - Series A
    
151,547
      
563,661
  
Grupe, S.A.B. de C.V. - Series B (a)
    
552,928
      
1,345,212
  
             
1,908,873
  
Mining - 4.90%
                
Grupo Mexico, S.A.B. de C.V. - Series B
    
750,991
      
2,496,470
  
Industrias Penoles, S.A.B. de C.V.
    
88,383
      
1,855,084
  
             
4,351,554
  
Railroads - 3.22%
                
GMexico Transportes S.A.B. de C.V.
    
1,787,369
      
2,852,787
  
Real Estate Services - 3.75%
                
Corporacion Inmobiliaria Vesta, S.A.B. de C.V.
    
2,306,226
      
3,329,480
  
Retail - 5.65%
                
El Puerto de Liverpool, S.A.B. de C.V. - Series C - 1
    
249,934
      
1,667,559
  
La Comer S.A.B. de C.V. - Series UBC (a)
    
140,332
      
147,895
  
Wal-Mart de Mexico, S.A.B. de C.V.
    
1,150,292
      
3,196,477
  
             
5,011,931
  
Telecommunication - 7.03%
                
America Movil, S.A.B. de C.V. - Series L
    
6,736,221
      
6,234,824
  
TOTAL COMMON STOCKS (Cost $79,709,301)
            
85,495,766
  
 
 
CAPITAL DEVELOPMENT CERTIFICATES - 1.73%
                
Atlas Discovery Trust II (b)(c)(d)
    
300,000
      
1,538,077
  
TOTAL CAPITAL DEVELOPMENT CERTIFICATES (Cost $1,460,703)
            
1,538,077
  
                 
MEXICAN MUTUAL FUNDS - 1.46%
                
Scotiabankinverlat - Scotia Gubernamental S.A. de C.V. SIID (a)
    
7,187,237
      
1,292,212
  
TOTAL MEXICAN MUTUAL FUNDS (Cost $1,284,770)
            
1,292,212
  
                 
REAL ESTATE INVESTMENT TRUSTS - 0.66%
                
Macquarie Mexico Real Estate Management S.A. de C.V. (a)
    
551,588
      
588,689
  
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $626,638)
            
588,689
  
TOTAL MEXICO (Cost $83,081,412)
            
88,914,744
  
                 
UNITED STATES - 0.16%
          
Value
  
                 
INVESTMENT COMPANIES - 0.16%
                
Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class - 1.601% (e)
    
144,042
      
144,042
  
TOTAL INVESTMENT COMPANIES (Cost $144,042)
            
144,042
  
TOTAL UNITED STATES (Cost $144,042)
            
144,042
  
                 
Total Investments (Cost $83,225,454) - 100.35%
            
89,058,786
  
Liabilities in Excess of Other Assets - (0.35)%
            
(312,941
)
TOTAL NET ASSETS - 100.00%
          
$
88,745,845
  
 
Percentages are stated as a percent of net assets.
        
 
(a)
  
Non-income producing security.
        
(b)
  
Fair valued security. The total market value of this security was $1,538,077, representing 1.73% of net assets.
        
(c)
  
Illiquid securities. The total market value of these securities were $2,883,289, representing 3.25% of net assets.
        
(d)
  
Level 3 security. Values determined using significant unobservable inputs.
        
(e)
  
The rate shown represents the 7-day yield at April 30, 2018.
        
 
 
 
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, 2018:
    
 
     
Level 1*
    
Level 2*
    
Level 3**
    
Total***
  
Equity
                          
Airports
    
$
1,517,775
    
$
-
    
$
-
    
$
1,517,775
  
Auto Parts and Equipment
      
1,899,409
      
-
      
-
      
1,899,409
  
Beverages
      
11,112,320
      
-
      
-
      
11,112,320
  
Building Materials
      
7,611,995
      
-
      
-
      
7,611,995
  
Capital Development Certificates
      
-
      
-
      
1,538,077
      
1,538,077
  
Chemical Products
      
5,718,675
      
-
      
-
      
5,718,675
  
Construction and Infrastructure
      
4,607,736
      
-
      
-
      
4,607,736
  
Consumer Financing Services
      
1,947,043
                      
1,947,043
  
Energy
      
6,283,653
                      
6,283,653
  
Financial Groups
      
14,352,726
      
-
      
-
      
14,352,726
  
Food
      
4,421,700
      
-
      
-
      
4,421,700
  
Holding Companies
      
2,333,285
      
-
      
-
      
2,333,285
  
Hotels, Restaurants, and Recreation
      
563,661
      
1,345,212
      
-
      
1,908,873
  
Mining
      
4,351,554
      
-
      
-
      
4,351,554
  
Railroads
      
2,852,787
      
-
      
-
      
2,852,787
  
Real Estate Services
      
3,329,480
      
-
      
-
      
3,329,480
  
Retail
      
5,011,931
              
-
      
5,011,931
  
Telecommunications
      
6,234,824
      
-
      
-
      
6,234,824
  
Total Equity
    
$
84,150,554
    
$
1,345,212
    
$
1,538,077
    
$
87,033,843
  
                                   
Mexican Mutual Funds
    
$
1,292,212
    
$
-
    
$
-
    
$
1,292,212
  
                                   
Real Estate Investment Trusts
    
$
588,689
    
$
-
    
$
-
    
$
588,689
  
                                   
Short-Term Investments
    
$
144,042
    
$
-
    
$
-
    
$
144,042
  
Total Investments in Securities
    
$
86,175,497
    
$
1,345,212
    
$
1,538,077
    
$
89,058,786
  
 
* Transfers between Levels are recognized at the end of the reporting period.
          
** The Fund measures Level 3 activity as of the beginning and end of each reporting period.
        
*** There were no transfers between levels. Transfers between levels are recognized at the end of the reporting period.
    
                 
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, 2018.
    
                 
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, 2017
  
$
2,277,007
  
Acquisition/Purchase
    
-
  
Sales
    
-
  
Realized gain
    
-
  
Change in unrealized appreciation (depreciation)
    
(738,930
)
Balance as of April 30, 2018
  
$
1,538,077
  
 
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, 2018:
 
              
 
Fair Value April 30, 2018
    
Valuation Methodologies
  
Unobservable Input (1)
  
Impact to Valuation from an Increase in Input (2)
Capital Development Certificates
 $                    1,538,077
    
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.
                 
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                                     6/18/2018                                                                                                     
 


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                                     6/18/2018                                                                                                     


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

Date                                    6/18/2018                                                                                                      


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