N-Q 1 fp0047028_nq.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number 811-02363  

 

Cornerstone Total Return Fund, Inc.
(Exact name of registrant as specified in charter)

 

225 Pictoria Drive, Suite 450       Cincinnati, Ohio 45246
(Address of principal executive offices) (Zip code)

 

Benjamin V. Mollozzi, Esq.

 

Ultimus Fund Solutions, LLC       225 Pictoria Drive, Suite 450       Cincinnati, Ohio 45246
(Name and address of agent for service)

 

Registrant's telephone number, including area code: (513) 587-3400  

 

Date of fiscal year end: December 31  
     
Date of reporting period: September 30, 2019  

 

Form N-Q is to be used by management investment companies other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to Rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

 

Item 1.Schedule of Investments.

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)
 
Description  No. of Shares   Value 
EQUITY SECURITIES - 98.66%          
CLOSED-END FUNDS - 21.64%          
CORE - 6.09%          
Adams Diversified Equity Fund, Inc.   540,382   $8,559,650 
General American Investors Company, Inc.   154,896    5,630,470 
Royce Micro-Cap Trust, Inc.   83,976    675,167 
Royce Value Trust, Inc.   285,105    3,923,045 
Source Capital, Inc.   64,061    2,339,162 
Tri-Continental Corporation   133,032    3,625,122 
         24,752,616 
DEVELOPED MARKET - 0.84%          
Aberdeen Japan Equity Fund, Inc.   53,708    390,994 
European Equity Fund, Inc. (The)   27,208    242,151 
First Trust Dynamic Europe Equity Income Fund   4,600    62,422 
Japan Smaller Capitalization Fund, Inc.   205,355    1,800,964 
New Germany Fund, Inc. (The)   21,312    295,384 
New Ireland Fund, Inc. (The) *   43,689    373,978 
Swiss Helvetia Fund, Inc. (The) *   29,099    233,665 
         3,399,558 
DIVERSIFIED EQUITY - 0.01%          
Sprott Focus Trust, Inc.   4,240    28,535 
           
EMERGING MARKETS - 2.06%          
Central and Eastern Europe Fund, Inc. (The)   50,519    1,313,494 
First Trust/Aberdeen Emerging Opportunity Fund   29,132    385,416 
Herzfeld Caribbean Basin Fund, Inc. (The) *   67,356    428,384 
Mexico Equity and Income Fund, Inc. (The)   23,135    243,332 
Mexico Fund, Inc. (The)   67,976    887,087 
Morgan Stanley India Investment Fund, Inc. *   68,902    1,305,693 
Taiwan Fund, Inc. (The) *   13,521    249,733 
Templeton Dragon Fund, Inc.   111,496    1,996,893 
Templeton Emerging Markets Fund   79,268    1,162,069 
Voya Emerging Markets High Dividend Equity Fund   55,824    400,258 
         8,372,359 
ENERGY MLP FUNDS - 1.58%          
ClearBridge Energy Midstream Opportunity Fund Inc.   61,149    531,996 
ClearBridge MLP and Midstream Fund Inc.   99,114    1,127,917 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Continued)
 
Description  No. of Shares   Value 
ENERGY MLP FUNDS - 1.58% (Continued)          
ClearBridge MLP and Midstream Total Return Fund Inc.   144,862   $1,290,720 
Cushing Energy Income Fund (The)   31,500    193,829 
Kayne Anderson Midstream/Energy Fund, Inc.   163,611    1,771,908 
Neuberger Berman MLP and Energy Income Fund Inc.   68,028    489,802 
Salient Midstream & MLP Fund   129,318    1,016,439 
         6,422,611 
GLOBAL - 3.06%          
Aberdeen Global Dynamic Dividend Fund   111,285    1,073,900 
Aberdeen Total Dynamic Dividend Fund   539,300    4,497,763 
Clough Global Dividend and Income Fund   33,764    366,339 
Delaware Enhanced Global Dividend and Income Fund   91,666    903,827 
Gabelli Global Small and Mid Cap Value Trust (The)   121,475    1,352,017 
GDL Fund (The)   191,987    1,764,361 
John Hancock Tax-Advantaged Global Shareholder Yield Fund   53,262    363,779 
Lazard Global Total Return and Income Fund, Inc.   15,981    249,783 
Royce Global Value Trust, Inc.   79,060    800,087 
Voya Infrastructure, Industrials and Materials Fund   93,596    1,071,674 
         12,443,530 
GLOBAL INCOME - 0.12%          
BrandywineGLOBAL - Global Income Opportunities Fund Inc.   40,277    487,352 
           
