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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-22066
CORNERSTONE PROGRESSIVE RETURN FUND
(Exact name of registrant as specified in charter)
305 Madison Avenue, New York, New York 10165
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(Address of principal executive offices) (Zip code)
Gary A. Bentz
305 Madison Avenue, New York, New York 10165
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(Name and address of agent for service)
Registrant's telephone number, including area code: (513) 326-3597
Date of fiscal year end: December 31, 2008
Date of reporting period: December 31, 2008
Form N-CSR is to be used by management investment companies to file
reports with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
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.
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ITEM 1. REPORTS TO STOCKHOLDERS.
The report of Cornerstone Progressive Return Fund (the "Registrant") to
stockholders for the period ended December 31, 2008 follows.
CORNERSTONE PROGRESSIVE RETURN FUND
ANNUAL REPORT
DECEMBER 31, 2008
CONTENTS
Portfolio Summary 1
Summary Schedule of Investments 2
Statement of Assets and Liabilities 4
Statement of Operations 5
Statement of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 8
Report of Independent Registered Public Accounting Firm 13
Tax Information 14
Additional Information Regarding the Fund's Trustees
and Corporate Officers 15
Description of Dividend Reinvestment Plan 18
Proxy Voting and Portfolio Holdings Information 20
Privacy Policy Notice 20
Summary of General Information 21
Shareholder Information 21
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CORNERSTONE PROGRESSIVE RETURN FUND
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2008 (UNAUDITED)
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SECTOR ALLOCATION
Percent of
Sector Net Assets
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Closed-End Funds 18.5
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Information Technology 12.9
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Healthcare 11.5
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Consumer Staples 11.4
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Energy 10.9
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Financials 9.2
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Industrials 8.8
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Consumer Discretionary 6.7
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Utilities 3.3
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Telecommunication Services 3.2
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Materials 2.2
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Other 1.4
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TOP TEN HOLDINGS, BY ISSUER
Percent of
Holding Sector Net Assets
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1. Exxon Mobil Corporation Energy 5.2
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2. Johnson & Johnson Healthcare 3.0
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3. Calamos Strategic Total Return Fund Closed-End Funds 2.4
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4. Wal-Mart Stores, Inc. Consumer Staples 2.3
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5. Microsoft Corporation Information Technology 2.2
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6. General Electric Company Industrials 2.1
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7. AT&T Inc. Telecommunication Services 2.1
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8. Procter & Gamble Company (The) Consumer Staples 2.1
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9. Chevron Corporation Energy 1.9
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10. Eaton Vance Tax-Managed Global Diversified
Equity Income Fund Closed-End Funds 1.8
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1
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CORNERSTONE PROGRESSIVE RETURN FUND
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2008
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No. of
Description Shares Value
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EQUITY SECURITIES - 99.34%
CLOSED-END FUNDS - 18.53%
Advent/Claymore Enhanced
Growth & Income Fund 49,761 $ 403,562
Calamos Strategic
Total Return Fund 254,700 1,591,875
Clough Global Equity Fund 50,200 477,904
Clough Global
Opportunities Fund 129,000 1,167,450
Dreman/Claymore Dividend
& Income Fund 228,755 432,347
Eaton Vance Tax-Advantaged
Global Dividend
Income Fund 47,000 499,140
Eaton Vance Tax-Managed
Global Buy-Write
Opportunities Fund 70,900 717,508
Eaton Vance Tax-Managed
Global Diversified
Equity Income Fund 124,550 1,226,817
Gabelli Dividend &
Income Trust 49,414 508,964
ING Risk Managed Natural
Resources Fund 46,720 618,106
Liberty All-Star Equity Fund 306,100 1,071,350
LMP Capital and Income
Fund Inc 101,300 783,049
Other Closed-End Funds ^(a) 2,885,305
------------
12,383,377
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CONSUMER DISCRETIONARY - 6.68%
McDonald's Corporation 11,000 684,090
Walt Disney Company (The) 25,000 567,250
Other Consumer
Discretionary ^(a) 3,210,979
------------
4,462,319
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CONSUMER STAPLES - 11.41%
Coca-Cola Company (The) 15,000 679,050
Kraft Foods Inc, Class A 18,000 483,300
PepsiCo, Inc. 12,000 657,240
Philip Morris
International Inc. 18,337 797,843
Procter & Gamble
Company (The) 22,233 1,374,444
No. of
Description Shares Value
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Wal-Mart Stores, Inc. 27,000 $ 1,513,620
Other Consumer Staples ^(a) 2,115,135
------------
7,620,632
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ENERGY - 10.93%
Chevron Corporation 17,251 1,276,056
ConocoPhillips 8,208 425,174
Exxon Mobil Corporation 43,475 3,470,609
Schlumberger Limited 12,598 533,273
Other Energy ^(a) 1,594,818
------------
7,299,930
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FINANCIALS - 9.19%
Bank of America Corporation 29,792 419,471
JPMorgan Chase & Co. 35,498 1,119,252
Wells Fargo & Company 30,206 890,473
Other Financials ^(a) 3,710,295
------------
6,139,491
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HEALTHCARE - 11.53%
Abbott Laboratories 13,229 706,032
Amgen Inc. * 9,119 526,622
Gilead Sciences, Inc. * 13,000 664,820
Johnson & Johnson 33,000 1,974,390
Medtronic, Inc. 16,000 502,720
Other Healthcare ^(a) 3,329,713
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7,704,297
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INDUSTRIALS - 8.83%
Danaher Corporation 8,000 452,880
Emerson Electric Co. 11,000 402,710
General Electric Company 85,918 1,391,872
United Parcel Service, Inc.,
Class B 9,191 506,975
United Technologies
Corporation 10,108 541,789
Other Industrials ^(a) 2,599,876
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5,896,102
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INFORMATION TECHNOLOGY - 12.86%
Apple Inc. * 5,068 432,554
Cisco Systems, Inc. * 52,470 855,261
Google Inc. * 3,032 932,795
Hewlett-Packard Company 18,265 662,837
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See accompanying notes to financial statements.
2
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CORNERSTONE PROGRESSIVE RETURN FUND
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2008 (CONCLUDED)
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No. of
Description Shares Value
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INFORMATION TECHNOLOGY (CONTINUED)
Intel Corporation 48,599 $ 712,461
International Business
Machines Corporation 12,000 1,009,920
Microsoft Corporation 75,913 1,475,749
Oracle Corporation * 45,555 807,690
QUALCOMM Inc. 11,308 405,165
Other Information
Technology ^(a) 1,296,057
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8,590,489
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MATERIALS - 2.25%
Monsanto Company 10,000 703,500
Other Materials ^(a) 800,742
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1,504,242
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REAL ESTATE INVESTMENT TRUSTS - 0.69%
Total Real Estate
Investment Trusts (a) 464,400
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TELECOMMUNICATION SERVICES - 3.15%
AT&T Inc. 48,636 1,386,126
Verizon Communications
Inc. 21,000 711,900
Other Telecommunication
Services (a) 8,416
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2,106,442
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UTILITIES - 3.29%
Southern Company (The) 14,000 518,000
Other Utilities ^(a) 1,678,998
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2,196,998
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TOTAL EQUITY SECURITIES
(cost - $94,500,544) 66,368,719
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SHORT-TERM INVESTMENTS - 4.35%
MONEY MARKET SECURITY - 0.82%
JPMorgan U.S.
