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 811-22066
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Cornerstone Progressive Return Fund
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(Exact name of registrant as specified in charter)
237 Park Avenue, New York, NY 10017
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(Address of principal executive offices) (Zip code)
Kayadti A. Madison
Cornerstone Progressive Return Fund, 237 Park Avenue, New York, NY 10017
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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: September 30, 2008
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ITEM 1: SCHEDULE OF INVESTMENTS
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CORNERSTONE PROGRESSIVE RETURN FUND
SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
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EQUITY SECURITIES - 99.61%
CLOSED-END FUNDS - 2.38%
Dreman/Claymore Dividend & Income Fund 63,050 $ 328,491
Liberty All-Star Equity Fund 217,000 978,670
Royce Value Trust, Inc. 24,000 319,680
Tri-Continental Corporation 36,995 540,497
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2,167,338
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CONSUMER DISCRETIONARY - 8.33%
Amazon.com, Inc. * 5,500 400,180
Best Buy Co., Inc. 8,000 300,000
Coach, Inc. * ^ 4,000 100,160
Comcast Corporation, Class A 36,000 706,680
DIRECTV Group, Inc. (The)* 15,000 392,550
Ford Motor Company * ^ 30,000 156,000
Gamestop Corporation, Class A * ^ 2,500 85,525
Gap, Inc. (The) 11,000 195,580
Home Depot, Inc. (The) 15,000 388,350
Johnson Controls, Inc. 10,000 303,300
Kohl's Corporation * ^ 3,500 161,280
Lowe's Companies, Inc. 14,000 331,660
McDonald's Corporation ^ 15,000 925,500
News Corporation, Class A ^ 31,000 371,690
NIKE, Inc., Class B ^ 8,000 535,200
Nordstrom, Inc. ^ 5,500 158,510
Omnicom Group Inc. ^ 4,000 154,240
Staples, Inc. ^ 5,000 112,500
Target Corporation 8,000 392,400
Time Warner Inc. 30,000 393,300
TJX Companies, Inc. (The) 4,000 122,080
Walt Disney Company (The) ^ 25,000 767,250
Yum! Brands, Inc. 4,000 130,440
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7,584,375
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CONSUMER STAPLES - 12.40%
Altria Group, Inc. 18,000 357,120
Archer-Daniels-Midland Company ^ 6,000 131,460
Coca-Cola Company (The) ^ 25,000 1,322,000
Colgate-Palmolive Company 5,000 376,750
ConAgra Foods, Inc. 9,000 175,140
Costco Wholesale Corporation 4,000 259,720
CVS Caremark Corporation 14,000 471,240
Estee Lauder Companies Inc. (The) ^ 3,000 149,730
General Mills, Inc. 5,000 343,600
H.J. Heinz Company 6,000 299,460
Kraft Foods Inc, Class A 18,000 589,500
Kroger Co. (The) 7,000 192,360
Molson Coors Brewing Company 4,000 187,000
PepsiCo, Inc. 12,000 855,240
Philip Morris International Inc. 18,000 865,800
Procter & Gamble Company (The) 27,000 1,881,630
Sysco Corporation 7,000 215,810
Walgreen Company 11,000 340,560
Wal-Mart Stores, Inc. ^ 38,000 2,275,820
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11,289,940
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ENERGY - 12.23%
Apache Corporation 3,500 364,980
Chesapeake Energy Corporation ^ 4,000 143,440
Chevron Corporation 25,000 2,062,000
ConocoPhillips 13,000 952,250
Devon Energy Corporation 4,000 364,800
EOG Resources, Inc. ^ 3,000 268,380
Exxon Mobil Corporation 50,000 3,883,000
Halliburton Company 10,000 323,900
National-Oilwell Varco Inc. * 5,000 251,150
Noble Corporation 5,000 219,500
Peabody Energy Corporation ^ 5,000 225,000
Schlumberger Limited 15,500 1,210,395
Southwestern Energy Company * 3,000 91,620
Transocean Inc. * 2,098 230,444
Williams Companies, Inc. (The) ^ 13,000 307,450
XTO Energy, Inc. 5,000 232,600
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11,130,909
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FINANCIALS - 14.38%
AFLAC Incorporated 4,000 235,000
American Express Company 10,000 354,300
American International Group, Inc. 25,000 83,250
Ameriprise Financial, Inc. 5,000 191,000
Aon Corporation 3,000 134,880
