The Herzfeld Caribbean Basin Fund, Inc. announced that the Fund has made the following distribution pursuant to the Fund’s managed distribution plan (the “Plan”):
|Declaration Date||Ex-Date||Record Date||Payment Date||Per Share|
The primary purpose of the Plan is to provide stockholders with a constant, but not guaranteed, fixed minimum rate of distribution each quarter (currently set at the annual rate of 15% of the Fund’s net asset value as determined on March 31, 2020 and payable in quarterly installments). The Fund cannot predict what effect, if any, the Plan will have on the market price of its shares or whether such market price will reflect a greater or lesser discount to net asset value as compared to prior to the adoption of the Plan.
Under the Plan, the Fund will distribute all available investment income to its stockholders, consistent with its investment objective and as required by the Internal Revenue Code of 1986, as amended (the “Code”). The amount distributed per share is subject to change at the discretion of the Fund’s Board of Directors (“Board”). If sufficient investment income is not available on a quarterly basis, the Fund will distribute long-term capital gains and/or return capital to its stockholders in order to maintain its managed distribution level. The Fund is currently not relying on any exemptive relief from Section 19(b) of the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund may make additional distributions from time to time, including additional capital gain distributions at the end of the taxable year, if required to meet requirements imposed by the Code and/or the 1940 Act. Please note that for shareholders enrolled in the Fund’s Dividend Distribution Reinvestment Plan, the distribution will be reinvested in additional shares of the Fund as described in the Plan.
The Fund expects that distributions under the Plan will exceed investment income and available capital gains and thus expects that distributions under the Plan will likely include returns of capital for the foreseeable future. A return of capital may occur, for example, when some or all of a stockholder’s investment is paid back to the stockholder. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ Any such returns of capital will decrease the Fund’s total assets and, therefore, could have the effect of increasing the Fund’s expense ratio. In addition, in order to maintain the level of distributions called for under its Plan, the Fund may have to sell portfolio securities at a less than opportune time.
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized capital gains and return of capital. All amounts are expressed per common share.
|Current Distribution||% Breakdown of the Current Distribution||Total Cumulative Distributions for the Fiscal Year to Date||% Breakdown of the Total Cumulative Distributions for the Fiscal Year to Date|
|Net Investment Income||$0.00||0%||$0.00||0%|
|Net Realized Short-Term Capital Gains||$0.00||0%||$0.00||0%|
|Net Realized Long-Term Capital Gains||$0.00||0%||$0.00||0%|
|Return of Capital||$0.15525||100%||$0.15525||100%|
|Total (per common share)||$0.15525||100%||$0.15525||100%|
|Average annual total return (in relation to NAV) for the 5-year period ending on August 31, 2020||-0.17%|
|Annualized current distribution rate expressed as a percentage of NAV as of August 31, 2020||12.22%|
|Cumulative total return (in relation to NAV) for the fiscal year through August 31, 2020||6.95%|
|Cumulative fiscal year distributions as a percentage of NAV as of August 31, 2020||0.00%|
No conclusions should be drawn about the Fund’s investment performance from the amount of the Fund’s distributions or from the terms of the Plan.
The amount distributed per share is subject to change at the discretion of the Board. The Plan is subject to ongoing review by the Board to determine whether it should be continued, modified or terminated. The Board may amend the terms of the Plan, suspend the Plan, or terminate the Plan at any time without prior notice to the Fund’s stockholders if it deems such actions to be in the best interest of the Fund or its stockholders. The amendment or termination of the Plan could have an adverse effect on the market price of the Fund’s shares.
With each distribution that does not consist solely of net investment income, the Fund will issue a notice to stockholders and an accompanying press release that will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and sources of distributions reported in the notice to stockholders are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its full fiscal year and may be subject to changes based on tax regulations. The Fund will send stockholders a Form 1099-DIV for the respective calendar year that will tell them how to report these distributions for federal income tax purposes. Stockholders should consult their tax advisor for proper tax treatment of the Fund’s distributions.
About Thomas J. Herzfeld Advisors, Inc.
Thomas J. Herzfeld Advisors, Inc., founded in 1984, is an SEC registered investment advisor, specializing in investment analysis and account management in closed-end funds. The Firm also specializes in investment in the Caribbean Basin. The HERZFELD/CUBA division of Thomas J. Herzfeld Advisors, Inc. serves as the investment advisor to The Herzfeld Caribbean Basin Fund, Inc. a publicly traded closed-end fund (NASDAQ: CUBA).
More information about the advisor can be found at www.herzfeld.com.