N-Q 1 fp0016296_nq.htm
 
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)

48 Wall Street New York, NY
10005
(Address of principal executive offices)
(Zip code)

Frank J. Maresca

AST Fund Solutions, LLC           48 Wall Street               New York, NY 10005
(Name and address of agent for service)

Registrant's telephone number, including area code: (866) 668-6558

Date of fiscal year end: December 31

Date of reporting period: September 30, 2015


Item 1. Schedule of Investments.
 
CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
EQUITY SECURITIES - 95.56%
       
CLOSED-END FUNDS - 14.98%
 
CONVERTIBLE SECURITIES - 1.39%
 
AllianzGI Convertible & Income Fund
   
39,400
   
$
229,702
 
AllianzGI Convertible & Income Fund II
   
260,000
     
1,372,800
 
             
1,602,502
 
CORE - 0.54%
 
General American Investors Company, Inc.
   
4,800
     
148,704
 
Royce Micro-Cap Trust, Inc.
   
61,400
     
475,236
 
             
623,940
 
DEVELOPED MARKET - 0.28%
 
Aberdeen Australia Equity Fund, Inc.
   
60,773
     
325,075
 
                 
EMERGING MARKETS - 1.63%
 
Aberdeen Chile Fund, Inc.
   
39,191
     
234,362
 
China Fund, Inc. (The)
   
44,688
     
710,986
 
Morgan Stanley China A Shares, Inc.
   
34,000
     
762,960
 
Turkish Investment Fund, Inc. (The)
   
19,982
     
159,856
 
             
1,868,164
 
ENERGY MLP - 0.40%
 
ClearBridge Energy MLP Opportunity Fund Inc.
   
21,100
     
304,262
 
ClearBridge Energy MLP Total Return Fund Inc.
   
11,323
     
155,691
 
             
459,953
 
GENERAL BOND - 0.45%
 
Deutsche Multi-Market Income Trust
   
38,692
     
285,934
 
John Hancock Investors Trust
   
15,691
     
228,932
 
             
514,866
 
GLOBAL - 2.62%
 
Alpine Global Dynamic Dividend Fund
   
24,200
     
206,910
 
Gabelli Global Utility & Income Trust (The)
   
14,948
     
239,915
 
GDL Fund (The)
   
49,446
     
485,560
 
John Hancock Hedged Equity & Income Fund
   
15,413
     
221,793
 
Lazard World Dividend & Income Fund, Inc.
   
43,176
     
393,333
 
Nuveen Global Equity Income Fund
   
48,400
     
493,196
 
Voya Infrastructure, Industrials and Materials Fund
   
78,700
     
964,862
 
             
3,005,569
 
HIGH CURRENT YIELD (LEVERAGED) - 0.08%
 
MFS Special Value Trust
   
17,190
     
89,904
 
                 
NATURAL RESOURCES - 1.04%
 
BlackRock Resources & Commodities Strategy Trust
   
144,050
     
1,022,755
 
Cushing Renaissance Fund (The)
   
3,208
     
46,644
 
First Trust Energy Infrastructure Fund
   
7,500
     
119,925
 
             
1,189,324
 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 2.39%
 
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund
   
189,900
     
2,426,922
 
Madison Strategic Sector Premium Fund
   
6,338
     
67,626
 
Voya Global Equity Dividend and Premium Opportunity Fund
   
8,200
     
56,990
 
Voya International High Dividend Equity Income Fund
   
31,011
     
196,920
 
             
2,748,458
 
 
See accompanying notes to schedule of investments.
 

CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
PACIFIC EX JAPAN - 0.12%
 
Aberdeen Greater China Fund, Inc.
   
15,967
    $
135,400
 
                 
REAL ESTATE - 3.56%
 
Alpine Global Premier Properties Fund
   
26,108
     
145,683
 
CBRE Clarion Global Real Estate Income Fund
   
99,508
     
734,369
 
Cohen & Steers Preferred Securities and Income Fund, Inc.
   
112,200
     
1,944,426
 
Cohen & Steers Quality Income Realty Fund, Inc.
   
8,000
     
90,400
 
Neuberger Berman Real Estate Securities Income Fund Inc.
   
