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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 811-05150  

 

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, 2018  

 

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, 2018 (Unaudited)

 

 

Description  No. of Shares   Value 
EQUITY SECURITIES - 99.33%        
CLOSED-END FUNDS - 15.80%        
CONVERTIBLE SECURITIES - 0.01%        
Advent Claymore Convertible Securities and Income Fund   1,965   $30,792 
           
CORE - 4.33%          
Adams Diversified Equity Fund, Inc.   441,551    7,360,655 
General American Investors Company, Inc.   135,450    5,010,296 
Source Capital, Inc.   35,732    1,428,565 
Sprott Focus Trust, Inc.   11,304    83,424 
Tri-Continental Corporation   236,423    6,589,109 
         20,472,049 
DEVELOPED MARKET - 0.76%          
Aberdeen Japan Equity Fund, Inc.   27,217    228,351 
European Equity Fund, Inc. (The)   8,470    79,533 
Japan Smaller Capitalization Fund, Inc.   140,303    1,553,154 
Morgan Stanley Asia-Pacific Fund, Inc.   63,843    1,050,856 
New Germany Fund, Inc. (The)   10,645    193,739 
New Ireland Fund, Inc. (The) *   43,689    461,356 
         3,566,989 
EMERGING MARKETS - 4.41%          
Aberdeen Emerging Markets Equity Income Fund, Inc.   101,629    697,175 
Central and Eastern Europe Fund, Inc.   53,978    1,298,441 
First Trust/Aberdeen Emerging Opportunity Fund   36,561    476,390 
Herzfeld Caribbean Basin Fund, Inc. (The) *   43,542    278,233 
India Fund, Inc. (The)   119,417    2,642,698 
Latin American Discovery Fund, Inc. (The)   26,840    297,924 
Mexico Equity & Income Fund, Inc. (The)   52,751    646,727 
Mexico Fund, Inc. (The)   67,061    1,093,094 
Morgan Stanley China A Share Fund, Inc.   140,228    3,013,499 
Morgan Stanley Emerging Markets Fund, Inc.   131,397    2,049,793 
Morgan Stanley India Investment Fund, Inc.   62,211    1,456,982 
Taiwan Fund, Inc. (The)   11,721    223,637 
Templeton Dragon Fund, Inc.   144,189    2,873,687 
Templeton Emerging Markets Fund   209,725    3,076,665 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)

 

 

Description  No. of Shares   Value 
EMERGING MARKETS - 4.41% (Continued)        
Voya Emerging Markets High Income Dividend Equity Fund   92,409   $745,741 
         20,870,686 
ENERGY MLP FUNDS - 0.23%          
Cushing Energy Income Fund (The)   26,006    240,035 
Kayne Anderson Midstream/Energy Fund, Inc.   66,902    856,346 
         1,096,381 
GLOBAL - 1.23%          
Aberdeen Total Dynamic Dividend Fund   209,176    1,836,565 
Gabelli Global Small and Mid Cap Value Trust (The) *   121,475    1,481,995 
GDL Fund (The)   172,973    1,572,325 
Lazard World Dividend & Income Fund, Inc.   15,809    165,046 
Royce Global Value Trust, Inc.   72,053    757,277 
         5,813,208 
GLOBAL INCOME - 0.04%          
BrandywineGLOBAL - Global Income Opportunities Fund Inc.   18,697    203,423 
           
INCOME & PREFERRED STOCK - 0.26%          
Eagle Growth and Income Opportunities Fund   44,916    684,026 
LMP Capital and Income Fund Inc.   31,091    424,703 
RiverNorth Opportunities Fund, Inc.   5,700    106,875 
         1,215,604 
LOAN PARTICIPATION - 0.15%          
Invesco Senior Income Trust   54,632    234,918 
Nuveen Floating Rate Income Opportunity Fund   44,856    462,465 
         697,383 
NATURAL RESOURCES - 1.39%          
Adams Natural Resources Fund, Inc.   300,702    5,992,991 
BlackRock Energy and Resources Trust   35,376    515,782 
First Trust Energy Infrastructure Fund   4,152    65,394 
         6,574,167 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 0.36%          
BlackRock Enhanced International Dividend Trust   190,296    1,090,396 
Voya Asia Pacific High Dividend Equity Income Fund   64,166    612,144 
         1,702,540 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)