Government Money
Market Fund 546,252 546,252
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Principal
Amount
Description (000s) Value
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REPURCHASE AGREEMENTS - 3.53%
J.P. Morgan Securities Inc.+
(Agreements dated
12/31/2008 to be
repurchased at
$2,362,700) (b) $ 2,363 $ 2,362,695
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TOTAL SHORT-TERM INVESTMENTS
(cost - $2,908,947) 2,908,947
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TOTAL INVESTMENTS - 103.69%
(cost - $97,409,491) 69,277,666
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LIABILITIES IN EXCESS OF
OTHER ASSETS - (3.69)% (2,466,969)
------------
NET ASSETS - 100.00% $ 66,810,697
============
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^ Security or a portion thereof is out on loan.
* Non-income producing security.
+ Includes $2,362,695 of investments purchased with collateral received
for securities on loan.
(a) Represents issues not identified as a top 50 holdings in terms of
market value and issues or issuers not exceeding 1% of net assets
individually or in the aggregate, respectively, as of December 31,
2008.
(b) At December 31, 2008, the maturity date for all repurchase agree-
ments held was January 2, 2009, with interest rates ranging from 0.02%
to 0.04% and collateralized by $2,435,453 in U.S. Treasury Bonds
maturing December 31, 2010.
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See accompanying notes to financial statements.
3
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CORNERSTONE PROGRESSIVE RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2008
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ASSETS
Investments, at value, including collateral for securities on loan of $2,362,695
(Cost $97,409,491) (1) $ 69,277,666
Receivables:
Investments sold 521,097
Dividends 194,571
Prepaid expenses 1,489
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Total Assets 69,994,823
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LIABILITIES
Payables:
Upon return of securities loaned 2,362,695
Investments purchased 711,863
Investment management fees 55,519
Trustees' fees 20,738
Other accrued expenses 33,311
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Total Liabilities 3,184,126
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NET ASSETS (applicable to 9,336,732 shares of common outstanding) $ 66,810,697
=============
NET ASSET VALUE PER SHARE ($66,810,697 / 9,336,732) $ 7.16
=============
NET ASSETS CONSIST OF
Paid-in capital $ 114,547,805
Accumulated net realized loss on investments (19,605,283)
Net unrealized depreciation in value of investments (28,131,825)
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Net assets applicable to shares outstanding $ 66,810,697
=============
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(1) Includes securities out on loan to brokers with a market value of
$2,340,643.
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See accompanying notes to financial statements.
4
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CORNERSTONE PROGRESSIVE RETURN FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2008
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INVESTMENT INCOME
Income:
Dividends $ 2,682,774
Interest 45,539
Securities lending 27,409
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Total Investment Income 2,755,722
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Expenses:
Investment management fees 1,006,426
Administration fees 100,640
Trustees' fees 80,398
Legal and audit fees 43,909
Accounting fees 37,650
Custodian fees 19,998
Transfer agent fees 13,680
Printing 11,869
Stock exchange listing fees 8,309
Insurance 5,293
Miscellaneous 3,800
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Total Expenses 1,331,972
Less: Fees paid indirectly (70,401)
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Net Expenses 1,261,571
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Net Investment Income 1,494,151
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investments (19,608,587)
Capital gain distributions from regulated investment companies and
real estate investment trusts 3,304
Net change in unrealized depreciation in value of investments (23,781,155)
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Net realized and unrealized loss on investments (43,386,438)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(41,892,287)
============
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See accompanying notes to financial statements.
5
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CORNERSTONE PROGRESSIVE RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
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For the Period
For the September 10, 2007*
Year Ended Through
December 31, 2008 December 31, 2007
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INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income $ 1,494,151 $ 566,522
Net realized gain/(loss) from investments (19,608,587) 1,274,327
Capital gain distributions from regulated investment companies
and real estate investment trusts 3,304 --
Net change in unrealized depreciation in value of investments (23,781,155) (4,350,670)
------------- -------------
Net decrease in net assets resulting from operations (41,892,287) (2,509,821)
------------- -------------
Dividends and distributions to shareholders:
Net investment income (1,494,151) (566,522)
Net realized capital gains -- (1,274,327)
Return-of-capital (21,470,420) (3,647,294)
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Total dividends and distributions to shareholders (22,964,571) (5,488,143)
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Capital stock transactions:
Proceeds from initial public offering of 8,097,800 shares of common -- 121,467,000
Proceeds from secondary offering of 1,228,865 shares of common -- 18,432,975
Offering expenses associated with the issuance of common shares -- (379,619)
Proceeds from 3,066 and 333 shares newly issued in reinvestment of
dividends and distributions, respectively 39,846 5,297
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Net increase in net assets from capital share transactions 39,846 139,525,653
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Total increase/(decrease) in net assets (64,817,012) 131,527,689
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NET ASSETS
Beginning of period 131,627,709 100,020
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End of period $ 66,810,697 $ 131,627,709
============= =============
----------
* Commencement of operations.
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See accompanying notes to financial statements.
6
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CORNERSTONE PROGRESSIVE RETURN FUND FINANCIAL HIGHLIGHTS
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Contained below is per share operating performance data for a share of common
outstanding, total investment return, ratios to average net assets and other
supplemental data for each period indicated. This information has been derived
from information provided in the financial statements and market price data for
the Fund's shares.
For the Period
For the Year September 10, 2007*
Ended through
December 31, 2008 December 31, 2007
----------------- -----------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.10 $ 14.96^
-------- ---------
Net investment income # 0.16 0.06
Net realized and unrealized loss on investments (4.64) (0.35)
-------- ---------
Net decrease in net assets resulting from operations (4.48) (0.29)
-------- ---------
Dividends and distributions to shareholders:
Net investment income (0.16) (0.06)
Net realized capital gains -- (0.15)
Return-of-capital (2.30) (0.41)
-------- ---------
Total dividends and distributions to shareholders (2.46) (0.62)
-------- ---------
Capital share transactions:
Anti-dilutive effect due to issuance of common shares -- 0.05
Anti-dilutive effect due to shares issued in reinvestment of
dividends and distributions -- 0.00+
-------- ---------
Total capital share transactions -- 0.05
-------- ---------
Net asset value, end of period $ 7.16 $ 14.10
======== =========
Market value, end of period $ 7.10 $ 16.75
======== =========
Total investment return (a) (47.53)% 16.02%
======== =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 66,811 $ 131,628
Ratio of expenses to average net assets, net of fees paid indirectly 1.25% 1.29%(b)
Ratio of expenses to average net assets, excluding the
reduction for fees paid indirectly 1.32% 1.42%(b)
Ratio of net investment income to average net assets 1.48% 1.46%(b)
Portfolio turnover rate 20.19% 6.77%
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* Commencement of operations.
^ Based on $15.00 per share public offering price less $0.04 per share
of offering expenses related to the Fund's initial public offering.
# Based on average shares outstanding.
+ Amount is less than a $0.01.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions.
(b) Annualized.
================================================================================
See accompanying notes to financial statements.
