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: March 31, 2006
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ITEM 1: SCHEDULE OF INVESTMENTS
CORNERSTONE TOTAL RETURN FUND, INC.
SCHEDULE OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
NO. OF
DESCRIPTION SHARES VALUE
EQUITY SECURITIES - 99.75%
UNITED STATES - 99.51%
CLOSED-END DOMESTIC FUNDS - 7.26%
Adams Express Company 70,400 $ 936,320
Boulder Total Return Fund, Inc. 18,900 336,798
Dreman/Claymore Dividend & Income Fund 49,500 929,610
John Hancock Bank and Thrift
Opportunity Fund 35,700 342,363
Liberty All-Star Growth Fund, Inc. 78,900 446,574
Zweig Fund, Inc. @ 165,900 912,450
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3,904,115
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CONSUMER DISCRETIONARY - 10.36%
Apollo Group, Inc. + 2,500 131,275
AutoNation, Inc. + 2,500 53,875
Bed Bath & Beyond Inc. + 2,500 96,000
Best Buy Co., Inc. 3,750 209,738
CBS Corporation 4,500 107,910
Clear Channel Communications, Inc. @ 2,700 78,327
Coach, Inc. + 2,500 86,450
Comcast Corporation, Class A + 6,008 157,169
Comcast Corporation, Special Class A + @ 4,500 117,540
D.R. Horton, Inc. @ 2,500 83,050
eBay Inc. + 7,000 273,420
Ford Motor Company @ 15,200 120,992
Fortune Brands, Inc. 2,500 201,575
Goodyear Tire & Rubber Company (The) + @ 2,500 36,200
Harley-Davidson, Inc. 2,500 129,700
Hilton Hotels Corporation 2,500 63,650
Home Depot, Inc. (The) 12,300 520,290
J.C. Penney Company, Inc. 2,500 151,025
Kohl's Corporation + 2,500 132,525
Live Nation Inc. + 337 6,686
Lowe's Companies, Inc. 3,700 238,428
Marriott International, Inc., Class A 2,500 171,500
Mattel, Inc. 4,500 81,585
McDonald's Corporation 8,100 278,316
McGraw-Hill Companies, Inc. (The) 2,500 144,050
Nordstrom, Inc. 2,500 97,950
Office Depot, Inc. + 2,500 93,100
Omnicom Group Inc. 1,500 124,875
Pulte Homes, Inc. 2,500 96,050
Staples, Inc. 3,150 80,388
Starbucks Corporation + 5,000 188,200
Target Corporation 4,600 239,246
Time Warner Inc. 25,500 428,145
Tribune Company 2,500 68,575
Univision Communications Inc., Class A + 2,500 86,175
Viacom Inc., Class B + 4,500 174,600
Walt Disney Company (The) 8,000 223,120
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5,571,700
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CONSUMER STAPLES - 8.58%
Albertson's Inc. 2,500 64,175
Altria Group, Inc. 7,700 545,622
2
NO. OF
DESCRIPTION SHARES VALUE
Archer-Daniels-Midland Company 3,000 100,950
Campbell Soup Company 5,700 184,680
Coca-Cola Company (The) 13,500 565,245
Coca-Cola Enterprises Inc. 2,500 50,850
Colgate-Palmolive Company 2,500 142,750
General Mills, Inc. 2,500 126,700
H.J. Heinz Company 2,700 102,384
Kroger Co. (The) @ 3,600 73,296
PepsiCo, Inc. @ 7,500 433,425
Procter & Gamble Company (The) 13,972 805,067
Safeway Inc. 4,900 123,088
Sara Lee Corporation 2,600 46,488
Sysco Corporation @ 3,500 112,175
Walgreen Co. @ 5,600 241,528
Wal-Mart Stores, Inc. 19,000 897,560
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4,615,983
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ENERGY - 9.19%
Anadarko Petroleum Corp. 2,500 252,525
BJ Services Company 3,000 103,800
Burlington Resources Inc. 2,500 229,775
Chevron Corporation 6,568 380,747
ConocoPhillips 5,838 368,670
Devon Energy Corporation 2,500 152,925
El Paso Corporation. 3,000 36,150
EOG Resources, Inc. @ 2,500 180,000
Exxon Mobil Corporation 32,000 1,947,518
Halliburton Company 2,500 182,550
Occidental Petroleum Corporation 2,500 231,625
Peabody Energy Corporation 5,000 252,050
Schlumberger Limited 2,500 316,425
Transocean Inc. + 2,500 200,750
XTO Energy, Inc. 2,500 108,925
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4,944,435
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FINANCIALS - 18.52%
AFLAC Incorporated @ 4,000 180,520
American Express Company @ 6,100 320,555
American International Group, Inc. 12,331 814,956
Ameriprise Financial, Inc. 1,220 54,973
AmSouth Bancorporation 2,500 67,625
Bank of America Corporation 19,521 888,986
BB&T Corporation 4,500 176,400
Charles Schwab Corporation (The) 8,200 141,122
Chubb Corporation (The) 2,500 238,600
Cincinnati Financial Corporation 2,500 105,175
Citigroup Inc. 25,600 1,209,344
