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: 06/30/09
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Date of reporting period: 03/31/09
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ITEM 1. SCHEDULE OF INVESTMENTS
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009 (unaudited)
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Shares or
Principal Amount Description Market Value
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Common stocks - 98.86% of net assets
Banking and finance - 8.15%
30,280 Bancolombia, S.A $ 589,551
40,000 Banco Latinoamericano de Exportaciones, S.A 374,800
50,000 Banco Popular, Inc. 109,000
6,500 Doral Financial Corp. 11,700
16,400 Grupo Financiero Banorte, S.A. de C.V. Series O 21,850
9,900 Grupo Financiero Inbursa, S.A. de C.V. Series O 25,622
3,844 W Holding Co.Inc. 34,942
5,000 Western Union Co. 62,850
Communications - 16.54%
35,600 America Movil, S.A. de C.V. Series A 48,037
50,891 America Movil, S.A. de C.V. Series L 69,608
20,000 America Movil 541,600
36,819 Atlantic Tele-Network, Inc. 706,188
11,900 Carso Global Telecom, S.A. de C.V. Series A1 39,236
176,000 Fuego Entertainment 1,760
871 Grupo Iusacell, S.A. de C.V. Series V 778
21,120 Grupo Radio Centro, S.A. ADR 103,699
32,400 Grupo Televisa, S.A. ADR 441,936
13,400 Grupo Televisa, S.A. Series CPO 36,581
80,304 Spanish Broadcasting System Inc. 12,046
15,000 Telefonos de Mexico ADR 225,600
23,800 Telefonos de Mexico, S.A. de C.V. Series A 17,838
78,600 Telefonos de Mexico, S.A. de C.V. Series L 59,746
15,000 Telmex International S.A.B. de C.V ADR 137,550
23,800 Telmex International Series A 11,560
78,600 Telmex International Series L 36,226
13,900 TV Azteca, S.A. de C.V. Series CPO 4,485
Conglomerates and holdings companies - 1.16%
250,000 Admiralty Holding Co. 125
5,400 Alfa, S.A. de C.V. Series A 8,416
42,595 BB Holdings Ltd. 86,391
30,300 Cocleshell Ltd. Ord 22,801
3,200 Corporacion Interamericana de Entretenimiento,
S.A. de C.V. Series B 1,929
11,000 Grupo Carso, S.A. de C.V. Series A1 26,831
1,580 Grupo Kuo SAB de CV 527
20 Grupo Pochetca S.A.B. de C.V. 2
3,250 Shellshock Ltd. Ord. 2,329
2,900 Vitro, S.A. Series A 915
27,918 Vitro, S.A. ADR 24,289
Construction and related - 6.61%
21,863 Cemex, S.A. de C.V. Series CPO 136,644
49,599 Cemex S.A. de C.V. ADR 31,019
20 Ceramica Carabobo Class A ADR 4,657
17,200 Consorcio ARA, S.A. de C.V. 4,525
1,580 Dine S.A.B de C.V. 571
3,583 Empresas ICA, Sociedad Controladora, S.A. de C.V. 6,097
800 Grupo Cementos de Chihuahua, S.A. de C.V 1,622
67,132 Mastec, Inc. 811,626
Consumer products and related manufacturing - 8.13%
13,273 Grupo Casa Saba, S.A. ADR 172,416
31,000 Watsco Incorporated 1,054,930
Food, beverages and tobacco - 7.64%
1,219 Alsea, S.A. de C.V. 355
12,000 Chiquita Brands International Inc. 79,560
19,500 Coca-Cola Femsa, S.A. de C.V. ADR 664,170
200 Coca-Cola Femsa, S.A. de C.V., Series L 682
18,900 Fomento Economico Mexicano, S.A. de C.V. Series UBD 48,191
18,690 Fresh Del Monte Produce Inc. 306,890
800 Gruma S.A. de C.V. Series B 306
7,600 Grupo Bimbo, S.A. de C.V. Series A 28,561
7,700 Grupo Modelo, S.A.Series B 23,423
Housing - 1.69%
1,700 Corporacion Geo S.A. de C.V., Series B 1,724
100 Desarrolladora Homex, S.A. de C.V. 223
33,500 Lennar Corp. 251,585
400 Sare Holding, S.A. de C.V. Series B 50
1,500 Urbi Dessarrollos Urbanos, S.A. de C.V. 1,323
Investment companies - 0.03%
4,420 Shellproof Limited 2,724
147 Western Asset Emerging Markets Debt Fund 1,735
Leisure - 8.28%
37,500 Carnival Corp. 810,000
33,500 Royal Caribbean Cruises Ltd. 268,335
7,000 Steiner Leisure Ltd. 170,870