7
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CORNERSTONE PROGRESSIVE RETURN FUND
NOTES TO FINANCIAL STATEMENTS
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NOTE A. ORGANIZATION
Cornerstone Progressive Return Fund (the "Fund") was organized as a Delaware
statutory trust on April 26, 2007 and commenced investment operations on
September 10, 2007. Prior to such date it had no operations other than the sale
and issuance of 6,668 shares at an aggregate purchase price of $100,020 on July
20, 2007. Its investment objective is to provide long-term total return. The
Fund is registered under the Investment Company Act of 1940, as amended, as a
closed-end, diversified management investment company.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
("GAAP") requires management to make certain estimates and assumptions that may
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. Readily marketable portfolio securities listed on the NYSE
are valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the NYSE on the business day as of which such
value is being determined. If there has been no sale on such day, the securities
are valued at the mean of the closing bid and asked prices on such day. If no
bid or asked prices are quoted on such day or if market prices may be unreliable
because of events occurring after the close of trading, then the security is
valued by such method as the Board of Trustees shall determine in good faith to
reflect its fair market value. Readily marketable securities not listed on the
NYSE but listed on other domestic or foreign securities exchanges are valued in
a like manner. Portfolio securities traded on more than one securities exchange
are valued at the last sale price on the business day as of which such value is
being determined as reflected on the consolidated tape at the close of the
exchange representing the principal market for such securities. Securities
trading on the Nasdaq Stock Market, Inc. ("NASDAQ") are valued at the closing
price.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by Cornerstone Advisors, Inc.
(the "Investment Adviser" or "Cornerstone") to be over-the-counter, are valued
at the mean of the current bid and asked prices as reported by the NASDAQ or, in
the case of securities not reported by the NASDAQ or a comparable source, as the
Board of Trustees deem appropriate to reflect their fair market value. Where
securities are traded on more than one exchange and also over-the-counter, the
securities will generally be valued using the quotations the Board of Trustees
believes reflect most closely the value of such securities.
At December 31, 2008, the Fund held no securities valued in good faith by the
Board of Trustees. The net asset value per share of the Fund is calculated
weekly and on the last business day of the month with the exception of those
days on which the NYSE Alternext US LLC is closed.
On March 19, 2008, Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 161, "Disclosures about Derivative
instruments and Hedging Activities" ("FAS 161"). FAS 161 requires qualitative
disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative
instruments, and disclosures about credit-risk-related contingent features in
derivative agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal years.
At this time, management is evaluating the implications of FAS 161 and its
impact on the financial statements is not expected to be material.
REPURCHASE AGREEMENTS: The Fund has agreed to purchase securities from financial
institutions subject to the seller's agreement to repurchase them at an
agreed-upon time and price ("repurchase agreements"). The financial institutions
with whom the Fund enters into repurchase agreements are banks
================================================================================
8
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CORNERSTONE PROGRESSIVE RETURN FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
and broker/dealers, which Cornerstone considers creditworthy. The seller under a
repurchase agreement will be required to maintain the value of the securities as
collateral, subject to the agreement at not less than the repurchase price plus
accrued interest. Cornerstone monitors the mark-to-market of the value of the
collateral, and, if necessary, requires the seller to maintain additional
securities, so that the value of the collateral is not less than the repurchase
price. Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with the
disposition of the underlying securities.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to qualify as a regulated investment company and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from all or substantially all U.S. federal income and excise taxes. In July
2006, the Financial Accounting Standards Board ("FASB") released FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an
interpretation of FASB Statement No. 109. FIN 48 provides guidance for how
uncertain tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the accounting and disclosure of
tax positions taken or expected to be taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are "more likely than
not" of being sustained by the applicable tax authority. Tax positions not
deemed to meet the more likely than not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is effective during
the first required financial reporting period for fiscal years beginning after
December 15, 2006. Management has adopted FIN 48 and reviewed any uncertain tax
positions for open tax years 2007 and 2008. There was no material impact to the
financial statements or, other than as described herein, the disclosures thereto
as a result of the adoption of the pronouncement.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund makes a level distribution to its
shareholders each month pursuant to a managed distribution policy adopted by the
Board of Trustees ("Managed Distribution Policy"). To the extent these
distributions are not represented by net investment income and capital gains,
they will not represent yield or investment return on the Fund's portfolio. The
level distribution rate may be modified by the Board of Trustees from time to
time. If, for any monthly distribution, investment company taxable income, if
any (which term includes net short-term capital gain), and net tax-exempt
income, if any, is less than the amount of the distribution, the difference will
generally be a tax-free return of capital distributed from the Fund's assets.
The Fund's final distribution for each calendar year is expected to include any
remaining investment company taxable income and net tax exempt income
undistributed during the year, as well as all net capital gain realized during
the year.
However, if they determine it is appropriate to do so, the Board of Trustees may
elect to not distribute realized gains and to pay taxes incurred. In general,
the total distributions made in any taxable year (other than distributions of
net capital gain or return of capital) would be treated as ordinary dividend
income to the extent of the Fund's current and accumulated earnings and profits.
Distributions in excess of the earnings and profits would first be a tax-free
return of capital to the extent of the adjusted tax basis in the shares.
The Managed Distribution Policy described above would result in the payment of
approximately the same amount or percentage to the Fund's shareholders each
month. These distributions will not be tied to the Fund's investment income and
capital gains and will not represent yield or investment return on the Fund's
portfolio. Section 19(a) of the 1940 Act and Rule 19a-1 thereunder require the
Fund
================================================================================
9
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CORNERSTONE PROGRESSIVE RETURN FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
to provide a written statement accompanying any such payment that adequately
discloses its source or sources, other than net investment income. Thus, if the
source of some or all of the dividend or other distribution were the original
capital contribution of the shareholder, and the payment amounted to a return of
capital, the Fund would be required to provide written disclosure to that
effect. Nevertheless, persons who periodically receive the payment of a dividend
or other distribution may be under the impression that they are receiving net
profits when they are not. Shareholders should read any written disclosure
provided pursuant to Section 19(a) and Rule 19a-1 carefully, and should not
assume that the source of any distribution from the Fund is net profit.
The Board of Trustees reserves the right to change the monthly distribution
policy from time to time.
NOTE C. FAIR VALUE
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 December 31, 2008 in valuing the
Fund's investments carried at value:
INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS*
--------------------------------------------------------------------------------
Level 1 - Quoted
Prices $66,368,719 --
Level 2 - Other
Significant
Observable Inputs 2,908,947 --
Level 3 - Significant
Unobservable Inputs -- --
------------ -----------
Total $69,277,666 --
=========== ===========
--------
* 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 December
31, 2008.
================================================================================
10
--------------------------------------------------------------------------------
CORNERSTONE PROGRESSIVE RETURN FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE D. AGREEMENTS
Cornerstone serves as the Fund's Investment Adviser with respect to all
investments. As compensation for its investment management services, Cornerstone
receives from the Fund, an annual fee, calculated weekly and paid monthly, equal
to 1.00% of the Fund's average weekly net assets. For the year ended December
31, 2008, Cornerstone earned $1,006,426 for investment management services.
Included in the Statement of Operations, under the caption Fees paid indirectly,
are expense offsets of $70,401 arising from credits earned on portfolio
transactions executed with a broker, pursuant to a directed brokerage
arrangement.
The Fund paid or accrued approximately $26,001 for the year ended December 31,
2008 for legal services to Blank Rome LLP ("Blank"), c ounsel to the Fund.
Thomas R. Westle, partner of Blank, served as Secretary of the Fund until
February 15, 2008.
