The Herzfeld Caribbean Basin Fund, Inc.
The Herzfeld Building
PO Box 161465
Miami, FL 33116
(305) 271-1900
Investment Advisor
HERZFELD/CUBA
a division of Thomas J. Herzfeld Advisors, Inc.
PO Box 161465
Miami, FL 33116
(305) 271-1900
Transfer Agent & Registrar
State Street Bank and Trust
200 Clarendon Street, 16th Floor
Boston, MA 02116
(617) 443-6870
Custodian
State Street Bank and Trust
200 Clarendon Street, 5th Floor
Boston, MA 02116
Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Independent Auditors
Rothstein, Kass & Company, P.C.
4 Becker Farm Road
Roseland, NJ 07068
|
The Herzfeld Caribbean Basin Fund Inc.’s investment objective is long-term capital appreciation. To achieve its objective, the Fund invests in issuers that are likely, in the Advisor’s view, to benefit from economic, political, structural and technological developments in the countries in the Caribbean Basin, which include, among others, Cuba, Jamaica, Trinidad and Tobago, the Bahamas, the Dominican Republic, Barbados, Aruba, Haiti, the Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico, Honduras, Guatemala, Belize, Costa Rica, Panama, Colombia, the United States and Venezuela (“Caribbean Basin Countries”). The Fund invests at least 80% of its total assets in equity and equity-linked securities of issuers, including U.S.-based companies which engage in substantial trade with, and derive substantial revenue from, operations in the Caribbean Basin Countries.
|
Geographic
Allocation
|
% of Net Assets
|
Largest Portfolio Positions
|
% of Net Assets
|
|
USA
|
55.94%
|
Seaboard Corporation
|
10.59%
|
|
Mexico
|
19.49%
|
Coca Cola Femsa, S.A.B. de C.V. ADR
|
6.94%
|
|
Panama
|
9.16%
|
Copa Holdings, S.A.
|
6.75%
|
|
Bahamas
|
5.27%
|
Watsco Incorporated
|
6.45%
|
|
Colombia
|
4.71%
|
Royal Caribbean Cruises Ltd.
|
5.55%
|
|
Cayman Island
|
2.42%
|
Carnival Corp.
|
5.18%
|
|
Puerto Rico
|
0.70%
|
Norfolk Southern Corporation
|
4.72%
|
|
Belize
|
0.21%
|
Bancolombia, S.A.
|
4.71%
|
|
Cuba
|
0.00%
|
Mastec, Inc.
|
4.65%
|
|
Cash and Other Countries
|
2.10%
|
América Móvil, S.A.B. de C.V. ADR
|
4.04%
|
Sincerely,
|
|
Thomas J. Herzfeld
|
|
Chairman of the Board, President and
|
|
Portfolio Manager
|
|
Erik M. Herzfeld
|
|
Portfolio Manager
|
Shares or Principal Amount
|
Description
|
Fair Value
|
|||||
Common stocks - 98.16% of net assets
|
|||||||
Airlines - 6.75%
|
|||||||
30,500 |
Copa Holdings, S.A.
|
$ | 2,035,570 | ||||
Banking and finance - 9.07%
|
|||||||
21,280 |
Bancolombia, S.A.
|
1,420,014 | |||||
42,000 |
Banco Latinoamericano de Exportaciones, S.A.
|
727,440 | |||||
11,500 |
Doral Financial Corp.*
|
22,540 | |||||
60,000 |
Popular Inc.*
|
165,600 | |||||
3,844 |
W Holding Co. Inc.*
|
1,115 | |||||
20,000 |
Western Union Company
|
400,600 | |||||
Communications - 12.13%
|
|||||||
22,595 |
América Móvil, S.A.B. de C.V. ADR
|
1,217,419 | |||||
71,200 |
América Móvil, S.A.B. de C.V. Series A
|
94,716 | |||||
209,144 |
América Móvil, S.A.B. de C.V. Series L
|
281,608 | |||||
13,698 |
Atlantic Tele-Network, Inc.