 

 

Description  No. of Shares   Value 
PACIFIC EX JAPAN - 0.02%        
Korea Fund, Inc. (The)   3,066   $112,338 
           
REAL ESTATE - 1.19%          
CBRE Clarion Global Real Estate Income Fund   346,438    2,528,998 
Cohen & Steers REIT and Preferred Income Fund, Inc.   51,036    996,733 
RMR Real Estate Income Fund   116,386    2,092,620 
         5,618,351 
SECTOR EQUITY - 0.87%          
Gabelli Healthcare & WellnessRx Trust   147,809    1,630,333 
Nuveen Real Asset Income and Growth Fund   107,836    1,737,238 
Tekla Healthcare Opportunities Fund   40,557    760,038 
         4,127,609 
UTILITY - 0.55%          
Macquarie Global Infrastructure Total Return Fund, Inc.   122,388    2,600,745 
           
TOTAL CLOSED-END FUNDS        74,702,265 
           
CONSUMER DISCRETIONARY - 11.36%          
Amazon.com, Inc. *   8,000    16,024,000 
Booking Holdings, Inc. *   1,400    2,777,600 
Carnival Corporation   7,000    446,390 
Charter Communications, Inc. - Class A *   7,400    2,411,512 
Comcast Corporation - Class A   158,000    5,594,780 
Home Depot, Inc. (The)   35,000    7,250,250 
Lowe's Companies, Inc.   24,000    2,755,680 
Marriott International, Inc. - Class A   11,000    1,452,330 
McDonald's Corporation   16,600    2,777,014 
Netflix, Inc. *   13,000    4,863,690 
TJX Companies, Inc. (The)   18,000    2,016,360 
Twenty-First Century Fox, Inc.   8,500    389,470 
Walt Disney Company (The)   35,000    4,092,900 
Yum! Brands, Inc.   9,500    863,645 
         53,715,621 
CONSUMER STAPLES - 4.77%          
Altria Group, Inc.   55,000    3,317,050 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)

 

 

Description  No. of Shares   Value 
CONSUMER STAPLES - 4.77% (Continued)        
Costco Wholesale Corporation   10,000   $2,348,800 
Estée Lauder Companies Inc. (The) - Class A   13,000    1,889,160 
Kroger Company (The)   30,000    873,300 
Lamb Weston Holdings, Inc.   1    66 
Monster Beverage Corporation *   21,000    1,223,880 
Philip Morris International, Inc.   35,000    2,853,900 
Sysco Corporation   16,000    1,172,000 
Tyson Foods, Inc.   10,000    595,300 
Walgreen Boots Alliance, Inc.   18,000    1,312,200 
Walmart Inc.   74,000    6,949,340 
         22,534,996 
ENERGY - 3.85%          
Chevron Corporation   62,000    7,581,360 
Concho Resources Inc. *   5,000    763,750 
ConocoPhillips   40,000    3,096,000 
EOG Resources, Inc.   18,000    2,296,260 
Exxon Mobil Corporation   25,000    2,125,500 
Marathon Petroleum Corporation   14,000    1,119,580 
Occidental Petroleum Corporation   10,900    895,653 
Pioneer Natural Resources Company   2,000    348,380 
         18,226,483 
EXCHANGE-TRADED FUNDS - 3.08%          
iShares Core S&P 500 ETF   25,000    7,318,250 
SPDR S&P 500 ETF Trust   25,000    7,268,000 
         14,586,250 
FINANCIALS - 11.22%          
Allstate Corporation (The)   13,000    1,283,100 
American Express Company   16,000    1,703,840 
Ameriprise Financial, Inc.   5,000    738,300 
Aon plc   7,000    1,076,460 
Bank of America Corporation   321,000    9,456,660 
Bank of New York Mellon Corporation (The)   31,000    1,580,690 
BB&T Corporation   24,000    1,164,960 
Capital One Financial Corporation   15,000    1,423,950 
Citigroup Inc.   78,700    5,645,938 
CME Group Inc.   8,000    1,361,680 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)

