fp0011882_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)
 
7 Dawson Street         Huntington Station, New York
11746
(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, 2014                  
 
 
 
 
 
Item 1.  Schedule of Investments.
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
  
No. of
Shares
    
Value
  
EQUITY SECURITIES - 98.51%
  
CLOSED-END FUNDS - 13.08%
  
CORE - 1.20%
  
Adams Express Company (The)
     6,000     $ 83,640  
General American Investors Company, Inc.
     21,671       802,911  
Tri-Continental Corporation
     6,328       132,065  
              1,018,616  
DEVELOPED MARKET - 0.16%
  
Aberdeen Australia Equity Fund, Inc.
     4,316       33,708  
Swiss Helvetia Fund, Inc. (The)
     7,413       100,298  
              134,006  
                 
EMERGING MARKETS - 0.25%
  
Aberdeen Japan Equity Fund, Inc.
     500       3,555  
Central Europe, Russia, and Turkey Fund, Inc. (The)
     3,984       98,803  
First Trust/Aberdeen Emerging Opportunity Fund
     579       10,300  
Templeton Emerging Markets Fund
     4,888       86,713  
Templeton Russia and East European Fund, Inc.
     700       8,820  
Turkish Investment Fund, Inc. (The)
     500       5,215  
              213,406  
                 
ENERGY MLP - 2.10%
  
ClearBridge Energy MLP Total Return Fund Inc.
     21,737       500,820  
First Trust MLP and Energy Income Fund
     59,173       1,264,527  
Nuveen Energy MLP Total Return Fund
     700       15,477  
              1,780,824  
GENERAL & INSURED LEVERAGED - 0.58%
  
Eaton Vance Tax-Advantaged Bond and Option Strategies Fund
     19,545       275,975  
Invesco Advantage Municipal Income Trust II
     4,400       50,072  
Invesco Municipal Opportunity Trust
     12,900       161,637  
              487,684  
GLOBAL - 0.54%
  
Clough Global Allocation Fund
     3,730       53,373  
Gabelli Global Utility & Income Trust (The)
     9,526       182,804  
GDL Fund (The)
     20,865       219,917  
              456,094  
HIGH CURRENT YIELD (LEVERAGED) - 0.78%
  
Deutsche High Income Opportunities Fund, Inc.
     45,027       659,195  
                 
INCOME & PREFERRED STOCK - 0.36%
  
Nuveen Quality Preferred Income Fund 3
     36,888       308,753  
                 
LOAN PARTICIPATION - 1.47%
  
BlackRock Floating Rate Income Strategies Fund, Inc
     18,878       265,425  
Eaton Vance Senior Income Trust
     14,289       93,021  
First Trust Senior Floating Rate Income Fund II
     65,755       891,638  
              1,250,084  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
    
No. of
Shares
      
Value
  
NATURAL RESOURCES - 2.17%
  
BlackRock Real Asset Equity Trust
     66,980     $ 567,321  
BlackRock Resources & Commodities Strategy Trust
     5,600       62,888  
First Trust Energy Infrastructure Fund
     23,823       568,417  
Petroleum & Resources Corporation
     22,402       645,178  
              1,843,804  
PACIFIC EX JAPAN - 0.07%
  
Morgan Stanley Thai Fund, Inc.
     4,900       60,221  
                 
REAL ESTATE - 2.74%
  
Cohen & Steers Preferred Securities and Income Fund, Inc.
     31,956       558,271  
Cohen & Steers Total Return Realty Fund, Inc.
     4,200       50,190  
LMP Real Estate Income Fund Inc.
     1,400       15,722  
Neuberger Berman Real Estate Securities Income Fund Inc.
     191,405       922,572  
Nuveen Diversified Dividend and Income Fund
     15,559       181,107  
Nuveen Real Estate Income Fund
     27,570       289,761  
RMR Real Estate Income Fund
     16,181       305,012  
              2,322,635  
U.S. MORTGAGE - 0.16%
  
