It may be possible to claim a dependency exemption for a relative living in Mexico. While the niece cannot be a qualifying child because she does not live with you, the niece may be a qualifying relative. As long as she cannot be claimed as someone else’s dependent, then you can claim a dependency exemption (assuming all other dependency exemption requirements are met).
A mutual-fund distribution allocated to gains realized on the sale of fund portfolio assets. You report the distribution as long-term capital gain even if you held the fund shares short term.