FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
Investment Company Act file number 811-06445
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The Herzfeld Caribbean Basin Fund, Inc.
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(Exact name of registrant as specified in charter)
P.O. BOX 161465, MIAMI, FLORIDA 33116
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(Address of principal executive offices) (Zip code)
THOMAS J. HERZFELD
P.O. BOX 161465, MIAMI, FL 33116
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(Name and address of agent for service)
Registrant's telephone number, including area code: 305-271-1900
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Date of fiscal year end: 06/30/10
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Date of reporting period: 09/30/09
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ITEM 1. SCHEDULE OF INVESTMENTS
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2009 (unaudited)
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Shares or
Principal Amount Description Market Value
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Common stocks - 88.45% of net assets
Airline - 5.87%
28,500 Copa Holdings $ 1,267,965
16,000 AirTran Holdings Inc. 100,000
Banking and finance - 8.59%
24,280 Bancolombia, S.A 1,042,340
39,000 Banco Latinoamericano de Exportaciones, S.A 554,580
50,000 Popular, Inc. 141,500
6,500 Doral Financial Corp. 24,050
3,844 W Holding Co.Inc. 51,510
10,000 Western Union Co. 189,200
Communications - 11.61%
35,600 America Movil, S.A.B. de C.V. Series A 77,816
50,891 America Movil, S.A.B. de C.V. Series L 111,353
18,000 America Movil, S.A.B. de C.V. ADR 788,940
5,394 Atlantic Tele-Network, Inc. 288,147
11,900 Carso Global Telecom, S.A.B. de C.V. Series A1 48,948
176,000 Fuego Entertainment 12,320
21,120 Grupo Radio Centro, S.A.B. ADR 144,883
32,400 Grupo Televisa, S.A.B. ADR 602,316
80,304 Spanish Broadcasting System Inc. 37,751
15,000 Telefonos de Mexico ADR 261,600
78,600 Telefonos de Mexico, S.A.B. de C.V. Series L 68,618
15,000 Telmex International S.A.B. de C.V ADR 209,250
78,600 Telmex International Series L 54,999
Conglomerates and holdings companies - 0.77%
250,000 Admiralty Holding Co. 475
70,348 BCB Holdings Ltd. 137,826
3,250 Shellshock Ltd. Ord. 1,819
27,918 Vitro, S.A.B.de C.V. ADR 39,923
Construction and related - 4.94%
21,737 Cemex, S.A.B. de C.V. Series CPO 280,842
51,582 Cemex S.A.B. de C.V. ADR 66,535
20 Ceramica Carabobo Class A ADR --
66,132 Mastec, Inc. 803,503
Consumer products and related manufacturing - 7.33%
13,273 Grupo Casa Saba, S.A. ADR 252,187
27,000 Watsco Inc. 1,455,570
Food, beverages and tobacco - 6.16%
12,000 Chiquita Brands International Inc. 193,920
16,500 Coca-Cola Femsa, S.A.B. de C.V. ADR 793,650
18,900 Fomento Economico Mexicano, S.A.B. de C.V. Series UBD 71,919
16,690 Fresh Del Monte Produce Inc. 377,361
Housing - 1.99%
32,500 Lennar Corp. 463,125
Investment companies - 0.02%
4,420 Shellproof Limited 2,015
147 Western Asset Emerging Markets Debt Fund 2,533
Leisure - 8.81%
33,500 Carnival Corp. 1,114,880
31,500 Royal Caribbean Cruises Ltd. 758,520
5,000 Steiner Leisure Ltd. 178,800
Medical - 0.24%
8,386 Micromet, Inc. 55,851
Mining - 8.27%
28,000 Freeport McMoran Copper & Gold, Inc. 1,921,080
3,863 Grupo Mexico, S.A.B. de C.V., Series B 7,117
Pulp and paper - 0.11%
6,100 Kimberly-Clark de Mexico, S.A.B. de C.V. Series A 25,299
Railroad and landholdings - 3.14%
17,000 Norfolk Southern Corporation 732,870
Retail - 0.89%
1,270 Grupo Elektra, S.A.B. de C.V. Series CPO 50,311
45,111 Wal-Mart de Mexico, S.A.B. de C.V. Series V 156,326
Service - 0.01%
700 Grupo Aeroportuario del Sureste, S.A.B. de C.V. Series B 2,991
Trucking and marine freight - 12.06%
12,280 Grupo TMM, S.A.B. ADR 48,015
1,201 Seaboard Corporation 1,561,324
1,000 Seacor Holdings, Inc. 81,630
20,000 Teekay Corporation 437,400
8,361 Teekay LNG Partners LP. 207,520
66,797 Trailer Bridge, Inc. 360,704
23,000 Ultrapetrol Bahamas Ltd. 113,160
Utilities - 7.44%
12,000 Caribbean Utilities Ltd. Class A 102,720
64,841 Consolidated Water, Inc. 1,058,854
700 Cuban Electric Company 2,975
40,500 Teco Energy Inc. 570,240
Other - 0.20%
13,000 Impellam Group 10,604
55,921 Margo Caribe, Inc. 33,553
895 Siderurgica Venezolana S.A. ADR 1,432
79 Siderurgica Venezolana S.A. Series B 126
45,000 Xcelera Inc. --
Total common stocks - 88.45% (cost $21,917,333) $ 20,615,581
Bonds and fixed income - 0.00% of net assets
165,000 Republic of Cuba - 4.5%, 1977 -
in default (cost $63,038) --
Other assets less liabilities - 11.55% of net assets $ 2,692,928
Net assets - 100% (applicable to 3,713,070 shares; equivalent
to $6.28 per share) (a) $ 23,308,519
(a) The cost for federal income tax purposes was $21,980,371. At September 30,
2009, net unrealized loss for all securities based on tax cost was $1,364,790.