Countrywide Financial Corporation 3,500 128,450
Fannie Mae @ 3,200 164,480
Fifth Third Bancorp @ 2,500 98,400
Franklin Resources, Inc. @ 2,500 235,600
Freddie Mac 3,300 201,300
Goldman Sachs Group, Inc. (The) 3,000 470,880
Hartford Financial Services
Group, Inc. (The) 1,600 128,880
JPMorgan Chase & Co. 12,700 528,828
KeyCorp 2,500 92,000
Lehman Brothers Holdings Inc. 2,500 361,325
M&T Bank Corporation 2,500 285,350
Marsh & McLennan Companies, Inc. @ 4,600 135,056
Mellon Financial Corporation 2,300 81,880
3
NO. OF
DESCRIPTION SHARES VALUE
Merrill Lynch & Co., Inc. 1,100 86,636
MetLife, Inc. 6,000 290,220
Moody's Corporation 2,000 142,920
Morgan Stanley @ 3,700 232,434
Northern Trust Corporation 1,100 57,750
PNC Financial Services Group, Inc. 1,400 94,234
Prudential Financial, Inc. 2,500 189,525
SLM Corporation 2,500 129,850
St. Paul Travelers Companies, Inc. (The) @ 5,092 212,795
State Street Corporation 1,600 96,688
Synovus Corporation 2,500 67,725
Wachovia Corporation @ 8,100 454,005
Washington Mutual, Inc. 5,251 223,798
Wells Fargo & Company 9,000 574,830
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9,964,095
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HEALTHCARE - 11.44%
Aetna Inc. 4,000 196,560
Amgen Inc. + 8,300 603,825
Biomet, Inc. 2,500 88,800
Bristol-Myers Squibb Company @ 9,600 236,256
Caremark Rx, Inc. + 2,500 122,950
Eli Lilly and Company 4,100 226,730
Gilead Sciences, Inc. + 2,500 155,550
Health Management Associates, Inc.,
Class A 2,500 53,925
Johnson & Johnson 15,500 917,910
Laboratory Corporation of America + 2,500 146,200
McKesson Corporation 2,500 130,325
Medco Health Solutions, Inc. + 1,531 87,604
Medtronic, Inc. 7,100 360,325
Merck & Co. Inc. 8,700 306,501
PerkinElmer, Inc. @ 1,500 35,205
Pfizer Inc. @ 37,460 933,503
Schering-Plough Corporation 8,400 159,516
St. Jude Medical, Inc. + @ 2,500 102,500
Stryker Corporation 2,000 88,680
UnitedHealth Group Incorporated 10,000 558,600
Waters Corporation + 2,500 107,875
Wyeth 7,500 363,900
Zimmer Holdings, Inc. + 2,500 169,000
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6,152,240
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INDUSTRIALS - 10.82%
3M Co. 2,500 189,225
Boeing Company (The) 3,900 303,927
Burlington Northern Santa Fe Corporation 2,000 166,660
Caterpillar Inc. 5,000 359,050
CSX Corporation @ 2,500 149,500
Danaher Corporation 2,500 158,875
Dover Corporation 1,000 48,560
Emerson Electric Co. 2,000 167,260
FedEx Corp. 2,500 282,350
General Dynamics Corporation @ 5,000 319,900
General Electric Company 52,000 1,808,560
Honeywell International Inc. 3,300 141,141
Illinois Tool Works Inc. 2,500 240,775
Lockheed Martin Corporation 2,500 187,825
Norfolk Southern Corporation 2,500 135,175
Raytheon Company 2,500 114,600
Rockwell Automation, Inc. 2,500 179,775
4
NO. OF
DESCRIPTION SHARES VALUE
Southwest Airlines Co. 6,100 109,739
United Parcel Service, Inc., Class B 4,000 317,520
United Technologies Corporation 4,400 255,068
Waste Management, Inc. 5,300 187,090
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5,822,575
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INFORMATION TECHNOLOGY - 14.68%
Adobe Systems Incorporated + 2,500 87,300
Agilent Technologies Inc. + 5,000 187,750
Apple Computer, Inc. + 5,000 313,600
Applied Materials, Inc. 8,000 140,080
Autodesk, Inc. 2,500 96,300
Cisco Systems, Inc. + 35,000 758,450
Corning Incorporated + 7,500 201,825
Dell Inc. + 13,700 407,712
Electronic Data Systems Corporation 7,500 201,225
EMC Corporation + @ 8,000 109,040
First Data Corporation 4,325 202,496
Fiserv, Inc. + 2,500 106,375
Freescale Semiconductor Inc., Class B + 1,777 49,347
Hewlett-Packard Company 13,342 438,952
Intel Corporation 32,000 619,200
International Business Machines
Corporation 5,700 470,079
Jabil Circuit, Inc. + @ 2,500 107,150
Lucent Technologies Inc. + 15,000 45,750
Maxim Integrated Products, Inc. 2,500 92,875
Microsoft Corporation 48,000 1,306,080
Motorola, Inc. 16,100 368,851
Network Appliance, Inc. + 2,500 90,075
Oracle Corporation + 33,600 459,984
Paychex, Inc. 2,500 104,150
QUALCOMM Inc. 4,300 217,623
Texas Instruments Incorporated 13,500 438,345
Yahoo! Inc. + 8,500 274,210
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7,894,824