191,405
     
882,377
 
RMR Real Estate Income Fund
   
16,381
     
294,694
 
             
4,091,949
 
SECTOR EQUITY - 0.20%
 
GAMCO Natural Resources, Gold & Income Trust
   
40,300
     
233,337
 
                 
UTILITY - 0.08%
 
Duff & Phelps Global Utility Income Fund Inc.
   
5,800
     
87,812
 
                 
VALUE - 0.21%
 
First Trust Dividend and Income Fund
   
30,712
     
240,168
 
                 
TOTAL CLOSED-END FUNDS
           
17,216,421
 
                 
CONSUMER DISCRETIONARY - 10.99%
               
Amazon.com, Inc. *
   
2,000
     
1,023,780
 
CBS Corporation - Class B
   
5,000
     
199,500
 
Comcast Corporation - Class A
   
23,012
     
1,308,923
 
Comcast Corporation - Special Class A
   
4,250
     
243,270
 
Delphi Automotive PLC
   
3,000
     
228,120
 
Dollar General Corporation
   
3,000
     
217,320
 
D.R. Horton, Inc.
   
2,500
     
73,400
 
Home Depot, Inc. (The)
   
13,500
     
1,559,115
 
Johnson Controls, Inc.
   
6,500
     
268,840
 
L Brands, Inc.
   
2,000
     
180,260
 
Lowe's Companies, Inc.
   
9,000
     
620,280
 
Macy's, Inc.
   
4,000
     
205,280
 
Marriott International, Inc. - Class A
   
3,000
     
204,600
 
Nike, Inc. - Class B
   
4,000
     
491,880
 
O’Reilly Automotive, Inc. *
   
1,000
     
250,000
 
Priceline Group Inc. (The) *
   
500
     
618,430
 
Ross Stores, Inc.
   
4,000
     
193,880
 
Royal Caribbean Cruises Ltd.
   
2,000
     
178,180
 
Starbucks Corporation
   
14,000
     
795,760
 
Time Warner Cable Inc.
   
2,500
     
448,425
 
Time Warner Inc.
   
7,466
     
513,288
 
TJX Companies, Inc. (The)
   
7,000
     
499,940
 
Twenty-First Century Fox, Inc.
   
2,500
     
67,675
 
VF Corporation
   
4,000
     
272,840
 
Viacom Inc. - Class B
   
4,000
     
172,600
 
Walt Disney Company (The)
   
17,500
     
1,788,500
 
             
12,624,086
 
 
See accompanying notes to schedule of investments.
 

CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
CONSUMER STAPLES - 8.22%
             
Altria Group, Inc.
   
21,000
   
1,142,400
 
Archer-Daniels-Midland Company
   
6,000
     
248,700
 
Colgate-Palmolive Company
   
3,000
     
190,380
 
Constellation Brands, Inc.
   
2,500
     
313,025
 
Costco Wholesale Corporation
   
5,000
     
722,850
 
CVS Caremark Corporation
   
13,200
     
1,273,536
 
General Mills, Inc.
   
3,000
     
168,390
 
Kimberly-Clark Corporation
   
2,000
     
218,080
 
Kraft Heinz Company (The)
   
1,000
     
70,580
 
Kroger Co. (The)
   
10,000
     
360,700
 
Mondelēz International, Inc. - Class A
   
12,000
     
502,440
 
Monster Beverage Corporation *
   
2,000
     
270,280
 
PepsiCo, Inc.
   
3,000
     
282,900
 
Reynolds American Inc.
   
14,000
     
619,780
 
Sysco Corporation
   
2,000
     
77,940
 
Tyson Foods, Inc.
   
4,000
     
172,400
 
Walgreens Boots Alliance, Inc.
   
12,000
     
997,200
 
Wal-Mart Stores, Inc.
   
28,000
     
1,815,520
 
             
9,447,101
 
ENERGY - 4.09%
               
Chevron Corporation
   
4,000
     
315,520
 
EOG Resources, Inc.
   
6,000
     
436,800
 
Exxon Mobil Corporation
   
31,000
     
2,304,850
 
Kinder Morgan, Inc.
   