|
525,455 | |||||
377,100 |
Fuego Enterprises Inc.*
|
12,067 | |||||
23,666 |
Grupo Radio Centro, S.A.B. ADR*
|
230,034 | |||||
32,400 |
Grupo Televisa, S.A.B. ADR
|
797,040 | |||||
80,304 |
Spanish Broadcasting System, Inc.*
|
56,212 | |||||
23,000 |
Telefonos de Mexico, S.A.B. de C.V. ADR Series L
|
379,500 | |||||
78,600 |
Telefonos de Mexico, S.A.B. de C.V. Series L
|
64,948 | |||||
Conglomerates and holding companies - 0.21%
|
|||||||
250,000 |
Admiralty Holding Company (Note 2)*
|
-- | |||||
70,348 |
BCB Holdings Ltd.*
|
60,988 | |||||
3,250 |
Shellshock Ltd. Ord.*
|
2,765 | |||||
Construction and related - 6.39%
|
|||||||
55,438 |
Cemex S.A.B. de C.V. ADR*
|
476,767 | |||||
55,790 |
Cemex S.A.B. de C.V. Series CPO*
|
47,860 | |||||
20 |
Ceramica Carabobo Class A ADR (Note 2)*
|
-- | |||||
71,132 |
Mastec, Inc.*
|
1,402,723 |
Shares or Principal Amount
|
Description
|
Fair Value
|
|||||
Consumer products and related manufacturing - 7.17%
|
|||||||
13,273 |
Grupo Casa Saba, S.A.B. de C.V. ADR*
|
$ | 219,005 | ||||
28,600 |
Watsco Incorporated
|
1,944,514 | |||||
Food, beverages and tobacco - 10.40%
|
|||||||
20,000 |
Chiquita Brands International Inc.*
|
260,400 | |||||
53,874 |
Cleanpath Resources Corp.*
|
539 | |||||
22,500 |
Coca Cola Femsa, S.A.B. de C.V. ADR
|
2,092,725 | |||||
18,900 |
Fomento Económico Mexicano, S.A.B. de C.V. Series UBD
|
125,469 | |||||
2,000 |
Fomento Económico Mexicano S.A.B. de C.V. ADR
|
132,980 | |||||
19,690 |
Fresh Del Monte Produce Inc.
|
525,132 | |||||
Housing - 2.26%
|
|||||||
37,500 |
Lennar Corporation
|
680,625 | |||||
Investment companies - 1.18%
|
|||||||
4,420 |
Shellproof Limited*
|
3,335 | |||||
4,000 |
iShares MSCI Mexico Investable Market Index Fund
|
250,240 | |||||
2,000 |
iShares S&P Latin America 40 Index Fund
|
103,240 | |||||
Leisure - 12.93%
|
|||||||
41,500 |
Carnival Corp.
|
1,561,645 | |||||
44,500 |
Royal Caribbean Cruises Ltd.*
|
1,674,980 | |||||
14,527 |
Steiner Leisure Ltd.*
|
633,593 | |||||
Mining - 0.05%
|
|||||||
3,863 |
Grupo México, S.A.B. de C.V. Series B
|
12,735 | |||||
Pulp and paper - 0.13%
|
|||||||
6,100 |
Kimberly-Clark de México, S.A.B. de C.V. Series A
|
40,053 | |||||
Railroad - 6.21%
|
|||||||
19,000 |
Norfolk Southern Corporation
|
1,423,670 | |||||
30,000 |
Rail America Inc.*
|
450,000 |
Shares or Principal Amount
|
Description
|
Fair Value
|
|||||
Retail - 2.12%
|
|||||||
1,270 |
Grupo Elektra, S.A.B. de C.V. Series CPO
|
$ | 64,979 | ||||
6,000 |
Pricemart, Inc.
|
307,380 | |||||
90,222 |
Wal-Mart de México, S.A.B. de C.V. Series V
|
267,352 | |||||
Service - 0.01%
|
|||||||
700 |
Grupo Aeroportuario del Sureste, S.A.B. de C.V. Series B
|
4,113 | |||||
Trucking and marine freight - 15.41%
|
|||||||
12,280 |
Grupo TMM, S.A.B. ADR*
|
21,367 | |||||
1,321 |
Seaboard Corporation
|
3,194,178 | |||||
2,000 |
Seacor Holdings, Inc.*
|
199,920 | |||||
20,000 |
Teekay Corporation
|
617,600 | |||||
8,361 |
Teekay LNG Partners LP
|
309,273 | |||||
93,687 |
Trailer Bridge, Inc.*
|
168,637 | |||||
28,000 |
Ultrapetrol Bahamas Ltd.*
|
138,320 | |||||
Utilities - 5.27%
|
|||||||
12,000 |
Caribbean Utilities Ltd. Class A
|
110,280 | |||||
66,841 |
Consolidated Water, Inc.