INCOME & PREFERRED STOCK - 0.35%          
Eagle Growth and Income Opportunities Fund   11,645    185,621 
LMP Capital and Income Fund Inc.   87,663    1,236,925 
         1,422,546 
NATURAL RESOURCES - 1.62%          
Adams Natural Resources Fund, Inc.   234,266    3,708,431 
BlackRock Resources & Commodities Strategy Trust   358,813    2,683,921 
First Trust Energy Infrastructure Fund   345    5,696 
Tortoise Energy Independence Fund, Inc.   27,305    112,770 
Tortoise Pipeline & Energy Fund, Inc.   4,597    60,956 
Voya Natural Resources Equity Income Fund   7,500    29,400 
         6,601,174 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Continued)
 
Description  No. of Shares   Value 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 0.73%          
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund   88,889   $1,086,224 
BlackRock Enhanced Global Dividend Trust   130,741    1,363,628 
BlackRock Enhanced International Dividend Trust   44,094    239,430 
Madison Covered Call & Equity Strategy Fund   20,554    131,546 
Voya Asia Pacific High Dividend Equity Income Fund   12,385    105,025 
Voya Global Equity Dividend and Premium Opportunity Fund   8,400    50,400 
         2,976,253 
PACIFIC EX JAPAN - 0.03%          
Korea Fund, Inc. (The)   4,709    129,168 
           
REAL ESTATE - 2.74%          
Aberdeen Global Premier Properties Fund   243,316    1,513,426 
CBRE Clarion Global Real Estate Income Fund   898,488    7,107,039 
RMR Real Estate Income Fund   123,758    2,523,426 
         11,143,891 
SECTOR EQUITY - 1.77%          
Gabelli Healthcare & WellnessRx Trust (The)   130,494    1,359,747 
Nuveen Real Asset Income and Growth Fund   207,016    3,624,851 
Tekla Healthcare Investors   92,000    1,687,280 
Tekla Life Sciences Investors   33,191    501,184 
         7,173,062 
UTILITY - 0.64%          
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund   43,525    431,333 
Macquarie Global Infrastructure Total Return Fund Inc.   89,982    2,166,766 
         2,598,099 
           
TOTAL CLOSED-END FUNDS        87,950,754 
           
COMMUNICATION SERVICES - 9.41%          
Alphabet Inc. - Class C *   13,002    15,849,438 
AT&T Inc.   156,000    5,903,040 
Charter Communications, Inc. - Class A *   5,300    2,184,236 
Comcast Corporation - Class A   158,000    7,122,640 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Continued)
 
Description  No. of Shares   Value 
COMMUNICATION SERVICES - 9.41% (Continued)          
Walt Disney Company (The)   55,000   $7,167,600 
         38,226,954 
CONSUMER DISCRETIONARY - 8.12%          
Amazon.com, Inc. *   7,000    12,151,370 
AutoZone, Inc. *   700    759,234 
Dollar General Corporation   7,000    1,112,580 
Home Depot, Inc. (The)   30,000    6,960,600 
Lowe's Companies, Inc.   15,000    1,649,400 
McDonald's Corporation   13,000    2,791,230 
NIKE, Inc. - Class B   25,000    2,348,000 
Ross Stores, Inc.   10,000    1,098,500 
Starbucks Corporation   36,000    3,183,120 
TJX Companies, Inc. (The)   17,000    947,580 
         33,001,614 
CONSUMER STAPLES - 6.07%          
Coca-Cola Company (The)   100,000    5,444,000 
Costco Wholesale Corporation   14,000    4,033,540 
Estée Lauder Companies, Inc. (The) - Class A   9,000    1,790,550 
General Mills, Inc.   15,000    826,800 
Procter & Gamble Company (The)   71,000    8,830,980 
Sysco Corporation   16,000    1,270,400 
Walmart Inc.   21,000    2,492,280 
         24,688,550 
ENERGY - 1.34%          
Chevron Corporation   8,000    948,800 
Exxon Mobil Corporation   55,000    3,883,550 
Kinder Morgan, Inc.   29,300    603,873 
         5,436,223 
EXCHANGE-TRADED FUNDS - 1.46%          
iShares Core S&P 500 ETF   10,000    2,985,200 
SPDR S&P 500 ETF Trust   10,000    2,967,700 
         5,952,900 
FINANCIALS - 9.78%          
Aflac Incorporated   20,000    1,046,400 
American Express Company   16,000    1,892,480 
Aon plc   7,000    1,354,990 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Continued)
 
