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)

 

 

Frank J. Maresca

 

---

(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, 2016

 

Item 1.  Schedule of Investments.

 

CORNERSTONE TOTAL RETURN FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2016 (Unaudited)

Description		No. of Shares				Value
EQUITY SECURITIES - 98.88%
CLOSED-END FUNDS - 30.00%
CORE - 9.04%
Adams Diversified Equity Fund, Inc.			159,441			$	2,096,649
General American Investors Company, Inc.			69,430				2,266,889
Liberty All-Star Equity Fund			358,612				1,857,610
Royce Micro-Cap Trust, Inc.			97,800				763,818
Royce Value Trust			108,626				1,375,205
Sprott Focus Trust, Inc.			1,600				11,040
Tri-Continental Corporation			47,195				1,009,029
							9,380,240
DEVELOPED MARKET - 0.26%
Aberdeen Singapore Fund, Inc.			20,826				195,348
Swiss Helvetia Fund, Inc. (The)			7,310				78,144
							273,492
EMERGING MARKETS - 1.36%
Aberdeen Chile Fund, Inc.			22,386				140,360
Morgan Stanley China A Share Fund, Inc.			65,800				1,230,460
Turkish Investment Fund, Inc. (The)			4,755				38,183
							1,409,003
GLOBAL - 7.62%
Alpine Global Dynamic Dividend Fund			33,506				291,502
Alpine Global Total Dynamic Dividend Fund			262,952				2,006,324
Clough Global Allocation Fund			39,372				477,582
Clough Global Equity Fund			69,175				787,212
Clough Global Opportunities Fund			174,883				1,691,119
Gabelli Global Small and Mid Cap Value Trust (The) *			25,580				276,264
Gabelli Global Utility & Income Trust (The)			4,308				78,793
GDL Fund (The)			49,446				491,988
Lazard World Dividend & Income Fund, Inc.			5,004				50,540
Royce Global Value Trust, Inc.			47,099				382,915
Voya Infrastructure, Industrials and Materials Fund			34,814				469,293
Wells Fargo Advantage Global Dividend Opportunity Fund			154,185				895,815
							7,899,347
GLOBAL INCOME - 0.13%
Legg Mason BW Global Income Opportunities Fund Inc.			10,100				137,158
INCOME & PREFERRED STOCK - 1.06%
LMP Capital and Income Fund Inc.			80,839				1,101,835
NATURAL RESOURCES - 2.30%
Adams Natural Resources Fund, Inc.			10,900				217,237
BlackRock Resources & Commodities Strategy Trust			266,250				2,169,938
							2,387,175
OPTION ARBITRAGE/OPTIONS STRATEGIES - 1.51%
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund			123,700				1,563,568
PACIFIC EX JAPAN - 0.12%
Aberdeen Greater China Fund, Inc.			14,095				128,124

Description		No. of Shares				Value
REAL ESTATE - 5.48%
Alpine Global Premier Properties Fund			220,193			$	1,222,071
CBRE Clarion Global Real Estate Income Fund			219,218				1,841,431
Cohen & Steers Preferred Securities and Income Fund, Inc.			112,200				2,260,830
RMR Real Estate Income Fund			16,381				356,287
							5,680,619
UTILITY - 1.12%
Macquarie Global Infrastructure Total Return Fund Inc.			53,270				1,160,753
TOTAL CLOSED-END FUNDS							31,121,314
CONSUMER DISCRETIONARY - 7.92%
Amazon.com, Inc. *			2,000				1,674,620
Dollar General Corporation			3,000				209,970
Dollar Tree, Inc. *			2,500				197,325
Home Depot, Inc. (The)			13,500				1,737,180
Lowe's Companies, Inc.			9,000				649,890
McDonald's Corporation			6,600				761,376
O’Reilly Automotive, Inc. *			1,000				280,110
Ross Stores, Inc.			4,000				257,200
Starbucks Corporation			14,000				757,960
Twenty-First Century Fox, Inc.			2,500				61,850
Walt Disney Company (The)			17,500				1,625,050
							8,212,531
CONSUMER STAPLES - 7.42%
Altria Group, Inc.			21,000				1,327,830
Clorox Company (The)			2,000				250,360
Colgate-Palmolive Company			3,000				222,420
ConAgra Foods, Inc.			2,000				94,220
Constellation Brands, Inc.			2,500				416,225
Costco Wholesale Corporation			5,000				762,550
General Mills, Inc.			3,000				191,640
Kimberly-Clark Corporation			2,000				252,280
Molson Coors Brewing Company			2,000				219,600
Monster Beverage Corporation *			2,000				293,620
PepsiCo, Inc.			3,000				326,310
Reynolds American Inc.			14,000				660,100
Sysco Corporation			4,000				196,040
Walgreens Boots Alliance, Inc.			12,000				967,440
Wal-Mart Stores, Inc.			21,000				1,514,520
							7,695,155
ENERGY - 5.15%
Chevron Corporation			14,000				1,440,880
Concho Resources Inc. *			2,000				274,700
Exxon Mobil Corporation			26,000				2,269,280
Occidental Petroleum Corporation			5,900				430,228
ONEOK, Inc.			1,400				71,946
Phillips 66			6,000				483,300
Pioneer Natural Resources Company			2,000				371,300
							5,341,634

