Annual Report by Investment Company (Form N-CSR)
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
| Investment Company Act file number | 811-05150 |
| (Exact name of registrant as specified in charter) |
| 45246 | ||
| (Address of principal executive offices) | (Zip code) |
| ( |
| Registrant's telephone number, including area code: | (513) 587-3400 |
| Date of fiscal year end: | ||
| Date of reporting period: |
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid
Item 1. Reports to Stockholders.
| (a) |
Cornerstone Strategic
CONTENTS
|
Letter to Stockholders |
1 |
|
Performance Information |
4 |
|
Portfolio Summary |
5 |
|
Schedule of Investments |
6 |
|
Statement of Assets and Liabilities |
12 |
|
Statement of Operations |
13 |
|
Statements of Changes in Net Assets |
14 |
|
Financial Highlights |
15 |
|
Notes to Financial Statements |
16 |
|
Report of Independent Registered Public Accounting Firm |
21 |
|
2024 Tax Information |
22 |
|
Additional Information Regarding the Fund's Directors and Corporate Officers |
23 |
|
Fund Investment Objectives, Policies and Risks |
25 |
|
Description of Dividend Reinvestment Plan |
34 |
|
Proxy Voting and Portfolio Holdings Information |
36 |
|
Summary of General Information |
36 |
|
Stockholder Information |
36 |
Letter to Stockholders
Dear Fellow Stockholders:
The following is the annual report for
Economic and Market Summary
Positive macroeconomic indicators in 2024 included strong productivity growth, a softening yet resilient labor market, and effective
Portfolio
Most of the Fund's portfolio comprises domestic large-cap stocks, which performed very well in 2024, matching the bullish gains seen in 2023 and driving the S&P 500 to new highs. Other than pullbacks in April and late summer, the stock market saw steady gains throughout the year. All stock market sectors ended the year with gains, except materials, which ended in the negative. For the second year in a row, communication services and information technology outpaced the rest of the market. The "Magnificent Seven" stocks comprised of Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Tesla, and
|
1 |
Letter to Stockholders(continued)
Managed Distribution Policy
The Fund has maintained its policy of regular distributions to stockholders, which continues to be popular with investors. These distributions are not tied to the Fund's investment income and capital gains and do not represent yield or investment retuon the Fund's portfolio. The policy of maintaining regular monthly distributions is designed to enhance stockholder value by increasing liquidity for individual investors and providing greater flexibility to manage their investment in the Fund. As always, stockholders can take their distributions in cash or reinvest them in shares of the Fund pursuant to the Fund's reinvestment plan. Pursuant to the Fund's distribution policy, the monthly distribution amount for the year 2025 was reset to
Distribution Reinvestment Considerations
The Fund's distribution reinvestment plan may at times provide significant benefits to plan participants; therefore, stockholders should evaluate the advantages of reinvesting their distribution payments through the plan. Under the plan, the method for determining the number of newly issued shares received when distributions are reinvested is determined by dividing the amount of the distribution either by the Fund's last reported NAV or by a price equal to the average closing price of the Fund over the five trading days preceding the payment date of the distribution, whichever is lower. When the Fund trades at a premium to its NAV, as it has in recent history, stockholders may find that reinvestments through the plan provide potential advantages worth considering.
Outlook
The
|
2 |
Letter to Stockholders(concluded)
suggest a bullish outlook for 2025. However, with a new presidential administration assuming office, the investment landscape could shift in unpredictable ways. Bull markets are never permanent, and transitions often bring a degree of uncertainty.
The Fund's Board of Directors, its officers, and its investment adviser appreciate your ongoing support. We are all aware that investors have placed their trust in us. We know you have a choice, and we all remain committed to continuing to provide our service to you.
|
|
|
|
3 |
|
|
Comparison of the Change in Value of a
|
Average Annual Total Returns (for periods ended |
|||
|
1 Year |
5 Years |
10 Years |
|
|
|
43.57% |
17.98% |
14.99% |
|
S&P 500® Index(b) |
25.02% |
14.53% |
13.10% |
|
(a) |
The Fund's investment retuat market value is based on the changes in market price of a share during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Fund's dividend reinvestment plan. Total investment retudoes not reflect brokerage commissions or the deduction of taxes a stockholder would pay on Fund distributions or the sale of Fund shares. |
|
(b) |
The S&P 500 Index tracks the stocks of 500 large companies. The index does not reflect expenses, fees, or sales charges, which would lower performance. The index is unmanaged and is not available for investment. |
|
4 |
|
|
SECTOR ALLOCATION
|
Sector |
Percent of |
|
Information Technology |
24.4 |
|
Financials |
12.3 |
|
Consumer Discretionary |
11.0 |
|
Health Care |
9.0 |
|
|
8.9 |
|
Exchange-Traded Funds |
8.6 |
|
Closed-End Funds |
7.2 |
|
Industrials |
6.6 |
|
Consumer Staples |
6.3 |
|
Energy |
2.2 |
|
Utilities |
1.8 |
|
Materials |
0.6 |
|
Real Estate |
0.5 |
|
Other |
0.6 |
|
Holding |
Sector |
Percent of |
|
|
1. |
|
Information Technology |
7.4 |
|
2. |
|
Information Technology |
5.5 |
|
3. |
|
Information Technology |
5.5 |
|
4. |
|
|
4.6 |
|
5. |
|
Consumer Discretionary |
4.5 |
|
6. |
Technology Select Sector SPDR® Fund (The) |
Exchange-Traded Funds |
2.9 |
|
7. |
|
Consumer Discretionary |
2.8 |
|
8. |
Industrial Select Sector SPDR® Fund (The) |
Exchange-Traded Funds |
2.1 |
|
9. |
|
|
1.9 |
|
10. |
|
Financials |
1.5 |
|
5 |
|
|
|
Description |
No. of |
Value |
||||||
|
EQUITY SECURITIES - 99.43% |
||||||||
|
CLOSED-END FUNDS - 7.24% |
||||||||
|
CONVERTIBLE SECURITY FUNDS - 0.03% |
||||||||
|
|
25,215 | $ | 446,558 | |||||
|
|
11,802 | 44,966 | ||||||
|
|
26,100 | 90,567 | ||||||
|
|
352 | 7,726 | ||||||
| 589,817 | ||||||||
|
DIVERSIFIED EQUITY - 1.49% |
||||||||
|
|
510,921 | 12,287,649 | ||||||
|
|
159,161 | 8,118,803 | ||||||
|
|
13,790 | 303,656 | ||||||
|
Liberty All-Star® |
12,600 | 87,570 | ||||||
|
Liberty All-Star® |
716,623 | 4,048,920 | ||||||
|
|
35,688 | 1,130,953 | ||||||
| 25,977,551 | ||||||||
|
GENERAL BOND FUNDS - 0.01% |
||||||||
|
|
17,100 | 258,381 | ||||||
|
GLOBAL - 1.02% |
||||||||
|
|
657,456 | 11,985,423 | ||||||
|
|
184,497 | 4,660,394 | ||||||
|
|
6,477 | 75,781 | ||||||
|
|
113,493 | 910,214 | ||||||
|
|
17,857 | 191,461 | ||||||
| 17,823,273 | ||||||||
|
HIGH YIELD FUNDS LEVERAGED - 0.04% |
||||||||
|
|
62,411 | 612,252 | ||||||
|
INCOME & PREFERRED STOCK - 0.73% |
||||||||
|
Calamos Strategic Total RetuFund |
714,571 | 12,655,052 | ||||||
|
John Hancock Preferred Income Fund II |
3,692 | 61,103 | ||||||
| 12,716,155 | ||||||||
|
NATURAL RESOURCES - 0.07% |
||||||||
|
|
53,573 | 1,164,677 | ||||||
|
OPTION ARBITRAGE/OPTIONS STRATEGIES - 3.26% |
||||||||
|
|
432,081 | 8,684,828 | ||||||
|
|
322,124 | 2,998,974 | ||||||
|
|
804,779 | 11,596,866 | ||||||
|
|
21,603 | 447,398 | ||||||
|
|
401,920 | 6,052,915 | ||||||
|
|
690,900 | 18,688,844 | ||||||
See accompanying notes to financial statements.
