UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-Q
QUARTERLY
SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT
INVESTMENT COMPANIES
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Investment
Company Act file number:
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811-06120
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Exact
name of registrant as specified in charter:
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The First
Israel Fund, Inc.
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Address
of principal executive offices:
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c/o 1735 Market Street, 32nd
Floor
Philadelphia, PA
19103
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Name
and address of agent for service:
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Ms. Andrea
Melia
Aberdeen Asset Management
Inc.
c/o 1735 Market Street, 32nd
Floor
Philadelphia, PA
19103
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Registrant’s
telephone number, including area code:
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866-839-5205
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Date
of fiscal year end:
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December 31
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Date
of reporting period:
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09/30/09
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Item
1:
Schedule of
Investments
The
First Israel Fund, Inc.
Schedule
of Investments
September
30, 2009 (unaudited)
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Description
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No.
of
Shares
|
|
Value
|
|
EQUITY
OR EQUITY-LINKED SECURITIES-96.18%
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Israel-95.72%
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|
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Aerospace
& Defense-3.10%
|
|
|
|
Elbit
Systems Ltd.
|
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20,000
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|
$ 1,351,478
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|
FMS
Enterprises Migun Ltd.
|
|
19,498
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|
605,719
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|
|
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|
1,957,197
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|
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|
|
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Capital
Markets-1.16%
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IBI
Investment House Ltd.
|
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86,005
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732,144
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Chemicals-11.32%
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Frutarom
Industries Ltd.
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146,000
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1,087,635
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Israel
Chemicals Ltd.
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526,500
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6,056,501
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7,144,136
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Commercial
Banks-19.50%
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Bank
Hapoalim Ltd.
†
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827,000
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|
2,943,223
|
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Bank
Leumi Le-Israel Ltd.
†
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770,000
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|
2,956,952
|
|
First
International Bank of Israel Ltd.
†
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|
100,000
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|
282,202
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|
United
Mizrahi Bank Ltd.
†
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|
718,900
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|
6,122,861
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|
|
|
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12,305,238
|
|
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Commercial
Services & Supplies-0.16%
|
|
|
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Leadcom
Integrated Solutions Ltd.
†
|
|
103,952
|
|
2,860
|
|
Tefen
Industrial Engineering & Management & Systems Analysis Ltd.
†
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50,000
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|
99,222
|
|
|
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102,082
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|
|
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|
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Communications
Equipment-0.97%
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20,000
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608,800
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Construction
& Engineering-3.46%
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Maman
Cargo Terminals & Handling Ltd.
†
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47,756
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|
74,081
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|
Minrav
Holdings Ltd.
†
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4,382
|
|
234,499
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Shikun
& Binui Ltd.
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|
1,112,500
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|
1,874,245
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2,182,825
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Diversified
Financial Services-2.59%
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2,705
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1,635,052
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Diversified
Telecommunication Services-9.37%
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Bezeq
Israeli Telecommunication Corp. Ltd.
|
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2,751,000
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5,910,832
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Electrical
Equipment & Instruments-1.87%
|
|
|
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Melta
Inter Industry Ltd.
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162,500
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|
258,176
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|
Nisko
Industries (1992) Ltd.
†
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|
39,301
|
|
102,304
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|
Priortech
Ltd.
†
|
|
100,190
|
|
266,060
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|
Rapac
Electronics Ltd.
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68,272
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|
214,191
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Starlims
Technologies Ltd.
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39,223
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339,120
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1,179,851
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Food
& Staples Retailing-3.31%
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Blue
Square-Israel Ltd.
†
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|
28,476
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|
272,098
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|
Shufersal
Ltd.
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412,000
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1,818,422
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2,090,520
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Health
Care Equipment & Supplies-0.37%
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39,860
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|
231,986
|
|
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Health
Care Technology-0.16%
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|
Procognia
(Israel) Ltd.
†
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575,453
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101,331
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Household
Durables-0.37%
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25,000
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235,891
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Household
Products-0.52%
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Albaad
Massuot Yitzhak Ltd.
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27,731
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327,940
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Insurance-6.36%
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Clal
Insurance Enterprise Holdings Ltd.
