fp0007107_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)
 
200A Executive Drive         Edgewood, New York
11717
(Address of principal executive offices)
(Zip code)
 
Frank J. Maresca
 
AST Fund Solutions, LLC         200A Executive Drive
Edgewood, NY 11717
(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:    March 31, 2013              
 
 
 
 
 
Item 1.  Schedule of Investments.
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2013 (Unaudited)
 
Description  
No. of
Shares
    
Value
  
EQUITY SECURITIES - 98.81%            
 
CLOSED-END FUNDS - 26.54%
            
 
CONVERTIBLE SECURITIES - 0.83%
            
 
Advent Claymore Global Convertible Securities and Income Fund II
     43,298     $ 311,746  
 
Putnam High Income Securities Fund
     15,664       128,445  
                440,191  
 
CORE - 0.60%
                
 
General American Investors Company, Inc.
     10,260       320,420  
                   
 
CORPORATE DEBT INVESTMENT GRADE-LEVERAGED - 2.10%
  
 
Western Asset/Claymore Inflation-Linked Opportunities & Income Fund
     54,047       716,123  
 
Western Asset/Claymore Inflation-Linked Securities & Income Fund
     29,732       402,869  
                1,118,992  
 
CORPORATE DEBT INVESTMENT GRADE-RATED - 0.99%
  
 
Federated Enhanced Treasury Income Fund
     11,217       153,561  
 
Invesco Van Kampen Bond Fund
     18,677       371,672  
                525,233  
 
DEVELOPED MARKET - 0.56%
                
 
Singapore Fund, Inc. (The)
     10,201       144,854  
 
Swiss Helvetia Fund, Inc. (The)
     12,300       150,798  
                295,652  
 
EMERGING MARKETS - 1.07%
                
 
Templeton Dragon Fund, Inc.
     18,500       516,705  
 
Turkish Investment Fund, Inc. (The)
     2,900       53,128  
                569,833  
 
GENERAL & INSURED LEVERAGED - 2.16%
                
 
Invesco Value Municipal Income Trust
     21,816       352,328  
 
Nuveen Dividend Advantage Municipal Fund 2
     41,295       626,445  
 
Western Asset Municipal Partners Fund, Inc.
     10,500       171,570  
                1,150,343  
 
GENERAL BOND - 0.46%
                
 
Nuveen Build America Bond Opportunity Fund
     11,100       245,532  
                   
 
GLOBAL - 1.55%
                
 
Clough Global Allocation Fund
     9,798       147,656  
 
Clough Global Equity Fund
     5,394       79,292  
 
Delaware Enhanced Global Dividend and Income Fund
     36,266       442,083  
 
Nuveen Global Value Opportunities Fund
     11,196       158,535  
                827,566  
 
GLOBAL INCOME - 0.95%
                
 
Nuveen Multi-Currency Short-Term Government Income Fund
     39,014       505,621  
                   
 
INCOME & PREFERRED STOCK - 1.65%
                
 
John Hancock Premium Dividend Fund
     8,100       114,777  
 
Nuveen Quality Preferred Income Fund 3
     23,100       209,286  
 
Zweig Total Return Fund, Inc. (The)
     42,804       557,308  
                881,371  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2013 (Unaudited) (Continued)
 
Description  
No. of
Shares
    
Value
  
 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 10.04%
                
 
AllianzGI International & Premium Strategy Fund
     32,718     $ 328,816  
 
BlackRock Enhanced Equity Dividend Trust
     98,200       767,924  
 
BlackRock Global Opportunities Equity Trust
     156,832       2,176,828  
 
BlackRock International Growth and Income Trust
     201,931       1,540,734  
 
Eaton Vance Enhanced Equity Income Fund
     45,872       535,785  
                5,350,087  
 
REAL ESTATE - 0.71%
                
 
Neuberger Berman Real Estate Securities Income Fund Inc.
     73,524       380,119  
                   
 
SECTOR EQUITY - 2.87%
                
 
BlackRock EcoSolutions Investment Trust
     23,594       214,941  
 
BlackRock Real Asset Equity Trust
     66,980       669,800  
 
BlackRock Utility and Infrastructure Trust
     32,873       642,667  
                1,527,408  
                   