|
6 |
|
|
|
Description |
No. of |
Value |
||||||
|
OPTION ARBITRAGE/OPTIONS STRATEGIES (Continued) |
||||||||
|
|
582,625 | $ | 8,150,924 | |||||
|
|
20,161 | 357,858 | ||||||
| 56,978,607 | ||||||||
|
REAL ESTATE - 0.06% |
||||||||
|
|
50,121 | 241,082 | ||||||
|
|
10,000 | 122,400 | ||||||
|
Cohen & Steers REIT and |
12,221 | 255,419 | ||||||
|
|
27,343 | 316,632 | ||||||
|
|
33,400 | 118,570 | ||||||
| 1,054,103 | ||||||||
|
SECTOR EQUITY - 0.31% |
||||||||
|
|
127,101 | 479,171 | ||||||
|
|
135,651 | 4,841,384 | ||||||
| 5,320,555 | ||||||||
|
UTILITY - 0.22% |
||||||||
|
|
99,066 | 2,321,117 | ||||||
|
|
65,687 | 1,579,115 | ||||||
| 3,900,232 | ||||||||
|
TOTAL CLOSED-END FUNDS |
126,395,603 | |||||||
|
COMMON STOCKS - 83.58% |
||||||||
|
|
||||||||
|
|
423,800 | 80,708,472 | ||||||
|
|
164,400 | 6,169,932 | ||||||
|
|
56,400 | 33,022,764 | ||||||
|
|
16,600 | 14,795,912 | ||||||
|
|
38,100 | 8,409,813 | ||||||
|
|
115,400 | 4,614,846 | ||||||
|
|
66,600 | 7,415,910 | ||||||
| 155,137,649 | ||||||||
|
CONSUMER DISCRETIONARY - 10.95% |
||||||||
|
|
358,600 | 78,673,254 | ||||||
|
|
600 | 1,921,200 | ||||||
|
|
2,000 | 9,936,840 | ||||||
|
|
55,000 | 3,316,500 | ||||||
|
|
24,200 | 1,499,190 | ||||||
|
|
46,500 | 2,477,055 | ||||||
|
|
8,500 | 2,100,860 | ||||||
|
|
37,800 | 14,703,822 | ||||||
|
|
22,000 | 5,429,600 | ||||||
|
|
21,500 | 6,232,635 | ||||||
|
|
41,000 | 3,102,470 | ||||||
|
|
2,700 | 3,201,660 | ||||||
|
|
9,000 | 1,361,430 | ||||||
|
|
32,500 | 2,965,625 | ||||||
|
|
122,600 | 49,510,784 | ||||||
|
|
39,200 | 4,735,752 | ||||||
| 191,168,677 | ||||||||
|
CONSUMER STAPLES - 6.25% |
||||||||
|
|
50,400 | 2,635,416 | ||||||
|
|
8,800 | 444,576 | ||||||
|
|
246,200 | 15,328,412 | ||||||
See accompanying notes to financial statements.
|
7 |
|
|
|
Description |
No. of |
Value |
||||||
|
CONSUMER STAPLES (Continued) |
||||||||
|
|
25,231 | $ | 2,293,750 | |||||
|
|
2,300 | 508,300 | ||||||
|
|
21,500 | 19,699,805 | ||||||
|
|
7,600 | 576,232 | ||||||
|
|
11,800 | 752,486 | ||||||
|
|
5,200 | 880,620 | ||||||
|
|
32,500 | 1,043,900 | ||||||
|
|
4,900 | 642,096 | ||||||
|
|
18,400 | 565,064 | ||||||
|
Mondelēz |
44,000 | 2,628,120 | ||||||
|
|
61,500 | 3,232,440 | ||||||
|
|
57,300 | 8,713,038 | ||||||
|
|
60,700 | 7,305,245 | ||||||
|
|
86,300 | 14,468,195 | ||||||
|
|
11,400 | 1,541,052 | ||||||
|
|
285,700 | 25,812,995 | ||||||
| 109,071,742 | ||||||||
|
ENERGY - 2.25% |
||||||||
|
|
56,500 | 8,183,460 | ||||||
|
|
40,700 | 4,036,219 | ||||||
|
|
31,200 | 1,021,176 | ||||||
|
|
188,363 | 20,262,208 | ||||||
|
|
121,900 | 3,340,060 | ||||||
|
|
36,600 | 1,808,406 | ||||||
|
|
2,000 | 227,860 | ||||||
|
|
4,300 | 164,862 | ||||||
|
|
100 | 12,259 | ||||||
|
|
3,100 | 167,772 | ||||||
| 39,224,282 | ||||||||
|
FINANCIALS - 12.28% |
||||||||
|
|
16,500 | 1,706,760 | ||||||
|
|
23,500 | 6,974,565 | ||||||
|
|
8,100 | 589,680 | ||||||
|
|
9,300 | 3,340,188 | ||||||
|
|
8,000 | 2,270,800 | ||||||
|
|
361,300 | 15,879,135 | ||||||
|
|
57,800 | 26,199,584 | ||||||
|
|
5,400 | 5,535,594 | ||||||
|
|
3,700 | 659,784 | ||||||
|
|
83,100 | 6,150,231 | ||||||
|
|
13,500 | 3,730,050 | ||||||
|
|
122,600 | 8,629,814 | ||||||
|
|
13,300 | 3,088,659 | ||||||
|
|
12,100 | 2,485,582 | ||||||
|
|
13,500 | 7,730,370 | ||||||
|
|
18,300 | 2,726,883 | ||||||
|
|
112,200 | 26,895,462 | ||||||
|
|
18,300 | 3,887,103 | ||||||
|
|
33,200 | 17,482,124 | ||||||
|
|
22,200 | 1,817,736 | ||||||
|
|
8,100 | 3,834,297 | ||||||
|
Morgan Stanley |
64,900 | 8,159,228 | ||||||
|
|
3,800 | 2,280,038 | ||||||
See accompanying notes to financial statements.
|
8 |
|
|
|
Description |
No. of |
Value |
||||||
|
FINANCIALS (Continued) |
||||||||
|
|
52,100 | $ | 4,446,735 | |||||
|
|
14,100 | 2,719,185 | ||||||
|
|
26,700 | 6,397,587 | ||||||
|
|
11,700 | 5,826,951 | ||||||
|
|
3,000 | 722,670 | ||||||
|
|
58,700 | 2,807,621 | ||||||
|
|
62,000 | 19,594,480 | ||||||
|
|
140,900 | 9,896,816 | ||||||
| 214,465,712 | ||||||||
|
HEALTH |
||||||||
|
|
59,000 | 6,673,490 | ||||||
|
|
55,700 | 9,897,890 | ||||||
|
|
18,700 | 4,873,968 | ||||||
|
|
1,800 | 408,366 | ||||||
|
|
3,600 | 550,512 | ||||||
|
|
51,300 | 4,582,116 | ||||||
|
|
74,800 | 4,230,688 | ||||||
|
|
4,800 | 290,784 | ||||||
|
|
11,600 | 3,203,224 | ||||||
|
|
12,800 | 574,592 | ||||||
|
|
26,900 | 6,174,895 | ||||||
|
|
13,600 | 1,057,672 | ||||||
|
|
2,700 | 199,881 | ||||||
|
|
8,700 | 3,209,430 | ||||||
|
|
32,900 | 25,398,800 | ||||||
|
|
51,200 | 4,729,344 | ||||||
|
|
10,500 | 3,151,575 | ||||||
|
|
4,200 | 1,065,582 | ||||||
|
|
8,500 | 4,436,660 | ||||||
|
|
4,600 | 903,946 | ||||||
|
|
82,400 | 11,916,688 | ||||||
|
|
5,200 | 2,963,532 | ||||||
|
|
35,500 | 2,835,740 | ||||||
|
|
94,800 | 9,430,704 | ||||||
|
|
700 | 856,576 | ||||||
|
|
170,100 | 4,512,753 | ||||||
|
|
4,300 | 3,063,019 | ||||||
|
|
3,625 | 239,468 | ||||||
|
|
14,400 | 5,184,720 | ||||||
|
|
15,300 | 7,959,519 | ||||||
|
|
35,300 | 17,856,858 | ||||||
|
|
9,700 | 3,906,190 | ||||||
| 156,339,182 | ||||||||
|
INDUSTRIALS - 6.63% |
||||||||
|
|
9,600 | 1,239,264 | ||||||
|
|
11,700 | 3,424,941 | ||||||
|
|
29,300 | 5,186,100 | ||||||
|
|
14,700 | 1,003,422 | ||||||
|
|
26,400 | 9,576,864 | ||||||
|
|
5,600 | 1,023,120 | ||||||
|
|
112,100 | 3,617,467 | ||||||
|
|
3,400 | 1,185,240 | ||||||
|
|
16,300 | 6,906,310 | ||||||
|
|
10,700 | 3,551,009 | ||||||
|
|
34,700 | 4,300,371 | ||||||
|
|
5,800 | 1,631,714 | ||||||
|
|
7,825 | 2,573,877 | ||||||
|
|
16,400 | 4,321,236 | ||||||
|
|
32,100 | 5,353,959 | ||||||
See accompanying notes to financial statements.
