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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.
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(Exact name of registrant as specified in charter)
305 Madison Avenue, Suite 740 New York, New York 10165
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(Address of principal executive offices) (Zip code)
Frank J. Maresca
Ultimus Fund Solutions, LLC 305 Madison Avenue, Suite 740 New York, NY 10165
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 652-6155
----------------------------
Date of fiscal year end: December 31, 2009
--------------------------
Date of reporting period: March 31, 2009
--------------------------
Form N-Q is to be used by management investment companies other than small
business investment companies registered on Form N-5 (ss.ss. 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. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2009 (UNAUDITED)
DESCRIPTION NO. OF SHARES VALUE
--------------------------------------------------------------------------------
EQUITY SECURITIES - 99.21%
CLOSED-END FUNDS - 9.87%
Adams Express Company (The) (a) 73,000 $ 546,770
Alpine Global Premier Properties Fund ^ 8,000 23,520
Blue Chip Value Fund 27,000 60,210
Central Europe & Russia Fund, Inc. (The) ^ 2,500 38,225
Denali Fund (The) 6,000 49,320
Dreman/Claymore Dividend & Income Fund ^ 56,500 81,925
Gabelli Global Multimedia Trust, Inc. 8,500 28,815
General American Investors Company, Inc. 4,000 61,400
H&Q Healthcare Investors 14,400 145,008
H&Q Life Sciences Investors 9,000 70,200
Japan Equity Fund ^ 13,000 53,690
Liberty All-Star Equity Fund 37,000 108,410
Liberty All-Star Growth Fund 76,075 183,341
Petroleum & Resources Corporation (a) 3,000 54,900
Templeton Emerging Markets Fund 3,000 28,950
Zweig Fund, Inc. ^ 85,000 211,650
Zweig Total Return Fund, Inc. (The) ^ 5,000 15,700
------------
1,762,034
------------
CONSUMER DISCRETIONARY - 7.84%
Amazon.com, Inc. * 1,500 110,160
Apollo Group, Inc. - Class A * 1,000 78,330
Bed Bath & Beyond, Inc. ^ * 2,500 61,875
Comcast Corporation - Special Class A 4,250 54,698
Comcast Corporation - Class A 2,012 27,444
DIRECTV Group, Inc. (The) ^ * 4,000 91,159
Ford Motor Company ^ * 5,000 13,150
Home Depot, Inc. (The) 5,000 117,800
Lowe's Companies, Inc. 5,000 91,250
Mattel, Inc. 1,500 17,295
McDonald's Corporation 3,100 169,167
News Corporation - Class B ^ 2,500 19,250
NIKE, Inc. - Class B 2,500 117,225
Omnicom Group, Inc. ^ 3,000 70,200
Pulte Homes, Inc. 2,500 27,325
Staples, Inc. ^ 3,150 57,047
Time Warner Cable, Inc. 669 16,600
Time Warner, Inc. ^ 2,667 51,467
TJX Companies, Inc. (The) ^ 2,500 64,100
Walt Disney Company (The) ^ 8,000 145,279
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2009 (UNAUDITED) (CONTINUED)
CONSUMER DISCRETIONARY (CONTINUED)
------------
1,400,821
------------
CONSUMER STAPLES - 11.97%
Altria Group, Inc. 5,000 $ 80,100
Archer-Daniels-Midland Company 2,500 69,450
Coca-Cola Company (The) 5,000 219,750
Colgate-Palmolive Company 1,000 58,980
ConAgra Foods, Inc. 2,500 42,175
CVS Caremark Corporation 4,175 114,771
H.J. Heinz Company ^ 2,700 89,262
Kraft Foods, Inc. - Class A 5,328 118,761
Kroger Company (The) 3,600 76,392
PepsiCo, Inc. 3,000 154,440
Philip Morris International, Inc. ^ 3,700 131,646
Procter & Gamble Company (The) 8,472 398,946
Sara Lee Corporation 2,500 20,200
Walgreen Company 1,600 41,536
Wal-Mart Stores, Inc. 10,000 521,000
------------
2,137,409
------------
ENERGY - 12.16%
Apache Corporation 1,000 64,090
Chevron Corporation 5,068 340,772
Devon Energy Corporation ^ 2,500 111,725
El Paso Corporation 5,000 31,250
EOG Resources, Inc. ^ 1,000 54,760
Exxon Mobil Corporation 14,000 953,400
Halliburton Company 2,500 38,675
Occidental Petroleum Corporation 2,500 139,125
Peabody Energy Corporation 2,500 62,600
Schlumberger Ltd. ^ 5,000 203,100
Spectra Energy Corporation ^ 2,500 35,350
Transocean Ltd. ^ * 1,000 58,840
Williams Companies, Inc. ^ 2,500 28,450
XTO Energy, Inc. ^ 1,625 49,758
------------
2,171,895
------------
FINANCIALS - 8.54%
AFLAC, Inc. ^ 1,500 29,040
Aon Corporation ^ 2,500 102,050
Bank of America Corporation 10,521 71,753
Bank of New York Mellon Corporation (The) 2,800 79,100
BB&T Corporation ^ 2,000 33,840
Charles Schwab Corporation (The) ^ 4,200 65,100
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2009 (UNAUDITED) (CONTINUED)
FINANCIALS (CONTINUED)
Chubb Corporation (The) 1,000 $ 42,320
Goldman Sachs Group, Inc. (The) ^ 1,000 106,020
Hudson City Bancorp, Inc. 2,500 29,225
JPMorgan Chase & Company 12,200 324,276
Loews Corporation 2,000 44,200