11,000
     
304,480
 
Marathon Petroleum Corporation
   
5,000
     
231,650
 
Phillips 66
   
6,000
     
461,040
 
Schlumberger Limited
   
4,500
     
310,365
 
Valero Energy Corporation
   
5,500
     
330,550
 
             
4,695,255
 
EXCHANGE-TRADED FUNDS - 3.51%
               
iShares Core S&P 500 ETF
   
6,000
     
1,156,260
 
SPDR S&P 500 ETF Trust
   
15,000
     
2,874,450
 
             
4,030,710
 
FINANCIALS - 13.41%
               
ACE Limited
   
4,000
     
413,600
 
Allstate Corporation (The)
   
4,000
     
232,960
 
American Express Company
   
10,000
     
741,300
 
American International Group, Inc.
   
6,000
     
340,920
 
American Tower Corporation
   
4,000
     
351,920
 
Ameriprise Financial, Inc.
   
2,000
     
218,260
 
Aon plc
   
3,500
     
310,135
 
BB&T Corporation
   
5,000
     
178,000
 
Berkshire Hathaway Inc. - Class B *
   
14,000
     
1,825,600
 
BlackRock, Inc. - Class A
   
2,000
     
594,940
 
Capital One Financial Corporation
   
5,500
     
398,860
 
Charles Schwab Corporation (The)
   
13,000
     
371,280
 
 
See accompanying notes to schedule of investments.
 

CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
Chubb Corporation (The)
   
2,000
    $
245,300
 
Citigroup Inc.
   
16,000
     
793,760
 
Discover Financial Services
   
4,000
     
207,960
 
Goldman Sachs Group, Inc. (The)
   
4,000
     
695,040
 
Intercontinental Exchange, Inc.
   
1,000
     
234,990
 
JPMorgan Chase & Co.
   
22,200
     
1,353,534
 
Marsh & McLennan Companies, Inc.
   
5,000
     
261,100
 
McGraw Hill Financial, Inc.
   
3,000
     
259,500
 
MetLife, Inc.
   
6,000
     
282,900
 
Moody’s Corporation
   
2,000
     
196,400
 
Morgan Stanley
   
16,000
     
504,000
 
PNC Financial Services Group, Inc. (The)
   
5,000
     
446,000
 
State Street Corporation
   
4,000
     
268,840
 
SunTrust Banks, Inc.
   
5,000
     
191,200
 
Travelers Companies, Inc. (The)
   
3,000
     
298,590
 
T. Rowe Price Group, Inc.
   
2,500
     
173,750
 
U.S. Bancorp
   
17,000
     
697,170
 
Wells Fargo & Company
   
43,000
     
2,208,050
 
Weyerhaeuser Company
   
4,000
     
109,360
 
             
15,405,219
 
HEALTH CARE - 11.53%
               
Abbott Laboratories
   
10,000
     
402,200
 
AbbVie Inc.
   
11,000
     
598,510
 
Aetna Inc.
   
3,000
     
328,230
 
Alexion Pharmaceuticals, Inc. *
   
2,000
     
312,780
 
Allergan plc *
   
3,104
     
843,698
 
AmerisourceBergen Corporation
   
2,000
     
189,980
 
Amgen Inc.
   
7,000
     
968,240
 
Anthem, Inc.
   
2,000
     
280,000
 
Baxter International Inc.
   
4,000
     
131,400
 
Becton, Dickinson and Co.
   
2,000
     
265,320
 
Biogen Inc. *
   
3,000
     
875,430
 
Cardinal Health, Inc.
   
4,000
     
307,280
 
Celgene Corporation *
   
7,000
     
757,190
 
Cerner Corporation *
   
4,000
     
239,840
 
Cigna Corporation
   
2,000
     
270,040
 
Express Scripts Holding Company *
   
7,000
     
566,720
 
Gilead Sciences, Inc.
   
2,000
     
196,380
 
HCA Holdings, Inc. *
   
4,000
     
309,440
 
Johnson & Johnson
   
8,500
     
793,475
 
McKesson Corporation
   
3,000
     
555,090
 
Merck & Company, Inc.
   
27,000
     
1,333,530
 
Mylan N.V. *
   
4,000
     
161,040
 
Regeneron Pharmaceuticals, Inc. *
   
1,000
     
465,140
 
St. Jude Medical, Inc.
   