First Trust Mortgage Income Fund
     9,045       136,579  
                 
UTILITY - 0.50%
  
BlackRock Utility and Infrastructure Trust
     21,066       421,531  
                 
TOTAL CLOSED-END FUNDS
             11,093,432  
                 
CONSUMER DISCRETIONARY - 9.13%
                
CBS Corporation - Class B
     4,000       214,000  
Comcast Corporation - Class A
     21,012       1,130,025  
Comcast Corporation - Special Class A
     4,250       227,375  
CST Brands, Inc.
     277       9,958  
D.R. Horton, Inc.
     2,500       51,300  
DIRECTV *
     4,500       389,340  
Ford Motor Company
     31,000       458,490  
Gap, Inc. (The)
     3,000       125,070  
Home Depot, Inc. (The)
     11,500       1,055,010  
Johnson Controls, Inc.
     5,500       242,000  
Macy's, Inc.
     3,000       174,540  
McDonald's Corporation
     9,000       853,290  
Ralph Lauren Corporation
     1,000       164,730  
Time Inc. *
     808       18,931  
Time Warner Cable Inc.
     2,500       358,725  
Time Warner Inc.
     6,466       486,308  
TJX Companies, Inc. (The)
     3,000       177,510  
Twenty-First Century Fox, Inc.
     2,500       83,275  
Viacom Inc. - Class B
     3,000       230,820  
Walt Disney Company (The)
     14,500       1,290,935  
 
            7,741,632  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
    
No. of
Shares
      
Value
  
CONSUMER STAPLES - 7.84%
                
Altria Group, Inc.
     17,000     $ 780,980  
Archer-Daniels-Midland Company
     5,000       255,500  
Coca-Cola Company (The)
     17,000       725,220  
CVS Caremark Corporation
     13,200       1,050,588  
Kellogg Company
     3,000       184,800  
Kraft Foods Group, Inc.
     1,000       56,400  
Kroger Co. (The)
     5,000       260,000  
Mondelēz International, Inc. - Class A
     3,000       102,795  
PepsiCo, Inc.
     8,000       744,720  
Tyson Foods, Inc.
     3,000       118,110  
Wal-Mart Stores, Inc.
     31,000       2,370,570  
              6,649,683  
ENERGY - 8.67%
                
Anadarko Petroleum Corporation
     4,000       405,760  
Chesapeake Energy Corporation
     5,000       114,950  
ConocoPhillips
     8,000       612,160  
Devon Energy Corporation
     3,500       238,630  
EOG Resources, Inc.
     4,000       396,080  
Exxon Mobil Corporation
     31,000       2,915,550  
Kinder Morgan, Inc.
     5,000       191,700  
Marathon Oil Corporation
     6,900       259,371  
Occidental Petroleum Corporation
     5,000       480,750  
Phillips 66
     3,000       243,930  
Schlumberger Limited
     11,500       1,169,435  
Seventy Seven Energy Inc. *
     357       8,475  
Southwestern Energy Company *
     3,000       104,850  
Valero Energy Corporation
     4,500       208,215  
              7,349,856  
EXCHANGE-TRADED FUNDS - 2.33%
                
iShares Core S&P 500 ETF
     5,000       991,300  
SPDR S&P 500 ETF Trust
     5,000       985,100  
              1,976,400  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
    