NOTE E. INVESTMENT IN SECURITIES
For the year ended December 31, 2008, purchases and sales of securities, other
than short-term investments, were $20,420,370 and $40,864,618 respectively.
NOTE F. COMMON SHARES OF BENEFICIAL INTEREST
The Fund has 9,336,732 common shares of beneficial interest authorized and
outstanding at December 31, 2008. As of that date, two individuals that control
Cornerstone owned 9,604 shares in the Fund. Transactions in common shares for
the year ended December 31, 2008 were as follows:
Shares at beginning of year 9,333,666
Shares newly issued in reinvestment
of dividends and distributions 3,066
---------
Shares at end of year 9,336,732
=========
NOTE G. SHARE REPURCHASE PROGRAM
Pursuant to Section 23 of the Investment Company Act of 1940, as amended, the
Fund may purchase shares of its common shares of beneficial interest on the open
market from time to time, at such times, and in such amounts as may be deemed
advantageous to the Fund. Nothing herein shall be considered a commitment to
purchase such shares. The Fund had no repurchases during the year ended December
31, 2008. No limit has been placed on the number of shares to be repurchased by
the Fund other than those imposed by federal securities laws.
To the extent such purchases are made they will be in accordance with federal
securities laws, with shares repurchased held in treasury for future use by the
Fund.
NOTE H. SECURITIES LENDING
To generate additional income, the Fund may lend up to 33(1)/3% of its total
assets. The Fund receives payments from borrowers equivalent to the dividends
and interest that would have been earned on securities lent while simultaneously
seeking to earn interest on the investment of cash collateral. Loans are subject
to termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments. Loans of securities are required at all
times to be secured by collateral equal to at least 100% of the market value of
securities on loan. However, in the event of default or bankruptcy of the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. In the event that the borrower fails to return
securities, and collateral maintained by the lender is insufficient to cover the
value of loaned securities, the borrower is obligated to pay the amount of the
shortfall (and interest thereon) to the Fund. However, there can be no assurance
the Fund can recover this amount.
The value of securities on loan to brokers at December 31, 2008 was $2,340,643.
During the year ended December 31, 2008, the Fund earned $27,409 in securities
lending income which is included under the caption SECURITIES LENDING in the
Statement of Operations.
NOTE I. FEDERAL INCOME TAXES
Income and capital gains distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP. These differences are
primarily due to differing treatments of losses
================================================================================
11
--------------------------------------------------------------------------------
CORNERSTONE PROGRESSIVE RETURN FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
--------------------------------------------------------------------------------
deferred due to wash sales and Post- October losses (as later defined), and
excise tax regulations. The tax character of dividends and distributions paid
during the year ended December 31, 2008 and period September 10, 2007
(commencement of operations) through December 31, 2007 for the Fund were as
follows:
ORDINARY INCOME RETURN-OF-CAPITAL
--------------- -----------------
2008 2007 2008 2007
---- ---- ---- ----
$ 1,494,151 $566,522 $21,470,420 $3,647,294
CAPITAL GAINS
-------------
2008 2007
---- ----
-- $1,274,327
At December 31, 2008 the components of the accumulated deficit on a tax basis,
for the Fund were as follows:
Capital loss carryforward $ (8,177,222)
Net unrealized depreciation (28,336,360)
Other accumulated loss (11,223,526)
------------
Total accumulated deficit $(47,737,108)
============
Under current tax law, certain capital losses realized after October 31 within a
taxable year may be deferred and treated as occurring on the first day of the
following tax year ("Post-October losses"). For the tax period ended December
31, 2008, the Fund incurred Post-October losses in the amount of $11,223,526.
At December 31, 2008, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $8,177,222 which expires in 2016.
At December 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 depreciation from investments were $97,614,026, $1,758,750,
$(30,095,110), and $(28,336,360), respectively.
NOTE J. SUBSEQUENT EVENTS
Effective February 13, 2009, Kayadti A. Madison resigned as Treasurer.
Effective that same day Gary A. Bentz was appointed as Assistant Treasurer.
Effective February 28, 2009, Ultimus Fund Solutions, LLC replaced Bear Stearns
Funds Management Inc. as Fund Administrator and Commonwealth Fund Services, LLC
as Fund Accounting agent.
================================================================================
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors Cornerstone
Progressive Return Fund New York, New York
We have audited the accompanying statement of assets and liabilities of
Cornerstone Progressive Return Fund, including the schedule of investments as of
December 31, 2008, and the related statement of operations for the year then
ended, the statements of changes in net assets, and the financial highlights for
the year then ended and for the period September 10, 2007 (commencement of
operations) to December 31, 2007. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2008, by correspondence with the custodian
and brokers. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Cornerstone Progressive Return Fund, as of December 31, 2008, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period September 10,
2007 (commencement of operations) to December 31, 2007, in conformity with
accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
February 24, 2009
================================================================================
13
2008 TAX INFORMATION (UNAUDITED)
Cornerstone Progressive Return Fund (the "Fund") is required by Subchapter M of
the Internal Revenue Code of 1986, as amended, to advise its shareholders within
60 days of the Fund's year end (December 31, 2008) as to the U.S. federal tax
status of the dividends and distributions received by the Fund's shareholders in
respect of such fiscal year. The $22,964,571 in dividend and distributions paid
to shareholders in respect of such year, is represented by $1,494,151 of net
investment income, and $21,470,420 of return-of-capital.
As indicated in this notice, significant portions of the Fund's distributions
for 2008 were comprised of a return-of-capital; accordingly these distributions
do NOT represent yield or investment return on the Fund's portfolio. During the
year ended December 31, 2008 the following dividends and distributions per share
were paid by the Fund:
SOURCES OF DIVIDENDS AND DISTRIBUTIONS
(PER SHARE AMOUNTS)
PAYMENT DATES: 1/31/08 2/29/08 3/31/08 4/30/08 5/30/08 6/30/08
-------------- ------- ------- ------- ------- ------- -------
Ordinary Income(1) $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133
Return-of-Capital(2) 0.1917 0.1917 0.1917 0.1917 0.1917 0.1917
-------- -------- -------- -------- -------- --------
Total: $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050
======== ======== ======== ======== ======== ========
PAYMENT DATES: 7/31/08 8/29/08 9/30/08 10/31/08 11/28/08 12/19/08
-------------- ------- ------- ------- -------- -------- --------
Ordinary Income(1) $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133 $ 0.0133
Return-of-Capital(2) 0.1917 0.1917 0.1917 0.1917 0.1917 0.1917
-------- -------- -------- -------- -------- --------
Total: $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050 $ 0.2050
======== ======== ======== ======== ======== ========
------------------------------------------------------------------------------------------------------------
Notes:
(1) ORDINARY INCOME DIVIDENDS - This is the total per share amount of
ordinary income dividends and short-term capital gain distributions
included in the amount reported in Box 1a on Form 1099-DIV.
(2) RETURN-OF-CAPITAL - This is the per share amount of return-of-capital,
or sometimes called nontaxable, distributions reported in Box 3 -
under the title "Nondividend distributions" - on Form 1099-DIV. This
amount should NOT be reported as taxable income on your current
return. Rather, it should be treated as a reduction in the original
cost basis of your investment in the Fund.