 
TOTAL CLOSED-END FUNDS
             14,138,368  
                   
 
CONSUMER DISCRETIONARY - 7.41%
                
 
CBS Corporation - Class B
     3,000       140,070  
 
Comcast Corporation - Class A
     9,012       378,594  
 
Comcast Corporation - Special Class A
     4,250       168,385  
 
D.R. Horton, Inc.
     2,500       60,750  
 
DIRECTV *
     2,000       113,220  
 
Gap, Inc. (The)
     3,000       106,200  
 
Home Depot, Inc. (The)
     9,500       662,910  
 
Lowe's Companies, Inc.
     5,000       189,600  
 
Macy's, Inc.
     3,000       125,520  
 
News Corporation - Class B
     2,500       76,900  
 
NIKE, Inc. - Class B
     4,000       236,040  
 
Omnicom Group Inc.
     2,000       117,800  
 
Starbucks Corporation
     3,000       170,880  
 
Target Corporation
     3,500       239,575  
 
Time Warner Inc.
     6,466       372,571  
 
TJX Companies, Inc. (The)
     5,000       233,750  
 
Viacom Inc. - Class B
     3,000       184,710  
 
Walt Disney Company (The)
     6,500       369,200  
                3,946,675  
 
CONSUMER STAPLES - 8.55%
                
 
Altria Group, Inc.
     7,000       240,730  
 
Coca-Cola Company (The)
     20,000       808,800  
 
Colgate-Palmolive Company
     3,500       413,105  
 
Costco Wholesale Corporation
     2,500       265,275  
 
CVS Caremark Corporation
     7,000       384,930  
 
General Mills, Inc.
     3,000       147,930  
 
Kimberly-Clark Corporation
     1,000       97,980  
 
Kraft Foods Group, Inc.
     1,000       51,530  
 
Mondelēz International, Inc. - Class A
     3,000       91,830  
 
Philip Morris International, Inc.
     6,000       556,260  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2013 (Unaudited) (Continued)
 
Description  
No. of
Shares
    
Value
  
 
Wal-Mart Stores, Inc.
     20,000     $ 1,496,600  
                4,554,970  
 
ENERGY - 8.37%
                
 
Anadarko Petroleum Corporation
     1,000       87,450  
 
Chevron Corporation
     6,000       712,920  
 
ConocoPhillips
     8,000       480,800  
 
EOG Resources, Inc.
     2,000       256,140  
 
Exxon Mobil Corporation
     20,000       1,802,200  
 
Hess Corporation
     2,000       143,220  
 
Marathon Oil Corporation
     4,900       165,228  
 
Phillips 66
     3,000       209,910  
 
Schlumberger Limited
     5,500       411,895  
 
Valero Energy Corporation
     2,500       113,725  
 
Williams Companies, Inc. (The)
     2,000       74,920  
                4,458,408  
 
FINANCIALS - 12.50%
                
 
AFLAC, Inc.
     3,000       156,060  
 
Allstate Corporation (The)
     2,500       122,675  
 
American Express Company
     8,000       539,680  
 
Aon plc
     2,500       153,750  
 
BB&T Corporation
     4,500       141,255  
 
Berkshire Hathaway Inc. - Class B *
     9,000       937,800  
 
BlackRock, Inc. - Class A
     1,000       256,880  
 
Capital One Financial Corporation
     2,500       137,375  
 
Chubb Corporation (The)
     2,000       175,060  
 
Discover Financial Services
     4,000       179,360  
 
Fifth Third Bancorp
     7,000       114,170  
 
Franklin Resources, Inc.
     2,000       301,620  
 
JPMorgan Chase & Co.
     22,200       1,053,612  
 
Marsh & McLennan Companies, Inc.
     3,000       113,910  
 
MetLife, Inc.
     5,500       209,110  
 
SunTrust Banks, Inc.
     5,000       144,050  
 
T. Rowe Price Group, Inc.
     2,000       149,740  
 
U.S. Bancorp
     12,500       424,125  
 
Wells Fargo & Company
     33,000       1,220,670  
 
Weyerhaeuser Company
     4,000       125,520  
                6,656,422  
 
HEALTH CARE - 9.03%
                
 
Abbott Laboratories
     10,000       353,200  
 
AbbVie Inc.
     6,000       244,680  
 
Allergan, Inc.
     2,000       223,260  
 
Amgen Inc.
     6,000       615,060  
 
Baxter International, Inc.
     1,200       87,168  
 
Biogen Idec, Inc. *
     2,000       385,820  
 
Bristol-Myers Squibb Company
     3,000       123,570  
 
Celgene Corporation *
     3,500       405,685  
 
Cigna Corporation
     2,000       124,740  
 
Covidien plc
     2,000       135,680  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2013 (Unaudited) (Continued)
 
Description  
No. of
Shares
    
Value
  
 
Eli Lilly & Company
     2,500     $ 141,975  
 
Johnson & Johnson
     10,500       856,065  
 
McKesson Corporation
     2,000       215,920  
 
Merck & Company, Inc.
     8,000       353,840  
 
Pfizer, Inc.
     16,462       475,093  
 
Stryker Corporation
     1,000       65,240  
                4,806,996  
 
INDUSTRIALS - 6.67%
                
 
3M Company
     7,000       744,170  
 
Deere & Company
     2,500       214,950  
 
Emerson Electric Co.
     4,000       223,480  
 
General Electric Company
     32,000       739,840  
 
Honeywell International Inc.
     4,000       301,400  
 
Illinois Tool Works, Inc.
     3,500       213,290  
 
Lockheed Martin Corporation
     2,500       241,300  
 
Precision Castparts Corporation
     1,500       284,430  
 
Union Pacific Corporation
     2,500       356,025  
 
United Technologies Corporation
     2,500       233,575  
                3,552,460  
 