MetLife, Inc. ^ 1,500 34,155
Morgan Stanley 2,000 45,540
Northern Trust Corporation ^ 1,000 59,820
T. Rowe Price Group, Inc. ^ 1,000 28,860
Travelers Companies, Inc. (The) 3,092 125,659
U.S. Bancorp 5,000 73,050
Unum Group 2,500 31,250
Wells Fargo & Company 14,000 199,360
------------
1,524,618
------------
HEALTH CARE - 13.50%
Abbott Laboratories 3,000 143,100
Aetna, Inc. 4,000 97,320
Amgen, Inc. ^ * 3,000 148,560
Baxter International, Inc. ^ 2,500 128,050
Bristol-Myers Squibb Company 4,000 87,680
Celgene Corporation * 2,500 111,000
Express Scripts, Inc. ^ * 1,200 55,404
Gilead Sciences, Inc. * 3,000 138,960
Johnson & Johnson 13,500 710,100
McKesson Corporation 2,500 87,600
Medtronic, Inc. 4,500 132,615
Merck & Company, Inc. ^ 2,500 66,875
Pfizer, Inc. 12,000 163,440
St. Jude Medical, Inc. * 2,500 90,825
Stryker Corporation 2,000 68,080
UnitedHealth Group, Inc. 3,500 73,255
Wyeth 2,500 107,600
------------
2,410,464
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INDUSTRIALS - 8.55%
Caterpillar, Inc. 2,500 69,900
CSX Corporation 5,000 129,250
Danaher Corporation 2,500 135,550
Emerson Electric Company 2,500 71,450
General Dynamics Corporation ^ 2,500 103,975
General Electric Company ^ 34,000 343,740
Illinois Tool Works, Inc. 1,000 30,850
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2009 (UNAUDITED) (CONTINUED)
INDUSTRIALS (CONTINUED)
Lockheed Martin Corporation 2,500 $ 172,575
Republic Services, Inc. 1,125 19,294
United Parcel Service, Inc. - Class B 4,000 196,880
United Technologies Corporation 4,400 189,112
Waste Management, Inc. ^ 2,500 64,000
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1,526,576
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INFORMATION TECHNOLOGY - 16.51%
Agilent Technologies, Inc. * 2,500 38,425
Apple, Inc. * 2,000 210,240
Automatic Data Processing, Inc. 2,500 87,900
Cisco Systems, Inc. * 13,000 218,010
Computer Associates International, Inc. 2,500 44,025
Corning, Inc. ^ 3,000 39,810
EMC Corporation * 5,500 62,700
Google, Inc. - Class A * 1,000 348,060
Hewlett-Packard Company 5,000 160,300
Intel Corporation 16,000 240,800
International Business Machines Corporation 4,200 406,938
Intuit, Inc. ^ * 2,500 67,500
Microsoft Corporation 20,000 367,400
Oracle Corporation * 17,600 318,032
Paychex, Inc. ^ 2,500 64,175
QUALCOMM, Inc. 3,800 147,858
Texas Instruments, Inc. 4,000 66,040
Xerox Corporation 3,000 13,650
Xilinx, Inc. 2,500 47,900
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2,949,763
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MATERIALS - 2.54%
Dow Chemical Company (The) ^ 3,500 29,505
E.I. Du Pont de Nemours & Company 2,800 62,524
Freeport-McMoRan Copper & Gold, Inc. ^ 2,500 95,275
Monsanto Company 2,000 166,200
Praxair, Inc. 1,500 100,935
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454,439
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REAL ESTATE INVESTMENT TRUST - 0.50%
Simon Property Group, Inc. ^ 2,559 88,644
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TELECOMMUNICATION SERVICES - 3.75%
AT&T, Inc. 17,589 443,243
Verizon Communications, Inc. ^ 7,500 226,500
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669,743
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CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 2009 (UNAUDITED) (CONTINUED)
UTILITIES - 3.48%
Dominion Resources, Inc. ^ 2,000 $ 61,980
Duke Energy Corporation 6,600 94,512
Exelon Corporation 2,500 113,475
FirstEnergy Corporation 2,500 96,500
FPL Group, Inc. ^ 1,000 50,730
NiSource, Inc. ^ 2,500 24,500
Southern Company (The) 2,500 76,550
Xcel Energy, Inc. 5,500 102,465
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620,712
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TOTAL EQUITY SECURITIES (cost $23,793,215) $ 17,717,118
------------
SHORT-TERM INVESTMENTS - 9.56%
MONEY MARKET SECURITY - 0.82%
JPMorgan U.S. Government Money Market Fund 145,799 145,799
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PRINCIPAL
AMOUNT (000'S)
--------------
REPURCHASE AGREEMENTS - 8.74%
J.P. Morgan Securities, Inc.+ ++
(Agreement dated 3/31/2009 to be repurchased
at $79,524, 0.1562%, 4/1/2009, collateralized
by $83,431 in United States Treasury Notes) $ 80 79,524
J.P. Morgan Securities, Inc.+ ++
(Agreement dated 3/31/2009 to be repurchased
at $1,481,287, 0.3125%, 4/1/2009,
collateralized by $1,527,837 in United
States Treasury Notes) 1,481 1,481,275
$ 1,560,799
------------
TOTAL SHORT-TERM INVESTMENTS (cost - $1,706,598) 1,706,598
TOTAL INVESTMENTS - 108.77% (cost $25,499,813) 19,423,716
------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (8.77)% (1,565,338)
