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
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Cornerstone Total Return Fund, Inc.
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(Exact name of registrant as specified in charter)
383 Madison Avenue, New York, NY 10179
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(Address of principal executive offices) (Zip code)
Kayadti A. Madison
Cornerstone Total Return Fund, Inc., 383 Madison Avenue, New York, NY 10179
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 272-3550
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Date of fiscal year end: December 31, 2008
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Date of reporting period: March 31, 2008
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ITEM 1: SCHEDULE OF INVESTMENTS
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CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS -- MARCH 31, 2008 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
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EQUITY SECURITIES - 99.53%
CLOSED-END FUNDS - 7.59%
Adams Express Company (a) 67,400 $ 844,522
Alpine Global Premier Properties Fund 3,000 38,010
Boulder Growth & Income Fund Inc. 2,700 22,329
Boulder Total Return Fund, Inc. 7,500 150,600
Central Europe and Russia Fund, Inc. (The) ^ 2,500 118,575
Denali Fund (The) 8,500 147,900
Dreman/Claymore Dividend & Income Fund 53,500 768,795
H&Q Healthcare Investors 11,400 171,114
H&Q Life Sciences Investors 6,000 70,860
Japan Equity Fund * 13,000 89,700
Liberty All-Star Growth Fund, Inc. 39,075 184,825
Petroleum & Resources Corporation (a) 3,000 109,290
Templeton Emerging Markets Fund ^ 3,000 59,130
Zweig Fund, Inc. 37,000 169,830
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2,945,480
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CONSUMER DISCRETIONARY - 7.69%
Amazon.com, Inc. * 2,500 178,250
Bed Bath & Beyond Inc. * 2,500 73,750
Best Buy Co., Inc. 2,500 103,650
Comcast Corporation, Class A 9,012 174,292
Comcast Corporation, Special Class A * 4,250 80,622
DIRECTV Group, Inc. (The) * 4,000 99,160
Ford Motor Company * 14,000 80,080
Gap, Inc. (The) 3,000 59,040
Goodyear Tire & Rubber Company (The) * 2,500 64,500
Home Depot, Inc. (The) 5,000 139,850
Johnson Controls, Inc. 2,500 84,500
Lowe's Companies, Inc. 5,000 114,700
Marriott International, Inc., Class A 2,000 68,720
Mattel, Inc. 4,500 89,550
McDonald's Corporation 5,100 284,427
News Corporation, Class B 7,500 142,800
NIKE, Inc., Class B 2,500 170,000
Omnicom Group Inc. 3,000 132,540
Pulte Homes, Inc. 2,500 36,375
Staples, Inc. 3,150 69,646
Starbucks Corporation * 2,500 43,750
Tata Motors Limited ADR 2,500 39,050
Time Warner Inc. 17,000 238,340
TJX Companies, Inc. (The) 2,500 82,675
Viacom Inc., Class B * 2,000 79,240
Walt Disney Company (The) 8,000 251,040
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2,980,547
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CONSUMER STAPLES - 10.72%
Altria Group, Inc. 7,700 170,940
Coca-Cola Company (The) 11,000 669,570
Colgate-Palmolive Company 2,500 194,775
ConAgra Foods, Inc. 2,500 59,875
CVS Corporation 4,175 169,129
H.J. Heinz Company 2,700 126,819
Kraft Foods Inc, Class A 5,328 165,221
Kroger Co. (The) 3,600 91,440
PepsiCo, Inc. 5,000 361,000
Philip Morris International Inc. * 7,700 389,466
Procter & Gamble Company (The) 11,472 803,843
Sysco Corporation 2,500 72,550
Walgreen Co. 3,100 118,079
Wal-Mart Stores, Inc. 14,500 763,860
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4,156,567
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ENERGY - 12.35%
Chevron Corporation 10,068 859,404
Devon Energy Corporation 2,500 260,825
El Paso Corporation. 2,500 41,600
Exxon Mobil Corporation 25,000 2,114,503
Halliburton Company 2,500 98,325
Marathon Oil Corp. 2,500 114,000
NiSource Inc. 2,500 43,100
Occidental Petroleum Corporation 2,500 182,925
Peabody Energy Corporation 2,500 127,500
Schlumberger Limited 5,000 435,000
Spectra Energy Corporation 2,500 56,875
Weatherford International Ltd. * 2,500 181,175
Williams Companies, Inc. (The) 2,500 82,450
XTO Energy, Inc. 3,125 193,312
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4,790,994
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FINANCIALS - 14.11%