 

 

Description  No. of Shares   Value 
FINANCIALS - 11.22% (Continued)          
Goldman Sachs Group, Inc. (The)   12,000   $2,690,880 
Intercontinental Exchange, Inc.   16,000    1,198,240 
JPMorgan Chase & Co.   101,000    11,396,840 
Moody's Corporation   7,000    1,170,400 
Morgan Stanley   52,500    2,444,925 
PNC Financial Services Group, Inc. (The)   14,000    1,906,660 
Progressive Corporation (The)   20,000    1,420,800 
Prudential Financial, Inc.   12,800    1,296,896 
S&P Global Inc.   8,000    1,563,120 
SunTrust Banks, Inc.   14,000    935,060 
U.S. Bancorp   30,000    1,584,300 
         53,043,699 
HEALTH CARE - 13.64%          
Abbott Laboratories   36,000    2,640,960 
AbbVie Inc.   50,000    4,729,000 
Aetna Inc.   7,000    1,419,950 
Allergan plc   6,900    1,314,312 
Amgen Inc.   20,000    4,145,800 
Anthem, Inc.   8,000    2,192,400 
Baxter International Inc.   19,000    1,464,710 
Becton, Dickinson and Company   5,000    1,305,000 
Biogen, Inc. *   6,000    2,119,860 
Boston Scientific Corporation *   43,000    1,655,500 
Bristol-Myers Squibb Company   28,000    1,738,240 
Centene Corporation *   8,000    1,158,240 
Cigna Corporation   8,000    1,666,000 
CVS Health Corporation   30,000    2,361,600 
Danaher Corporation   21,000    2,281,860 
Edwards Lifesciences Corporation *   7,100    1,236,110 
Eli Lilly and Company   17,000    1,824,270 
Express Scripts Holding Company *   13,000    1,235,130 
HCA Healthcare, Inc.   12,000    1,669,440 
Intuitive Surgical, Inc. *   2,300    1,320,200 
Johnson & Johnson   46,000    6,355,820 
Pfizer Inc.   159,000    7,007,130 
Thermo Fisher Scientific Inc.   8,000    1,952,640 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)

 

 

Description  No. of Shares   Value 
HEALTH CARE - 13.64% (Continued)        
UnitedHealth Group Incorporated   33,000   $8,779,320 
Zoetis, Inc.   10,000    915,600 
         64,489,092 
INDUSTRIALS - 8.72%          
3M Company   5,000    1,053,550 
Boeing Company (The)   22,000    8,181,800 
Caterpillar Inc.   20,000    3,049,800 
CSX Corporation   26,900    1,991,945 
Cummins Inc.   5,000    730,350 
Deere & Company   11,000    1,653,630 
Delta Air Lines, Inc.   15,000    867,450 
FedEx Corporation   8,000    1,926,320 
Fortive Corporation   8,000    673,600 
Honeywell International Inc.   11,000    1,830,400 
Illinois Tool Works Inc.   10,000    1,411,200 
Ingersoll-Rand Public Limited Company   8,000    818,400 
Lockheed Martin Corporation   10,000    3,459,600 
Norfolk Southern Corporation   10,000    1,805,000 
Parker-Hannifin Corporation   4,700    864,471 
Roper Technologies, Inc.   2,500    740,525 
Southwest Airlines Co.   12,000    749,400 
Stanley Black & Decker, Inc.   5,300    776,132 
Union Pacific Corporation   25,000    4,070,750 
United Parcel Service, Inc. - Class B   28,600    3,339,050 
Waste Management, Inc.   14,000    1,265,040 
         41,258,413 
INFORMATION TECHNOLOGY - 22.62%          
Accenture plc - Class A   14,000    2,382,800 
Alphabet Inc. - Class C *   13,002    15,517,497 
Apple Inc.   96,500    21,783,910 
Applied Materials, Inc.   32,000    1,236,800 
Broadcom Inc.   12,000    2,960,760 
Cognizant Technology Solutions Corporation   21,000    1,620,150 
Facebook, Inc. - Class A *   75,000    12,334,500 
Fiserv, Inc. *   14,000    1,153,320 
Intel Corporation   160,200    7,575,858 

 

See accompanying notes to schedule of investments.