|
9 |
|
|
|
Description |
No. of |
Value |
||||||
|
INDUSTRIALS (Continued) |
||||||||
|
|
28,800 | $ | 6,505,632 | |||||
|
|
19,400 | 4,919,064 | ||||||
|
|
9,500 | 749,835 | ||||||
|
|
12,000 | 5,831,280 | ||||||
|
Norfolk SoutheCorporation |
14,500 | 3,403,150 | ||||||
|
|
3,000 | 1,407,870 | ||||||
|
|
3,800 | 670,320 | ||||||
|
|
30,100 | 3,131,002 | ||||||
|
|
2,100 | 1,335,663 | ||||||
|
|
7,300 | 1,023,606 | ||||||
|
|
5,200 | 1,046,136 | ||||||
|
|
7,200 | 2,057,688 | ||||||
|
|
66,600 | 7,706,952 | ||||||
|
|
6,400 | 2,363,840 | ||||||
|
|
2,900 | 3,675,112 | ||||||
|
|
12,600 | 760,032 | ||||||
|
|
27,300 | 6,225,492 | ||||||
|
|
19,800 | 2,496,780 | ||||||
|
|
10,766 | 1,096,517 | ||||||
|
|
22,600 | 4,560,454 | ||||||
| 115,861,319 | ||||||||
|
INFORMATION TECHNOLOGY - 24.39% |
||||||||
|
|
24,000 | 8,442,960 | ||||||
|
|
6,800 | 3,023,824 | ||||||
|
|
51,100 | 6,172,369 | ||||||
|
|
16,100 | 3,420,606 | ||||||
|
|
517,400 | 129,567,308 | ||||||
|
|
54,400 | 8,847,072 | ||||||
|
|
111,300 | 25,803,792 | ||||||
|
|
133,000 | 7,873,600 | ||||||
|
|
8,800 | 5,530,800 | ||||||
|
|
3,000 | 1,890,360 | ||||||
|
|
36,000 | 2,600,280 | ||||||
|
|
6,500 | 547,040 | ||||||
|
|
227,500 | 95,891,250 | ||||||
|
|
716,900 | 96,272,501 | ||||||
|
|
59,300 | 9,881,752 | ||||||
|
|
18,200 | 2,795,884 | ||||||
|
|
29,600 | 9,896,168 | ||||||
|
|
5,700 | 2,766,552 | ||||||
|
|
25,100 | 4,706,501 | ||||||
| 425,930,619 | ||||||||
|
MATERIALS - 0.63% |
||||||||
|
|
4,800 | 1,392,192 | ||||||
|
|
14,800 | 843,008 | ||||||
|
|
6,800 | 1,593,376 | ||||||
|
|
9,100 | 346,528 | ||||||
|
|
10,800 | 4,521,636 | ||||||
|
|
4,900 | 571,879 | ||||||
|
|
4,900 | 1,665,657 | ||||||
| 10,934,276 | ||||||||
|
REAL ESTATE - 0.53% |
||||||||
|
|
6,800 | 1,247,188 | ||||||
|
|
3,000 | 659,910 | ||||||
|
|
12,500 | 1,641,125 | ||||||
|
|
2,700 | 2,545,803 | ||||||
See accompanying notes to financial statements.
|
10 |
|
|
|
Description |
No. of |
Value |
||||||
|
REAL ESTATE (Continued) |
||||||||
|
|
8,500 | $ | 609,960 | |||||
|
|
4,300 | 1,287,592 | ||||||
|
|
17,200 | 918,652 | ||||||
|
|
2,200 | 448,360 | ||||||
| 9,358,590 | ||||||||
|
UTILITIES - 1.84% |
||||||||
|
|
23,900 | 2,204,297 | ||||||
|
|
13,500 | 1,680,615 | ||||||
|
|
27,333 | 6,114,665 | ||||||
|
|
22,700 | 1,222,622 | ||||||
|
|
25,600 | 2,758,144 | ||||||
|
|
66,800 | 2,514,352 | ||||||
|
|
92,100 | 6,602,649 | ||||||
|
Sempra |
31,500 | 2,763,180 | ||||||
|
SoutheCompany |
61,300 | 5,046,216 | ||||||
|
|
12,300 | 1,156,692 | ||||||
| 32,063,432 | ||||||||
|
TOTAL COMMON STOCKS |
1,459,555,480 | |||||||
|
EXCHANGE-TRADED FUNDS - 8.61% |
||||||||
|
|
112,500 | 8,843,625 | ||||||
|
Energy Select Sector SPDR® Fund (The) |
73,700 | 6,313,142 | ||||||
|
Health Care Select Sector SPDR® Fund (The) |
43,700 | 6,011,809 | ||||||
|
Industrial Select Sector SPDR® Fund (The) |
273,200 | 35,996,832 | ||||||
|
Materials Select Sector SPDR® Fund (The) |
216,900 | 18,249,966 | ||||||
|
Real Estate Select Sector SPDR® Fund (The) |
515,900 | 20,981,653 | ||||||
|
Technology Select Sector SPDR® Fund (The) |
215,500 | 50,108,060 | ||||||
|
Vanguard Information Technology Index Fund ETF |
6,100 | 3,792,980 | ||||||
|
TOTAL EXCHANGE-TRADED FUNDS |
150,298,067 | |||||||
|
TOTAL EQUITY SECURITIES (cost - |
1,736,249,150 | |||||||
|
SHORT-TERM INVESTMENT - 0.62% |
||||||||
|
MONEY MARKET FUND - 0.62% |
||||||||
|
Fidelity Institutional Money Market Government Portfolio - Class I, 4.38% ^ (cost - |
10,775,666 | 10,775,666 | ||||||
|
TOTAL INVESTMENTS - 100.05% (cost - |
1,747,024,816 | |||||||
|
LIABILITIES IN EXCESS OF OTHER ASSETS-(0.05%) |
(800,086 | ) | ||||||
|
NET ASSETS - 100.00% |
$ | 1,746,224,730 | ||||||
|
* |
Non-income producing security. |
|
^ |
The rate shown is the 7-day effective yield as of |
|
ADR |
American Depositary Receipts |
|
ETF |
Exchange-Traded Funds |
|
plc |
|
See accompanying notes to financial statements.
|
11 |
|
|
|
ASSETS |
||||
|
Investments, at value (cost - |
$ | 1,747,024,816 | ||
|
Receivables: |
||||
|
Dividends |
1,070,501 | |||
|
Prepaid expenses |
44,299 | |||
|
Total Assets |
1,748,139,616 | |||
|
LIABILITIES |
||||
|
Payables: |
||||
|
Investment management fees (Note D) |
1,521,052 | |||
|
Directors' fees and expenses |
77,986 | |||
|
Administration and fund accounting fees (Note D) |
59,506 | |||
|
Other accrued expenses |
256,342 | |||
|
Total Liabilities |
1,914,886 | |||
|
NET ASSETS (applicable to 248,400,965 shares of common stock) |
$ | 1,746,224,730 | ||
|
NET ASSET VALUE PER SHARE ( |
$ | 7.03 | ||
|
NET ASSETS CONSISTS OF |
||||
|
Common stock, |
$ | 248,401 | ||
|
Paid-in capital |
1,223,307,075 | |||
|
Accumulated earnings |
522,669,254 | |||
|
Net assets applicable to shares outstanding |
$ | 1,746,224,730 |
See accompanying notes to financial statements.
|
12 |
|
|
|
INVESTMENT INCOME |
||||
|
Income: |
||||
|
Dividends |
$ | 24,479,727 | ||
|
Expenses: |
||||
|
Investment management fees (Note D) |
16,943,070 | |||
|
Administration and fund accounting fees (Note D) |
709,799 | |||
|
Directors' fees and expenses |
308,928 | |||
|
Printing |
229,160 | |||
|
Custodian fees |
191,518 | |||
|
Legal and audit fees |
68,911 | |||
|
Transfer agent fees |
46,267 | |||
|
Stock exchange listing fees |
34,010 | |||
|
Insurance |
29,087 | |||
|
Miscellaneous |
47,144 | |||
|
Total Expenses |
18,607,894 | |||
|
Net Investment Income |
5,871,833 | |||
|
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS |
||||
|
Net realized gain from investments |
106,993,804 | |||
|
Long-term capital gain distributions from regulated investment companies |
9,360,996 | |||
|
Net change in unrealized appreciation/(depreciation) in value of investments |
251,974,330 | |||
|
Net realized and unrealized gain on investments |
368,329,130 | |||
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 374,200,963 |
See accompanying notes to financial statements.
