N-Q 1 fp0002902_nq.htm CORNERSTONE TOTAL RETURN FUND - FORM N-Q fp0002902_nq.htm
 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
 
Investment Company Act file number          811-02363                         
 
 
Cornerstone Total Return Fund, Inc. 

(Exact name of registrant as specified in charter)
 
 
350 Jericho Turnpike, Suite 206         Jericho, New York
11753
(Address of principal executive offices)
(Zip code)
 
 
Frank J. Maresca
 
Ultimus Fund Solutions, LLC    350 Jericho Turnpike, Suite 206    Jericho, NY 11753 

(Name and address of agent for service)
 
 
Registrant's telephone number, including area code:  (513) 587-3400   
 
Date of fiscal year end:         December 31, 2011                
 
Date of reporting period:       March 31, 2011                      
 
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 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 - MARCH 31, 2011 (UNAUDITED)
 
   
Description
 
No. of Shares
   
Value
 
EQUITY SECURITIES - 99.57%
 
CLOSED-END FUNDS - 9.38%
 
CORE - 3.17%
       
Adams Express Company (The) (a)
    59,400     $ 674,784  
SunAmerica Focused Alpha Large-Cap Fund, Inc.
    8,000       145,280  
              820,064  
CORPORATE DEBT FUNDS INVESTMENT GRADE-RATED - 0.57%
 
AllianceBernstein Income Fund
    6,000       46,140  
MFS Government Markets Income Trust
    16,000       102,400  
              148,540  
DEVELOPED MARKET - 0.14%
         
Ibero-America Fund, Inc.
    2,123       14,861  
New Ireland Fund, Inc. (The)
    2,620       20,043  
              34,904  
GLOBAL INCOME - 0.84%
         
Nuveen Multi-Currency Short-Term Government Income Fund
    15,656       218,401  
                 
HIGH CURRENT YIELD (LEVERAGED) - 0.28%
         
First Trust Strategic High Income Fund
    8,000       28,240  
First Trust Strategic High Income Fund III
    10,400       44,616  
              72,856  
INCOME & PREFERRED STOCK - 0.34%
         
Preferred Income Strategies Fund
    8,951       87,988  
                 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 3.31%
         
Eaton Vance Risk-Managed Diversified Equity Income Fund
    28,800       369,217  
Eaton Vance Tax-Managed Buy-Write Opportunities Fund
    18,000       231,840  
Eaton Vance Tax-Managed Diversified Equity Income Fund
    23,085       253,935  
              854,992  
SECTOR EQUITY - 0.47%
         
Evergreen Utilities and High Income Fund
    5,608       66,455  
Gabelli Healthcare & WellnessRx Trust (The)*
    7,074       54,399  
              120,854  
U.S. MORTGAGE - 0.26%
         
BlackRock Income Trust, Inc.
    9,896       66,501  
 
See accompanying notes to schedule of investments.
 
 
 

 

CORNERSTONE TOTAL RETURN FUND, INC.
 
SCHEDULE OF INVESTMENTS - MARCH 31, 2011 (UNAUDITED) (Continued)
 
   
CLOSED-END FUNDS (Continued)
 
TOTAL CLOSED-END FUNDS
    $ 2,425,100  
           
CONSUMER DISCRETIONARY - 9.65%
 
Amazon.com, Inc. *
    1,000       180,130  
Bed Bath & Beyond, Inc. *
    2,500       120,675  
Comcast Corporation - Class A
    2,012       49,737  
Comcast Corporation - Special Class A
    4,250       98,685  
DIRECTV Group, Inc. (The) - Class A *
    4,000       187,200  
Ford Motor Company *
    10,000       149,100  
Gap, Inc. (The)
    2,500       56,650  
Home Depot, Inc. (The)
    5,000       185,300  
Kohl's Corporation
    2,000       106,080  
Lowe's Companies, Inc.
    3,000       79,290  
McDonald's Corporation
    2,000       152,180  
News Corporation - Class B
    2,500       46,550  
NIKE, Inc. - Class B
    2,500       189,250  
Starbucks Corporation
    2,500       92,375  
Target Corporation
    1,500       75,015  
Time Warner, Inc.
    4,666       166,576  
TJX Companies, Inc. (The)
    2,500       124,325  
Viacom, Inc. - Class B
    2,000       93,040  
Walt Disney Company (The)
    5,000       215,450  
Yum! Brands, Inc.
    2,500       128,450  
              2,496,058  
CONSUMER STAPLES - 9.05%
 