|
620,953 | |||||
700 |
Cuban Electric Company (Note 2)*
|
56 | |||||
45,500 |
Teco Energy Inc.
|
859,495 | |||||
Other - 0.47%
|
|||||||
100,000 |
Cuba Business Development (Note 2)*
|
-- | |||||
25,000 |
Geltech Solutions Inc.*
|
43,750 | |||||
13,000 |
Impellam Group*
|
75,657 | |||||
55,921 |
Margo Caribe, Inc.*
|
22,368 | |||||
895 |
Siderurgica Venezolana Sivensa, S.A. ADR (Note 2)*
|
-- | |||||
79 |
Siderurgica Venezolana Sivensa, S.A. Series B (Note 2)*
|
-- | |||||
Total common stocks (cost $25,371,697)
|
$ | 29,613,539 |
Shares or Principal Amount
|
Description |
Fair Value
|
|||||
Bonds - 0% of net assets
|
|||||||
$ | 165,000 |
Republic of Cuba - 4.5%, 1977 - in default (Cost $63,038) (Note 2)*
|
-- | ||||
Other assets less liabilities - 1.84% of net assets
|
$ | 555,542 | |||||
Net assets - 100%
|
$ | 30,169,081 |
United States of America
|
55.94%
|
Mexico
|
19.49%
|
Panama
|
9.16%
|
Bahamas
|
5.27%
|
Other, individually under 5%**
|
10.14%
|
100.00%
|
ASSETS
|
||||||||
Investments in securities, at fair value (cost $25,434,735)
|
||||||||
(Notes 1 and 2)
|
$ | 29,613,539 | ||||||
Cash
|
655,688 | |||||||
Dividends receivable
|
15,868 | |||||||
Other assets
|
18,867 | |||||||
TOTAL ASSETS
|
30,303,962 | |||||||
LIABILITIES
|
||||||||
Accrued investment advisor fee (Note 3)
|
$ | 107,693 | ||||||
Other payables
|
27,188 | |||||||
TOTAL LIABILITIES
|
134,881 | |||||||
NET ASSETS (Equivalent to $8.13 per share
|
||||||||
based on 3,713,071 shares outstanding)
|
$ | 30,169,081 | ||||||
Net assets consist of the following:
|
||||||||
Common stock, $.001 par value; 100,000,000
|
||||||||
shares authorized; 3,713,071* shares issued
|
||||||||
and outstanding
|
$ | 3,713 | ||||||
Additional paid-in capital
|
26,344,063 | |||||||
Accumulated net investment loss and net realized loss on investments
|
(357,499 | ) | ||||||
Net unrealized gain on investments (Notes 4 and 5)
|
4,178,804 | |||||||
NET ASSETS
|
$ | 30,169,081 |
INVESTMENT INCOME AND EXPENSES
|
||||||||
Dividends and interest
|
$ | 513,749 | ||||||
Investment advisor fees (Note 3)
|
$ | 403,592 | ||||||
Professional fees
|
85,000 | |||||||
Custodian fees
|
76,000 | |||||||
Insurance
|
46,138 | |||||||
CCO salary
|
26,913 | |||||||
Director fees
|
20,800 | |||||||
Transfer agent fees
|
19,792 | |||||||
Listing fees
|
15,000 | |||||||
Printing and postage
|
12,260 | |||||||
Proxy services
|
10,050 | |||||||
Other
|
21,977 | |||||||
Total investment expenses
|
737,522 | |||||||
NET INVESTMENT LOSS
|
(223,773 | ) | ||||||
REALIZED AND UNREALIZED GAIN (LOSS)
|
||||||||
ON INVESTMENTS AND FOREIGN CURRENCY
|
||||||||
Net realized gain on investments and foreign
|
||||||||
currency
|
943,018 | |||||||
Net increase in unrealized appreciation (depreciation)
|
||||||||
on investments and foreign currency
|
6,742,688 | |||||||
NET GAIN ON INVESTMENTS
|
7,685,706 | |||||||
NET INCREASE IN NET ASSETS RESULTING
|
||||||||
FROM OPERATIONS
|
$ | 7,461,933 |
2011
|
2010
|
|||||||
INCREASE (DECREASE) IN NET ASSETS RESULTING
|
||||||||
FROM OPERATIONS
|
||||||||
Net investment loss
|
$ | (223,773 | ) | $ | (246,930 | ) | ||
Net realized gain on investments and
|
||||||||
foreign currency
|
943,018 | 1,631,231 | ||||||
