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)
Jodi Levine
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, 2006
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Date of reporting period: September 30, 2006
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ITEM 1: SCHEDULE OF INVESTMENTS
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2006 (UNAUDITED)
NO. OF
DESCRIPTION SHARES VALUE
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EQUITY SECURITIES - 99.37%
UNITED STATES - 99.10%
CLOSED-END DOMESTIC FUNDS - 6.78%
Adams Express Company 70,400 $ 951,808
Boulder Total Return Fund, Inc. ^ 13,900 266,046
Dreman/Claymore Dividend & Income Fund 49,500 1,010,790
John Hancock Bank and Thrift Opportunity Fund 30,400 295,488
Liberty All-Star Growth Fund, Inc. 140,800 713,856
Neuberger Berman Real Estate Income Fund Inc. ^ 5,500 147,510
Petroleum & Resources Corporation 3,000 98,040
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3,483,538
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CONSUMER DISCRETIONARY - 9.95%
Apollo Group, Inc. * 2,500 123,100
Bed Bath & Beyond Inc. ^ * 2,500 95,650
Best Buy Co., Inc. 3,750 200,850
CBS Corporation ^ 4,500 126,765
Coach, Inc. * 2,500 86,000
Comcast Corporation, Class A * 4,500 165,645
Comcast Corporation, Special Class A ^ * 6,008 221,395
eBay Inc. * 4,000 113,440
Fortune Brands, Inc. 2,500 187,775
Goodyear Tire & Rubber Company (The) ^ * 2,500 36,250
Harley-Davidson, Inc. ^ 2,500 156,875
Hilton Hotels Corporation ^ 2,500 69,625
Home Depot, Inc. (The) 12,300 446,121
J.C. Penney Company, Inc. 2,500 170,975
Kohl's Corporation ^ * 2,500 162,300
Lowe's Companies, Inc. ^ 7,400 207,644
Marriott International, Inc., Class A 5,000 193,200
Mattel, Inc. 4,500 88,650
McDonald's Corporation 8,100 316,872
McGraw-Hill Companies, Inc. (The) 2,500 145,075
Nordstrom, Inc. 2,500 105,750
Office Depot, Inc. * 2,500 99,250
Omnicom Group Inc. 1,500 140,400
Staples, Inc. ^ 3,150 76,640
Starbucks Corporation * 5,000 170,250
Target Corporation 4,600 254,150
Time Warner Inc. 21,000 382,830
TJX Companies, Inc. (The) 2,500 70,075
Tribune Company ^ 2,500 81,800
Viacom Inc. * 4,500 167,310
Walt Disney Company (The) 8,000 247,280
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5,109,942
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CONSUMER STAPLES - 9.76%
Altria Group, Inc. 7,700 589,435
Archer-Daniels-Midland Company 3,000 113,640
NO. OF
DESCRIPTION SHARES VALUE
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Campbell Soup Company 5,700 $ 208,050
Coca-Cola Company (The) 13,500 603,180
Colgate-Palmolive Company 2,500 155,250
ConAgra Foods, Inc. 2,500 61,200
CVS Corporation 3,000 96,360
General Mills, Inc. 2,500 141,500
H.J. Heinz Company 2,700 113,211
Kroger Co. (The) 3,600 83,304
PepsiCo, Inc. 7,500 489,450
Procter & Gamble Company (The) 13,972 865,985
Safeway Inc. 4,900 148,715
Sara Lee Corporation 2,600 41,782
Sysco Corporation ^ 3,500 117,075
Walgreen Co. 5,600 248,584
Wal-Mart Stores, Inc. 19,000 937,080
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5,013,801
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ENERGY - 8.78%
Anadarko Petroleum Corp. ^ 5,000 219,150
BJ Services Company 3,000 90,390
Chevron Corporation 6,568 426,000
ConocoPhillips 5,000 297,650
Devon Energy Corporation 2,500 157,875
El Paso Corporation 3,000 40,920
Exxon Mobil Corporation 32,000 2,147,199
Halliburton Company ^ 5,000 142,250
Norsk Hydro ADR 2,500 56,275
Occidental Petroleum Corporation 5,000 240,550
Peabody Energy Corporation 2,500 91,950
Schlumberger Limited 5,000 310,150
Transocean Inc. * 2,500 183,075
XTO Energy, Inc. ^ 2,500 105,325
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4,508,759
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FINANCIALS - 19.56%
AFLAC Incorporated 4,000 183,040
American Express Company 6,100 342,088
American International Group, Inc. 12,331 817,052
Ameriprise Financial, Inc. 1,220 57,218
AmSouth Bancorporation 2,500 72,600
Aon Corporation 2,500 84,675
Bank of America Corporation 17,021 911,815
BB&T Corporation 4,500 197,010
Charles Schwab Corporation (The) 8,200 146,780
Chubb Corporation (The) 5,000 259,800
Cincinnati Financial Corporation 2,500 120,150
Citigroup Inc. ^ 25,600 1,271,552
Countrywide Financial Corporation 3,500 122,640
Fannie Mae 3,200 178,912
Franklin Resources, Inc. 2,500 264,375
Freddie Mac 3,300 218,889
Goldman Sachs Group, Inc. (The) ^ 3,000 507,510
Hartford Financial Services Group, Inc. (The) 1,600 138,800