Altria Group, Inc.
    5,000       130,150  
Coca-Cola Company (The)
    5,000       331,750  
Coca-Cola Enterprises
    2,500       68,250  
General Mills, Inc.
    3,000       109,650  
H.J. Heinz Company
    2,700       131,814  
PepsiCo, Inc.
    3,000       193,230  
Philip Morris International, Inc.
    5,000       328,150  
Procter & Gamble Company (The)
    6,972       429,475  
Sara Lee Corporation
    2,500       44,175  
Wal-Mart Stores, Inc.
    11,000       572,550  
              2,339,194  
ENERGY - 11.93%
 
Apache Corporation
    2,000       261,840  
Chevron Corporation
    3,500       376,005  
ConocoPhillips
    5,000       399,300  
El Paso Corporation
    5,000       90,000  
Exxon Mobil Corporation
    12,000       1,009,560  
Halliburton Company
    2,500       124,600  
 
See accompanying notes to schedule of investments.
 
 
 

 
 
CORNERSTONE TOTAL RETURN FUND, INC.
 
SCHEDULE OF INVESTMENTS - MARCH 31, 2011 (UNAUDITED) (Continued)
 
   
ENERGY (Continued)
 
Occidental Petroleum Corporation
    4,000     $ 417,960  
Schlumberger Ltd.
    3,000       279,780  
Southwestern Energy Company *
    1,500       64,455  
Williams Companies, Inc.
    2,000       62,360  
              3,085,860  
FINANCIALS - 13.66%
 
AFLAC, Inc.
    1,500       79,170  
American Express Company
    4,000       180,800  
Bank of America Corporation
    10,521       140,245  
Bank of New York Mellon Corporation (The)
    3,000       89,610  
BB&T Corporation
    2,000       54,900  
Capital One Financial Corporation
    2,500       129,900  
Chubb Corporation (The)
    1,000       61,310  
Citigroup, Inc. *
    28,000       123,760  
Discover Financial Services
    1,000       24,120  
Franklin Resources, Inc.
    1,000       125,080  
Goldman Sachs Group, Inc. (The)
    2,500       396,175  
Hudson City Bancorp, Inc.
    2,500       24,200  
JPMorgan Chase & Co.
    12,200       562,420  
KeyCorp
    2,500       22,200  
M&T Bank Corporation
    1,000       88,470  
Marsh & McLennan Companies, Inc.
    4,000       119,240  
MetLife, Inc.
    1,500       67,095  
Morgan Stanley
    2,000       54,640  
PNC Financial Services Group, Inc.
    1,000       62,990  
Prudential Financial, Inc.
    1,500       92,370  
State Street Corporation
    2,000       89,880  
Travelers Companies, Inc. (The)
    3,092       183,912  
U.S. Bancorp
    3,500       92,505  
Unum Group
    2,500       65,625  
Wells Fargo & Company
    19,000       602,300  
              3,532,917  
HEALTH CARE - 9.73%
 
Abbott Laboratories
    3,000       147,150  
Allergan, Inc.
    1,000       71,020  
Amgen, Inc. *
    3,000       160,350  
Baxter International, Inc.
    2,500       134,425  
Bristol-Myers Squibb Company
    6,000       158,580  
Celgene Corporation *
    1,000       57,530  
Cigna Corporation
    3,000       132,840  
Eli Lilly & Company
    2,500       87,925  
Express Scripts, Inc. *
    2,400       133,464  
Gilead Sciences, Inc. *
    2,000       84,880  
 
See accompanying notes to schedule of investments.
 