3,000
     
189,270
 
Stryker Corporation
   
4,000
     
376,400
 
Thermo Fisher Scientific Inc.
   
4,000
     
489,120
 
UnitedHealth Group Incorporated
   
9,000
     
1,044,090
 
             
13,249,833
 
 
See accompanying notes to schedule of investments.

CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
INDUSTRIALS - 8.01%
               
Boeing Company (The)
   
6,000
    $
785,700
 
CSX Corporation
   
11,000
     
295,900
 
Danaher Corporation
   
7,000
     
596,470
 
Delta Air Lines, Inc.
   
8,000
     
358,960
 
Eaton Corporation plc
   
5,000
     
256,500
 
FedEx Corporation
   
3,000
     
431,940
 
General Dynamics Corporation
   
3,000
     
413,850
 
General Electric Company
   
28,000
     
706,160
 
Honeywell International Inc.
   
8,000
     
757,520
 
Illinois Tool Works Inc.
   
4,000
     
329,240
 
Lockheed Martin Corporation
   
3,500
     
725,585
 
Norfolk Southern Corporation
   
3,000
     
229,200
 
Northrop Grumman Corporation
   
2,000
     
331,900
 
PACCAR Inc
   
2,000
     
104,340
 
Precision Castparts Corporation
   
1,500
     
344,565
 
Raytheon Company
   
3,000
     
327,780
 
Southwest Airlines Co.
   
7,000
     
266,280
 
3M Company
   
6,000
     
850,620
 
Union Pacific Corporation
   
9,000
     
795,690
 
Waste Management, Inc.
   
6,000
     
298,860
 
             
9,207,060
 
INFORMATION TECHNOLOGY - 16.01%
               
Accenture plc - Class A
   
2,000
     
196,520
 
Adobe Systems Incorporated
   
4,000
     
328,880
 
Apple Inc.
   
41,000
     
4,522,300
 
Automatic Data Processing, Inc.
   
4,500
     
361,620
 
Avago Technologies Limited
   
1,000
     
125,010
 
Cisco Systems, Inc.
   
40,000
     
1,050,000
 
Cognizant Technology Solutions Corporation *
   
6,000
     
375,660
 
eBay Inc. *
   
4,000
     
97,760
 
EMC Corporation
   
13,000
     
314,080
 
Facebook, Inc. *
   
8,000
     
719,200
 
Fiserv, Inc. *
   
3,000
     
259,830
 
Google Inc. - Class A *
   
1,000
     
638,370
 
Google Inc. - Class C *
   
7,002
     
4,260,157
 
Intel Corporation
   
42,000
     
1,265,880
 
MasterCard Incorporated
   
10,000
     
901,200
 
Oracle Corporation
   
35,700
     
1,289,484
 
PayPal Holdings, Inc. *
   
4,000
     
124,160
 
QUALCOMM Incorporated
   
11,000
     
591,030
 
salesforce.com, inc. *
   
5,000
     
347,150
 
Visa Inc. - Class A
   
9,000
     
626,940
 
             
18,395,231
 
MATERIALS - 1.98%
               
Air Products & Chemicals, Inc.
   
2,000
     
255,160
 
Dow Chemical Company (The)
   
11,000
     
466,400
 
Ecolab Inc.
   
3,000
     
329,160
 
E. I. du Pont de Nemours and Company
   
4,000
     
192,800
 
 
See accompanying notes to schedule of investments.
 

CORNERSTONE TOTAL RETURN FUND, INC.            
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2015 (Unaudited)
           
             
Description
   
No. of
Shares
     
Value
 
International Paper Company
   
3,300
    $
124,707
 
LyondellBasell Industries N.V.
   
5,000
     
416,800
 
PPG Industries, Inc.
   
3,000
     
263,070
 
Sherwin-Williams Company (The)
   
1,000
     
222,780
 
             
2,270,877
 
TELECOMMUNICATION SERVICES - 1.37%
               
AT&T, Inc.
   
16,103
     
524,636
 
Verizon Communications, Inc.
   
24,000
     
1,044,240
 
             
1,568,876
 
UTILITIES - 1.47%
               
American Electric Power Company, Inc.
   