NO. OF
DESCRIPTION SHARES VALUE
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JPMorgan Chase & Co. 12,700 $ 596,392
KeyCorp 2,500 93,600
Lehman Brothers Holdings Inc. 2,500 184,650
M&T Bank Corporation 2,500 299,900
Mellon Financial Corporation 2,300 89,930
Merrill Lynch & Co., Inc. ^ 1,100 86,042
Metlife, Inc. 3,000 170,040
Moody's Corporation 2,000 130,760
Morgan Stanley ^ 3,700 269,767
Northern Trust Corporation ^ 1,100 64,273
PNC Financial Services Group, Inc. 1,400 101,416
Prudential Financial, Inc. 2,500 190,625
SLM Corporation 2,500 129,950
St. Paul Travelers Companies, Inc. (The) 5,092 238,764
State Street Corporation 1,600 99,840
Synovus Corporation 2,500 73,425
Wachovia Corporation 8,100 451,980
Washington Mutual, Inc. 5,251 228,261
Wells Fargo & Company 18,000 651,240
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10,045,761
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HEALTHCARE - 11.36%
Aetna Inc. ^ 4,000 158,200
Amgen Inc. * 8,300 593,699
Biomet, Inc. 2,500 80,475
Bristol-Myers Squibb Company ^ 7,100 176,932
Caremark Rx, Inc. 2,500 141,675
Eli Lilly and Company 4,100 233,700
Gilead Sciences, Inc. * 2,500 171,750
Johnson & Johnson 15,500 1,006,570
Laboratory Corporation of America Holdings * 2,500 163,925
Medco Health Solutions, Inc. * 1,531 92,028
Medtronic, Inc. 7,100 329,724
Merck & Co. Inc. 8,700 364,530
Pfizer Inc. 32,460 920,566
Schering-Plough Corporation 8,400 185,556
St. Jude Medical, Inc. * 2,500 88,225
Stryker Corporation 2,000 99,180
UnitedHealth Group Incorporated 10,000 492,000
Waters Corporation ^ * 2,500 113,200
Wyeth 5,000 254,200
Zimmer Holdings, Inc. * 2,500 168,750
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5,834,885
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INDUSTRIALS - 9.94%
3M Co. 2,500 186,050
Boeing Company (The) 1,400 110,390
Caterpillar Inc. ^ 5,000 329,000
CSX Corporation 5,000 164,150
Danaher Corporation ^ 2,500 171,675
Dover Corporation 1,000 47,440
FedEx Corp. 2,500 271,700
General Dynamics Corporation 2,500 179,175
NO. OF
DESCRIPTION SHARES VALUE
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General Electric Company 52,000 $ 1,835,600
Honeywell International Inc. 3,300 134,970
Illinois Tool Works Inc. 5,000 224,500
Lockheed Martin Corporation 2,500 215,150
Norfolk Southern Corporation 2,500 110,125
Raytheon Company 2,500 120,025
Rockwell Automation, Inc. 2,500 145,250
Southwest Airlines Co. 6,100 101,626
United Parcel Service, Inc., Class B 4,000 287,760
United Technologies Corporation 4,400 278,740
Waste Management, Inc. 5,300 194,404
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5,107,730
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INFORMATION TECHNOLOGY - 13.99%
Advanced Micro Devices * 2,500 62,125
Agilent Technologies Inc. * 5,000 163,450
Apple Computer, Inc. * 5,000 385,150
Applied Materials, Inc. 8,000 141,840
Broadcom Corporation - Class A * 2,500 75,850
Cisco Systems, Inc. * 27,000 621,000
Corning Incorporated * 3,500 85,435
Dell Inc. * 5,700 130,188
Electronic Data Systems Corporation 7,500 183,900
EMC Corporation * 8,000 95,840
First Data Corporation 4,325 181,650
Fiserv, Inc. * 2,500 117,725
Freescale Semiconductor Inc., Class B * 1,777 67,544
Hewlett-Packard Company ^ 13,342 489,518
Intel Corporation 22,000 452,540
International Business Machines Corporation 5,700 467,058
Intuit Inc. * 2,500 80,225
Maxim Integrated Products, Inc. 2,500 70,175
Microsoft Corporation 43,000 1,175,190
Motorola, Inc. 16,100 402,500
Network Appliance, Inc. ^ * 2,500 92,525
Oracle Corporation * 33,600 596,064
Paychex, Inc. 2,500 92,125
QUALCOMM Inc. 6,800 247,180
Texas Instruments Incorporated 13,500 448,875
Xerox Corporation * 3,000 46,680
Yahoo! Inc. * 8,500 214,880
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7,187,232
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MATERIALS - 2.37%
Air Products & Chemicals, Inc. 2,500 165,925
Alcoa Inc. ^ 3,000 84,120
E. I. du Pont de Nemours and Company ^ 5,800 248,472
International Paper Company ^ 2,300 79,649
Monsanto Company 3,546 166,697
Newmont Mining Corporation 2,500 106,875
Nucor Corporation ^ 5,000 247,450
Rohm and Hass Company 2,500 118,375
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1,217,563
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NO. OF
DESCRIPTION SHARES VALUE
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REAL ESTATE INVESTMENT TRUST - 0.44%
Simon Property Group, Inc. 2,500 $ 226,550