------------
NET ASSETS - 100.00% $ 17,858,378
============
(a) Affiliated investment. The fund holds 3.06% and 0.31% (based on net
assets) of Adams Express Company and Petroleum & Resources Corporation,
respectively. A director of the Fund also serves as a director to such
companies. During the three months ended March 31, 2009 there were no
purchases or sales of either of these securities.
^ Security or a portion thereof is out on loan.
* Non-income producing security.
+ Stated interest rate, before rebate earned by borrower of securities on
loan.
++ Represents investment purchased with collateral received for securities on
loan.
See accompanying notes to schedule of investments.
CORNERSTONE TOTAL RETURN FUND, INC.
NOTES TO SCHEDULES OF INVESTMENTS
MARCH 31, 2009 (UNAUDITED)
================================================================================
Federal Income Tax Cost: At March 31, 2009 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 depreciation from investments were
$25,499,813, $1,248,601, $(7,324,698) and $(6,076,097), respectively.
The Fund adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective
January 1, 2008. In accordance with FAS 157, fair value is defined as the price
that the Fund would receive upon selling an investment in a timely transaction
to an independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk, for example,
the risk inherent in a particular valuation technique used to measure fair value
including such a pricing model and/or the risk inherent in the inputs to the
valuation technique. Inputs may be observable or unobservable. Observable inputs
are inputs that reflect the assumptions market participants would use in pricing
the asset or liability developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs that reflect
the reporting entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances. The three-tier hierarchy of inputs
is summarized in the three broad Levels listed below.
o Level 1 - quoted prices in active markets for identical investments
o Level 2 - other significant observable inputs (including quoted
prices for similar investments, interest rates, prepayment speeds,
credit risks, etc.)
o Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of March 31, 2009 in valuing
the Fund's investments carried at value:
OTHER
INVESTMENTS IN FINANCIAL
Valuation Inputs SECURITIES INSTRUMENTS*
---------------------------------------------- ------------ ------------
Level 1 - Quoted Prices $ 19,423,716 $ --
Level 2 - Other Significant Observable Inputs -- --
Level 3 - Significant Unobservable Inputs -- --
============ ============
Total $ 19,423,716 $ --
============ ============
* Other financial instruments include futures, forwards and swap contracts.
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, 2009.
As of January 1, 2009, the Fund adopted SFAS No. 161, DISCLOSURES ABOUT
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This standard amends and expands
the disclosure requirements of SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, to illustrate how and why an entity uses
derivative instruments; how derivative instruments and related hedged items are
accounted for under SFAS No. 133; and how derivative instruments and related
hedged items affect an entity's financial position, financial performance and
cash flows. SFAS No. 161 is effective for financial statements issued for fiscal
years beginning after November 15, 2008 and interim periods within those fiscal
years.
The Fund is exposed to financial market risks, including the valuations of its
investment portfolio. For the period ended March 31, 2009, the Fund did not
engage in derivative instruments and other hedging activities.
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 6, 2009 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 6, 2009, 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 - https://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.
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By (Signature and Title)* /s/ Ralph W. Bradshaw
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Ralph W. Bradshaw, President and Chairman
(Principal Executive Officer)
Date May 21, 2009
------------------------
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 21, 2009
------------------------
By (Signature and Title)* /s/ Frank J. Maresca
--------------------------------------------------
Frank J. Maresca, Treasurer
(Principal Financial Officer)
Date May 21, 2009
------------------------
* Print the name and title of each signing officer under his or her signature.