|
13 |
|
|
|
For the |
For the |
||||||||
|
INCREASE IN NET ASSETS |
|||||||||
|
Operations: |
|||||||||
|
Net investment income |
$ | 5,871,833 | $ | 5,719,087 | |||||
|
Net realized gain from investments |
116,354,800 | 120,041,542 | |||||||
|
Net change in unrealized appreciation/(depreciation) in value of investments |
251,974,330 | 267,486,319 | |||||||
|
Net increase in net assets resulting from operations |
374,200,963 | 393,246,948 | |||||||
|
Distributions to stockholders (Note B): |
|||||||||
|
From earnings |
(120,825,925 | ) | (124,050,838 | ) | |||||
|
Return-of-capital |
(192,374,807 | ) | (205,965,385 | ) | |||||
|
Total distributions to stockholders |
(313,200,732 | ) | (330,016,223 | ) | |||||
|
Common stock transactions: |
|||||||||
|
Proceeds from 14,921,848 and 17,467,548 shares newly issued in reinvestment of dividends and distributions, respectively |
105,032,122 | 116,621,678 | |||||||
|
Net increase in net assets from common stock transactions |
105,032,122 | 116,621,678 | |||||||
|
Total increase in net assets |
166,032,353 | 179,852,403 | |||||||
|
NET ASSETS |
|||||||||
|
Beginning of year |
1,580,192,377 | 1,400,339,974 | |||||||
|
End of year |
$ | 1,746,224,730 | $ | 1,580,192,377 | |||||
See accompanying notes to financial statements.
|
14 |
|
|
|
Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated. This information has been derived from information provided in the financial statements and market price data for the Fund's shares. |
|
For the Years Ended |
||||||||||||||||||||
|
2024 |
2023 |
2022 |
2021 |
2020 |
||||||||||||||||
|
PER SHARE OPERATING PERFORMANCE |
||||||||||||||||||||
|
Net asset value, beginning of year |
$ | 6.77 | $ | 6.48 | $ | 10.23 | $ | 9.93 | $ | 10.80 | ||||||||||
|
Net investment income # |
0.02 | 0.03 | 0.02 | 0.01 | 0.05 | |||||||||||||||
|
Net realized and unrealized gain/(loss) on investments |
1.54 | 1.74 | (2.20 | ) | 1.86 | 1.31 | ||||||||||||||
|
Net increase/(decrease) in net assets resulting from operations |
1.56 | 1.77 | (2.18 | ) | 1.87 | 1.36 | ||||||||||||||
|
Dividends and distributions to stockholders: |
||||||||||||||||||||
|
Net investment income |
(0.02 | ) | (0.03 | ) | (0.03 | ) | (0.01 | ) | (0.05 | ) | ||||||||||
|
Net realized capital gains |
(0.48 | ) | (0.53 | ) | (0.22 | ) | (0.92 | ) | (0.78 | ) | ||||||||||
|
Return-of-capital |
(0.80 | ) | (0.92 | ) | (1.91 | ) | (0.99 | ) | (1.40 | ) | ||||||||||
|
Total dividends and distributions to stockholders |
(1.30 | ) | (1.48 | ) | (2.16 | ) | (1.92 | ) | (2.23 | ) | ||||||||||
|
Common stock transactions: |
||||||||||||||||||||
|
Anti-dilutive effect due to shares issued: |
||||||||||||||||||||
|
Rights offering |
- | - | 0.59 | 0.35 | - | |||||||||||||||
|
Reinvestment of dividends and distributions |
0.00 | + | 0.00 | + | 0.00 | + | 0.00 | + | 0.00 | + | ||||||||||
|
Common stock repurchases |
- | - | - | - | 0.00 | + | ||||||||||||||
|
Total common stock transactions |
0.00 | + | 0.00 | + | 0.59 | 0.35 | 0.00 | + | ||||||||||||
|
Net asset value, end of year |
$ | 7.03 | $ | 6.77 | $ | 6.48 | $ | 10.23 | $ | 9.93 | ||||||||||
|
Market value, end of year |
$ | 8.59 | $ | 7.19 | $ | 7.37 | $ | 14.29 | $ | 11.73 | ||||||||||
|
Total investment retu(a) |
43.57 | % | 21.40 | % | (32.21 | )% | 47.04 | % | 31.58 | % | ||||||||||
|
RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
|
Net assets, end of year (000 omitted) |
$ | 1,746,225 | $ | 1,580,192 | $ | 1,400,340 | $ | 1,227,371 | $ | 769,031 | ||||||||||
|
Ratio of net expenses to average net assets (b) |
1.10 | % | 1.11 | % | 1.11 | % | 1.12 | % | 1.14 | % | ||||||||||
|
Ratio of net investment income to average net assets (c) |
0.35 | % | 0.38 | % | 0.31 | % | 0.14 | % | 0.47 | % | ||||||||||
|
Portfolio turnover rate |
22 | % | 46 | % | 39 | % | 72 | % | 95 | % | ||||||||||
|
# |
Based on average shares outstanding. |
|
+ |
Amount rounds to less than |
|
(a) |
Total investment retuat market value is based on the changes in market price of a share during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Fund's dividend reinvestment plan. Total investment retudoes not reflect brokerage commissions. |
|
(b) |
Expenses do not include expenses of investment companies in which the Fund invests. |
|
(c) |
Recognition of net investment income by the Fund may be affected by the timing of the declaration of dividends, if any, by investment companies in which the Fund invests. |
See accompanying notes to financial statements.
|
15 |
|
|
NOTE A. ORGANIZATION
The Fund operates as a single operating segment. The Fund's income, expenses, assets and performance are regularly monitored and assessed as a whole by
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
Management Estimates:The preparation of financial statements in conformity with accounting principles generally accepted in
Subsequent Events:The Fund has evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date its financial statements were issued. Based on this evaluation, no additional disclosures or adjustments were required to such financial statements.
Portfolio Valuation:Investments are stated at value in the accompanying financial statements. Readily marketable portfolio securities listed on the
Readily marketable securities traded in the over-the counter market, including listed securities whose primary market is believed by the Investment Manager, as the Fund's Valuation Designee, to be over-the-counter, are valued at the mean of the current bid and asked prices as reported by the NASDAQ or, in the case of securities not reported by the NASDAQ or a comparable source, as the Investment Manager, as the Fund's Valuation Designee, deems appropriate to reflect their fair market value. Where securities are traded on more than one exchange and also over-the-counter, the securities will generally be valued using the
|
16 |
|
|
quotations the Investment Manager, as the Fund's Valuation Designee, believes reflect most closely the value of such securities. At
The net asset value per share of the Fund is calculated weekly and on the last business day of the month with the exception of those days on which the NYSE is closed.
The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the year ended
Investment Transactions and Investment Income:Investment transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on an accrual basis; dividend income is recorded on the ex-dividend date.
The Fund holds certain investments which pay distributions to their stockholders based upon available funds from operations. It is possible for these dividends to exceed the underlying investments' taxable earnings and profits resulting in the excess portion of such dividends being designated as a retuof capital. Distributions received from investments in securities that represent a retuof capital or long-term capital gains are treated as a reduction of the cost of investments or as a realized gain, respectively.
Taxes:No provision is made for
The Accounting for Uncertainty in Income Taxes Topic of the FASB Accounting Standards Codification defines the threshold for recognizing the benefits of tax-retupositions in the financial statements as "more-likely-than-not" to be sustained by the taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50 percent likely to be realized. The Fund's policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of
Distributions to Stockholders:Effective
|
17 |
|
|
Board may terminate this distribution policy at any time and such termination may have an adverse effect on the market price for the Fund's common shares. The Fund determines annually whether to distribute any net realized long-term capital gains in excess of net realized short-term capital losses, including capital loss carryovers, if any. To the extent that the Fund's taxable income in any calendar year exceeds the aggregate amount distributed pursuant to this distribution policy, an additional distribution may be made to avoid the payment of a 4%
NOTE C. FAIR VALUE
As required by the Fair Value Measurement and Disclosures Topic of the 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. |
At the
|
18 |
|
|
market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before the Fund's NAV calculation that may affect a security's value, or the Valuation Designee is aware of any other data that calls into question the reliability of market quotations.
The following is a summary of the Fund's investments and the inputs used as of
|
Valuation Inputs |
Investments |
Other |
||||||
|
Level 1 - Quoted Prices |
||||||||
|
|
$ | 1,736,249,150 | $ | - | ||||
|
|
10,775,666 | - | ||||||
|
Level 2 - Other Significant Observable Inputs |
- | - | ||||||
|
Level 3 - Significant Unobservable Inputs |
- | - | ||||||
|
Total |
$ | 1,747,024,816 | $ | - | ||||
|
* |
Other financial instruments include futures, forwards and swap contracts, if any. |
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
NOTE D. AGREEMENTS WITH AFFILIATES
At
Investment Management Agreement
Cornerstone serves as the Fund's Investment Manager with respect to all investments. As compensation for its investment management services, Cornerstone receives from the Fund an annual fee, calculated weekly and paid monthly, equal to 1.00% of the Fund's average weekly net assets. For the year ended
Fund Accounting and Administration Agreement
Under the fund accounting and administration agreement with the Fund,
NOTE E. INVESTMENT IN SECURITIES
For the year ended
|
19 |
|
|
NOTE F. SHARES OF COMMON STOCK
The Fund has 800,000,000 shares of common stock authorized and 248,400,965 shares issued and outstanding at
|
Shares at beginning of year |
233,479,117 | |||
|
Shares newly issued from rights offering |
- | |||
|
Shares issued in reinvestment of dividends and distributions |
14,921,848 | |||
|
Shares at end of year |
248,400,965 |
NOTE G. FEDERAL INCOME TAXES
Income and capital gains distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of losses deferred due to wash sales.