†
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50,000
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|
1,059,774
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Harel
Insurance Investments & Financial Services Ltd.
†
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61,750
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2,952,980
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4,012,754
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Machinery-0.21%
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7,000
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132,602
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Metals
& Mining-0.32%
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|
Scope
Metals Group Ltd.
†
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17,500
|
|
198,609
|
|
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Paper
& Forest Products-0.59%
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6,602
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372,020
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Pharmaceuticals-16.27%
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Perrigo
Co.
|
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89,000
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|
2,995,707
|
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Teva
Pharmaceutical Industries Ltd., ADR
|
|
143,820
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7,271,539
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10,267,246
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Real
Estate Management & Development-0.38%
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Industrial
Buildings Corp. Ltd.
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150,638
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237,840
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Road
& Rail-0.72%
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Dan
Vehicle & Transportation
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79,527
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454,865
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|
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Software-7.28%
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|
|
Babylon
Ltd.
†
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|
75,000
|
|
114,399
|
|
Check
Point Software Technologies Ltd.
†
|
|
123,853
|
|
3,511,233
|
|
Formula
Systems (1985) Ltd.
|
|
83,713
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|
767,791
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|
ORT
Technologies Ltd.
|
|
23,819
|
|
196,262
|
|
|
|
|
|
4,589,685
|
|
|
|
|
|
|
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Specialty
Retail-0.25%
|
|
|
|
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|
27,500
|
|
158,481
|
|
|
|
|
|
|
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Venture
Capital-5.11%
|
|
|
|
ABS
GE Capital Giza Fund, L.P.
†‡
|
|
1,250,001
*
|
|
87,175
|
|
Advent
Israel (Bermuda) L.P.
†‡
|
|
1,682,293
*
|
|
40,503
|
|
BPA
Israel Ventures LLC
#†‡
|
|
1,674,588
*
|
|
574,988
|
|
Concord
Ventures Fund II, L.P.
†‡
|
|
2,000,000
*
|
|
385,682
|
|
Delta
Fund I, L.P.
†‡
|
|
250,440
*
|
|
103,993
|
|
Giza
GE Venture Fund III L.P.
†‡
|
|
1,250,000
*
|
|
290,075
|
|
K.T.
Concord Venture Fund L.P.
†‡
|
|
1,000,000
*
|
|
105,580
|
|
Neurone
Ventures II, L.P.
#†‡
|
|
686,184
*
|
|
187,250
|
|
Pitango
Fund II LLC
†‡
|
|
1,000,000
*
|
|
120,082
|
|
SVE
Star Ventures Enterprises GmbH & Co. No. IX KG
†‡
|
|
2,001,470
*
|
|
622,277
|
|
Walden-Israel
Ventures III, L.P.
#†‡
|
|
1,249,188
*
|
|
704,292
|
|
|
|
|
|
3,221,897
|
|
|
|
|
|
|
|
Total
Israel
|
|
|
|
|
|
60,391,824
|
|
Global-0.46%
|
|
|
|
Venture
Capital-0.46%
|
|
|
|
Emerging
Markets Ventures I, L.P.
#†‡
|
|
|
|
|
|
|
|
2,237,292
*
|
|
290,646
|
|
|
|
TOTAL
EQUITY OR EQUITY-LINKED SECURITIES
|
|
(Cost $51,062,278)
|
|
60,682,470
|
|
|
|
Principal
Amount
(000's)
|
|
|
|
|
|
SHORT-TERM
INVESTMENT-1.74%
|
|
|
|
United
Kingdom-1.74%
|
Citibank
London, overnight deposit, 0.03%, 10/01/09
|
|
|
|
|
|
|
|
$1,094
|
|
1,094,000
|
|
TOTAL
INVESTMENTS-97.92%
|
|
(Cost
$52,156,278)
|
|
61,776,470
|
|
|
|
Cash
and Other Assets in Excess of Liabilities-2.08%
|
|
1,314,239
|
|
|
|
NET
ASSETS-100.00%
|
|
$ 63,090,709
|
|
|
|
|
|
†
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|
Non-income
producing security.