INFORMATION TECHNOLOGY - 13.59%
                
 
Apple Inc.
     4,000       1,770,520  
 
Automatic Data Processing, Inc.
     3,500       227,570  
 
Cisco Systems, Inc.
     20,000       418,200  
 
eBay Inc. *
     9,000       487,980  
 
International Business Machines Corporation
     5,000       1,066,500  
 
Microsoft Corporation
     36,000       1,029,960  
 
Oracle Corporation
     24,600       795,564  
 
QUALCOMM Incorporated
     10,000       669,500  
 
Visa Inc. - Class A
     4,000       679,360  
 
Yahoo! Inc. *
     4,000       94,120  
                7,239,274  
 
MATERIALS - 1.65%
                
 
Air Products & Chemicals, Inc.
     1,500       130,680  
 
Ecolab Inc.
     2,000       160,360  
 
Freeport-McMoRan Copper & Gold, Inc.
     5,000       165,500  
 
International Paper Company
     2,300       107,134  
 
Monsanto Company
     3,000       316,890  
                880,564  
 
TELECOMMUNICATION SERVICES - 2.69%
                
 
AT&T, Inc.
     17,589       645,340  
 
Verizon Communications, Inc.
     16,000       786,400  
                1,431,740  
 
UTILITIES - 1.81%
                
 
AES Corporation (The)
     4,600       57,822  
 
Consolidated Edison, Inc.
     1,000       61,030  
 
Duke Energy Corporation
     2,200       159,698  
 
NextEra Energy, Inc.
     2,000       155,360  
 
NiSource Inc.
     2,000       58,680  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2013 (Unaudited) (Concluded)
 
Description  
No. of
Shares
    
Value
  
 
Sempra Energy
     1,500     $ 119,910  
 
Southern Company (The)
     4,000       187,680  
 
Xcel Energy Inc.
     5,500       163,350  
                963,530  
 
TOTAL EQUITY SECURITIES (cost - $45,486,565)
             52,629,407  
                   
 
SHORT-TERM INVESTMENTS - 0.98%
                
 
MONEY MARKET FUNDS - 0.98%
                
 
Fidelity Institutional Money Market Government Portfolio - Class I, 0.01%^ (cost - $523,718)
     523,718       523,718  
                   
 
TOTAL INVESTMENTS - 99.79% (cost - $46,010,283)
             53,153,125  
                   
 
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.21%
             111,728  
                   
 
NET ASSETS - 100.00%
           $ 53,264,853  
 
*
Non-income producing security.
^
The rate shown is the 7-day effective yield as of March 31, 2013.
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE TOTAL RETURN FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
MARCH 31, 2013 (UNAUDITED)
 
Federal Income Tax Cost: The following information is computed on a tax basis for each item as of March 31, 2013:
 
Cost of portfolio investments
   $ 46,017,407  
Gross unrealized appreciation
   $ 7,648,727  
Gross unrealized depreciation
     (513,009 )
Net unrealized appreciation
   $ 7,135,718  

The difference between the federal income tax cost of portfolio investments and the Schedule of Investments cost for the Fund is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and generally accepted accounting principles. These "book/tax" differences are temporary in nature and are due to the tax deferral of losses on wash sales.

As required by the Fair Value Measurement and Disclosures Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification, the Fund has performed an analysis of all assets and liabilities measured at fair value to determine the significance and character of all inputs to their fair value determination.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories.

·
Level 1 - quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement.

·
Level 2 - quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

·
Level 3 - model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Fund's  own assumptions that market participants would use to price the asset or liability based on the best available information.

 
 
 
 
The following is a summary of the inputs used as of March 31, 2013 in valuing the Fund's investments carried at value:
 
 
 
VALUATION INPUTS
  
INVESTMENTS
IN
SECURITIES
    
OTHER FINANCIAL INSTRUMENTS*
  
             
Level 1 – Quoted Prices
            
    Equity Investments
   $ 52,629,407     $ -  
    Short-Term Investments
     523,718       -  
Level 2 – Other Significant Observable Inputs
     -       -  
Level 3 – Significant Unobservable Inputs
     -       -  
Total
   $ 53,153,125     $ -  

* 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 March 31, 2013, 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 March 31, 2013.

The disclosures for the Fund's fiscal year beginning January 1, 2013 relate to presenting separately any Level 3 purchases, sales, issuances and settle1nents on a gross basis instead of one net amount. Management has evaluated 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. During the three months ended March 31, 2013, 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 March 4, 2013 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
May 20, 2013
    
       
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 20, 2013
    
       
By (Signature and Title)*
/s/ Frank J. Maresca
  
   
Frank J. Maresca, Treasurer (Principal Financial Officer)
       
Date
May 20, 2013
    
 
* Print the name and title of each signing officer under his or her signature.