The tax character of dividends and distributions paid to stockholders during the years ended
|
|
|
|||||||
|
Ordinary Income |
$ | 34,177,537 | $ | 14,232,381 | ||||
|
Long-Term Capital Gains |
86,648,388 | 109,818,457 | ||||||
|
|
192,374,807 | 205,965,385 | ||||||
|
Total Distributions |
$ | 313,200,732 | $ | 330,016,223 | ||||
At
|
Net unrealized appreciation |
$ | 522,669,254 | ||
|
Total accumulated earnings |
$ | 522,669,254 |
The following information is computed on a tax basis for each item as of
|
Cost of portfolio investments |
$ | 1,224,355,562 | ||
|
Gross unrealized appreciation |
$ | 558,506,624 | ||
|
Gross unrealized depreciation |
(35,837,370 | ) | ||
|
Net unrealized appreciation |
$ | 522,669,254 |
|
20 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of
The Fund's financial highlights for the years ended
Basis for Opinion
These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of
We have served as the Fund's auditor since 2022.
|
21 |
2024 Tax Information(unaudited)
This notification along with Form 1099-DIV reflects the amount to be used by calendar year taxpayers on their
|
SOURCES OF DIVIDENDS AND DISTRIBUTIONS |
||||||||||||||||||||||||
|
Payment Dates: |
|
|
|
|
|
|
||||||||||||||||||
|
Ordinary Income (1) |
$ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | ||||||||||||
|
|
0.0667 | 0.0667 | 0.0667 | 0.0667 | 0.0667 | 0.0667 | ||||||||||||||||||
|
Capital Gain (3) |
0.0300 | 0.0300 | 0.0300 | 0.0300 | 0.0300 | 0.0300 | ||||||||||||||||||
|
Total |
$ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | ||||||||||||
|
Payment Dates: |
|
|
|
|
|
|
||||||||||||||||||
|
Ordinary Income (1) |
$ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | $ | 0.0119 | ||||||||||||
|
|
0.0667 | 0.0667 | 0.0667 | 0.0667 | 0.0667 | 0.0667 | ||||||||||||||||||
|
Capital Gain (3) |
0.0300 | 0.0300 | 0.0300 | 0.0300 | 0.0300 | 0.0300 | ||||||||||||||||||
|
Total |
$ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | $ | 0.1086 | ||||||||||||
Notes:
|
(1) |
Ordinary Income Dividends - This is the total per share amount of ordinary income dividends and short-term capital gain distributions (if applicable) included in the amount reported in Box 1a on Form 1099-DIV. |
|
(2) |
|
|
(3) |
Capital Gains Distributions - This is the total per share amount of capital gain distribution included in the amount reported in Box 2a on Form 1099-DIV. |
The Fund has met the requirements to pass through 100% of its ordinary income dividends as qualified dividends, which are subject to a maximum federal tax rate of 23.8% (20% qualified dividends maximum long-term capital gain rate plus 3.8% Medicare tax). This is reported in Box 1b on Form 1099-DIV. Ordinary income dividends should be reported as dividend income on Form 1040. Please note that to utilize the lower tax rate for qualifying dividend income, stockholders generally must have held their shares in the
Long-term capital gain distributions arise from gains on securities held by the
Foreign stockholders will generally be subject to
In general, distributions received by tax-exempt recipients (e.g., IRA's and Keoghs) need not be reported as taxable income for
Stockholders are strongly advised to consult their own tax advisers with respect to the tax consequences of their investment in the Fund.
|
22 |
Additional Information Regarding the Fund's Directorsand Corporate Officers(unaudited)
|
|
Position(s) |
Principal Occupation |
Position |
|
|
Chairman of the Board of Directors and President |
President of |
1998 |
|
( |
Director; Assistant Secretary |
Chief Investment Officer of |
2022 |
|
( |
Director; Assistant Secretary |
Chief Executive Officer of |
2021 |
|
|
Director; Audit, Nominating and Corporate Governance Committee Member |
Director, |
2014 |
|
( |
Director; Audit, Nominating and Corporate Governance Committee Member |
President and CEO of |
2025 |
|
( |
Director; Audit, Nominating and Corporate Governance Committee Member |
President and Founder of |
2019 |
|
( |
Director; Chairman of Audit Committee; Nominating and Corporate Governance Committee Member |
Senior Advisor and Consultant, |
2020 |
|
( |
Director; Audit, Nominating and Corporate Governance Committee Member |
Founder and CEO, |
2017 |
|
23 |
Additional Information Regarding the Fund's Directorsand Corporate Officers(unaudited) (concluded)
|
|
Position(s) |
Principal Occupation |
Position |
|
|
Director; Audit, Nominating and Corporate Governance Committee Member |
Chief Executive Office, |
2001 |
|
|
Director; Chairman of |
Attorney and senior member of |
2001 |
|
|
Chief Compliance Officer |
Counsel and Chief Compliance Officer of |
2024 |
|
|
Secretary and Assistant Treasurer |
Vice President of |
2019, 2013 |
|
|
Treasurer |
Senior Vice President, Relationship Management of |
2022 |
|
* |
The mailing address of each Director and/or Officer with respect to the Fund's operation is |
|
** |
Designates a director who is an "interested person" of the Fund as defined by the Investment Company Act of 1940, as amended. Messrs. Bradshaw are interested persons of the Fund by virtue of their current position with the Investment Adviser of the Fund. |
|
24 |
Fund Investment Objectives, Policies and Risks(unaudited)
Investment Objective
The investment objective of
Investment Strategies
The Fund's portfolio, under normal market conditions, will consist principally of the equity securities of
In determining which securities to buy for the Fund's portfolio, the Investment Manager uses a balanced approach, including "value" and "growth" investing by seeking out companies at reasonable prices, without regard to sector or industry, which demonstrate favorable long-term growth characteristics. Valuation and growth characteristics may be considered for purposes of selecting potential investment securities. In general, valuation analysis is used to determine the inherent value of the company by analyzing financial information such as a company's price to book, price to sales, retuon equity, and retuon assets ratios; and growth analysis is used to determine a company's potential for long-term dividends and earnings growth due to market-oriented factors such as growing market share, the launch of new products or services, the strength of its management and market demand. Fluctuations in these characteristics may trigger trading decisions to be made by the Investment Manager.
Although the Fund has the ability to invest a significant portion of its assets in non-
The Fund may invest without limitation in other closed-end investment companies and Exchange-Traded Funds ("ETFs"), provided that the Fund limits its investment in securities issued by other investment companies so that not more than 3% of the outstanding voting stock of any one investment company will be owned by the Fund. As a stockholder in any investment company, the Fund will bear its ratable share of the investment company's expenses and would remain subject to payment of the Fund's advisory and administrative fees with respect to the assets so invested.
To comply with provisions of the Investment Company Act of 1940, as amended (the "1940 Act"), on any matter upon which the Fund is solicited to vote as a stockholder in an investment company in which it invests, the Investment Manager votes such shares in the same general proportion as shares held by other stockholders of that investment company. The Fund does not and will not invest in any other closed-end funds managed by the Investment Manager.
|
25 |
Fund Investment Objectives, Policies and Risks(unaudited) (continued)
The Fund may invest up to 15% of its assets in illiquid
The Fund's investment policies emphasize long-term investment in securities. Therefore, the Fund's annual portfolio turnover rate is expected to continue to be relatively low, normally ranging between 10% and 90%. Higher portfolio turnover rates resulting from more actively traded portfolio securities generally result in higher transaction costs, including brokerage commissions and related capital gains or losses.
The Fund's foregoing investment policies may be changed by the Fund's Board of Directors without stockholder vote.
Although the Fund does not anticipate having any securities lending income during the current calendar year, the Fund may lend the securities that it owns to others, which would allow the Fund the opportunity to eaadditional income. Although the Fund will require the borrower of the securities to post collateral for the loan in accordance with market practice and the terms of the loan will require that the Fund be able to reacquire the loaned securities if certain events occur, the Fund is still subject to the risk that the borrower of the securities may default, which could result in the Fund losing money, which would result in a decline in the Fund's net asset value.