Net increase in unrealized appreciation
|
||||||||
(depreciation) on investments and foreign currency
|
6,742,688 | 1,441,347 | ||||||
NET INCREASE (DECREASE) IN NET ASSETS
|
||||||||
RESULTING FROM OPERATIONS
|
7,461,933 | 2,825,648 | ||||||
DISTRIBUTIONS TO STOCKHOLDERS
|
||||||||
Net investment income
|
-- | -- | ||||||
Long-term realized gains
|
-- | -- | ||||||
NET DISTRIBUTIONS TO STOCKHOLDERS
|
-- | -- | ||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
7,461,933 | 2,825,648 | ||||||
NET ASSETS
|
||||||||
Beginning
|
22,707,148 | 19,881,500 | ||||||
Ending
|
$ | 30,169,081 | $ | 22,707,148 |
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
PER SHARE OPERATING PERFORMANCE
|
||||||||||||||||||||
(For a share of capital stock outstanding for the year)
|
||||||||||||||||||||
Net asset value, beginning of year
|
$ | 6.12 | $ | 5.35 | $ | 7.31 | $ | 9.77 | $ | 8.08 | ||||||||||
Operations:
|
||||||||||||||||||||
Net investment income (loss)1
|
(0.06 | ) | (0.07 | ) | (0.05 | ) | 0.22 | (0.14 | ) | |||||||||||
Net realized and unrealized gain (loss) on
|
||||||||||||||||||||
investment transactions1
|
2.07 | 0.84 | (1.70 | ) | (1.40 | ) | 2.83 | |||||||||||||
Total from operations
|
2.01 | 0.77 | (1.75 | ) | (1.18 | ) | 2.69 | |||||||||||||
Distributions:
|
||||||||||||||||||||
From net investment income
|
-- | -- | (0.16 | ) | (0.06 | ) | -- | |||||||||||||
From net realized gains
|
-- | -- | (0.05 | ) | (1.22 | ) | (1.00 | ) | ||||||||||||
Total distributions
|
-- | -- | (0.21 | ) | (1.28 | ) | (1.00 | ) | ||||||||||||
Net asset value, end of year
|
$ | 8.13 | $ | 6.12 | $ | 5.35 | $ | 7.31 | $ | 9.77 | ||||||||||
Per share market value, end of year
|
$ | 7.14 | $ | 5.67 | $ | 6.07 | $ | 7.69 | $ | 13.59 | ||||||||||
Total investment return (loss) based on
|
||||||||||||||||||||
market value per share
|
25.93 | % | (6.59 | %) | (17.73 | %) | (34.29 | %) | 94.61 | % | ||||||||||
RATIOS AND SUPPLEMENTAL DATA
|
||||||||||||||||||||
Net assets, end of year (in 000’s)
|
$ | 30,169 | $ | 22,707 | $ | 19,882 | $ | 27,131 | $ | 16,481 | ||||||||||
Ratio of expenses to average net assets
|
2.66 | % | 2.78 | % | 3.02 | % | 2.74 | % | 3.28 | % | ||||||||||
Ratio of net investment income (loss)
|
||||||||||||||||||||
to average net assets
|
(0.81 | %) | (1.05 | %) | (0.84 | %) | 1.70 | % | (1.83 | %) | ||||||||||
Portfolio turnover rate
|
22 | % | 27 | % | 17 | % | 25 | % | 28 | % |
LEVEL
|
Investments in Securities*
|
Level 1
|
$29,572,948
|
Level 2
|
$40,535
|
Level 3
|
$56**
|
Investment in Securities
|
|
Balance as of 6/30/10
|
$0
|
Unrealized gain/(loss)
|
8,299
|
Net purchases/(sales)
|
(11,250)
|
Transfer in/(out) of Level 3
|
3,007
|
Balance as of 6/30/11
|
$56
|
Accumulated Net
Investment Loss
|
Accumulated Net
Realized Loss on
Investments
|
Additional Paid
in Capital
|
|
Year ended June 30, 2011
|
223,773
|
$14
|
($223,787)
|
Name
Address
and Age
|
Position(s)
Held
with Fund
|
Term of Office
and Length of
Time Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of Portfolios
In Complex Overseen
By Director
|
Other
Directorships
Held by Director
|
Interested Director
|
|||||
Thomas J. Herzfeld*
|
President, Portfolio
|
three years;
|
Chairman and President of
|
2
|
The Cuba Fund, Inc.