Description		No. of Shares				Value
EXCHANGE-TRADED FUNDS - 0.63%
SPDR S&P 500 ETF Trust			3,000			$	648,900
FINANCIALS - 9.44%
Aflac Incorporated			3,000				215,610
Allstate Corporation (The)			4,000				276,720
American Tower Corporation			4,000				453,320
Assurant, Inc.			1,100				101,475
Berkshire Hathaway Inc. - Class B *			14,000				2,022,580
BlackRock, Inc. - Class A			2,000				724,920
Charles Schwab Corporation (The)			13,000				410,410
Chubb Limited			5,203				653,757
CME Group Inc.			2,000				209,040
Discover Financial Services			4,000				226,200
Intercontinental Exchange, Inc.			1,400				377,104
Marsh & McLennan Companies, Inc.			5,000				336,250
Nasdaq, Inc.			1,000				67,540
PNC Financial Services Group, Inc. (The)			5,000				450,450
Progressive Corporation (The)			5,000				157,500
S&P Global, Inc.			3,000				379,680
Torchmark Corporation			1,600				102,224
Travelers Companies, Inc. (The)			3,000				343,650
Unum Group			2,700				95,337
U.S. Bancorp			17,000				729,130
Wells Fargo & Company			33,000				1,461,240
							9,794,137
HEALTH CARE - 9.28%
Anthem, Inc.			2,000				250,620
Baxter International Inc.			4,000				190,400
Becton, Dickinson and Co.			2,000				359,460
Bristol-Myers Squibb Company			7,000				377,440
Cardinal Health, Inc.			4,000				310,800
Celgene Corporation *			7,000				731,710
Cerner Corporation *			4,000				247,000
Cigna Corporation			2,000				260,640
Edwards Lifesciences Corporation *			1,100				132,616
Johnson & Johnson			12,000				1,417,560
McKesson Corporation			3,000				500,250
Merck & Company, Inc.			33,000				2,059,530
Mylan N.V. *			4,000				152,480
Pfizer Inc.			8,200				277,734
Stryker Corporation			4,000				465,640
Thermo Fisher Scientific Inc.			4,000				636,240
UnitedHealth Group Incorporated			9,000				1,260,000
							9,630,120
INDUSTRIALS - 7.08%
Danaher Corporation			7,000				548,730