The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund's principal investment strategies in attempting to respond to adverse market, economic, political or other conditions. During such times, the Fund may temporarily invest up to 100% of its assets in cash or cash equivalents, including money market instruments, prime commercial paper, repurchase agreements,
The Investment Manager may invest the Fund's cash balances in any investments it deems appropriate. Such investments may include, without limitation and as permitted under the 1940 Act, money market funds,
The Fund has no current intent to use leverage; however, the Fund reserves the right to utilize limited leverage through issuing preferred shares. The Fund also may borrow money in amounts not exceeding 10% of its total assets (including the amount borrowed) for temporary or emergency purposes, including the payment of dividends and the settlement of securities transactions, which otherwise might require untimely dispositions of Fund securities. In addition, the Fund may incur leverage through the use of investment management techniques (e.g., "uncovered" sales of put and call options, futures contracts and options on futures contracts). In order to hedge against adverse market shifts and for non-hedging, speculative purposes, the Fund may utilize up to 5% of its net assets to purchase put and call options on securities or stock indices.
Risk Factors
An investment in the Fund's shares is subject to risks. The value of the Fund's investments will increase or decrease based on changes in the prices of the investments it holds. You could lose money by investing in the Fund. By itself, the Fund does not constitute a balanced investment program. You should consider carefully the following principal risks before investing in the Fund. There may be additional risks that the Fund does not currently foresee or consider material. You may wish to consult with your legal or tax advisors, before deciding whether to invest in the Fund. This section describes the principal risk factors associated with investment in
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
the Fund specifically, as well as those factors generally associated with investment in an investment company with investment objectives, investment policies, capital structure or trading markets similar to the Fund's. Each risk summarized below is a risk of investing in the Fund and different risks may be more significant at different times depending upon market conditions or other factors. The Fund bears these risks directly and indirectly through its investments in other investment companies.
Principal Risks
Stock Market Volatility.Stock markets can be volatile. In other words, the prices of stocks can rise or fall rapidly in response to developments affecting a specific company or industry, changing economic, political or market conditions, inflation, changes in interest rate levels, lack of liquidity in the markets, volatility in the equities or other securities markets, adverse investor sentiment or political events. The Fund is subject to the general risk that the value of its investments may decline if the stock markets perform poorly. There is also a risk that the Fund's investments will underperform either the securities markets generally or particular segments of the securities markets.
Market Disruption and Geopolitical Risk.The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Governments may respond aggressively to such events, including by closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, as well as the forced or voluntary closure of, or operational changes to, many retail and other businesses, which could have negative impacts, and in many cases severe negative impacts, on markets worldwide. War, terrorism, and related geopolitical events (and their aftermath) have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on
The COVID-19 outbreak in 2020 resulted in travel restrictions and disruptions, closed borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, quarantines, event cancellations and restrictions, service cancellations or reductions, disruptions to business operations, supply chains and customer activity, lower consumer demand for goods and services, as well as general conceand uncertainty that has negatively affected the economic environment. The impact of this outbreak and any other epidemic or pandemic that may arise in the future could adversely affect the economies of many nations or the entire global economy, the financial performance of individual issuers, borrowers and sectors and the health of capital markets and other markets generally in potentially significant and unforeseen ways. This crisis or other public health crises may also exacerbate other pre-existing political, social and economic risks in certain countries or globally. The foregoing could lead to a significant economic downtuor recession, increased market volatility, a greater number of market closures, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts, which may vary across asset classes, may adversely affect the performance of the Fund and a stockholder's investment in the Fund.
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
Issuer Specific Changes.Changes in the financial condition of an issuer, changes in the specific economic or political conditions that affect a particular type of security or issuer, and changes in general economic or political conditions can affect the credit quality or value of an issuer's securities. Lower-quality debt securities tend to be more sensitive to these changes than higher-quality debt securities.
Closed-End Fund Risk.Closed-end investment companies are subject to the risks of investing in the underlying securities. The Fund, as a holder of the securities of the closed-end investment company, will bear its pro rata portion of the closed-end investment company's expenses, including advisory fees. These expenses are in addition to the direct expenses of the Fund's own operations.
Common Stock Risk.The Fund will invest a significant portion of its net assets in common stocks. Common stocks represent an ownership interest in a company. The Fund may also invest in securities that can be exercised for or converted into common stocks (such as convertible preferred stock). Common stocks and similar equity securities are more volatile and more risky than some other forms of investment. Therefore, the value of your investment in the Fund may sometimes decrease instead of increase. Common stock prices fluctuate for many reasons, including changes in investors' perceptions of the financial condition of an issuer, the general condition of the relevant stock market or when political or economic events affecting the issuers occur. In addition, common stock prices may be sensitive to rising interest rates, as the costs of capital rise for issuers. Because convertible securities can be converted into equity securities, their values will normally increase or decrease as the values of the underlying equity securities increase or decrease. The common stocks in which the Fund will invest are structurally subordinated to preferred securities, bonds and other debt instruments in a company's capital structure in terms of priority to corporate income and assets and, therefore, will be subject to greater risk than the preferred securities or debt instruments of such issuers.
Defensive Positions.During periods of adverse market or economic conditions, the Fund may temporarily invest all or a substantial portion of its net assets in cash or cash equivalents. The Fund would not be pursuing its investment objective in these circumstances and could miss favorable market developments.
Foreign Securities Risk.Investments in securities of non-
Global Market Risk.An investment in Fund shares is subject to investment risk, including the possible loss of the entire principal amount invested. The Fund is subject to the risk that geopolitical and other similar events will disrupt the economy on a national or global level. For instance, war, terrorism, market manipulation, government defaults, government shutdowns, political changes or diplomatic developments, public health emergencies (such as the spread of infectious diseases, pandemics and epidemics) and natural/environmental disasters can all negatively impact the securities markets.
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
Managed Distribution Policy Risk.Under the Fund's managed distribution policy (the "Distribution Policy"), the Fund makes monthly distributions to stockholders at a rate that may include periodic distributions of its net income and net capital gains ("Net Earnings"), or from return-of-capital. For any fiscal year where total cash distributions exceeded Net Earnings (the "Excess"), the Excess would decrease the Fund's total assets and, as a result, would have the likely effect of increasing the Fund's expense ratio. There is a risk that the total Net Earnings from the Fund's portfolio would not be great enough to offset the amount of cash distributions paid to stockholders. If this were to be the case, the Fund's assets would be depleted, and there is no guarantee that the Fund would be able to replace the assets. In addition, in order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action. Furthermore, such assets used to make distributions will not be available for investment pursuant to the Fund's investment objective. Distributions may constitute a retuof capital to stockholders and lower the tax basis in their shares which, for the taxable stockholders, will defer any potential gains until the shares are sold. For the taxable stockholders, the portion of distribution that constitutes ordinary income and/or capital gains is taxable to such stockholders in the year the distribution is declared. A retuof capital is non-taxable to the extent of the stockholder's basis in the shares. The stockholders would reduce their basis (but not below zero) in the shares by the amount of the distribution and therefore may result in an increase in the amount of any taxable gain on a subsequent disposition of such shares, even if such shares are sold at a loss to the stockholder's original investment amount. Any retuof capital will be separately identified when stockholders receive their tax statements. Any retuof capital that exceeds cost basis may be treated as capital gain. Stockholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in the Fund. The Fund may need to raise additional capital in order to maintain the Distribution Policy.
Management Risk.The Fund is subject to management risk because it is an actively managed portfolio. The Fund's successful pursuit of its investment objective depends upon the Investment Manager's ability to find and exploit market inefficiencies with respect to undervalued securities. Such situations occur infrequently and sporadically and may be difficult to predict and may not result in a favorable pricing opportunity that allows the Investment Manager to fulfill the Fund's investment objective. The Investment Manager's security selections and other investment decisions might produce losses or cause the Fund to underperform when compared to other funds with similar investment goals. If one or more key individuals leave the employ of the Investment Manager, the Investment Manager may not be able to hire qualified replacements or may require an extended time to do so. This could prevent the Fund from achieving its investment objective.
Other Investment Company Securities Risk.The Fund may invest in the securities of other closed-end investment companies and in ETFs. Investing in other investment companies and ETFs involves substantially the same risks as investing directly in the underlying instruments, but the total retuon such investments at the investment company level may be reduced by the operating expenses and fees of such other investment companies, including advisory fees. To the extent the Fund invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company's portfolio securities, and a stockholder in the Fund will bear not only his proportionate share of the expenses of the Fund, but also, indirectly the expenses of the purchased investment company. There can be no assurance that the investment objective of any investment company or ETF in which the Fund invests will be achieved.
Although the Fund currently does not intend to use financial leverage, the securities of other investment companies in which the Fund invests may be leveraged, which will subject the Fund to the risks associated with the use of leverage. Such risks include, among other things, the likelihood of greater volatility of the net asset value and market price of such shares; the risk that fluctuations in interest rates on the borrowings of
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
such investment companies, or in the dividend rates on preferred shares that they must pay, will cause the yield on the shares of such companies to fluctuate more than the yield generated by unleveraged shares; and the effect of leverage in a declining market, which is likely to cause a greater decline in the net asset value of such shares than if such companies did not use leverage, which may result in a greater decline in the market price of such shares.
Non-Principal Risks
In addition to the principal risks set forth above, the following additional risks may apply to an investment in the Fund.