4,000
     
227,440
 
Dominion Resources, Inc.
   
3,000
     
211,140
 
Edison International
   
2,000
     
126,140
 
NextEra Energy, Inc.
   
4,000
     
390,200
 
PG&E Corporation
   
4,000
     
211,200
 
PPL Corporation
   
5,000
     
164,450
 
Public Service Enterprises Group, Inc.
   
4,000
     
168,640
 
Xcel Energy Inc.
   
5,500
     
194,755
 
             
1,693,965
 
TOTAL EQUITY SECURITIES (cost - $103,111,558)
           
109,804,634
 
                 
SHORT-TERM INVESTMENTS - 4.79%
               
MONEY MARKET FUNDS - 4.79%
               
Fidelity Institutional Money Market Government Portfolio - Class I, 0.01%^ (cost - $5,500,981)
   
5,500,981
     
5,500,981
 
                 
TOTAL INVESTMENTS - 100.35% (cost - $108,612,539)
           
115,305,615
 
                 
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.35)%
           
(402,442
)
                 
NET ASSETS - 100.00%
         
$
114,903,173
 
 

* Non-income producing security.
^ The rate shown is the 7-day effective yield as of September 30, 2015.
 
See accompanying notes to schedule of investments.
 

CORNERSTONE TOTAL RETURN FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2015 (UNAUDITED)


Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2015:

Cost of portfolio investments
 
$
108,664,580
 
Gross unrealized appreciation
 
$
12,361,594
 
Gross unrealized depreciation
   
(5,720,559
)
Net unrealized appreciation
 
$
6,641,035
 
 
The difference between the federal income tax cost of portfolio investments and the Schedule of Investments cost for the Fund is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and generally accepted accounting principles. These "book/tax" differences are temporary in nature and are due to the tax deferral of losses on wash sales.
 
As required by the Fair Value Measurement and Disclosures Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification, the Fund has performed an analysis of all assets and liabilities measured at fair value to determine the significance and character of all inputs to their fair value determination.
 
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories.

· Level 1 - quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement.
 
· Level 2 - quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
 
· Level 3 - model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Fund's own assumptions that market participants would use to price the asset or liability based on the best available information.
 

The following is a summary of the inputs used as of September 30, 2015 in valuing the Fund's investments carried at value:
 
VALUATION INPUTS
 
INVESTMENTS
IN
SECURITIES
   
OTHER FINANCIAL INSTRUMENTS*
 
         
Level 1 – Quoted Prices
       
Equity Investments
 
$
109,804,634
   
$
-
 
Short-Term Investments
   
5,500,981
     
-
 
Level 2 – Other Significant Observable Inputs
   
-
     
-
 
Level 3 – Significant Unobservable Inputs
   
-
     
-
 
Total
 
$
115,305,615
   
$
-
 

* 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.

As of September 30, 2015, the Fund did not have any transfers in and out of any Level.

The Fund did not have any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2015.

The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the nine months ended September 30, 2015, the Fund did not engage in derivative instruments and other hedging activities.
 
The Fund has evaluated the need for additional disclosures and/or adjustments resulting through the date its financial statements were issued. Based on this evaluation, no additional disclosures or adjustments were required to such Schedule of Investments.

Securities valuation policies and other investment related disclosures are hereby incorporated by reference to the Fund's semi-annual report previously filed with the Securities and Exchange Commission on Form N-CSR on September 1, 2015 with a file number 811-02363.
 
Other information regarding the Fund is available in the Fund’s most recent semi-annual report. This information is also available on the Fund’s website at www.cornerstonetotalreturnfund.com; or on the website of the Securities and Exchange Commission at www.sec.gov.


Item 2. Controls and Procedures.

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

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Cornerstone Total Return Fund, Inc.

By (Signature and Title)*
/s/ Ralph W. Bradshaw
 
   
Ralph W. Bradshaw, President and Chairman
 
   
(Principal Executive Officer)
 
       
Date
October 15, 2015
   
       
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
October 15, 2015
   
       
By (Signature and Title)*
/s/ Frank J. Maresca
 
   
Frank J. Maresca, Treasurer
(Principal Financial Officer)
 
       
Date
October 15, 2015
   

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