Description  No. of Shares   Value 
FINANCIALS - 9.78% (Continued)          
Bank of America Corporation   125,000   $3,646,250 
BB&T Corporation   24,000    1,280,880 
Berkshire Hathaway Inc. - Class B *   17,000    3,536,340 
Citigroup Inc.   78,700    5,436,596 
CME Group Inc.   5,000    1,056,700 
Intercontinental Exchange, Inc.   16,000    1,476,320 
JPMorgan Chase & Co.   101,000    11,886,690 
PNC Financial Services Group, Inc. (The)   14,000    1,962,240 
Progressive Corporation (The)   20,000    1,545,000 
S&P Global Inc.   8,000    1,959,840 
U.S. Bancorp   30,000    1,660,200 
         39,740,926 
HEALTH CARE - 11.40%          
Abbott Laboratories   54,000    4,518,180 
Anthem, Inc.   8,000    1,920,800 
Baxter International Inc.   7,000    612,290 
Becton, Dickinson and Company   5,000    1,264,800 
Boston Scientific Corporation *   43,000    1,749,670 
Cigna Corporation   11,164    1,694,584 
Edwards Lifesciences Corporation *   5,000    1,099,550 
Eli Lilly and Company   22,000    2,460,260 
IQVIA Holdings Inc. *   5,300    791,714 
Johnson & Johnson   39,000    5,045,820 
Medtronic Public Limited Company   40,000    4,344,800 
Merck & Co., Inc.   100,800    8,485,344 
Pfizer Inc.   99,000    3,557,070 
Stryker Corporation   10,000    2,163,000 
Thermo Fisher Scientific Inc.   8,000    2,330,160 
UnitedHealth Group Incorporated   14,000    3,042,480 
Zoetis Inc.   10,000    1,245,900 
         46,326,422 
INDUSTRIALS - 6.88%          
Boeing Company (The)   14,000    5,326,580 
CSX Corporation   26,900    1,863,363 
Deere & Company   11,000    1,855,480 
Honeywell International Inc.   11,000    1,861,200 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Continued)
 
Description  No. of Shares   Value 
INDUSTRIALS - 6.88% (Continued)          
IHS Markit Ltd. *   10,000   $668,800 
Ingersoll-Rand Public Limited Company   8,000    985,680 
Lockheed Martin Corporation   10,000    3,900,600 
Norfolk Southern Corporation   10,000    1,796,600 
Republic Services, Inc.   10,000    865,500 
Roper Technologies, Inc.   2,500    891,500 
Union Pacific Corporation   18,000    2,915,640 
United Parcel Service, Inc. - Class B   28,600    3,426,852 
Waste Management, Inc.   14,000    1,610,000 
         27,967,795 
INFORMATION TECHNOLOGY - 18.32%          
Accenture plc - Class A   18,000    3,462,300 
Apple Inc.   38,000    8,510,860 
Automatic Data Processing, Inc.   13,000    2,098,460 
Broadcom Inc.   12,000    3,312,840 
Cisco Systems, Inc.   137,000    6,769,170 
Fiserv, Inc. *   14,000    1,450,260 
FleetCor Technologies, Inc. *   2,000    573,560 
Intuit Inc.   8,000    2,127,520 
Mastercard Incorporated - Class A   14,000    3,801,980 
Microsoft Corporation   147,400    20,493,022 
Motorola Solutions, Inc.   4,000    681,640 
Paychex, Inc.   11,000    910,470 
PayPal Holdings, Inc. *   30,000    3,107,700 
salesforce.com, inc. *   19,000    2,820,360 
Texas Instruments Incorporated   30,000    3,877,200 
VeriSign, Inc. *   3,000    565,890 
Visa, Inc. - Class A   53,100    9,133,731 
Xilinx, Inc.   8,000    767,200 
         74,464,163 
MATERIALS - 0.94%          
Air Products and Chemicals, Inc.   7,000    1,553,020 
Dow Inc.   14,273    680,108 
Ecolab Inc.   8,000    1,584,320 
         3,817,448 

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2019 (Unaudited)(Concluded)
 