 
 

 
 
CORNERSTONE TOTAL RETURN FUND, INC.
 
SCHEDULE OF INVESTMENTS - MARCH 31, 2011 (UNAUDITED) (Continued)
 
   
HEALTH CARE (Continued)
 
Johnson & Johnson
    6,000     $ 355,500  
McKesson Corporation
    2,500       197,625  
Medco Health Solutions, Inc. *
    1,000       56,160  
Medtronic, Inc.
    4,500       177,075  
Merck & Company, Inc.
    2,500       82,525  
Pfizer, Inc.
    6,462       131,243  
Stryker Corporation
    1,000       60,800  
UnitedHealth Group, Inc.
    2,500       113,000  
WellPoint, Inc.
    2,500       174,475  
              2,516,567  
INDUSTRIALS - 10.38%
 
3M Company
    2,500       233,750  
Boeing Company (The)
    2,000       147,860  
Danaher Corporation
    2,000       103,800  
Deere & Company
    1,500       145,335  
Emerson Electric Company
    2,500       146,075  
FedEx Corporation
    1,500       140,325  
General Dynamics Corporation
    2,000       153,120  
General Electric Company
    24,000       481,200  
Honeywell International Inc.
    2,000       119,420  
Lockheed Martin Corporation
    2,500       201,000  
Precision Castparts Corporation
    1,000       147,180  
Republic Services, Inc.
    1,125       33,795  
Southwest Airlines Company
    2,000       25,260  
Union Pacific Corporation
    2,500       245,825  
United Parcel Service, Inc. - Class B
    2,000       148,640  
United Technologies Corporation
    2,500       211,625  
              2,684,210  
INFORMATION TECHNOLOGY - 16.94%
 
AOL, Inc. *
    242       4,726  
Apple, Inc. *
    2,000       696,900  
Applied Materials, Inc.
    3,000       46,860  
Cognizant Technology Solutions Corporation - Class A *
    1,500       122,100  
Corning, Inc.
    5,000       103,150  
eBay, Inc. *
    2,500       77,600  
EMC Corporation *
    5,000       132,750  
Google, Inc. - Class A *
    1,000       586,210  
Hewlett-Packard Company
    8,000       327,760  
Intel Corporation
    17,000       342,890  
International Business Machines Corporation
    4,000       652,280  
Intuit, Inc. *
    2,500       132,750  
Micron Technology, Inc. *
    2,000       22,920  
 
See accompanying notes to schedule of investments.
 
 
 

 

CORNERSTONE TOTAL RETURN FUND, INC.
 
SCHEDULE OF INVESTMENTS - MARCH 31, 2011 (UNAUDITED) (Continued)
 
   
INFORMATION TECHNOLOGY (Continued)
 
Microsoft Corporation
    24,000     $ 608,640  
Oracle Corporation
    12,600       420,462  
Texas Instruments, Inc.
    3,000       103,680  
              4,381,678  
MATERIALS - 3.19%
 
Air Products & Chemicals, Inc.
    1,500       135,270  
Dow Chemical Company (The)
    2,500       94,375  
E.I. Du Pont de Nemours & Company
    4,800       263,856  
Freeport-McMoRan Copper & Gold, Inc.
    5,000       277,750  
Newmont Mining Corporation
    1,000       54,580  
              825,831  
REAL ESTATE INVESTMENT TRUST - 0.01%
 
Simon Property Group, Inc.
    16       1,715  
                 
TELECOMMUNICATION SERVICES - 2.66%
 
AT&T, Inc.
    17,089       522,923  
Centurytel, Inc.
    4,000       166,200  
              689,123  
UTILITIES - 2.99%
 
Consolidated Edison, Inc.
    1,000       50,720  
Dominion Resources, Inc.
    2,000       89,400  
Duke Energy Corporation
    6,600       119,790  
Exelon Corporation
    3,500       144,340  
Nextera Energy, Inc.
    1,000       55,120  
NiSource, Inc.
    2,500       47,950  
Southern Company (The)
    3,500       133,385  
Xcel Energy, Inc.
    5,500       131,395  
              772,100  
                 
TOTAL EQUITY SECURITIES (cost - $23,371,931)
      25,750,353  
                 
                 
RIGHTS - 0.01%
               
Gabelli Healthcare & WellnessRx Trust (The) * (cost - $2,386)
    7,074       2,547  
                 
SHORT-TERM INVESTMENT - 0.34%
               
MONEY MARKET FUND - 0.34%
               
Fidelity Institutional Money Market Government Portfolio - Class I (cost $87,411)
    87,411       87,411  
 
See accompanying notes to schedule of investments.
 