The Fund has met the requirements to pass through all of its (100.00%) ordinary
income dividends as qualified dividends, which are subject to a maximum tax rate
of 15%. This is reported in Box 1b on Form 1099-DIV. Ordinary income dividends
should be reported as dividend income on Form 1040. Please note that to utilize
the lower tax rate for qualifying dividend income, shareholders generally must
have held their shares in the Fund for at least 61 days during the 121 day
period beginning 60 days before the ex-dividend date.
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of the actual ordinary income dividend paid by the Fund.
In general, distributions received by tax-exempt recipients (e.g., IRA's and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (E.G., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.
Shareholders are strongly advised to consult their own tax advisers with respect
to the tax consequences of their investment in the Fund.
================================================================================
14
ADDITIONAL INFORMATION REGARDING THE FUND'S TRUSTEES
AND CORPORATE OFFICERS (UNAUDITED)
NUMBER OF
PORTFOLIOS IN
NAME AND POSITION FUND COMPLEX
ADDRESS* POSITION(S) PRINCIPAL OCCUPATION WITH FUND OVERSEEN BY
(BIRTH DATE) HELD WITH FUND OVER LAST 5 YEARS SINCE TRUSTEES
-------------------------------------------------------------------------------------------------------
Ralph W. Chairman of the President, Cornerstone Advisors, Inc.; 2007 3
Bradshaw** Board of Trustees Financial Consultant; President and
(Dec. and President Director of Cornerstone Total Return
1950)
Fund, Inc. and Cornerstone Strategic
Value Fund, Inc.
Thomas H. Trustee; Audit, Independent Financial Adviser; Director 2007 3
Lenagh Nominating and of Photonics Products Group; Director of
(Nov. Corporate Cornerstone Total Return Fund, Inc. and
1924)
Governance Cornerstone Strategic Value Fund, Inc.;
Committee Director of Adams Express Company and
Member Petroleum and Resources Corporation.
Edwin Trustee; Audit, Distinguished Fellow, The Heritage 2007 3
Meese III Nominating and Foundation Washington D.C.;
(Dec. Corporate Distinguished Visiting Fellow at the
1931)
Governance Hoover Institution, Stanford University;
Committee Senior Adviser, Revelation L.P.; Director of
Member Cornerstone Total Return Fund, Inc. and
Cornerstone Strategic Value Fund, Inc.
Scott B. Trustee; Audit, Chairman, Board of Health Partners, 2007 3
Rogers
(July Nominating and Inc.; Chief Executive Officer, Asheville
1955)
Corporate Buncombe Community Christian
Governance Ministry; and President, ABCCM
Committee Doctor's Medical Clinic; Appointee, NC
Member Governor's Commission on Welfare to
Work; Director of Cornerstone Total
Return Fund, Inc. and Cornerstone
Strategic Value Fund, Inc.
================================================================================
15
ADDITIONAL INFORMATION REGARDING THE FUND'S TRUSTEES
AND CORPORATE OFFICERS (UNAUDITED) (CONTINUED)
NUMBER OF
PORTFOLIOS IN
NAME AND POSITION FUND COMPLEX
ADDRESS* POSITION(S) PRINCIPAL OCCUPATION WITH FUND OVERSEEN BY
(BIRTH DATE) HELD WITH FUND OVER LAST 5 YEARS SINCE TRUSTEES
-------------------------------------------------------------------------------------------------------
Andrew A. Trustee; Attorney and senior member of Strauss 2007 3
Strauss Chairman of & Associates, P.A., Attorneys,
(Nov. 1953) Nominating and Asheville and Hendersonville, NC; previous
Corporate President of White Knight
Governance Healthcare, Inc. and LMV Leasing, Inc., a
Committees and wholly owned subsidiary of Xerox Credit
Audit Committee Corporation; Director of Cornerstone
Member Total Return Fund, Inc. and Cornerstone
Strategic Value Fund, Inc.
Glenn W. Trustee; Chairman of the Board, Tower 2007 3
Wilcox, Sr. Chairman of Associates, Inc.; Chairman of the Board
(Dec. 1931) Audit Committee, and Chief Executive Officer of Wilcox
Nominating and Travel Agency, Inc.; Director of
Corporate Cornerstone Total Return Fund, Inc. and
Governance Cornerstone Strategic Value Fund, Inc.
Committee
Member
================================================================================
16
ADDITIONAL INFORMATION REGARDING THE FUND'S TRUSTEES
AND CORPOROFFICERS (UNAUDITED) (CONCLUDED)
NUMBER OF
PORTFOLIOS IN
NAME AND POSITION FUND COMPLEX
ADDRESS* POSITION(S) PRINCIPAL OCCUPATION WITH FUND OVERSEEN BY
(BIRTH DATE) HELD WITH FUND OVER LAST 5 YEARS SINCE TRUSTEES
-------------------------------------------------------------------------------------------------------
Gary A. Bentz Chief Chairman and Chief Financial Officer of 2007, 2008,
(June 1956) Compliance Cornerstone Advisors, Inc.; previous 2009
Officer, Director, Vice President and Treasurer of
Secretary, Cornerstone Total Return Fund, Inc. and
and Assistant Cornerstone Strategic Value Fund, Inc.,
Treasurer Financial Consultant, C.P.A.; Chief Compliance
Officer, Secretary, and Assistant Treasurer of
Cornerstone Total Return Fund, Inc. and
Cornerstone Strategic Value Fund, Inc.
William A. Vice President Director and Stockholder of Cornerstone 2007
Clark Advisors, Inc.; Vice President and former
(Oct. 1945) Director of Cornerstone Strategic Value Fund,
Inc. and Cornerstone Total Return Fund, Inc.;
Financial Consultant; former Director of
Investors First Fund, Inc.
--------------------------------------------------------------------------------------------------------
* The mailing address of each Trustee and/or Officer with respect to the
Fund's operation is 305 Madison Ave., New York, NY 10165.
** Designates a trustee who is an "interested person" of the Fund as
defined by the Investment Company Act of 1940, as amended. Mr.
Bradshaw is an interested person of the Fund by virtue of his current
position with the Investment Adviser of the Fund.
================================================================================
17
DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED)
Cornerstone Progressive Return Fund (the "Fund") operates a Dividend
Reinvestment Plan (the "Plan"), sponsored and administered by American Stock
Transfer & Trust Company (the "Agent"), pursuant to which the Fund's income
dividends or capital gains or other distributions (each, a "Distribution" and
collectively, "Distributions"), net of any applicable U.S. withholding tax, are
reinvested in shares of the Fund.
Shareholders automatically participate in the Fund's Plan, unless and until an
election is made to withdraw from the Plan on behalf of such participating
shareholder. Shareholders who do not wish to have Distributions automatically
reinvested should so notify their broker, or if a registered shareholder, the
Agent in writing at P.O. Box 922, Wall Street Station, New York, New York
10269-0560. Such written notice must be received by the Agent prior to the
record date of the Distribution or the shareholder will receive such
Distribution in shares through the Plan. Under the Plan, the Fund's
Distributions to shareholders are reinvested in full and fractional shares as
described below.
When the Fund declares a Distribution the Agent, on the shareholder's behalf,
will (i) receive additional authorized shares from the Fund either newly issued
or repurchased from shareholders by the Fund and held as treasury stock ("Newly
Issued Shares") or (ii) purchase outstanding shares on the open market, on the
NYSE Alternext US LLC or elsewhere, with cash allocated to it by the Fund ("Open
Market Purchases").