Anti-Takeover Provisions.The Fund's Charter and Bylaws include provisions that could limit the ability of other persons or entities to acquire control of the Fund or to cause it to engage in certain transactions or to modify its structure.
Convertible Securities Risk.The value of a convertible security, including, for example, a warrant, is a function of its "investment value" (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its "conversion value" (the security's worth, at market value, if converted into the underlying common stock). The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors may also have an effect on the convertible security's investment value. The conversion value of a convertible security is determined by the market price of the underlying common stock. If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value. Generally, the conversion value decreases as the convertible security approaches maturity. To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income security.
A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument. If a convertible security held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. Any of these actions could have an adverse effect on the Fund's ability to achieve its investment objective.
Credit Risk.Fixed income securities rated B or below by
Debt Security Risk.In addition to interest rate risk, call risk and extension risk, debt securities are also subject to the risk that they may also lose value if the issuer fails to make principal or interest payments when due, or the credit quality of the issuer falls.
Extension Risk.The Fund is subject to the risk that an issuer will exercise its right to pay principal on an obligation held by that Fund (such as mortgage-backed securities) later than expected. This may happen when there is a rise in interest rates. These events may lengthen the duration (i.e. interest rate sensitivity) and potentially reduce the value of these securities.
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
Foreign Currency Risk.Although the Fund will report its net asset value and pay expenses and distributions in
Interest Rate Risk.Debt securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt security can fall when interest rates rise and can rise when interest rates fall. Securities with longer maturities and mortgage securities can be more sensitive to interest rate changes although they usually offer higher yields to compensate investors for the greater risks. The longer the maturity of the security, the greater the impact a change in interest rates could have on the security's price. In addition, short-term and long-term interest rates do not necessarily move in the same amount or the same direction. Short-term securities tend to react to changes in short-term interest rates and long-term securities tend to react to changes in long-term interest rates.
Investment in Small and Mid-Capitalization Companies.The Fund may invest in companies with mid or small sized capital structures (generally a market capitalization of
Leverage Risk.Utilization of leverage is a speculative investment technique and involves certain risks to the holders of common stock. These include the possibility of higher volatility of the net asset value of the common stock and potentially more volatility in the market value of the common stock. So long as the Fund is able to realize a higher net retuon its investment portfolio than the then current cost of any leverage together with other related expenses, the effect of the leverage will be to cause holders of common stock to realize higher current net investment income than if the Fund were not so leveraged. On the other hand, to the extent that the then current cost of any leverage, together with other related expenses, approaches the net retuon the Fund's investment portfolio, the benefit of leverage to holders of common stock will be reduced, and if the then
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Fund Investment Objectives, Policies and Risks(unaudited) (continued)
current cost of any leverage were to exceed the net retuon the Fund's portfolio, the Fund's leveraged capital structure would result in a lower rate of retuto stockholders than if the Fund were not so leveraged. There can be no assurance that the Fund's leverage strategy will be successful.
Market Discount from Net Asset Value.Shares of closed-end investment companies frequently trade at a discount from their net asset value. This characteristic is a risk separate and distinct from the risk that the Fund's net asset value could decrease as a result of its investment activities. Whether investors will realize gains or losses upon the sale of the shares will depend not upon the Fund's net asset value but entirely upon whether the market price of the shares at the time of sale is above or below the investor's purchase price for the shares. Because the market price of the shares will be determined by factors such as relative supply of and demand for the shares in the market, general market and economic conditions, and other factors beyond the control of the Fund, the Fund cannot predict whether the shares will trade at, below or above net asset value.
Portfolio Turnover Risk.The Investment Manager cannot predict the Fund's securities portfolio turnover rate with certain accuracy, but anticipates that its annual portfolio turnover rate will normally range between 10% and 90% under normal market conditions. However, it could be materially higher under certain conditions. Higher portfolio turnover rates could result in corresponding increases in brokerage commissions and may generate short-term capital gains taxable as ordinary income.
Preferred Securities Risk.Investment in preferred securities carries risks including credit risk, deferral risk, redemption risk, limited voting rights, risk of subordination and lack of liquidity. Fully taxable or hybrid preferred securities typically contain provisions that allow an issuer, at its discretion, to defer distributions for up to 20 consecutive quarters. Traditional preferreds also contain provisions that allow an issuer, under certain conditions to skip (in the case of "noncumulative preferreds") or defer (in the case of "cumulative preferreds"), dividend payments. If the Fund owns a preferred security that is deferring its distributions, the Fund may be required to report income for tax purposes while it is not receiving any distributions. Preferred securities typically contain provisions that allow for redemption in the event of tax or security law changes in addition to call features at the option of the issuer. In the event of a redemption, the Fund may not be able to reinvest the proceeds at comparable rates of return. Preferred securities typically do not provide any voting rights, except in cases when dividends are in arrears beyond a certain time period, which varies by issue. Preferred securities are subordinated to bonds and other debt instruments in a company's capital structure in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than those debt instruments. Preferred securities may be substantially less liquid than many other securities, such as
Real Estate Investment Trust ("REIT") Risk.Investments in REITs will subject the Fund to various risks. The first, real estate industry risk, is the risk that REIT share prices will decline because of adverse developments affecting the real estate industry and real property values. In general, real estate values can be affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs often invest in highly leveraged properties. The second risk is the risk that returns from REITs, which typically are small or medium capitalization stocks, will trail returns from the overall stock market. The third, interest rate risk, is the risk that changes in interest rates may hurt real estate values or make REIT shares less attractive than other income producing investments. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.
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Fund Investment Objectives, Policies and Risks(unaudited) (concluded)
Qualification as a REIT under the Code in any particular year is a complex analysis that depends on a number of factors. There can be no assurance that the entities in which the Fund invests with the expectation that they will be taxed as a REIT will qualify as a REIT. An entity that fails to qualify as a REIT would be subject to a corporate level tax, would not be entitled to a deduction for dividends paid to its stockholders and would not pass through to its stockholders the character of income earned by the entity. If the Fund were to invest in an entity that failed to qualify as a REIT, such failure could drastically reduce the Fund's yield on that investment.
REITs can be classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs invest primarily in real property and earental income from leasing those properties. They may also realize gains or losses from the sale of properties. Equity REITs will be affected by conditions in the real estate rental market and by changes in the value of the properties they own. Mortgage REITs invest primarily in mortgages and similar real estate interests and receive interest payments from the owners of the mortgaged properties. They are paid interest by the owners of the financed properties. Mortgage REITs will be affected by changes in creditworthiness of borrowers and changes in interest rates. Hybrid REITs invest both in real property and in mortgages. Equity and mortgage REITs are dependent upon management skills, may not be diversified and are subject to the risks of financing projects.
Dividends paid by REITs will not generally qualify for the reduced
The Fund's investment in REITs may include an additional risk to stockholders. Some or all of a REIT's annual distributions to its investors may constitute a non-taxable retuof capital. Any such retuof capital will generally reduce the Fund's basis in the REIT investment, but not below zero. To the extent the distributions from a particular REIT exceed the Fund's basis in such REIT, the Fund will generally recognize gain. In part because REIT distributions often include a nontaxable retuof capital, Fund distributions to stockholders may also include a nontaxable retuof capital. Stockholders that receive such a distribution will also reduce their tax basis in their shares of the Fund, but not below zero. To the extent the distribution exceeds a stockholder's basis in the Fund shares, such stockholder will generally recognize capital gain.
Repurchase Agreement Risk.The Fund does not enter into nor does it currently intend to enter into repurchase agreements, however, if the Fund were to enter into repurchase agreements, the Fund could suffer a loss if the proceeds from a sale of the securities underlying a repurchase agreement to which it is a party turns out to be less than the repurchase price stated in the agreement. In addition, repurchase agreements may involve risks in the event of default or insolvency of the seller, including possible delays or restrictions upon the Fund's ability to dispose of the underlying securities.
Securities Lending Risk.Securities lending is subject to the risk that loaned securities may not be available to the Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell the securities at a desirable price. Any loss in the market price of securities loaned by the Fund that occurs during the term of the loan would be borne by the Fund and would adversely affect the Fund's performance. Also, there may be delays in recovery, or no recovery, of securities loaned or even a loss of rights in the collateral should the borrower of the securities fail financially while the loan is outstanding. The Fund retains the right to recall securities that it lends to enable it to vote such securities if it determines such vote to be material. Despite its right to recall securities lent, there can be no guarantee that recalled securities will be received timely to enable the Fund to vote those securities. The Fund does not anticipate having any securities lending income during the current calendar year.