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|
‡
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|
Restricted
security, not readily marketable; security is valued at fair value as
determined in good faith by, or under the direction of, the Board of
Directors under procedures established by the Board of
Directors.
|
|
#
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|
As
of September 30, 2009, the aggregate amount of open commitments for the
Fund is $1,077,748.
|
|
*
|
|
Represents
contributed capital.
|
|
ADR
|
|
American
Depositary Receipts.
|
|
|
Security Valuation
- The net
asset value of the Fund is determined daily as of the close of regular trading
on the New York Stock Exchange, Inc. (the “Exchange”) on each day the Exchange
is open for business. Equity investments are valued at market value, which is
generally determined using the closing price on the exchange or market on which
the security is primarily traded at the time of valuation (the “Valuation
Time”). If no sales are reported, equity investments are generally valued at the
most recent bid quotation as of the Valuation Time or at the lowest ask
quotation in the case of a short sale of securities. Debt securities with a
remaining maturity greater than 60 days are valued in accordance with the price
supplied by a pricing service, which may use a matrix, formula or other
objective method that takes into consideration market indices, yield curves and
other specific adjustments. Debt obligations that will mature in 60 days or less
are valued on the basis of amortized cost, which approximates market value,
unless it is determined that using this method would not represent fair value.
Investments in mutual funds are valued at the mutual fund’s closing net asset
value per share on the day of valuation. Securities and other assets for which
market quotations are not readily available, or whose values have been
materially affected by events occurring before the Fund’s Valuation Time, but
after the close of the securities’ primary market, are valued at fair value as
determined in good faith by, or under the direction of, the Board of Directors
under procedures established by the Board of Directors. The Fund may utilize a
service provided by an independent third party which has been approved by the
Board of Directors to fair value certain securities. When fair-value pricing is
employed, the prices of securities used by a fund to calculate its net asset
value may differ from quoted or published prices for the same securities. At
September 30, 2009, the Fund held 5.57% of its net assets in securities valued
at fair value as determined in good faith under procedures established by the
Board of Directors with an aggregate cost of $10,222,883 and fair value of
$3,512,543. The Fund’s estimate of fair value assumes a willing buyer and a
willing seller neither acting under a compulsion to buy or sell. Although these
securities may be resold in privately negotiated transactions, the prices
realized on such sales could differ from the prices originally paid by the fund
or the current carrying values, and the difference could be
material.
Restricted
Securities - Certain of the Fund’s investments are restricted as to resale and
are valued at fair value as determined in good faith by, or under the direction
of, the Board of Directors under procedures established by the Board of
Directors in the absence of readily ascertainable market values.
|
Security
|
|
Acquisition
Date(s)
|
|
Cost
|
|
Fair
Value At 9/30/09
|
|
Percent
of Net Assets
|
|
Distributions
Received
|
|
Open
Commitments
|
|
ABS
GE Capital Giza Fund, L.P.
|
|
02/03/98
- 02/13/02
|
|
$ 985,303
|
|
$ 87,175
|
|
0.14
|
|
$ 1,660,765
|
|
$ -
|
|
Advent
Israel (Bermuda) L.P.
|
|
06/16/93
- 01/16/98
|
|
1,436,643
|
|
40,503
|
|
0.06
|
|
3,851,769
|
|
-
|
|
BPA
Israel Ventures LLC
|
|
10/05/00
- 12/09/05
|
|
1,160,529
|
|
574,988
|
|
0.91
|
|
97,293
|
|
625,412
|
|
Concord
Ventures Fund II, L.P.
|
|
09/29/00
- 12/15/06
|
|
1,316,619
|
|
385,682
|
|
0.61
|
|
129,290
|
|
-
|
|
Delta
Fund I, L.P.
|
|
11/15/00
- 03/28/07
|
|
167,473
|
|
103,993
|
|
0.16
|
|
57,937
|
|
-
|
|
Emerging
Markets Ventures I, L.P.
|
|
01/22/98
- 01/10/06
|
|
860,088
|
|
290,646
|
|
0.46
|
|
2,443,399
|
|
262,708
|
|
Giza
GE Venture Fund III, L.P.
|
|
01/31/00
- 11/23/06
|
|
828,929
|
|
290,075
|
|
0.46
|
|
329,171
|
|
-
|
|
K.T.