The method for determining the number of shares to be received when
Distributions are reinvested will vary depending upon whether the net asset
value of the Fund's shares is higher or lower than its market price. If the net
asset value of the Fund's shares is lower than its market price, the number of
Newly Issued Shares received will be determined by dividing the amount of the
Distribution either by the Fund's net asset value per share or by 95% of its
market price, whichever is higher. If the net asset value of the Fund's shares
is higher than its market price, shares acquired by the Agent in Open Market
Purchases will be allocated to the reinvesting shareholders based on the average
cost of such Open Market Purchases.
Whenever the Fund declares a Distribution and the net asset value of the Fund's
shares is higher than its market price, the Agent will apply the amount of such
Distribution payable to Plan participants of the Fund in Fund shares (less such
Plan participant's pro rata share of brokerage commissions incurred with respect
to Open Market Purchases in connection with the reinvestment of such
Distribution) to the purchase on the open market of Fund shares for such Plan
participant's account. Such purchases will be made on or after the payable date
for such Distribution, and in no event more than 30 days after such date except
where temporary curtailment or suspension of purchase is necessary to comply
with applicable provisions of federal securities laws. The Agent may aggregate a
Plan participant's purchases with the purchases of other Plan participants, and
the average price (including brokerage commissions) of all shares purchased by
the Agent shall be the price per share allocable to each Plan participant.
Participants in the Plan may withdraw from the Plan by providing written notice
to the Agent at least 30 days prior to the applicable Distribution payment date.
When a Participant withdraws from the Plan, or upon suspension or termination of
the Plan at the sole discretion of the Fund's Board of Trustees, certificates
for whole shares credited to his or her account under the Plan will, upon
request, be issued. Whether or not a participant requests that certificates for
whole shares be issued, a cash payment will be made for any fraction of a share
credited to such account.
The Agent will maintain all shareholder accounts in the Plan and furnish written
confirmations of all transactions in the accounts, including information needed
by shareholders for personal and tax records. The Agent will hold shares in the
account of the Plan participant in non-certificated form in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan. Each participant, nevertheless, has the right to receive
certificates for whole shares owned.
================================================================================
18
DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED)(CONCLUDED)
The Agent will distribute all proxy solicitation materials to participating
shareholders.
In the case of shareholders, such as banks, brokers or nominees, that hold
shares for others who are beneficial owners participating in the Plan, the Agent
will administer the Plan on the basis of the number of shares certified from
time to time by the record shareholder as representing the total amount of
shares registered in the shareholder's name and held for the account of
beneficial owners participating in the Plan. Neither the Agent nor the Fund
shall have any responsibility or liability beyond the exercise of ordinary care
for any action taken or omitted pursuant to the Plan, nor shall they have any
duties, responsibilities or liabilities except such as expressly set forth
herein. Neither shall they be liable hereunder for any act done in good faith or
for any good faith omissions to act, including, without limitation, failure to
terminate a participants account prior to receipt of written notice of his or
her death or with respect to prices at which shares are purchased or sold for
the participants account and the terms on which such purchases and sales are
made, subject to applicable provisions of the federal securities laws.
The automatic reinvestment of Distributions will not relieve participants of any
federal, state or local income tax that may be payable (or required to be
withheld) on such Distributions. The Fund reserves the right to amend or
terminate the Plan. There is no direct service charge to participants with
regard to purchases in the Plan.
All correspondence concerning the Plan should be directed to the Agent at P.O.
Box 922, Wall Street Station, New York, New York 10269-0560. Certain
transactions can be performed online at www.amstock.com or by calling the toll
free number 877-864-4833.
================================================================================
19
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how Cornerstone Progressive Return Fund (the "Fund") voted
proxies related to its portfolio securities during the 12-month period ended
June 30 of each year as well as the policies and procedures that the Fund uses
to determine how to vote proxies relating to its portfolio securities are
available by calling (513) 326-3597 or on the website of the Securities and
Exchange Commission, http://www.sec.gov.
This report incorporates a Summary Schedule of Investments for the Fund. A
complete Schedule of Investments for the Fund may be obtained free of charge by
contacting the Fund at (513) 326-3597. The Fund files a complete schedule of its
portfolio holdings for the first and third quarters of its fiscal year with the
SEC on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling (202) 551-8090.
PRIVACY POLICY NOTICE (UNAUDITED)
The following is a description of the Fund's policies regarding disclosure of
nonpublic personal information that you provide to the Fund or that the Fund
collects from other sources. In the event that you hold shares of the Fund
through a broker-dealer or other financial intermediary, the privacy policy of
the financial intermediary would govern how your nonpublic personal information
would be shared with unaffiliated third parties.
CATEGORIES OF INFORMATION THE FUND COLLECTS. The Fund collects the following
nonpublic personal information about you:
1. Information from the Consumer: this category includes information the
Fund receives from you on or in applications or other forms,
correspondence, or conversations (such as your name, address phone
number, social security number, assets, income and date of birth); and
2. Information about the Consumer's transactions: this category includes
information about your transactions with the Fund, its affiliates, or
others (such as your account number and balance, payment history,
parties to transactions, cost basis information, and other financial
information).
CATEGORIES OF INFORMATION THE FUND DISCLOSES. The Fund does not disclose any
nonpublic personal information about their current or former shareholders to
unaffiliated third parties, except as required or permitted by law. The Fund is
permitted by law to disclose all of the information it collects, as described
above, to its service providers (such as the Fund's custodian, administrator and
transfer agent) to process your transactions and otherwise provide services to
you.
CONFIDENTIALITY AND SECURITY. The Fund restricts access to your nonpublic
personal information to those persons who require such information to provide
products or services to you. The Fund maintains physical, electronic and
procedural safeguards that comply with federal standards to guard your nonpublic
personal information.
================================================================================
20
SUMMARY OF GENERAL INFORMATION (UNAUDITED)
Cornerstone Progressive Return Fund is a closed-end, diversified investment
company whose shares trade on the NYSE Alternext US LLC. Its investment
objective is to provide long-term total return. The Fund is managed by
Cornerstone Advisors, Inc.
SHAREHOLDER INFORMATION (UNAUDITED)
The Fund is listed on the NYSE Alternext US LLC (symbol "CFP"). The previous
week's net asset value per share, market price, and related premium or discount
are published each Monday in THE WALL STREET JOURNAL under the designation
"CrnrstnPrgRtFd" and BARRON'S under the designation "CornerstoneProgreRet". Such
information is available weekly and may be obtained by contacting the Fund at
the general inquiry phone number.
--------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, THAT CORNERSTONE PROGRESSIVE RETURN FUND MAY
FROM TIME TO TIME PURCHASE ITS SHARES IN THE OPEN MARKET.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in the report.
--------------------------------------------------------------------------------
================================================================================
21
================================================================================
TRUSTEES AND CORPORATE OFFICERS
Ralph W. Bradshaw Chairman of the Board of
Trustees and President
Thomas H. Lenagh Trustee
Edwin Meese III Trustee
Scott B. Rogers Trustee
Andrew A. Strauss Trustee
Glenn W. Wilcox, Sr. Trustee
Gary A. Bentz Chief Compliance Officer,
Secretary, and
Assistant Treasurer
William A. Clark Vice President
STOCK TRANSFER AGENT
INVESTMENT MANAGER AND REGISTRAR
Cornerstone Advisors, Inc. American Stock Transfer &
One West Pack Square Trust Co.