Description		No. of Shares				Value
FedEx Corporation			3,000			$	524,040
Fortive Corporation			3,500				178,150
General Dynamics Corporation			3,000				465,480
General Electric Company			22,100				654,602
Honeywell International Inc.			8,000				932,720
Illinois Tool Works Inc.			4,000				479,360
Lockheed Martin Corporation			3,500				839,020
Raytheon Company			3,000				408,390
3M Company			6,000				1,057,380
United Parcel Service, Inc.			6,100				667,096
United Technologies Corporation			2,000				203,200
Waste Management, Inc.			6,000				382,560
							7,340,728
INFORMATION TECHNOLOGY - 15.29%
Accenture plc - Class A			3,500				427,595
Activision Blizzard, Inc.			3,200				141,760
Adobe Systems Incorporated*			4,000				434,160
Alphabet Inc. - Class A *			1,000				804,060
Alphabet Inc. - Class C *			6,002				4,665,294
Applied Materials, Inc.			5,000				150,750
Automatic Data Processing, Inc.			4,500				396,900
Broadcom Limited			4,200				724,584
Cisco Systems, Inc.			20,000				634,400
Cognizant Technology Solutions Corporation *			6,000				286,260
eBay Inc. *			4,000				131,600
Facebook, Inc. *			15,900				2,039,493
Fidelity National Information Services, Inc.			1,500				115,545
Fiserv, Inc. *			3,000				298,410
Microsoft Corporation			35,600				2,050,560
Nvidia Corporation			7,000				479,640
Oracle Corporation			28,700				1,127,336
Paychex, Inc,			1,600				92,592
PayPal Holdings, Inc. *			4,000				163,880
salesforce.com, inc. *			5,000				356,650
Texas Instruments Incorporated			4,800				336,864
							15,858,333
MATERIALS - 2.26%
Air Products & Chemicals, Inc.			2,000				300,680
Dow Chemical Company (The)			11,000				570,130
E. I. du Pont de Nemours and Company			4,000				267,880
Freeport-McMoRan Inc.			10,600				115,116
Newmont Mining Corporation			5,000				196,450
Nucor Corporation			3,300				163,185
PPG Industries, Inc.			3,000				310,080
Sherwin-Williams Company (The)			1,000				276,660
Vulcan Materials Company			1,300				147,849
							2,348,030
TELECOMMUNICATION SERVICES - 1.83%
AT&T, Inc.			16,103				653,943
Verizon Communications, Inc.			24,000				1,247,520
							1,901,463

Description		No. of Shares				Value
UTILITIES - 2.58%
American Electric Power Company, Inc.			5,000			$	321,050
Consolidated Edison, Inc.			1,600				120,480
Dominion Resources, Inc.			3,000				222,810
Duke Energy Corporation			3,600				288,144
Edison International			2,000				144,500
Eversource Energy			1,600				86,688
NextEra Energy, Inc.			4,000				489,280
PPL Corporation			5,000				172,850
Public Service Enterprises Group, Inc.			4,000				167,480
Sempra Energy			1,100				117,909
Southern Company (The)			4,400				225,720
WEC Energy Group, Inc.			1,600				95,808
Xcel Energy Inc.			5,500				226,270
							2,678,989
TOTAL EQUITY SECURITIES (cost - $90,240,165)							102,571,334
SHORT-TERM INVESTMENT - 1.15%
MONEY MARKET FUND - 1.15%
Fidelity Institutional Money Market Government Portfolio - Class I, 0.27%^ (cost - $1,191,563)			1,191,563				1,191,563
TOTAL INVESTMENTS - 100.03% (cost - $91,431,728)							103,762,897
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.03)%							(30,388	)
NET ASSETS - 100.00%						$	103,732,509

CORNERSTONE TOTAL RETURN FUND, INC.

NOTES TO SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2016 (UNAUDITED)

---

 

Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2016:

Cost of portfolio investments		$	90,790,079
Gross unrealized appreciation		$	14,765,919
Gross unrealized depreciation			(1,793,101	)
Net unrealized appreciation		$	12,972,818

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 September 30, 2016 in valuing the Fund's investments carried at value:

VALUATION INPUTS		INVESTMENTS IN SECURITIES				OTHER FINANCIAL INSTRUMENTS*
Level 1 – Quoted Prices
Equity Investments		$	102,571,334			$	-
Short-Term Investments			1,191,563				-
Level 2 – Other Significant Observable Inputs			-				-
Level 3 – Significant Unobservable Inputs			-				-
Total		$	103,762,897			$	-

*	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, 2016, 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, 2016.

 

The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the nine months ended September 30, 2016, 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, 2016 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.

 

 

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