Concord Venture Fund L.P.
|
|
12/08/97
- 09/29/00
|
|
595,042
|
|
105,580
|
|
0.17
|
|
660,194
|
|
-
|
|
Neurone
Ventures II, L.P.
|
|
11/24/00
- 03/20/09
|
|
187,218
|
|
187,250
|
|
0.30
|
|
297,649
|
|
63,816
|
|
Pitango
Fund II LLC
|
|
10/31/96
- 08/01/01
|
|
388,547
|
|
120,082
|
|
0.19
|
|
1,175,618
|
|
-
|
|
SVE
Star Ventures Enterprises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/21/00
- 08/08/08
|
|
|
|
|
|
|
|
|
|
|
|
GmbH
& Co. No. IX KG
|
|
|
1,536,591
|
|
622,277
|
|
0.99
|
|
380,279
|
|
-
|
|
Walden-Israel
Ventures III, L.P.
|
|
02/23/01
- 11/02/06
|
|
759,901
|
|
704,292
|
|
1.12
|
|
942,976
|
|
125,812
|
|
Total
|
|
|
|
$10,222,883
|
|
$ 3,512,543
|
|
5.57
|
|
$ 12,026,340
|
|
$ 1,077,748
|
The Fund
may incur certain costs in connection with the disposition of the above
securities.
The Fund
adopted ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), effective
January 1, 2008. In accordance with ASC 820, fair value is defined as the price
that the Fund would receive upon selling an investment in a timely transaction
to an independent buyer in the principal or most advantageous market of the
investment. ASC 820 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk, for example,
the risk inherent in a particular valuation technique used to measure fair value
including such a pricing model and/or the risk inherent in the inputs to the
valuation technique. Inputs may be observable or unobservable. Observable inputs
are inputs that reflect the assumptions market participants would use in pricing
the asset or liability developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs that reflect
the reporting entity’s own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances. The three-tier hierarchy of inputs
is summarized in the three broad Levels listed below.
|
|
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
inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those
securities.
The
following is a summary of the inputs used as of September 30, 2009 in valuing
the Fund’s investments carried at value:
|
Investments,
at value
|
|
Quoted
Prices in Active Markets for Identical Investments (Level
1)
|
|
Other
Significant Observable Inputs (Level 2)
|
|
Significant
Unobservable Inputs (Level 3)
|
|
Balance
as of 09/30/2009
|
|
Aerospace & Defense
|
|
$ -
|
|
$
1,957,197
|
|
$
-
|
|
$ 1,957,197
|
|
Capital
Markets
|
|
-
|
|
732,144
|
|
-
|
|
732,144
|
|
Chemicals
|
|
-
|
|
7,144,136
|
|
-
|
|
7,144,136
|
|
Commercial
Banks
|
|
-
|
|
12,305,238
|
|
-
|
|
12,305,238
|
|
Commercial Services & Supplies
|
|
2,860
|
|
99,222
|
|
-
|
|
102,082
|
|
Communications Equipment
|
|
608,800
|
|
-
|
|
-
|
|
608,800
|
|
Construction & Engineering
|
|
-
|
|
2,182,825
|
|
-
|
|
2,182,825
|
|
Diversified Financial Services
|
|
-
|
|
1,635,052
|
|
-
|
|
1,635,052
|
|
Diversified
Telecommunication Services
|
|
-
|
|
5,910,832
|
|
-
|
|
5,910,832
|
|
Electrical Equipment
&
Instruments
|
|
258,176
|
|
921,675
|
|
-
|
|
1,179,851
|
|
Food
& Staples Retailing
|
|
-
|
|
2,090,520
|
|
-
|
|
2,090,520
|
|
Health Care Equipment
& Supplies
|
|
-
|
|
231,986
|
|
-
|
|
231,986
|
|
Health Care Technology
|
|
101,331
|
|
-
|
|
-
|
|
101,331
|
|
Household Durables
|
|
-
|
|
235,891
|
|
-
|
|
235,891
|
|
Household Products
|
|
-
|
|
327,940
|
|
-
|
|
327,940
|
|
Insurance
|
|
-
|
|
4,012,754
|
|
-
|
|
4,012,754
|
|
Machinery
|
|
-
|
|
132,602
|
|
-
|
|
132,602
|
|
Metals & Mining
|
|
-
|
|
198,609
|
|
-
|
|
198,609
|
|