|
PO Box 161465
|
Manager, Chairman,
|
1993 to present
|
Thomas J. Herzfeld & Co., Inc.,
|
(in registration)
|
|
Miami, FL 33116
|
Director
|
a broker dealer, and Thomas J.
|
|||
Age: 66
|
Herzfeld Advisors, Inc.
|
||||
Independent Directors
|
|||||
Ann S. Lieff
|
Director
|
three years;
|
President of the Lieff Company, a
|
1
|
Hastings
|
c/o The Herzfeld Caribbean
|
1998 to present
|
management consulting firm that
|
Entertainment, Inc.;
|
||
Basin Fund, Inc.
|
offers ongoing advisory services as
|
Birks & Mayors, Inc.;
|
|||
PO Box 161465
|
a corporate director to several
|
Furniture Brands
|
|||
Miami, FL 33116
|
retail operations, 1998-present;
|
International, Inc.
|
|||
Age: 59
|
former CEO Spec’s Music 1980-
|
||||
1998, a retailer of recorded music.
|
|||||
Michael A. Rubin
|
Director
|
three years;
|
Partner of Michael A. Rubin P.A.,
|
1
|
Margo Caribe, Inc.
|
c/o The Herzfeld Caribbean
|
2002 to present
|
attorney at law; Broker, Oaks
|
|||
Basin Fund, Inc.
|
Management & Real Estate Corp.,
|
||||
PO Box 161465
|
a real estate corporation
|
||||
Miami, FL 33116
|
|||||
Age: 69
|
|||||
Kay W. Tatum, Ph.D., CPA
|
Director
|
three years;
|
Associate Professor of Accounting,
|
1
|
None
|
c/o The Herzfeld Caribbean
|
2007 to present
|
University of Miami School of
|
|||
Basin Fund, Inc.
|
Business Administration, 1992-present;
|
||||
PO Box 161465
|
Chair, Department of Accounting,
|
||||
Miami, FL 33116
|
2004-2008; Assistant Professor
|
||||
Age: 59
|
of Accounting, University of Miami,
|
||||
1986-1992.
|
|||||
John A. Gelety
|
Director
|
2011 to present
|
John A. Gelety, PA, attorney at law, a
|
1
|
None
|
c/o The Herzfeld Caribbean
|
transactional law firm that specializes
|
||||
Basin Fund, Inc.
|
in business law, with a concentration on
|
||||
PO Box 161465
|
domestic and cross-border mergers &
|
||||
Miami, FL 33116
|
acquisitions, private equity and commercial
|
||||
Age: 43
|
transactions.
|
Name
Address
and Age
|
Position(s)
Held
with Fund
|
Term of Office
and Length of
Time Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of Portfolios
In Complex Overseen
By Director
|
Other
Directorships
Held by Director
|
Ted S. Williams**
|
Director
|
three years;
|
Vice President, Thomas J. Herzfeld
|
1
|
None
|
c/o The Herfzeld Caribbean
|
2010 to 2011
|
Advisors, Inc. 1991-2007
|
|||
Basin Fund, Inc.
|
|||||
PO Box 161465
|
|||||
Miami, FL 33116
|
|||||
Age: 49
|
|||||
Officers
|
|||||
Erik M. Herzfeld
|
Portfolio Manager
|
2008 to present
|
Portfolio Manager and Head of Alternative
|
N/A
|
|
PO Box 161465
|
Strategies, Thomas J. Herzfeld
|
||||
Miami, FL 33116
|
Advisors, Inc. 2007-present; Vice President
|
||||
Age: 38
|
JPMorgan Chase 2000-2007, foreign exchange
|
||||
option trading
|
|||||
Cecilia L. Gondor
|
Secretary,
|
1993 to present
|
Executive Vice President of
|
N/A
|
|
PO Box 161465
|
Treasurer
|
Thomas J. Herzfeld & Co., Inc.,
|
|||
Miami, FL 33116
|
a broker dealer, and Thomas J.
|
||||
Age: 49
|
Herzfeld Advisors, Inc.
|
|
1.
|
State Street Bank & Trust Company (the “Agent”) will act as agent for each Participant. The Agent will open an account for each registered shareholder as a Participant under the Plan in the same name in which such Participant’s shares of Common Stock are registered.
|
|
2.