 
 

 
 
CORNERSTONE TOTAL RETURN FUND, INC.
 
SCHEDULE OF INVESTMENTS - MARCH 31, 2011 (UNAUDITED) (Continued)
 
       
TOTAL INVESTMENTS - 99.92% (cost - $23,461,728)
  $ 25,840,311  
         
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.08%
    21,576  
         
NET ASSETS - 100.00%
  $ 25,861,887  


(a) Affiliated investment.  The Fund holds 2.61% (based on net assets) of The Adams Express Company.  A director of the Fund also serves as a director to such company.  There were no purchases or sales of this security during the three months ended March 31, 2011.
 
* Non-income producing security.
 
See accompanying notes to schedule of investments.
 
 
 

 
 
CORNERSTONE TOTAL RETURN FUND, INC.
NOTES TO SCHEDULES OF INVESTMENTS
March 31, 2011 (UNAUDITED)

 
Federal Income Tax Cost: At March 31, 2011 the identified cost for federal income tax purposes, as well as the gross unrealized appreciation from investments for those securities having an excess of value over cost, gross unrealized depreciation from investments for those securities having an excess of cost over value and the net unrealized appreciation from investments were $23,461,728, $3,764,297, $(1,385,714) and $2,378,583, respectively.
 
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.
 
The following is a summary of the inputs used as of March 31, 2011 in valuing the Fund’s investments carried at value:
 
Valuation Inputs
 
INVESTMENTS
IN
SECURITIES
   
OTHER
FINANCIAL
INSTRUMENTS*
 
             
Level 1 - Quoted Prices
           
  Equity Investments
 
$
25,752,900
   
$
-
 
  Short-Term Investments
   
87,411
     
-
 
Level 2 - Other Significant Observable Inputs
   
-
     
-
 
Level 3 – Significant Unobservable Inputs
   
-
     
-
 
Total
 
$
25,840,311
   
$
-
 
 
* Other financial instruments include futures, forwards and swap contracts.
 
 
 

 

The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.
 
During the three months ended March 31, 2011, the Fund did not have any significant transfers in and out of Level 1 or Level 2.
 
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 March 31, 2011.
 
The disclosures for the Fund’s fiscal year beginning January 1, 2011 relate to presenting separately any Level 3 purchases, sales, issuances and settlements on a gross basis instead of one net amount.  Management will continue to evaluate the impact of ASU No. 2010-6 for the required disclosures.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio.  For the three months ended March 31, 2011, 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 it’s Schedule of Investments 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 herby incorporated by reference to the Fund’s annual report previously filed with the Securities and Exchange Commission on the Form N-CSR on March 8, 2011 with a file number 811-02363.
 
Other information regarding the Fund is available in the Fund’s most recent annual report filed with the Securities and Exchange Commission on the Form N-CSR on March 8, 2011, file number 811-02363.  This information is also available to registered shareholders by calling (800) 937-5449.  For general inquiries, please call (513) 326-3597.  This information is also available on the website of the Securities and Exchange Commission – http://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, President and Chairman
 
 
(Principal Executive Officer)
 
     
Date
May 23, 2011
   
 
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, President and Chairman
 
 
(Principal Executive Officer)
 
     
Date
May 23, 2011
   
 
By (Signature and Title)*
/s/ Frank J. Maresca
 
 
Frank J. Maresca, Treasurer
 
 
(Principal Financial Officer)
 
     
Date
May 23, 2011
   
 
* Print the name and title of each signing officer under his or her signature.