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: 03/31/10
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ITEM 1. SCHEDULE OF INVESTMENTS
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2010 (unaudited)
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Shares or
Principal Amount Description Market Value
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Common stocks - 90.76% of net assets
Airlines - 6.93%
27,500 Copa Holdings, S.A. $ 1,672,000
19,000 AirTrans Holdings, Inc. 96,520
Banking and finance - 8.10%
24,280 Bancolombia, S.A 1,108,625
39,000 Banco Latinoamericano de Exportaciones, S.A 560,040
6,500 Doral Financial Corp. 28,015
50,000 Popular, Inc. 145,500
3,844 W Holding Co.,Inc. 38,478
11,000 Western Union Company 186,560
Communications - 12.06%
35,600 America Movil, S.A.B. de C.V. Series A 90,117
50,891 America Movil, S.A.B. de C.V. Series L 128,535
18,000 America Movil, S.A.B. de C.V. ADR 906,120
6,698 Atlantic Tele-Network, Inc. 300,941
11,900 Carso Global Telecom, S.A. de C.V. Series A1 60,952
377,100 Fuego Enterprises, Inc. 13,199
21,120 Grupo Radio Centro, S.A.B. ADR 173,606
32,400 Grupo Televisa, S.A.B. ADR 681,048
80,304 Spanish Broadcasting System Inc. 62,621
15,000 Telefonos de Mexico, S.A.B. de C.V. ADR Series L 234,000
78,600 Telefonos de Mexico, S.A. de C.V.B. Series L 61,731
15,000 Telmex International S.A.B. de C.V ADR 289,200
78,600 Telmex International S.A.B. de C.V. Series L 76,143
Conglomerates and holdings companies - 0.46%
250,000 Admiralty Holding Company 175
70,348 BCB Holdings Ltd. 114,714
3,250 Shellshock Ltd. Ord. 2,588
Construction and related - 4.64%
51,582 Cemex S.A.B. de C.V. Series CPO 53,109
26,737 Cemex S.A.B. de C.V. ADR 272,985
20 Ceramica Carabobo Class A ADR --
68,132 Mastec, Inc. 859,145
Consumer products and related manufacturing - 6.78%
13,273 Grupo Casa Saba, S.A.B. de C.V. ADR 216,350
26,600 Watsco Incorporated 1,513,008
Food, beverages and tobacco - 7.62%
14,000 Chiquita Brands International Inc. 220,220
53,874 Cleanpath Resources Corp. 1,616
19,500 Coca-Cola Femsa, S.A.B. de C.V. ADR 1,295,775
18,900 Fomento Economico Mexicano, S.A.B. de C.V. Series UBD 90,182
16,690 Fresh Del Monte Produce Inc. 337,973
Housing - 2.19%
32,500 Lennar Corp. 559,325
Investment companies - 0.01%
4,420 Shellproof Limited 2,146
Leisure - 10.00%
33,500 Carnival Corp. 1,302,480
30,500 Royal Caribbean Cruises Ltd. 1,006,195
5,500 Steiner Leisure Ltd. 243,760
Medical - 0.38%
8,386 Micromet, Inc. 67,759
800 Orthofix International NV 29,104
Mining - 7.57%
23,000 Freeport McMoran Copper & Gold, Inc. 1,921,420
3,863 Grupo Mexico, S.A.B. de C.V., Series B 10,377
Pulp and paper - 0.14%
6,100 Kimberly-Clark de Mexico, S.A.B. de C.V. Series A 34,595
Railroad and landholdings - 4.33%
16,000 Norfolk Southern Corporation 894,240
18,000 Rail America, Inc. 212,400
Retail - 1.16%
1,270 Grupo Elektra, S.A. de C.V. Series CPO 63,885
45,111 Wal-Mart de Mexico, S.A.B. de C.V. Series V 231,864
Service - 0.01%
700 Grupo Aeroportuario del Sureste, S.A.B. de C.V. Series B 3,716
Trucking and marine freight - 11.60%
12,280 Grupo TMM, S.A.B. ADR 36,594
1,221 Seaboard Corporation 1,586,201
2,000 Seacor Holdings Inc. 161,320
20,000 Teekay Corporation 454,800
8,361 Teekay LNG Partners LP. 249,576
71,497 Trailer Bridge, Inc. 346,760
23,000 Ultrapetrol Bahamas Ltd. 126,270
Utilities - 6.48%
12,000 Caribbean Utilities Ltd. Class A 102,000
68,241 Consolidated Water, Inc. 907,701
700 Cuban Electric Company 385
40,500 Teco Energy Inc. 643,545
Other - 0.30%
100,000 Cuba Business Development --
13,000 Impellam Group 13,409
55,921 Margo Caribe, Inc. 61,513
895 Siderurgica Venezolana Sivensa S.A. ADR 425
79 Siderurgica Venezolana Sivensa S.A. Series B 38
45,000 Xcelera Inc. --
Total common stocks (cost $22,853,050) $ 23,165,594
Bonds - 0.00% of net assets
165,000 Republic of Cuba - 4.5%, 1977 -
in default (cost $63,038) --
U.S. Treasury Obligations - 7.84% of net assets
2,000,000 U.S. Treasury Bills due 4/15/2010, 0% coupon
(cost $1,999,938) $ 1,999,938
Other assets less liabilities - 1.41% of net assets $ 359,238
Net assets - 100% (applicable to 3,713,070 shares; equivalent
to $6.87 per share) $ 25,524,770
Security Valuation
The Herzfeld Caribbean Basin Fund, Inc. (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, 2010:
Level 1 Level 2 Level 3 Total
Assets (at fair value)
Common Stocks $23,165,131 $463 $0 $23,165,594
Debt Securities 0 1,999,938 0 1,999,938
Total Investments in securities $23,165,131 $2,000,401 $0 $25,165,532
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 December 31, 2009 $25,000 $0 $25,000
Cost of purchases 0 0 0
Change in unrealized depreciation (25,000) 0 (25,000)
Transfers in or out of Level 3 0 0 0
Balance March 31, 2010 $0 $0 $0
ITEM 2. CONTROLS AND PROCEDURES
(a) The registrant's principal executive and principal financial
officers 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 19, 2010
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 19, 2010
By /s/ Cecilia L. Gondor
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Cecilia L. Gondor
Treasurer
Date: May 19, 2010