|
CASH OPTION. Pursuant to the Fund’s Plan, unless a holder of Common Stock otherwise elects, all dividend and capital gains distributions payable in cash (“Distributions”) will be automatically reinvested by the Agent in additional Common Stock of the Fund. Stockholders who elect not to participate in the Plan will receive all cash distributions in cash paid by check mailed directly to the shareholder of record (or, if the shares are held in street or other nominee name then to such nominee) by the Agent, as dividend paying agent. Stockholders and Participants may elect not to participate in the Plan and to receive all cash distributions of dividends and capital gains in cash by sending written instructions to the Agent, as dividend paying agent, at the address set forth below.
|
|
3.
|
MARKET PREMIUM ISSUANCES. If on the payment date for a Distribution, the net asset value per Common Stock is equal to or less than the market price per Common Stock plus estimated brokerage commissions, the Agent shall receive newly issued Common Stock (“Additional Common Stock”) from the Fund for each Participant’s account. The number of Additional Common Stock to be credited shall be determined by dividing the dollar amount of the Distribution by the greater of (i) the net asset value per Common Share on the payment date, or (ii) 95% of the market price per Common Share on the payment date.
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4.
|
MARKET DISCOUNT PURCHASES. If the net asset value per Common Stock exceeds the market price plus estimated brokerage commissions on the payment date for a Distribution, the Agent (or a broker-dealer selected by the Agent) shall endeavor to apply the amount of such Distribution on each Participant’s Common Stock to purchase Common Stock on the open market. In the event of a market discount on the payment date, the Agent will have 30 days after the dividend payment date (the “last purchase date”) to invest the dividend amount in shares acquired in open-market purchases. The weighted average price (including brokerage commissions) of all Common Stock purchased by the
|
|
Agent as Agent shall be the price per Common Stock allocable to each Participant. If, before the Agent has completed its purchases, the market price plus estimated brokerage commissions exceeds the net asset value of the Common Stock as of the payment date, the purchase price paid by Agent may exceed the net asset value of the Common Stock, resulting in the acquisition of fewer Common Stock than if such Distribution had been paid in Common Stock issued by the Fund. Because of the foregoing difficulty with respect to open-market purchases, the Plan provides that if the Plan Agent is unable to invest the full dividend amount in open-market purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent may cease making open-market purchases and may invest the uninvested portion of the dividend amount in newly issued Common Stock at the net asset value per Common Stock at the close of business on the last purchase date. Participants should note that they will not be able to instruct the Agent to purchase Common Stock at a specific time or at a specific price. Open-market purchases may be made on any securities exchange where Common Stock are traded, in the over-the-counter market or in negotiated transactions, and may be on such terms as to price, delivery and otherwise as the Agent shall determine. Each Participant’s uninvested funds held by the Agent will not bear interest. The Agent shall have no liability in connection with any inability to purchase Common Stock within the time provided, or with the timing of any purchases effected. The Agent shall have no responsibility for the value of Common Stock acquired. The Agent may commingle Participants’ funds to be used for open-market purchases of the Fund’s shares and the price per share allocable to each Participant in connection with such purchases shall be the average price (including brokerage commissions and other related costs) of all Fund shares purchased by Agent. The rules and regulations of the Securities and Exchange Commission may require the Agent to limit the Agent’s market purchases or temporarily cease making market purchases for Participants.
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5.
|
The market price of Common Stock on a particular date shall be the last sales price on the securities exchange where the Common Stock are listed on that date (currently the NASDAQ Capital Market)(the “Exchange”), or, if there is no sale on the Exchange on that date, then the average between the closing bid and asked quotations on the Exchange on such date will be used. The net asset value per Common Stock on a particular date shall be the amount calculated on that date (or if not calculated on such date, the amount most recently calculated) by or on behalf of the Fund.
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6.
|
Whenever the Agent receives or purchases shares or fractional interests for a Participant’s account, the Agent will send such Participant a notification of the transaction as soon as practicable. The Agent will hold such shares and fractional interests as such Participant’s agent and may hold them in the Agent’s name or the name of the Agent’s nominee. The Agent will not send a Participant stock certificates for shares unless a Participants so requests in writing or unless a Participant’s account is terminated as stated below. The Agent will vote any shares so held for a Participant in accordance with any proxy returned to the Fund by such Participant in respect of the shares of which such Participant is the record holder.
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7.
|
There is presently no service charge for the Agent serving as Participants’ agent and maintaining Participants’ accounts. The Agent may, however, charge Participants for extra services performed at their request. The Plan may be amended in the future to impose a service charge. In acting as Participants’ agent under the Plan, the Agent shall be liable only for acts, omissions, losses, damages or expenses caused by the Agent’s willful misconduct or gross negligence. In addition, the Agent shall not be liable for any taxes, assessments or governmental charges which may be levied or assessed on any basis whatsoever in connection with the administration of the Plan.