No. of
Shares
      
Value
  
FINANCIALS - 13.60%
                
Allstate Corporation (The)
     4,000     $ 245,480  
American International Group, Inc.
     11,000       594,220  
Aon plc
     2,500       219,175  
Bank of America Corporation
     27,700       472,285  
Bank of New York Mellon Corporation (The)
     11,000       426,030  
Berkshire Hathaway Inc. - Class B *
     14,000       1,933,960  
Capital One Financial Corporation
     2,500       204,050  
Citigroup, Inc.
     23,000       1,191,860  
Fifth Third Bancorp
     9,000       180,180  
Goldman Sachs Group, Inc. (The)
     3,500       642,495  
Hartford Financial Services Group, Inc. (The)
     4,000       149,000  
JPMorgan Chase & Co.
     22,200       1,337,328  
Loews Corporation
     3,000       124,980  
Marsh & McLennan Companies, Inc.
     3,000       157,020  
MetLife, Inc.
     10,500       564,060  
Morgan Stanley
     16,000       553,120  
PNC Financial Services Group, Inc. (The)
     5,000       427,900  
Prudential Financial, Inc.
     4,000       351,760  
SunTrust Banks, Inc.
     5,000       190,150  
T. Rowe Price Group, Inc.
     2,500       196,000  
Wells Fargo & Company
     24,000       1,244,880  
Weyerhaeuser Company
     4,000       127,440  
              11,533,373  
HEALTH CARE - 11.56%
                
Abbott Laboratories
     10,000       415,900  
AbbVie Inc.
     6,000       346,560  
Actavis plc *
     1,000       241,280  
Aetna Inc.
     3,000       243,000  
Allergan, Inc.
     3,000       534,570  
Amgen Inc.
     6,000       842,760  
Baxter International, Inc.
     5,700       409,089  
Cardinal Health, Inc.
     4,000       299,680  
Cigna Corporation
     2,000       181,380  
Express Scripts Holding Company *
     6,000       423,780  
Johnson & Johnson
     10,500       1,119,195  
Mallinckrodt public limited company *
     250       22,538  
McKesson Corporation
     2,000       389,340  
Merck & Company, Inc.
     27,000       1,600,560  
Pfizer, Inc.
     31,462       930,331  
St. Jude Medical, Inc.
     3,000       180,390  
Stryker Corporation
     3,000       242,250  
Thermo Fisher Scientific Inc.
     3,000       365,100  
UnitedHealth Group Incorporated
     9,000       776,250  
Wellpoint, Inc.
     2,000       239,240  
              9,803,193  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
    
No. of
Shares
      
Value
  
INDUSTRIALS - 8.77%
                
Boeing Company (The)
     3,000     $ 382,140  
Caterpillar Inc.
     4,000       396,120  
CSX Corporation
     8,000       256,480  
Deere & Company
     3,500       286,965  
Delta Air Lines, Inc.
     4,000       144,600  
FedEx Corporation
     3,000       484,350  
General Electric Company
     71,000       1,819,020  
Honeywell International Inc.
     7,000       651,840  
Lockheed Martin Corporation
     2,500       456,950  
Norfolk Southern Corporation
     3,000       334,800  
Northrop Grumman Corporation
     2,000       263,520  
Precision Castparts Corporation
     1,500       355,320  
Raytheon Company
     2,000       203,240  
Southwest Airlines Co.
     4,000       135,080  
Union Pacific Corporation
     9,000       975,780  
Veritiv Corporation
     63       3,154  
Waste Management, Inc.
     6,000       285,180  
              7,434,539  
INFORMATION TECHNOLOGY - 16.93%
                
Apple Inc.
     35,000       3,526,250  
Cisco Systems, Inc.
     40,000       1,006,800  
Cognizant Technology Solutions Corporation *
     6,000       268,620  
eBay Inc. *
     9,000       509,670  
EMC Corporation
     13,000       380,380  
Facebook, Inc. *
     10,000       790,400  
Google Inc. - Class A *
     1,000       588,410  
Google Inc. - Class C *
     1,000       577,360  
Hewlett-Packard Company
     17,000       602,990  
Intel Corporation
     42,000       1,462,440  
International Business Machines Corporation
     7,000       1,328,810  
Micron Technology, Inc.
     7,000       239,820  
Microsoft Corporation
     20,000       927,200  
Oracle Corporation
     34,700       1,328,316  
QUALCOMM Incorporated
     11,000       822,470  
              14,359,936  
MATERIALS - 2.65%
                