Bank of America Corporation ^ 44,000 1,540,000
Bank of New York Mellon Corporation 6,000 195,480
BB&T Corporation ^ 10,000 378,000
Capital One Financial Corporation ^ 4,500 229,500
Charles Schwab Corporation (The) 18,000 468,000
Chubb Corporation (The) 7,000 384,300
Citigroup Inc. 40,000 820,400
CME Group Inc. 500 185,755
Franklin Resources, Inc. ^ 5,000 440,650
Goldman Sachs Group, Inc. (The) 5,000 640,000
Hudson City Bancorp, Inc. ^ 5,000 92,250
JPMorgan Chase & Co. 39,000 1,821,300
Loews Corporation ^ 5,000 197,450
Manulife Financial Corporation ^ 10,000 366,900
Marsh & McLennan Companies, Inc. 5,500 174,680
MetLlife, Inc. 11,000 616,000
Morgan Stanley 10,000 230,000
PNC Financial Services Group, Inc. 4,000 298,800
ProLogis 5,000 206,350
State Street Corporation 5,000 284,400
SunTrust Banks, Inc. 3,000 134,970
T. Rowe Price Group Inc. 5,000 268,550
Travelers Companies, Inc. (The) 10,000 452,000
U.S. Bancorp 4,000 144,080
Wells Fargo & Company 38,000 1,426,140
XL Capital Ltd., Class A 5,000 89,700
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13,084,085
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HEALTHCARE - 12.57%
Abbott Laboratories 16,000 921,280
Aetna Inc. 9,000 324,990
Amgen Inc. * 9,000 533,430
Becton, Dickinson and Co. 3,000 240,780
Biogen Idec Inc.* 3,500 176,015
Bristol-Myers Squibb Company ^ 20,000 417,000
Celgene Corporation * ^ 4,000 253,120
Eli Lilly and Company ^ 15,000 660,450
Express Scripts, Inc. * 4,000 295,280
Gilead Sciences, Inc. * 13,000 592,540
Johnson & Johnson 33,000 2,286,240
Medco Health Solutions, Inc. * 12,000 540,000
Medtronic, Inc. 22,000 1,102,200
Merck & Co. Inc. 18,000 568,080
Pfizer Inc. ^ 15,000 276,600
Schering-Plough Corporation ^ 15,000 277,050
St. Jude Medical, Inc. * ^ 7,000 304,430
Stryker Corporation ^ 8,000 498,400
UnitedHealth Group Incorporated ^ 18,000 457,020
Wyeth 14,000 517,160
Zimmer Holdings, Inc. * 3,000 193,680
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11,435,745
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INDUSTRIALS - 10.85%
3M Co. 5,000 341,550
Boeing Company (The) 5,000 286,750
Burlington Northern Santa Fe Corporation 4,000 369,720
Caterpillar Inc. 7,000 417,200
CSX Corporation 8,000 436,560
Danaher Corporation 8,000 555,200
Deere & Company 10,000 495,000
Emerson Electric Co. 11,000 448,690
General Dynamics Corporation ^ 4,000 294,480
General Electric Company 111,000 2,830,500
Honeywell International Inc. 7,000 290,850
Illinois Tool Works Inc. 9,000 400,050
Lockheed Martin Corporation 4,000 438,680
Norfolk Southern Corporation ^ 7,500 496,575
Raytheon Company 7,000 374,570
United Parcel Service, Inc., Class B 9,000 566,010
United Technologies Corporation 10,000 600,600
Waste Management, Inc. 7,500 236,175
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9,879,160
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INFORMATION TECHNOLOGY - 15.73%
Agilent Technologies Inc. * 7,000 207,620
Analog Devices, Inc. 2,500 65,875
Apple Inc. * 9,000 1,022,940
Applied Materials Inc. 15,000 226,950
Automatic Data Processing, Inc. 9,000 384,750
Cisco Systems, Inc. * 52,000 1,173,120
Corning Incorporated 20,000 312,800
eBay Inc.* 10,000 223,800
EMC Corporation ^ 21,000 251,160
Google Inc. * ^ 4,500 1,802,340
Hewlett-Packard Company 18,000 832,320
Intel Corporation 61,000 1,142,530
International Business Machines Corporation ^ 15,000 1,754,400
Linear Technology Corporation ^ 2,500 76,650
Microsoft Corporation 89,000 2,375,410
Nokia, ADR 5,000 93,250
Oracle Corporation * 60,000 1,218,600
Paychex, Inc. 5,000 165,150
QUALCOMM Inc. 14,000 601,580
Texas Instruments Incorporated 12,000 258,000
Xerox Corporation 5,000 57,650
Xilinx, Inc. ^ 3,000 70,350
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14,317,245
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MATERIALS - 3.27%
Air Products and Chemicals, Inc. 2,500 171,225
Alcoa Inc. 8,000 180,640
Dow Chemical Company (The) 7,000 222,460
E. I. du Pont de Nemours and Company 12,500 503,750
Freeport-McMoRan Copper & Gold, Inc. ^ 4,000 227,400
International Paper Company ^ 5,000 130,900