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8.
|
The Agent may hold each Participant’s Common Stock acquired pursuant to the Plan together with the Common Stock of other Stockholders of the Fund acquired pursuant to the Plan in non-certificated form in the Agent’s name or that of the Agent’s nominee. Each Participant will be sent a confirmation by the Agent of each acquisition made for his or her account as soon as practicable, but in no event later than 60 days, after the date thereof. Upon a Participant’s request, the Agent will deliver to the Participant, without charge, a certificate or certificates for the full Common Stock. Although each Participant may from time to time have an undivided fractional interest in a Common Share of the Fund, no certificates for a fractional share will be issued. Similarly, Participants may request to sell a portion of the Common Stock held by the Agent in their Plan accounts by calling the Agent, writing to the Agent, or completing and returning the transaction form attached to each Plan statement. The Agent will sell such Common Stock through a broker-dealer selected by the Agent within 5 business days of receipt of the request. The sale price will equal the weighted average price of all Common Stock sold through the Plan on the day of the sale, less brokerage commissions. Participants should note that the Agent is unable to accept instructions to sell on a specific date or at a specific price. Any share dividends or split shares distributed by the Fund on Common Stock held by the Agent for Participants will be credited to their accounts. In the event that the Fund makes available to its Stockholders rights to purchase additional Common Stock, the Common Stock held for each Participant under the Plan will be added to other Common Stock held by the Participant in calculating the number of rights to be issued to each Participant.
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|
If a Participant holds more than one Common Stock Certificate registered in similar but not identical names or if more than one address is shown for a Participant on the Fund’s records, all of such Participant’s shares of Common Stock must be put into the same name and address if all of them are to be covered by one account. Additional shares subsequently acquired by a Participant otherwise than through the Plan will be covered by the Plan.
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9.
|
The reinvestment of Distributions does not relieve Participants of any federal, state or local taxes which may be payable (or required to be withheld on Distributions.) Participants will receive tax information annually for their personal records and to help them prepare their federal income tax return. For further information as to tax consequences of participation in the Plan, Participants should consult with their own tax advisors.
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10.
|
Each registered Participant may terminate his or her account under the Plan by notifying the Agent in writing at State Street Bank and Trust, P.O. Box 642, Boston, MA 02117-0642, or by calling the Agent at (617) 443-6870. Such termination will be effective with respect to a particular Distribution if the Participant’s notice is received by the Agent prior to such Distribution record date. The Plan may be terminated by the Agent or the Fund upon notice in writing mailed to each Participant at least 60 days prior to the effective date of the termination. Upon any termination, the Agent will cause a certificate or certificates to be issued for the full shares held for each Participant under the Plan and cash adjustment for any fraction of a Common Share at the then current market value of the Common Shares to be delivered to him. If preferred, a Participant may request the sale of all of the Common Shares held by the Agent in his or her Plan account in order to terminate participation in the Plan. If any Participant elects in advance of such termination to have Agent sell part or all of his shares, Agent is authorized to deduct from the proceeds the brokerage commissions incurred for the transaction. If a Participant has terminated his or her participation in the Plan but continues to have Common Shares registered in his or her name, he or she may re-enroll in the Plan at any time by notifying the Agent in writing at the address above.
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11.
|
These terms and conditions may be amended by the Agent or the Fund at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each Participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment shall be deemed to be accepted by each Participant unless, prior to the effective date thereof, the Agent receives notice of the termination of the Participant’s account under the Plan. Any such amendment may include an appointment by the Agent of a successor Agent, subject to the prior written approval of the successor Agent by the Fund.
|
12.
|
These terms and conditions shall be governed by the laws of the State of Maryland.
