UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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: 06/30/12
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Date of reporting period: 09/30/11
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ITEM 1. SCHEDULE OF INVESTMENTS
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2011 (unaudited)
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Shares or
Principal Amount Description Market Value
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Common stocks - 100.01% of net assets
Airlines - 7.70%
30,500 Copa Holdings, S.A. 1,868,735
Banking and finance - 9.20%
21,280 Bancolombia, S.A. 1,185,296
42,000 Banco Latinoamericano de Exportaciones, S.A. 639,660
11,500 Doral Financial Corp. 12,535
60,000 Popular Inc. 90,000
3,844 W Holding Co. Inc. 769
20,000 Western Union Company 305,800
Communications - 12.18%
71,200 America Movil, S.A.B. de C.V. Series A 78,769
209,144 America Movil, S.A.B. de C.V. Series L 231,529
45,190 America Movil, S.A.B. de C.V. ADR 997,795
13,698 Atlantic Tele-Network, Inc. 450,390
377,100 Fuego Enterprises Inc. 5,732
23,666 Grupo Radio Centro, S.A.B. ADR 178,678
32,400 Grupo Televisa, S.A.B. ADR 595,836
8,030 Spanish Broadcasting System, Inc. 13,330
23,000 Telefonos de Mexico, S.A.B. de C.V. ADR Series L 343,850
78,600 Telefonos de Mexico, S.A.B. de C.V. Series L 59,050
Conglomerates and holdings companies - 0.25%
250,000 Admiralty Holding Company --
70,348 BCB Holdings Ltd. 57,534
3,250 Shellshock Ltd. Ord. 2,683
Construction and related - 5.96%
55,790 Cemex S.A.B. de C.V. Series CPO 17,790
55,438 Cemex S.A.B. de C.V. ADR 175,184
20 Ceramica Carabobo Class A ADR --
71,132 Mastec, Inc. 1,252,635
Consumer products and related manufacturing - 6.64%
13,273 Grupo Casa Saba, S.A.B. de C.V. ADR 149,985
28,600 Watsco Incorporated 1,461,460
Food, beverages and tobacco - 11.84%
20,000 Chiquita Brands International Inc. 166,800
53,874 Cleanpath Resources Corp. 11
22,500 Coca Cola Femsa, S.A.B. de C.V. ADR 1,996,425
2,000 Fomento Economico Mexicano, S.A.B. de C.V. ADR 129,640
18,900 Fomento Economico Mexicano, S.A.B. de C.V. Series UBD 122,996
19,690 Fresh Del Monte Produce Inc. 456,808
Housing - 2.09%
37,500 Lennar Corporation 507,750
Investment companies - 1.86%
4,420 Shellproof Limited 2,961
6,000 iShares MSCI Mexico Investable Market Index Fund 293,760
4,000 iShares S+P Latin America 40 Index Fund 155,520
Leisure - 11.59%
41,500 Carnival Corp. 1,257,450
44,500 Royal Caribbean Cruises Ltd. 962,980
14,527 Steiner Leisure Ltd. 592,266
Mining - 0.04%
3,863 Grupo Mexico, S.A.B. de C.V. Series B 9,162
Pulp and paper - 0.13%
6,100 Kimberly-Clark de Mexico, S.A.B. de C.V. Series A 31,206
Railroad - 6.39%
19,000 Norfolk Southern Corporation 1,159,380
30,000 RailAmerica Inc. 390,900
Retail - 3.82%
1,270 Grupo Elektra, S.A.B. de C.V. Series CPO 96,884
10,000 Pricemart, Inc. 623,200
90,222 Wal-Mart de Mexico, S.A.B. de C.V. Series V 207,456
Service - 0.01%
700 Grupo Aeroportuario del Sureste, S.A.B. de C.V. Series B 3,485
Trucking and marine freight - 13.95%
12,280 Grupo TMM, S.A.B. ADR 22,104
1,321 Seaboard Corporation 2,380,429
2,000 Seacor Holdings, Inc. 160,420
20,000 Teekay Corporation 452,200
8,361 Teekay LNG Partners LP 260,194
93,687 Trailer Bridge, Inc. 46,844
28,000 Ultrapetrol Bahamas Ltd. 63,560
Utilities - 5.88%
12,000 Caribbean Utilities Ltd. Class A 120,000
66,841 Consolidated Water, Inc. 526,707
700 Cuban Electric Company 53
45,500 Teco Energy Inc. 779,415
Other - 0.48%
100,000 Cuba Business Development --
25,000 Geltech Solutions Inc. 19,000
13,000 Impellam Group 65,108
55,921 Margo Caribe, Inc. 31,316
895 Siderurgica Venezolana Sivensa, S.A. ADR --
79 Siderurgica Venezolana Sivensa, S.A. Series B --
Total common stocks - 100.01% (cost $25,799,133) 24,269,415
Bonds - 0.00% of net assets
165,000 Republic of Cuba - 4.5%, 1977 -
in default (cost $63,038) --
Other assets less liabilities - (0.01%) of net assets ($ 2,061)
Net assets - 100% (applicable to 3,713,071 shares; equivalent
to $6.54 per share) $ 24,267,354
Security Valuation
The Herzfeld Caribbean Basin Fund, Inc. (the "Fund") records its investments in
securities at fair value. Under generally accepted accounting principles
("GAAP"), 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. GAAP
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 classification of the Fund's investments by
the above fair value hierarchy levels as of September 30, 2011:
Level 1 Level 2 Level 3 Total
Assets (at fair value)
Common Stocks $24,226,670 $42,692 $53 $24,269,415
Debt Securities 0 0 0 0
Total Investments in securities $24,226,670 $42,692 $0 $24,269,415
The following is a reconciliation of assets in which significant unobservable
inputs (Level 3) were used to determine fair value:
Investments in Securities at Fair Value
Balance June 30, 2011 $56
Unrealized gain/(loss) (3)
Net purchases 0
Net sales (0)
Transfers into Level 3 0
Transfers out of Level 3 (0)
Balance September 30, 2011 $53
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 under the Investment Company Act of
1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are 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 __, 2011
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 __, 2011
By /s/ Cecilia L. Gondor
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Cecilia L. Gondor
Treasurer
Date: November __, 2011