AFLAC Incorporated 1,500 97,425
American Express Company 3,500 153,020
American International Group, Inc. 12,331 533,316
Ameriprise Financial, Inc. 1,220 63,257
Aon Corporation 2,500 100,500
Bank of America Corporation 17,521 664,221
Bank of New York Mellon Corporation 4,800 200,304
BB&T Corporation 2,000 64,120
Charles Schwab Corporation (The) 8,200 154,406
Chubb Corporation (The) 2,000 98,960
Citigroup Inc. 15,600 334,152
Discover Financial Services 1,850 30,284
Fannie Mae ^ 6,200 163,184
Franklin Resources, Inc. 2,500 242,475
Goldman Sachs Group, Inc. (The) 3,000 496,170
Hudson City Bancorp, Inc. 2,500 44,200
JPMorgan Chase & Co. 10,200 438,090
Lehman Brothers Holdings Inc. 2,500 94,100
Metlife, Inc. 3,000 180,780
Morgan Stanley 3,700 169,090
State Street Corporation 1,600 126,400
SunTrust Banks, Inc. 2,500 137,850
Synovus Corporation 2,500 27,650
Travelers Companies, Inc. (The) 5,092 243,652
UnumProvident Corporation 2,500 55,025
Wachovia Corporation 5,600 151,200
Wells Fargo & Company 14,000 407,400
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5,471,231
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HEALTHCARE - 10.88%
Aetna Inc. 4,000 168,360
Amgen Inc. * 2,500 104,450
Baxter International Inc. 2,500 144,550
Bristol-Myers Squibb Company 4,000 85,200
Celgene Corporation * 2,500 153,225
Eli Lilly and Company 4,100 211,519
Gilead Sciences, Inc. * 5,000 257,650
Johnson & Johnson 15,500 1,005,485
Laboratory Corporation of America Holdings * 2,500 184,200
McKesson Corporation 2,500 130,925
Medco Health Solutions, Inc. * 1,562 68,400
Medtronic, Inc. 4,500 217,665
Merck & Co. Inc. 13,700 519,915
Pfizer Inc. 3,000 62,790
Schering-Plough Corporation 4,400 63,404
St. Jude Medical, Inc. * 2,500 107,975
Stryker Corporation 2,000 130,100
UnitedHealth Group Incorporated 7,500 257,700
Waters Corporation * 2,500 139,250
Wyeth 5,000 208,800
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4,221,563
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INDUSTRIALS - 11.11%
Allied Waste Industries, Inc. * 2,500 27,025
Boeing Company (The) 1,400 104,118
Caterpillar Inc. 2,500 195,725
CSX Corporation 5,000 280,350
Danaher Corporation 2,500 190,075
General Dynamics Corporation 2,500 208,425
General Electric Company 49,000 1,813,490
Illinois Tool Works Inc. 2,500 120,575
Lockheed Martin Corporation 2,500 248,250
Raytheon Company 2,500 161,525
Rockwell Automation, Inc. 2,500 143,550
Textron Inc. 2,500 138,550
United Parcel Service, Inc., Class B 4,000 292,080
United Technologies Corporation 4,400 302,808
Waste Management, Inc. 2,500 83,900
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4,310,446
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INFORMATION TECHNOLOGY - 14.82%
Agilent Technologies Inc. * 2,500 74,575
Apple Computer, Inc. * 5,000 717,500
Automatic Data Processing, Inc. 2,500 105,975
Cisco Systems, Inc. * 22,000 529,980
Corning Incorporated 6,000 144,240
Dell Inc. * 4,000 79,680
eBay Inc. * 6,500 193,960
EMC Corporation * 8,000 114,720
Google Inc. * 1,000 440,470
Hewlett-Packard Company 7,500 342,450
Intel Corporation 13,000 275,340
International Business Machines Corporation 3,200 368,448
Intuit Inc. * 2,500 67,525
Microsoft Corporation 33,500 950,730
NVIDIA Corporation * 3,750 74,212
Oracle Corporation * 23,600 461,616
Paychex, Inc. 2,500 85,650
QUALCOMM Inc. 6,800 278,800
Texas Instruments Incorporated 11,000 310,970
Total Systems Services, Inc. 1,209 28,605
Xerox Corporation 3,000 44,910
Xilinx, Inc. 2,500 59,375
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5,749,731
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MATERIALS - 3.54%
Air Products & Chemicals, Inc. 2,500 230,000
Alcoa Inc. 3,000 108,180
Dow Chemical Company (The) 3,500 128,975
E. I. du Pont de Nemours and Company 5,800 271,208
Freeport-McMoRan Copper & Gold, Inc. 2,500 240,550
Monsanto Company 3,546 395,379
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1,374,292
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REAL ESTATE INVESTMENT TRUST - 0.60%
Simon Property Group, Inc. 2,500 232,275
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TELECOMMUNICATION SERVICES - 3.29%
AT&T Inc. 23,589 903,459
Nokia ADR 2,500 79,575
Qwest Communications International Inc. * 4,000 18,120
Verizon Communications Inc. 7,500 273,375