Description  No. of Shares   Value 
REAL ESTATE - 0.78%          
American Tower Corporation   6,800   $1,503,684 
Crown Castle International Corp.   12,000    1,668,120 
         3,171,804 
UTILITIES - 2.52%          
American Electric Power Company, Inc.   13,000    1,217,970 
Dominion Energy, Inc.   15,000    1,215,600 
DTE Energy Company   7,000    930,720 
Exelon Corporation   14,000    676,340 
NextEra Energy, Inc.   9,000    2,096,910 
Public Service Enterprise Group Incorporated   13,000    807,040 
Sempra Energy   7,000    1,033,270 
Southern Company (The)   22,000    1,358,940 
Xcel Energy Inc.   14,000    908,460 
         10,245,250 
           
TOTAL EQUITY SECURITIES (cost - $350,832,693)        400,990,803 
           
SHORT-TERM INVESTMENT - 1.05%          
MONEY MARKET FUNDS - 1.05%          
Fidelity Institutional Money Market Government Portfolio - Class I, 1.86% ^ (cost - $4,254,564)   4,254,564    4,254,564 
           
TOTAL INVESTMENTS - 99.71% (cost - $355,087,257)        405,245,367 
           
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.29%        1,197,953 
           
NET ASSETS - 100.00%       $406,443,320 

 

* Non-income producing security.
^ The rate shown is the 7-day effective yield as of September 30, 2019.

 

See accompanying notes to schedule of investments.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2019 (Unaudited)

 

Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2019:

 

Cost of portfolio investments  $355,421,964 
Gross unrealized appreciation  $57,207,710 
Gross unrealized depreciation   (7,384,307)
Net unrealized appreciation  $49,823,403 

 

The difference between the federal income tax cost of portfolio investments and the Schedule of Investments cost for Cornerstone Total Return Fund, Inc. (the “Fund”) is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and generally accepted accounting principles. These "book/tax" differences are temporary in nature and are due to the tax deferral of losses on wash sales.

 

As required by the Fair Value Measurement and Disclosures Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification, the Fund has performed an analysis of all assets and liabilities measured at fair value to determine the significance and character of all inputs to their fair value determination.

 

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories:

 

• Level 1 - quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement.

 

• Level 2 - quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model- derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

 

• Level 3 - model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Fund's own assumptions that market participants would use to price the asset or liability based on the best available information.

 

The following is a summary of the inputs used as of September 30, 2019 in valuing the Fund's investments carried at value:

 

VALUTION INPUTS    INVESTMENTS IN SECURITIES     OTHER FINANCIAL INSTRUMENTS* 
Level 1 - Quoted Prices          
Equity Securities  $400,990,803   $- 
Short-Term Investment   4,254,564    - 
Level 2 - Other Significant Observable Inputs   -    - 
Level 3 - Significant Unobservable Inputs   -    - 
Total  $405,245,367   $- 

 

*Other financial instruments include futures, forwards and swap contracts, if any.

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

 

The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.

 

The Fund did not have any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2019.

 

The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the period ended September 30, 2019, the Fund did not engage in derivative instruments and other hedging activities.

 

The Fund has evaluated the need for additional disclosures and/or adjustments resulting through the date its financial statements were issued. Based on this evaluation, no additional disclosures or adjustments were required to such Schedule of Investments.

 

Securities valuation policies and other investment related disclosures are hereby incorporated by reference to the Fund's semi-annual report previously filed with the Securities and Exchange Commission on Form N-CSRS on August 28, 2019 with a file number 811-02363.

 

Other information regarding the Fund is available in the Fund’s most recent annual report. This information is also available on the Fund’s website at www.cornerstonetotalreturnfund.com; or on the website of the Securities and Exchange Commission at www.sec.gov.

 

 

 

Item 2.Controls and Procedures.

 

(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that such information is recorded, processed, summarized, and reported on a timely basis.

 

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) 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.

 

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto

 

 

 

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.

 

(Registrant) Cornerstone Total Return Fund, Inc.    
       
By (Signature and Title)* /s/ Ralph W. Bradshaw  
    Ralph W. Bradshaw, Chairman and President
(Principal Executive Officer)		  
       
Date November 21, 2019    
       
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 (Signature and Title)* /s/ Ralph W. Bradshaw  
    Ralph W. Bradshaw, Chairman and President
(Principal Executive Officer)		  
       
Date November 21, 2019    
       
By (Signature and Title)* /s/ Theresa M. Bridge  
   

Theresa M. Bridge, Treasurer

(Principal Financial Officer)

  
       
Date November 21, 2019    

 

*Print the name and title of each signing officer under his or her signature.