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MATERIALS - 2.67%
Air Products & Chemicals, Inc. @ 2,500 167,975
Dow Chemical Company (The) 4,700 190,820
E. I. du Pont de Nemours and Company 5,800 244,818
International Paper Company 4,800 165,936
Monsanto Company @ 1,773 150,262
Newmont Mining Corporation 2,500 129,725
Nucor Corporation @ 2,500 261,975
Rohm and Hass Company @ 2,500 122,175
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1,433,686
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REAL ESTATE INVESTMENT TRUST - 0.39%
Simon Property Group, Inc. @ 2,500 210,350
TELECOMMUNICATIONS SERVICES - 2.88%
AT&T Inc. 24,699 667,861
BellSouth Corporation 5,200 180,180
Sprint Nextel Corporation 7,437 192,172
Verizon Communications Inc. 14,900 507,494
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1,547,707
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UTILITIES - 2.72%
AES Corporation (The) + 3,000 51,180
American Electric Power Company, Inc. 5,500 187,110
5
NO. OF
DESCRIPTION SHARES VALUE
CenterPoint Energy, Inc. 5,700 68,001
Duke Energy Corporation 6,600 192,390
Edison International @ 2,500 102,950
Exelon Corporation @ 2,500 132,250
Scottish Power plc, ADR @ 4,000 161,160
Southern Company (The) 2,500 81,925
TXU Corp. 7,400 331,224
Williams Companies, Inc. (The) 2,500 53,475
Xcel Energy, Inc. 5,500 99,825
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1,461,490
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TOTAL UNITED STATES
(cost - $51,172,997) 53,523,200
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CZECH REPUBLIC - 0.24%
CONSUMER DISCRETIONARY - 0.24%
Bonton a.s. + # 137,180 22
Bonton Book a.s. + # 68,590 25,985
Bonton Film Entertainment a.s. + # 68,590 74,077
Bonton Music a.s. + # 68,590 30,316
Bonton Pictures a.s. + # 68,590 22
130,422
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TOTAL CZECH REPUBLIC
(cost - $894,865) 130,422
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TOTAL EQUITY SECURITIES
(cost - $52,067,862) 53,653,622
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PRINCIPAL
AMOUNT
(000'S)
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SHORT-TERM INVESTMENTS - 1.88%
REPURCHASE AGREEMENTS - 1.88%
Bear, Stearns & Co. Inc. * ** $509 509,229
(Agreement dated 3/31/2006 to be
repurchased at $509,333), 2.4375%,
4/3/2006, collateralized by $524,832
in U.S. Treasury STRIPS)
Bear, Stearns & Co. Inc. 380 379,590
(Agreement dated 3/31/2006 to be
repurchased at $379,732), 4.8750%,
4/3/2006, collateralized by $391,400
in U.S. Treasury STRIPS)
Bear, Stearns & Co. Inc. * ** 123 122,500
(Agreement dated 3/31/2006 to be
repurchased at $122,550), 4.875%,
4/3/2006, collateralized by $127,501
in U.S. Treasury STRIPS)
TOTAL SHORT-TERM INVESTMENTS
(cost - $1,011,319) 1,011,319
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6
NO. OF
DESCRIPTION SHARES VALUE
TOTAL INVESTMENTS - 101.63%
(cost - $53,079,181) 54,664,941
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LIABILITIES IN EXCESS OF OTHER ASSETS - (1.63)% (875,086)
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NET ASSETS - 100.00% $ 53,789,855
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+ Non-income producing security.
# Securities are fair valued in accordance with procedures established by
the Board of Directors.
* 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.
ADR American Depositary Receipts
At March 31, 2006, the Fund held 0.24% 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 $130,422.
Federal Income Tax Cost - At March 31, 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
$53,079,181, $8,875,405, ($7,289,645), and $1,585,760, 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 March 10, 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
March 10, 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.
7
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.
8
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 25, 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: May 25, 2006
/s/ Jodi B. Levine
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Name: Jodi B. Levine
Title: Principal Financial Officer (Treasurer)
Date: May 25, 2006
9