|
Dated: November 22, 2006
|
Fiscal Year
Ended June 30,
|
Audit
Fees
|
Audit-Related
Fees
|
Tax
Fees(2)
|
All Other
Fees(3)
|
2010
|
$48,500
|
$0
|
$6,000
|
$0
|
2011
|
$50,500
|
$0
|
$9,800
|
$0
|
Period
|
(a) Total
Number of
Shares
Purchased
|
(b) Average
Price Paid
Per Share
|
(c) Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
|
(d) Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
|
Month #1 (beginning July 1, 2010 and ending July 31, 2010)
|
0 |
n/a
|
n/a |
n/a
|
Month #2 (beginning August 1, 2010 and ending August 31, 2010)
|
0 |
n/a
|
n/a
|
n/a
|
Month #3 (beginning September 1, 2010 and ending September 30, 2010) | 0 |
n/a
|
n/a
|
n/a
|
Month #3 (beginning October 1, 2010 and ending October 31, 2010)
|
0
|
n/a
|
n/a
|
n/a
|
Month #4 (beginning November 1, 2010 and ending November 30, 2010)
|
0
|
n/a
|
n/a
|
n/a
|
Month #5 (beginning December 1, 2010 and ending December 31, 2010)
|
0
|
n/a
|
n/a
|
n/a
|
Month #7 (beginning January 1, 2011 and ending January 31, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Month #8 (beginning February 1, 2011 and ending February 28, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Month #9 (beginning March 1, 2011 and ending March 31, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Month #10 (beginning April 1, 2011 and ending April 30, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Month #11 (beginning May 1, 2011 and ending May 31, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Month #12 (beginning June 1, 2011 and ending June 30, 2011)
|
0
|
n/a
|
n/a
|
n/a
|
Total
|
0
|
n/a
|
n/a
|
n/a
|
By: /s/ Thomas J. Herzfeld
|
|
Thomas J. Herzfeld
|
|
President and Chairman
|
|
Date: August 31, 2011
|
By: /s/ Thomas J. Herzfeld
|
|
Thomas J. Herzfeld
|
|
President and Chairman
|
|
Date: August 31, 2011
|
|
By: /s/ Cecilia L. Gondor
|
|
Cecilia L. Gondor
|
|
Secretary and Treasurer
|
|
(Principal Financial Officer)
|
|
Date: August 31, 2011
|
I.
|
POLICY
|
II.
|
PURPOSE
|
III.
|
PROCEDURES
|
IV.
|
RECORD KEEPING
|
V.
|
GUIDELINES
|
1.
|
Issues regarding the issuer's Board entrenchment and anti-takeover measures such as the following:
|
Oppose
|
|
b.
|
Proposals to limit the ability of shareholders to call special meetings;
|
||
c.
|
Proposals to require super majority votes;
|
||
d.
|
Proposals requesting excessive increases in authorized common or preferred shares where management provides no explanation for the use or need for these additional shares;
|
||
e.
|
Proposals regarding "poison pill" provisions; and
|
||
f.
|
Permitting "green mail".
|
||
2.
|
Providing cumulative voting rights.
|
Oppose
|
3.
|
"Social issues," unless specific client guidelines supersede, e.g., restrictions regarding South Africa.
|
Oppose
|
4.
|
Election of directors recommended by management, except if there is a proxy fight.
|
Approve
|
5.
|
Election of auditors recommended by management, unless seeking to replace if there exists a dispute over policies.
|
Approve
|
6.
|
Date and place of annual meeting.
|
Approve
|
7.
|
Limitation on charitable contributions or fees paid to lawyers.
|
Approve
|
8.
|
Ratification of directors' actions on routine matters since previous annual meeting.
|
Approve
|
9.
|
Confidential voting
|
Approve
|
Confidential voting is most often proposed by shareholders as a means of eliminating undue management pressure on shareholders regarding their vote on proxy issues.
|
||
The Adviser will generally approve these proposals as shareholders can later divulge their votes to management on a selective basis if a legitimate reason arises.
|
||
10.
|
Limiting directors' liability
|
Approve
|
11.
|
Eliminate preemptive right
|
Approve
|
Preemptive rights give current shareholders the opportunity to maintain their current percentage ownership through any subsequent equity offerings. These provisions are no longer common in the U.S., and can restrict management's ability to raise new capital.
|
||
The Adviser approves the elimination of preemptive rights, but will oppose the elimination of limited preemptive rights, E.G., on proposed issues representing more than an acceptable level of total dilution.
|
||
12.
|
Employee Stock Purchase Plan
|
Approve
|
13.
|
Establish 401(k) Plan
|
Approve
|
14.
|
Rotate annual meeting location/date
|
Approve
|
15.
|
Establish a staggered Board
|
Approve
|
16.
|
Eliminate director mandatory retirement policy
|
Case-by-Case
|
17.
|
Option and stock grants to management and directors
|
Case-by-Case
|
18.
|
Allowing indemnification of directors and/or officers after reviewing the applicable laws and extent of protection requested.
|
Case-by-Case
|