This consisted of aggregate gross unrealized appreciation for all securities in
which there was an excess value over tax cost of $2,828,421 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value of $4,193,211. The cost of securities owned for financial
statement purposes is lower than the cost basis for income tax purposes by
approximately $22,466 due to wash sale adjustments.
Security Valuation
The Fund adopted the provisions of SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"), effective January 1, 2008. Under SFAS No. 157, fair value is
defined as the price that would be received to sell an asset or paid to transfer
a liability (i.e., the "exit price") in an orderly transaction between market
participants at the measurement date.
In determining fair value, the Fund uses various valuation approaches. SFAS No.
157 establishes a fair value hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when
available. Observable inputs are those that market participants would use in
pricing the asset or liability based on market data obtained from sources
independent of the Fund. Unobservable inputs reflect the Fund's assumptions
about the inputs market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. The fair
value hierarchy is categorized into three levels based on the inputs as follows:
Level 1: quoted prices in active markets for identical investments
Level 2: other significant observable inputs (including quoted prices for
similar investments, 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 availability of valuation techniques and observable inputs can vary from
security to security and is affected by a wide variety of factors including, the
type of security, whether the security is new and not yet established in the
marketplace, and other characteristics particular to the transaction. 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. Those estimated values do not necessarily represent the amounts that
may be ultimately realized due to the occurrence of future circumstances that
cannot be reasonably determined. Because of the inherent uncertainty of
valuation, those estimated values may be materially higher or lower than the
values that would have been used had a ready market for the securities existed.
Accordingly, the degree of judgment exercised by the Fund in determining fair
value is greatest for securities categorized in Level 3. In certain cases, 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 in its entirety falls,
is determined based on the lowest level input that is significant to the fair
value measurement.
Fair value is a market-based measure considered from the perspective of a market
participant rather than an entity-specific measure. Therefore, even when market
assumptions are not readily available, the Fund's own assumptions are set to
reflect those that market participants would use in pricing the asset or
liability at the measurement date. The Fund uses prices and inputs that are
current as of the measurement date, including periods of market dislocation. In
periods of market dislocation, the observability of prices and inputs may be
reduced for many securities. This condition could cause a security to be
reclassified to a lower level within the fair value hierarchy.
The following table summarizes the valuation of the Fund's investments by the
above fair value hierarchy levels as of September 30, 2009.
Level 1 Level 2 Level 3 Total
Assets (at fair value)
Investments in Securities
Common stocks $20,610,787 $4,794 $0 $20,615,581
Debt securities $0 $0
Total investments in securities $20,610,787 $4,794 $0 $20,615,581
The following is a reconciliation of Level 3 investments for which significant
unobservable inputs were used to determine fair value:
Common Stocks Bonds Total
Balance, June 30, 2009 $0 $0 $0
Cost of purchases $0 $0 $0
Change in unrealized depreciation ($4,657) $0 ($4,657)
Transfers in or out of Level 3 $4,657 $0 $4,657
Balance September 30, 2009 $0 $0 $0
ITEM 2. CONTROLS AND PROCEDURES
(a) The registrant's principal executive and principal 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, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are
effective, as of a date within 90 days of the filing date of this
Form N-Q that includes the disclosure required by this paragraph
based on their evaluation of the controls and procedures required by
Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules
13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17
CFR 240.13a-15(b) or 240.15d-15(b)).
(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 has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
ITEM 3. EXHIBITS
The certifications required by Rule 30a-2 of the Investment Company Act of 1940,
as amended, is attached as an exhibit to this filing.
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.
The Herzfeld Caribbean Basin Fund, Inc.
By /s/ Thomas J. Herzfeld
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Thomas J. Herzfeld
Chairman and President
Date: November 13, 2009
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 /s/ Thomas J. Herzfeld
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Thomas J. Herzfeld
Chairman and President
Date: November 13, 2009
By /s/ Cecilia L. Gondor
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Cecilia L. Gondor
Treasurer
Date: November 13, 2009