Suite 1650 59 Maiden Lane
Asheville, NC 28801 New York, NY 10038
INDEPENDENT REGISTERED
ADMINISTRATOR PUBLIC ACCOUNTING FIRM
Ultimus Fund Solutions, LLC Tait, Weller & Baker LLP
305 Madison Avenue 1818 Market Street
New York, NY 10165 Suite 2400
Philadelphia, PA 19103
CUSTODIAN LEGAL COUNSEL
Custodial Trust Company Blank Rome LLP
101 Carnegie Center 405 Lexington Avenue
Princeton, NJ 08540 New York, NY 10174
EXECUTIVE OFFICES
305 Madison Avenue
New York, NY 10165
For shareholder inquiries, registered shareholders should call
(800) 937-5449. For general inquiries, please call (513) 326-3597.
CFP
LISTED
ALTERNEXT
CORNERSTONE PROGRESSIVE RETURN FUND
ITEM 2. CODE OF ETHICS.
(a) As of the end of the period covered by this report, the Registrant has
adopted a code of ethics that applies to the Registrant's principal executive
officer, principal accounting officer, and persons performing similar functions.
(c) and (d). During the period covered by this report, there was no amendment
to, and no waiver granted from, any provision of the code of ethics that applies
to the Registrant's principal executive officer, principal accounting officer,
and persons performing similar functions.
(f)(1) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit
(EX-99.CODE ETH) a copy of its code of ethics that applies to its principal
executive officer, principal financial officer, and persons performing similar
functions.
(f)(3) The Registrant undertakes to provide to any person without charge, upon
request, a copy of its code of ethics. This can be accomplished by calling the
Registrant at (513) 326-3597.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that it does not have
an audit committee financial expert serving on its audit committee.
(a)(2) Not applicable
(a)(3) At this time, the registrant believes that the experience provided by
each member of the audit committee together offer the registrant adequate
oversight for the registrant's level of financial complexity.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) through (d). The information in the table below is provided for services
rendered to the registrant by its independent registered public accounting firm,
Tait, Weller & Baker LLP for the Registrant's fiscal years ended December 31,
2008 and December 31, 2007.
2008 2007
------- -------
Audit Fees $14,100 $13,600
Audit-related Fees (1) -- 1,000
Tax Fees (2) 3,000 2,700
All Other Fees -- --
------- -------
Total $17,100 $17,300
======= =======
(1) Audit-related fees include charges related to the audit of seed capital.
(2) Tax services in connection with the registrant's excise tax calculations and
review of the registrant's applicable tax returns.
(e)(1) Audit Committee Pre-Approval Policies and Procedures.
Before the auditor is (i) engaged by the Registrant to render audit,
audit related or permissible non-audit services to the Registrant or (ii) with
respect to non-audit services to be provided by the auditor to the Registrant's
investment adviser or any entity in the investment Registrant complex, if the
nature of the services provided relate directly to the operations or financial
reporting of the Registrant, either: (a) the Audit Committee shall pre-approve
such engagement; or (b) such engagement shall be entered into pursuant to
pre-approval policies and procedures established by the Audit Committee. Any
such policies and procedures must be detailed as to the particular service and
not involve any delegation of the Audit Committee's responsibilities to the
Registrant's investment adviser. The Audit Committee may delegate to one or more
of its members the authority to grant pre-approvals. The pre-approval policies
and procedures shall include the requirement that the decisions of any member to
whom authority is delegated under this provision shall be presented to the full
Audit Committee at its next scheduled meeting. Under certain limited
circumstances, pre-approvals are not required if certain de minimis thresholds
are not exceeded, as such thresholds are set forth by the Audit Committee and in
accordance with applicable SEC rules and regulations.
(e)(2) None of the services provided to the Registrant described in paragraphs
(b)-(d) of Item 4 were pre-approved by the Audit Committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) There were no non-audit fees billed by Tait, Weller & Baker LLP for services
rendered to the Registrant, the Registrant's investment advisor (not including
any sub-advisor whose role is primarily portfolio management and is
subcontracted with or overseen by another investment advisor) or any entity
controlling, controlled by, or under common control with the investment advisor
that provides ongoing services to the Registrant for the Registrant's last
fiscal year (December 31, 2008).
(h) No disclosures are required by this Item 4(h).
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Securities and
Exchange Act of 1934, as amended. Glenn Wilcox (Chair), Edwin Meese, Thomas
Lenagh, Andy Strauss and Scott Rogers are the members of the Registrant's audit
committee.
(b) Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
CORNERSTONE PROGRESSIVE RETURN FUND
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2008
NO. OF
DESCRIPTION SHARES VALUE
------------------------------------------------------------------- ------------ -------------
EQUITY SECURITIES - 99.34%
CLOSED-END FUNDS - 18.53%
Advent/Claymore Enhanced Growth & Income Fund 49,761 $ 403,562
BlackRock Enhanced Capital and Income Fund, Inc. 20,300 227,157
Blue Chip Value Fund, Inc. 5,600 13,160
Calamos Strategic Total Return Fund 254,700 1,591,875
Clough Global Allocation Fund 2,300 24,564
Clough Global Equity Fund 50,200 477,904
Clough Global Opportunities Fund 129,000 1,167,450
Dreman/Claymore Dividend & Income Fund 228,755 432,347
Eaton Vance Tax-Advantaged Dividend Income Fund 8,500 99,025
Eaton Vance Tax-Advantaged Global Dividend Income Fund 47,000 499,140
Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund 70,900 717,508
Eaton Vance Tax-Managed Global Diversified Equity Income Fund 124,550 1,226,817
Gabelli Dividend & Income Trust 49,414 508,964
General American Investors Company, Inc.^ 18,600 323,640
H&Q Healthcare Investors 12,900 142,803
H&Q Life Sciences Investors 44,000 380,160
ING Risk Managed Natural Resources Fund 46,720 618,106