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Description of Dividend Reinvestment Plan(unaudited)
Stockholders automatically participate in the Fund's Plan, unless and until an election is made to withdraw from the Plan on behalf of such participating stockholder. Stockholders who do not wish to have Distributions automatically reinvested should so notify the Agent at
When the Fund declares a Distribution the Agent, on the stockholder's behalf, will (i) receive additional authorized shares from the Fund either newly issued or repurchased from stockholders by the Fund and held as treasury stock ("Newly Issued Shares") or (ii) purchase outstanding shares on the open market, on the NYSE American or elsewhere, with cash allocated to it by the Fund ("Open Market Purchases").
The method for determining the number of Newly Issued Shares received when Distributions are reinvested will be determined by dividing the amount of the Distribution either by the Fund's last reported net asset value per share or by a price equal to the average closing price of the Fund over the five trading days preceding the payment date of the Distribution, whichever is lower. However, if the last reported net asset value of the Fund's shares is higher than the average closing price of the Fund over the five trading days preceding the payment date of the Distribution ice (i.e., the Fund is selling at a discount), shares may be acquired by the Agent in Open Market Purchases and allocated to the reinvesting stockholders based on the average cost of such Open Market Purchases. Upon notice from the Fund, the Agent will receive the distribution in cash and will purchase shares of common stock in the open market, on the NYSE American or elsewhere, for the participants' accounts, except that the Agent will endeavor to terminate purchases in the open market and cause the Fund to issue the remaining shares if, following the commencement of the purchases, the market value of the shares, including brokerage commissions, exceeds the net asset value at the time of valuation. These remaining shares will be issued by the Fund at a price equal to the net asset value at the time of valuation.
In a case where the Agent has terminated open market purchases and caused the issuance of remaining shares by the Fund, the number of shares received by the participant in respect of the cash dividend or distribution will be based on the weighted average of prices paid for shares purchased in the open market, including brokerage commissions, and the price at which the Fund issues the remaining shares. To the extent that the Agent is unable to terminate purchases in the open market before the Agent has completed its purchases, or remaining shares cannot be issued by the Fund because the Fund declared a dividend or distribution payable only in cash, and the market price exceeds the net asset value of the shares, the average share purchase price paid by the Agent may exceed the net asset value of the shares, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund.
Whenever the Fund declares a Distribution and the last reported net asset value of the Fund's shares is higher than its market price, the Agent will apply the amount of such Distribution payable to Plan participants of the Fund in Fund shares (less such Plan participant's pro rata share of brokerage commissions incurred with respect to Open Market Purchases in connection with the reinvestment of such Distribution) to the purchase on the open market of Fund shares for such Plan participant's account. Such purchases will be made on or after the payable date for such Distribution, and in no event more than 30 days after such date except where
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Description of Dividend Reinvestment Plan(unaudited) (concluded)
temporary curtailment or suspension of purchase is necessary to comply with applicable provisions of federal securities laws. The Agent may aggregate a Plan participant's purchases with the purchases of other Plan participants, and the average price (including brokerage commissions) of all shares purchased by the Agent shall be the price per share allocable to each Plan participant.
Registered stockholders who do not wish to have their Distributions automatically reinvested should so notify the Fund in writing. If a stockholder has not elected to receive cash Distributions and the Agent does not receive notice of an election to receive cash Distributions prior to the record date of any Distribution, the stockholder will automatically receive such Distributions in additional shares.
Participants in the Plan may withdraw from the Plan by providing written notice to the Agent at least 30 days prior to the applicable Distribution payment date. The Agent will maintain all stockholder accounts in the Plan and furnish written confirmations of all transactions in the accounts, including information needed by stockholders for personal and tax records The Agent will hold shares in the account of the Plan participant in non-certificated form in the name of the participant, and each stockholder's proxy will include those shares purchased pursuant to the Plan. The Agent will distribute all proxy solicitation materials to participating stockholders.
In the case of stockholders, such as banks, brokers or nominees, that hold shares for others who are beneficial owners participating in the Plan, the Agent will administer the Plan on the basis of the number of shares certified from time to time by the record stockholder as representing the total amount of shares registered in the stockholder's name and held for the account of beneficial owners participating in the Plan.
Neither the Agent nor the Fund shall have any responsibility or liability beyond the exercise of ordinary care for any action taken or omitted pursuant to the Plan, nor shall they have any duties, responsibilities or liabilities except such as expressly set forth herein. Neither shall they be liable hereunder for any act done in good faith or for any good faith omissions to act, including, without limitation, failure to terminate a participants account prior to receipt of written notice of his or her death or with respect to prices at which shares are purchased or sold for the participants account and the terms on which such purchases and sales are made, subject to applicable provisions of the federal securities laws.
The automatic reinvestment of Distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Distributions. The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan.
Participants may at any time sell some or all their shares though the Agent. Shares may be sold via the internet at www.equiniti.com or through the toll free number. Participants can also use the tear off portion attached to the bottom of their statement and mail the request to
All correspondence concerning the Plan should be directed to
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Proxy Voting and Portfolio Holdings Information(unaudited)
The policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities are available:
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without charge, upon request, by calling toll-free (866) 668-6558; and |
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on the website of the |
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended
The Fund files a complete schedule of its portfolio holdings for the first and third quarters of its fiscal year with the
Summary of General Information(unaudited)
Stockholder Information(unaudited)
The Fund is listed on the NYSE American (symbol "CLM"). The previous week's net asset value per share, market price, and related premium or discount are available on the Fund's website at www.cornerstonestrategicinvestmentfund.com.
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Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that |
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CornerstoneStrategicInvestmentFund, Inc.
| (b) | Included with (a) |
Item 2. Code of Ethics.
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. Pursuant to Item 13(a)(1), a copy of registrant's code of ethics is filed as an exhibit to this Form N-CSR. During the period covered by this report, the code of ethics has not been amended, and the registrant has not granted any waivers, including implicit waivers, from the provisions of the code of ethics.
(c) During the period covered by the report, with respect to the registrant's code of ethics that applies to its Principal Executive Officer and Principal Financial Officer: there have been no amendments to a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2.
(d) During the period covered by the report, with respect to the registrant's code of ethics that applies to its Principal Executive Officer and Principal Financial Officer: there have been no waivers granted from a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2.
(e) Not applicable.
Item 3. Audit Committee Financial Expert.
The registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee. The name of the audit committee financial expert is
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees. The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were |
| (b) | Audit-Related Fees. No fees were billed in either of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. |
| (c) | Tax Fees. The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were |
| (d) | All Other Fees. Other fees billed were |
| (e)(1) | Before the principal accountant is engaged by the registrant to render (i) audit, audit-related or permissible non-audit services to the registrant or (ii) non-audit services to the registrant's investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant, either (a) the audit committee shall pre-approve such engagement; or (b) such engagement shall be entered into pursuant to pre-approval policies and procedures established by the audit committee. Any such policies and procedures must be detailed as to the particular service and not involve any delegation of the audit committee's responsibilities to the registrant's investment adviser. The audit committee may delegate to one or more of its members the authority to grant pre-approvals. The pre-approval policies and procedures shall include the requirement that the decisions of any member to whom authority is delegated under this provision shall be presented to the full audit committee at its next scheduled meeting. Under certain limited circumstances, pre-approvals are not required if certain de minimus thresholds are not exceeded, as such thresholds are determined by the audit committee in accordance with applicable Commission regulations. |
| (e)(2) | None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| (f) | Less than 50% of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. |
| (g) | With respect to the fiscal years ended |
| (h) | The principal accountant has not provided any non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant. |
| (i) | Not applicable. |
| (j) | Not applicable. |
Item 5.
| (a) | The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934. |
| (b) | Not applicable |
Item 6. Investments.
(a) The Registrant(s) schedule(s) of investments is included in the Financial Statements under Item 1 of this form.
(b) Not applicable
Item 7.Financial Statements and Financial Highlights for Open-End Management Investment Companies
(a) Not applicable
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable
Not applicable
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management
Not applicable
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Included under Item 1
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The registrant and
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
| (a)(1) | All information included in this Item is as of the date of the filing of this Form N-CSR, unless otherwise noted. |
| (a)(2) | Messrs. Bradshaw manage one other closed-end registered investment company: |
| (a)(3) | Compensation for each of |
| (a)(4) | The dollar range of equity securities in the registrant beneficially owned by each portfolio manager as of |
Item 14. Purchases of
Not applicable
Item 15. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors that have been implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) or this Item.
Item 16. 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 the information required in filings on Form N-CSR 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
The Registrant does not engage in securities lending activities.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) Not applicable
(b) Not applicable
Item 19. Exhibits.
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) 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
(1) Not applicable
(2) Change in the registrant's independent public accountant: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): 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) | ||||
| By (Signature and Title)* | /s/ |
|||
|
(Principal Executive Officer) |
||||
| Date | ||||
| 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/ |
|||
|
(Principal Executive Officer) |
||||
| Date | ||||
| By (Signature and Title)* | /s/ |
|||
| Date | ||||
| * | Print the name and title of each signing officer under his or her signature. |
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