Dow Chemical Company (The)
     11,000       576,840  
Ecolab Inc.
     2,000       229,660  
Freeport-McMoRan Copper & Gold Inc.
     8,500       277,525  
International Paper Company
     3,300       157,542  
LyondellBasell Industries N.V.
     3,000       325,980  
Newmont Mining Corporation
     4,000       92,200  
PPG Industries, Inc.
     1,000       196,740  
Praxair, Inc.
     3,000       387,000  
              2,243,487  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2014 (Unaudited)
 
Description
    
No. of
Shares
      
Value
  
TELECOMMUNICATION SERVICES - 2.15%
                
AT&T, Inc.
     17,589     $ 619,836  
Verizon Communications, Inc.
     24,000       1,199,760  
              1,819,596  
UTILITIES - 1.80%
                
AES Corporation (The)
     4,600       65,228  
American Electric Power Company, Inc.
     4,000       208,840  
Consolidated Edison, Inc.
     1,500       84,990  
Entergy Corporation
     2,000       154,660  
Exelon Corporation
     7,000       238,630  
FirstEnergy Corp.
     2,000       67,140  
PPL Corporation
     4,000       131,360  
Public Service Enterprises Group, Inc.
     4,000       148,960  
Southern Company (The)
     6,000       261,900  
Xcel Energy Inc.
     5,500       167,200  
              1,528,908  
TOTAL EQUITY SECURITIES (cost - $68,863,368)
             83,534,035  
                 
SHORT-TERM INVESTMENTS - 1.09%
                
MONEY MARKET FUNDS - 1.09%
                
Fidelity Institutional Money Market Government Portfolio - Class I, 0.01%^ (cost - $927,872)
     927,872       927,872  
                 
TOTAL INVESTMENTS - 99.60% (cost - $69,791,240)
             84,461,907  
                 
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.40%
             339,625  
                 
NET ASSETS - 100.00%
           $ 84,801,532  
 
*
Non-income producing security.
^
The rate shown is the 7-day effective yield as of September 30, 2014.
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2014 (UNAUDITED)
 
Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2014:

Cost of portfolio investments
   $ 69,800,910  
Gross unrealized appreciation
   $ 15,445,379  
Gross unrealized depreciation
     (784,382 )
Net unrealized appreciation
   $ 14,660,997  
 
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 Measuren1ent 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, 2014 in valuing the Fund's investments carried at value:
 
 
 
VALUATION INPUTS
  
INVESTMENTS
IN
SECURITIES
    
OTHER FINANCIAL INSTRUMENTS*
  
             
Level 1 – Quoted Prices
            
   Equity Investments
   $ 53,534,035     $ -  
   Short-Term Investments
     927,872       -  
Level 2 – Other Significant Observable Inputs
     -       -  
Level 3 – Significant Unobservable Inputs
     -       -  
Total
   $ 84,461,907     $ -  

*
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, 2014, 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, 2014.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the six months ended September 30, 2014, 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 annual report previously filed with the Securities and Exchange Commission on Form N-CSR on September 2, 2014 with a file number 811-02363.
 
Other information regarding the Fund is available in the Fund’s most recent annual report. This information is also available on the Fund’s website at www.cornerstonetotalreturnfund.com; or on the website of the Securities and Exchange Commission at www.sec.gov.
 
 
 
 
 
Item 2.  Controls and Procedures.
 
(a)   Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that such information is recorded, processed, summarized, and reported on a timely basis.
 
(b)   There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 3.  Exhibits.
 
File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)):  Attached hereto

 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
(Registrant) Cornerstone Total Return Fund, Inc.           
 
By (Signature and Title)*
/s/ Ralph W. Bradshaw
  
   
Ralph W. Bradshaw, President and Chairman
  
   
(Principal Executive Officer)
  
       
Date
November 25, 2014
    
       
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
November 25, 2014
    
       
By (Signature and Title)*
/s/ Frank J. Maresca
  
   
Frank J. Maresca, Treasurer
(Principal Financial Officer)
  
       
Date
November 25, 2014
    
 
* Print the name and title of each signing officer under his or her signature.