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TELECOMMUNICATIONS SERVICES - 3.24%
AT&T Inc. 24,699 804,199
BellSouth Corporation 5,200 222,300
Nokia ADR 2,500 49,225
Qwest Communications International Inc. ^ * 10,000 87,200
Sprint Nextel Corporation ^ 7,437 127,545
Verizon Communications Inc. 10,000 371,300
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1,661,769
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UTILITIES - 2.93%
AES Corporation (The) * 3,000 61,170
Alleghany Energy Inc. * 2,500 100,425
American Electric Power Company, Inc. 5,500 200,035
Duke Energy Corporation 6,600 199,320
FirstEnergy Corp. 2,500 139,650
PPL Corporation 2,500 82,250
Southern Company (The) ^ 2,500 86,150
TXU Corp. 7,400 462,648
Williams Companies, Inc. (The) ^ 2,500 59,675
Xcel Energy, Inc. 5,500 113,575
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1,504,898
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TOTAL UNITED STATES
(cost - $46,033,652) 50,902,428
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CZECH REPUBLIC - 0.27%
CONSUMER DISCRETIONARY - 0.27%
Bonton a.s. * # 137,180 23
Bonton Book a.s. * # 68,590 27,419
Bonton Film Entertainment a.s. * # 68,590 78,165
Bonton Music a.s. * # 68,590 31,989
Bonton Pictures a.s. * # 68,590 23
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TOTAL CZECH REPUBLIC
(cost - $894,865) 137,619
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TOTAL EQUITY SECURITIES
(cost - $46,928,517) 51,040,047
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PRINCIPAL
AMOUNT
000'S
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SHORT-TERM INVESTMENTS - 3.22%
REPURCHASE AGREEMENTS - 3.22%
Bear, Stearns and Co., Inc. + ++
(Agreement dated 9/30/2006 to be repurchased at
$1,146,190), 2.6875%, 10/2/2006, collateralized by
$1,181,968 in U.S. Treasury Bond Strips) $ 1,146 1,145,933
Bear, Stearns and Co., Inc.
(Agreement dated 9/30/2006 to be repurchased at
$381,782), 5.0000%, 10/2/2006, collateralized by
$394,950 in U.S. Treasury Bond Strips) 382 381,623
PRINCIPAL
AMOUNT
DESCRIPTION 000's VALUE
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Bear, Stearns and Co., Inc. + ++
(Agreement dated 9/30/2006 to be repurchased at
$126,307), 5.3750%, 10/2/2006, collateralized by
$132,611 in U.S. Treasury Bond Strips) 126 $ 126,250
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TOTAL SHORT-TERM INVESTMENTS
(cost - $1,653,806) 1,653,806
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TOTAL INVESTMENTS - 102.59%
(cost - $48,582,323) 52,693,853
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LIABILITIES IN EXCESS OF OTHER ASSETS - (2.59)% (1,328,967)
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NET ASSETS - 100.00% $51,364,886
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* 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.
^ Security or a portion thereof is out on loan.
# Securities are fair valued in accordance with procedures established by
the Board of Directors.
ADR American Depositary Receipts
At September 30, 2006, the Fund held 0.27% of its net assets in securities
valued in good faith by the Board of Directors with an aggregate cost of
$894,865 and a fair value of $137,619.
Federal Income Tax Cost: At September 30, 2006, 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
$48,582,323, $9,220,780, ($5,109,250), $4,111,530, respectively.
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 August 31, 2006
with a file number 811-02363.
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of financial and non-financial information about the company; comparisons
to the valuation and changes in valuation of similar securities, including
reference to special reports prepared by analysts and or reports published in
the financial press, the financial conditions and prospects of the issuer
available, including considering any recent management or capital structure
changes or other recent events that may impact the price of the security; and
evaluation of any other information that could be indicative of the value of the
security.
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
August 31, 2006, file number 881-02363. 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: November 22, 2006
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: November 22, 2006
/s/ Jodi B. Levine
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Name: Jodi B. Levine
Title: Principal Financial Officer
Date: November 22, 2006