Monsanto Company ^ 10,000 989,800
Nucor Corporation 3,000 118,500
Praxair, Inc. 6,000 430,440
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2,975,115
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REAL ESTATE INVESTMENT TRUSTS - 0.80%
Public Storage 2,500 247,525
Simon Property Group, Inc. ^ 5,000 485,000
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732,525
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TELECOMMUNICATION SERVICES - 3.13%
AT&T Inc. 72,000 2,010,240
Verizon Communications Inc. 26,000 834,340
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2,844,580
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UTILITIES - 3.54%
American Electric Power Company, Inc. ^ 7,000 259,560
Dominion Resources, Inc. ^ 14,000 598,920
Duke Energy Corporation 20,000 348,600
Entergy Corporation 5,000 445,050
Exelon Corporation ^ 6,000 375,720
FPL Group, Inc. ^ 7,000 352,100
PPL Corporation ^ 4,000 148,080
Questar Corporation 4,000 163,680
Southern Company (The) ^ 14,000 527,660
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3,219,370
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TOTAL EQUITY SECURITIES
(cost - $113,842,316) 90,660,387
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SHORT-TERM INVESTMENTS - 9.86%
MONEY MARKET SECURITY - 0.38%
J.P. Morgan U.S. Governement Money Market Fund 346,883 346,883
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PRINCIPAL
AMOUNT
(000's)
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REPURCHASE AGREEMENTS - 9.48%
Bear, Stearns & Co. Inc.+ ++
(Agreements dated 09/30/2008 to be
repurchased at $4,182,552, 3.50%,
10/01/2008, collateralized by $4,304,123
in United States Treasury Bonds) $4,182 4,182,145
Bear, Stearns & Co. Inc.+ ++
(Agreements dated 09/30/2008 to be
repurchased at $4,448,560, 7.0%,
10/01/2008, collateralized by $4,577,126
in United States Treasury Bonds) 4,448 4,447,695
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8,629,840
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TOTAL SHORT-TERM INVESTMENTS
(cost - $8,976,723) 8,976,723
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TOTAL INVESTMENTS - 109.47%
(cost - $122,819,039) 99,637,110
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LIABILITIES IN EXCESS OF OTHER ASSETS - (9.47)% (8,621,621)
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NET ASSETS - 100.00% $91,015,489
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^ 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 September 30, 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 depreciation from investments were
$122,819,039, $1,591,449, $(24,773,378), and $(23,181,929), 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 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 September 30, 2008 in
valuing the Fund's investments carried at value:
INVESTMENTS OTHER FINANCIAL
VALUATION INPUTS IN SECURITIES INSTRUMENTS*
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Level 1 - Quoted Prices $ 90,660,387 $ -
Level 2 - Other Significant Observable Inputs 8,976,723 -
Level 3 - Significant Unobservable Inputs - -
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TOTAL $ 99,637,110 $ -
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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
September 30, 2008.
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 the Form N-CSR on September
8, 2008 with a file number 811-22066.
Other information regarding the Fund is available in the Fund's most recent
semi-annual report filed with the Securities and Exchange Commission on Form
N-CSR on September 8, 2008, file number 811-22066. 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 Progressive Return Fund, Inc.
/s/ Ralph W. Bradshaw
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Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: November 26, 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: November 26, 2008
/s/ Kayadti A. Madison
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Name: Kayadti A. Madison
Title: Principal Financial Officer
Date: November 26, 2008