 

 

 

 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Continued)
 

 

Description  No. of Shares   Value 
INFORMATION TECHNOLOGY - 22.62% (Continued)        
Lam Research Corporation   5,000   $758,500 
Mastercard Incorporated   19,000    4,229,590 
Microchip Technology Incorporated   9,000    710,190 
Micron Technology, Inc. *   39,000    1,763,970 
Microsoft Corporation   121,400    13,884,518 
NVIDIA Corporation   14,700    4,130,994 
Oracle Corporation   69,700    3,593,732 
TE Connectivity Ltd.   12,000    1,055,160 
Texas Instruments Incorporated   30,000    3,218,700 
Visa, Inc. - Class A   43,100    6,468,879 
Western Digital Corporation   10,000    585,400 
         106,965,228 
MATERIALS - 1.48%          
Air Products and Chemicals, Inc.   3,000    501,150 
DowDuPont Inc.   42,820    2,753,754 
International Paper Company   11,800    579,970 
LyondellBasell Industries N.V.   14,000    1,435,140 
Praxair, Inc.   5,000    803,650 
Sherwin-Williams Company (The)   2,000    910,420 
         6,984,084 
TELECOMMUNICATION SERVICES - 1.43%          
AT&T, Inc.   58,162    1,953,080 
Verizon Communications, Inc.   90,000    4,805,100 
         6,758,180 
UTILITIES - 1.36%          
American Electric Power Company, Inc.   10,000    708,800 
Dominion Energy, Inc.   15,000    1,054,200 
DTE Energy Company   7,000    763,910 
Exelon Corporation   33,000    1,440,780 
NextEra Energy, Inc.   9,000    1,508,400 
Southern Company (The)   22,000    959,200 
         6,435,290 
           
TOTAL EQUITY SECURITIES (cost - $418,307,121)        469,699,601 

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2018 (Unaudited)(Concluded)
 

 

Description  No. of Shares   Value 
SHORT-TERM INVESTMENT - 0.55%        
MONEY MARKET FUNDS - 0.55%        
Fidelity Institutional Money Market Government Portfolio - Class I, 1.95% ^ (cost - $2,582,463)   2,582,463   $2,582,463 
           
TOTAL INVESTMENTS - 99.88% (cost - $420,889,584)        472,282,064 
           
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.12%        567,986 
           
NET ASSETS - 100.00%       $472,850,050 

 

__________________________
*Non-income producing security.
^The rate shown is the 7-day effective yield as of September 30, 2018.

 

See accompanying notes to schedule of investments.

 

 

 

 

CORNERSTONE TOTAL RETURN FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2018 (Unaudited)

 

 

Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2018:

 

Cost of portfolio investments  $421,130,833 
Gross unrealized appreciation  $60,298,961 
Gross unrealized depreciation   (9,147,730)
Net unrealized appreciation  $51,151,231 

 

The difference between the federal income tax cost of portfolio investments and the Schedule of Investments cost for 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, 2018 in valuing the Fund's investments carried at value:

 

VALUTION INPUTS 

INVESTMENTS

IN SECURITIES

   OTHER FINANCIAL INSTRUMENTS* 
Level 1 - Quoted Prices        
Equity Investments  $469,699,601   $- 
Short-Term Investments   2,582,463    - 
Level 2 - Other Significant Observable Inputs   -    - 
Level 3 - Significant Unobservable Inputs   -    - 
Total  $472,282,064   $- 

 

*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.

 

As of September 30, 2018, the Fund did not have any transfer in and out of any Level.

 

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, 2018.

 

The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the nine months ended September 30, 2018, 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-CSR on August 31, 2018 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 Financial Officer)

 
Date November 16, 2018    
       
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 16, 2018    
       
By (Signature and Title)* /s/ Theresa M. Bridge  
   

Theresa M. Bridge, Treasurer

(Principal Financial Officer)

 
       
Date November 16, 2018    

 

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