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1,274,529
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UTILITIES - 2.83%
AES Corporation (The) * 3,000 50,010
Alleghany Energy Inc. * 2,500 126,250
American Electric Power Company, Inc. 5,500 228,965
Dominion Resources, Inc. 5,000 204,200
Duke Energy Corporation 6,600 117,810
FirstEnergy Corp. 2,500 171,550
Southern Company (The) 2,500 89,025
Xcel Energy, Inc. 5,500 109,725
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1,097,535
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TOTAL EQUITY SECURITIES
(cost - $34,422,827) 38,605,190
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PRINCIPAL
AMOUNT
(000'S)
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SHORT-TERM INVESTMENTS - 1.12%
MONEY MARKET SECURITY - 0.48%
JPMorgan U.S. Government Money Market Fund $ 186 186,385
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REPURCHASE AGREEMENT - 0.64%
Bear, Stearns & Co. Inc. + ++
(Agreement dated 3/31/2008 to
be repurchased at $248,896, 3.00%,
4/1/2008, collateralized by $256,771
in United States Treasury Bonds) 249 248,875
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TOTAL SHORT-TERM INVESTMENTS
(cost - $435,260) 435,260
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TOTAL INVESTMENTS - 100.65%
(cost - $34,858,087) 39,040,450
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LIABILITIES IN EXCESS OF OTHER ASSETS - (0.65)% (251,318)
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NET ASSETS - 100.00% $ 38,789,132
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(a) Affiliated investment. The Fund holds 2.18% and 0.28% (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, 2008 there were no purchases or sales of
these securities.
^ Security or a portion thereof is out on loan.
* Non-income producing security.
ADR American Depositary Receipt
+ Stated interest rate, before rebate earned by borrower of securities on loan.
++ Represents investment purchased with collateral received for securities on
loan.
Federal Income Tax Cost: At March 31, 2008 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 appreciation from investments were
$34,858,087, $7,634,672, $(3,452,309), and $4,182,363, 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
risk, 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, 2008 in valuing
the Fund's investments carried at value:
INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS*
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Level 1 - Quoted Prices $38,605,190 $ --
Level 2 - Other Significant Observable Inputs 435,260 --
Level 3 - Significant Unobservable Inputs -- --
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TOTAL $39,040,450 $ --
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*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, 2008.
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 the Form N-CSR on March 10, 2008
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 Form N-CSR on
March 10, 2008, file number 811-02363. This information is also available to
registered shareholders by calling (800) 937-5449. For general inquiries, please
call (212) 272-3550. This information is also available on the website of the
Securities and Exchange Commission - http://www.sec.gov.
ITEM 2: CONTROLS AND PROCEDURES
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")), were effective based on
their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities and
Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) 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
1. The certifications of the registrant as required by Rule 30a-2(a) under the
Act are exhibits to this report.
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.
Cornerstone Total Return Fund, Inc.
/s/ Ralph W. Bradshaw
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Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: May 23, 2008
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.
/s/ Ralph W. Bradshaw
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Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: May 23, 2008
/s/ Kayadti A. Madison
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Name: Kayadti A. Madison
Title: Principal Financial Officer
Date: May 23, 2008