Medical - 0.18%
8,386 Micromet, Inc. 26,500
Mining - 7.85%
31,000 Freeport McMoran Copper & Gold, Inc. 1,181,410
3,776 Grupo Mexico, S.A. de C.V., Series B 2,763
Pulp and paper - 0.13%
6,100 Kimberly-Clark de Mexico, S.A. de C.V. Series A 19,888
Railroad and landholdings - 3.58%
16,000 Norfolk South Corp 540,000
Retail - 0.99%
3,700 Controladora Comercial Mexicana, S.A. de C.V
Series UBC 1,052
1,270 Grupo Elektra, S.A. de C.V. Series CPO 42,342
45,111 Wal-Mart de Mexico, S.A. de C.V. Series V 105,780
Service - 0.01%
700 Grupo Aeroportuario del Sureste, S.A. de C.V. Series B 2,018
100 Promotora Ambiental S.A. de C.V. 50
Trucking and marine freight - 12.81%
61,404 Grupo TMM, S.A. ADR 52,193
1,201 Seaboard Corporation 1,213,010
21,000 Teekay Corporation 298,830
8,361 Teekay LNG Partners LP. 140,381
66,797 Trailer Bridge, Inc. 165,657
23,000 Ultrapetrol Bahamas Ltd. 62,100
Utilities - 8.65%
12,000 Caribbean Utilities Ltd. Class A 99,000
68,241 Consolidated Water, Inc. 740,415
700 Cuban Electric Company 3,500
41,500 Teco energy Inc. 462,725
Other - 6.43%
33,000 Copa Holdings 946,110
13,000 Impellam Group 6,429
55,921 Margo Caribe, Inc. 15,099
300 Mexichem S.A. de C.V. 212
895 Siderurgica Venezolana Sivensa ADR 1,208
79 Siderurgica Venezolana Sivensa Series B 497
45,000 Xcelera Inc. --
Total common stocks (cost $23,420,053) $ 14,913,327
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 - 1.14% of net assets $ 171,688
Net assets - 100% (applicable to 3,713,070 shares; equivalent
to $4.06 per share) (a) $ 15,085,015
(a) The cost for federal income tax purposes was $23,483,091. At March 31, 2009,
net unrealized loss for all securities based on tax cost was $8,506,726. This
consisted of aggregate gross unrealized appreciation for all securities in which
there was an excess value over tax cost of $887,503 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value of $9,394,229. The cost of securities owned for financial
statement purposes is lower than the cost basis for income tax purposes by
approximately $170,181 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 March 31, 2009:
LEVEL Investments in Securities Other Financial Instruments
Level 1 $14,913,327 $0
Level 2 $0 $0
Level 3 $0* $0
*Investments in securities include $165,000 principal, 4.5%, 1977 Republic of
Cuba bonds purchased for $63,038. The bonds were listed on the New York Stock
Exchange and had been trading in default since 1960. A "regulatory halt" on
trading was imposed by the New York Stock Exchange in July, 1995 and trading in
the bonds was suspended as of December 28, 2006. The New York Stock Exchange has
stated that following the suspension of trading, application will be made to the
Securities and Exchange Commission to delist the issue. As of March 31, 2009,
the position was valued at $0 by the Board of Directors, which approximates the
bonds' fair value.
Investments in securities also include 45,000 shares of Xcelera, Inc. The
security traded on the Pink Sheets until the first quarter of 2007 when trading
was discontinued. As of March 31, 2009, the position was valued at $0 by the
Board of Directors, which approximates the position's fair value.
There was no change in the value of assets where the Fund utilizes unobservable
inputs (Level 3) during the period. Additionally there were no assets
transferred into or out of Level 3 for the period.
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: May 15, 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: May 15, 2009
By /s/ Cecilia L. Gondor
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Cecilia L. Gondor
Treasurer
Date: May 15, 2009