Paper
& Forest Products
|
|
-
|
|
372,020
|
|
-
|
|
372,020
|
|
Pharmaceuticals
|
|
7,271,539
|
|
2,995,707
|
|
-
|
|
10,267,246
|
|
Real Estate Management
& Development
|
|
-
|
|
237,840
|
|
-
|
|
237,840
|
|
Road
& Rail
|
|
-
|
|
454,865
|
|
-
|
|
454,865
|
|
Software
|
|
3,511,233
|
|
1,078,452
|
|
-
|
|
4,589,685
|
|
Specialty Retail
|
|
-
|
|
158,481
|
|
-
|
|
158,481
|
|
Venture
Capital
|
|
-
|
|
-
|
|
3,512,543
|
|
3,512,543
|
|
Short-Term
Investment
|
|
-
|
|
1,094,000
|
|
-
|
|
1,094,000
|
|
Total
|
|
$
11,753,939
|
|
$
46,509,988
|
|
$
3,512,543
|
|
$
61,776,470
|
Following
is a reconciliation of investments in which significant unobservable inputs
(Level 3) were used in determining value:
|
Investments,
at value
|
|
Balance
as of 12/31/2008
|
|
Accrued
discounts/ premiums
|
|
Realized
gain/(loss)
|
|
Change
in unrealized appreciation/
(depreciation)
|
|
Net
purchases (sales)
|
|
Net
transfers in and/or out of Level 3
|
|
Balance
as of 09/30/2009
|
|
Venture
Capital
|
|
$4,973,686
|
|
$ -
|
|
$(585,217)
|
|
$(887,759)
|
|
$11,833
|
|
$ -
|
|
$3,512,543
|
|
Total
|
|
$4,973,686
|
|
$ -
|
|
$(585,217)
|
|
$(887,759)
|
|
$11,833
|
|
$ -
|
|
$3,512,543
|
Short-Term
Investment -
The Fund sweeps available cash into a short-term time
deposit available through Brown Brothers Harriman & Co., the Fund’s
custodian. The short-term time deposit is a variable rate account classified as
a short-term investment.
Federal Income Tax Cost
- At
September 30, 2009, the identified cost for federal income tax purposes, as well
as the gross unrealized appreciation from investments for those securities
having an excess of value over cost, gross unrealized depreciation from
investments for those securities having an excess of cost over value and the net
unrealized appreciation from investments were $52,156,278, $19,363,143,
$(9,742,951) and $9,620,192, respectively.
Other
information regarding the Fund is available in the Fund’s most recent Report to
Shareholders. This information is also available on the website of the
Securities and Exchange Commission at www.sec.gov.
Item
2:
Controls and
Procedures
(a)
As of a date within 90
days from the filing date of this report, the principal executive officer and
principal financial officer concluded that the registrant’s disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940 (the “Act”)), were effective based on their evaluation of the disclosure
controls and procedures required by Rule 30a-3(b) under the Act and Rules
13a-15(b) or 15d-15(b) under the Securities and Exchange Act of
1934.
(b)
There were no changes in
the registrant’s internal control over financial reporting (as defined in Rule
30a-3(d) under the Act) that occurred during the registrant’s last fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the registrant’s internal control over financial reporting.
Item
3:
Exhibits
1.
The certifications of the
registrant as required by Rule 30a-2(a) under the Act are exhibits to this
report.
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 First
Israel Fund, Inc.
By:
/s/
Christian
Pittard
Christian
Pittard,
President
of
The First
Israel Fund, Inc.
Date:
November 25, 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/
Christian
Pittard
Christian
Pittard,
President
of
The First Israel Fund,
Inc.
Date:
November 25, 2009
By:
/s/
Andrea
Melia
Andrea
Melia,
Treasurer
of
The First
Israel Fund, Inc.
Date:
November 25, 2009
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