John Hancock Bank and Thrift Opportunity Fund ^ 4,000 55,080
Liberty All-Star Equity Fund 306,100 1,071,350
Liberty All-Star Growth Fund, Inc. 86,600 225,160
LMP Capital and Income Fund Inc 101,300 783,049
Morgan Stanley High Yield Fund, Inc. 27,600 104,604
Nuveen Diversified Dividend and Income Fund 17,900 112,949
Nuveen Tax-Advantaged Total Return Strategy Fund 7,800 59,124
Reaves Utility Income Fund (The) 31,107 364,263
Royce Value Trust, Inc. 24,000 201,360
SunAmerica Focused Alpha Growth Fund, Inc. 16,000 152,800
Zweig Fund, Inc. 138,700 399,456
----------
12,383,377
----------
CONSUMER DISCRETIONARY - 6.68%
Amazon.com, Inc. * 5,500 282,040
Best Buy Co., Inc. 2,000 56,220
Coach, Inc. * 4,000 83,080
Comcast Corporation, Class A 19,358 326,763
DIRECTV Group, Inc. (The) * ^ 15,000 343,650
Ford Motor Company * ^ 15,000 34,350
Gamestop Corporation, Class A * 2,500 54,150
Gap, Inc. (The) 11,000 147,290
Home Depot, Inc. (The) 15,000 345,300
Johnson Controls, Inc. 4,000 72,640
Kohl's Corporation * 3,695 133,759
Lowe's Companies, Inc. 10,000 215,200
McDonald's Corporation 11,000 684,090
NIKE, Inc., Class B ^ 5,000 255,000
Omnicom Group Inc. 4,000 107,680
Staples, Inc. 5,000 89,600
Target Corporation 8,114 280,177
Time Warner Inc. 30,000 301,800
TJX Companies, Inc. (The) 4,000 82,280
Walt Disney Company (The) 25,000 567,250
----------
4,462,319
----------
CONSUMER STAPLES - 11.41%
Altria Group, Inc. 14,422 217,195
Archer-Daniels-Midland Company 4,000 115,320
Coca-Cola Company (The) 15,000 679,050
Colgate-Palmolive Company 5,000 342,700
CVS Caremark Corporation 11,246 323,210
Estee Lauder Companies Inc. (The) ^ 3,000 92,880
General Mills, Inc. 3,000 182,250
H.J. Heinz Company 6,000 225,600
Kraft Foods Inc, Class A 18,000 483,300
Kroger Co. (The) 7,000 184,870
Molson Coors Brewing Company ^ 2,000 97,840
PepsiCo, Inc. 12,000 657,240
Philip Morris International Inc. 18,337 797,843
Procter & Gamble Company (The) 22,233 1,374,444
Sysco Corporation 7,000 160,580
Walgreen Company 7,000 172,690
Wal-Mart Stores, Inc. 27,000 1,513,620
----------
7,620,632
----------
ENERGY - 10.93%
Apache Corporation 3,500 260,855
Chesapeake Energy Corporation 4,244 68,627
Chevron Corporation 17,251 1,276,056
ConocoPhillips 8,208 425,174
Devon Energy Corporation 4,000 262,840
El Paso Corporation 1 8
EOG Resources, Inc. 2,000 133,160
Exxon Mobil Corporation 43,475 3,470,609
Halliburton Company ^ 5,163 93,863
National-Oilwell Varco Inc. * 2,500 61,100
Noble Corporation ^ 5,117 112,881
Peabody Energy Corporation 5,000 113,750
Schlumberger Limited 12,598 533,273
Southwestern Energy Company * 3,000 86,910
Transocean Ltd. * 2,156 101,871
Williams Companies, Inc. (The) 13,000 188,240
XTO Energy, Inc. 3,139 110,713
----------
7,299,930
----------
FINANCIALS - 9.19%
AFLAC Inc. 4,000 183,360
American Express Company 6,252 115,975
Aon Corporation 3,000 137,040
Bank of America Corporation 29,792 419,471
BB&T Corporation ^ 10,000 274,600
Charles Schwab Corporation (The) 18,000 291,060
Chubb Corporation (The) 7,000 357,000
Citigroup Inc. 40,430 271,285
Franklin Resources, Inc. 5,000 318,900
Goldman Sachs Group, Inc. (The) 3,000 253,170
Hudson City Bancorp, Inc. ^ 5,000 79,800
JPMorgan Chase & Co. 35,498 1,119,252
Loews Corporation 5,000 141,250
Manulife Financial Corporation 5,000 85,150
Marsh & McLennan Companies, Inc. 5,500 133,485
MetLlife, Inc. 3,194 111,343
Morgan Stanley 10,232 164,121
PNC Financial Services Group, Inc. 4,000 196,000
State Street Corporation 5,081 199,836
T. Rowe Price Group Inc. 2,000 70,880
Travelers Companies, Inc. (The) 5,000 226,000
U.S. Bancorp 4,000 100,040
Wells Fargo & Company 30,206 890,473
----------
6,139,491
----------
HEALTHCARE - 11.53%
Abbott Laboratories 13,229 706,032
Aetna Inc. 9,000 256,500
Amgen Inc. * 9,119 526,622
Becton, Dickinson and Company 3,000 205,170
Bristol-Myers Squibb Company 16,418 381,718
Celgene Corporation * 4,000 221,120
Eli Lilly and Company 10,000 402,700
Express Scripts, Inc. * ^ 4,078 224,208
Gilead Sciences, Inc. * 13,000 664,820
Johnson & Johnson 33,000 1,974,390
Medco Health Solutions, Inc. * 5,000 209,550
Medtronic, Inc. 16,000 502,720
Pfizer Inc. 8,823 156,255
Schering-Plough Corporation 10,768 183,379
St. Jude Medical, Inc. * 7,000 230,720
Stryker Corporation ^ 8,000 319,600
UnitedHealth Group Incorporated 5,179 137,761
Wyeth 7,395 277,387
Zimmer Holdings, Inc. * 3,059 123,645
----------
7,704,297
----------
INDUSTRIALS - 8.83%
3M Co. 5,067 291,555
Burlington Northern Santa Fe Corporation 2,000 151,420
Caterpillar Inc. 7,000 312,690
CSX Corporation 3,000 97,410
Danaher Corporation 8,000 452,880
Deere & Company ^ 3,053 116,991
Emerson Electric Co. 11,000 402,710
General Dynamics Corporation 2,000 115,180
General Electric Company 85,918 1,391,872
Honeywell International Inc. 3,236 106,238
Illinois Tool Works Inc. 3,000 105,150
Lockheed Martin Corporation 4,000 336,320
Norfolk Southern Corporation 7,500 352,875
Raytheon Company 7,161 365,497
United Parcel Service, Inc., Class B 9,191 506,975
United Technologies Corporation 10,108 541,789
Waste Management, Inc. ^ 7,500 248,550
----------
5,896,102
----------
INFORMATION TECHNOLOGY - 12.86%
Agilent Technologies Inc. * 7,000 109,410
Apple Inc. * 5,068 432,554
Automatic Data Processing, Inc. 9,000 354,060
Cisco Systems, Inc. * 52,470 855,261
Corning Incorporated 10,000 95,300
eBay Inc.* 7,000 97,720
EMC Corporation * 21,000 219,870
Google Inc. * 3,032 932,795
Hewlett-Packard Company 18,265 662,837
Intel Corporation 48,599 712,461
International Business Machines Corporation 12,000 1,009,920
Linear Technology Corporation 2,500 55,300
Microsoft Corporation 75,913 1,475,749
Oracle Corporation * 45,555 807,690
Paychex, Inc. 5,000 131,400
QUALCOMM Inc. 11,308 405,165
SAVVIS, Inc.^* 1 7
Texas Instruments Incorporated 9,000 139,680
Xerox Corporation 5,000 39,850
Xilinx, Inc. 3,000 53,460
----------
8,590,489
----------
MATERIALS - 2.25%
Air Products and Chemicals, Inc. 2,500 125,675
Dow Chemical Company (The) 7,000 105,630
E. I. du Pont de Nemours and Company 5,500 139,150
Freeport-McMoRan Copper & Gold, Inc. 2,119 51,789
International Paper Company 5,000 59,000
Monsanto Company 10,000 703,500
Nucor Corporation 3,061 141,418
Praxair, Inc. 3,000 178,080
----------
1,504,242
----------
REAL ESTATE INVESTMENT TRUSTS - 0.69%
Public Storage 2,500 198,750
Simon Property Group, Inc. 5,000 265,650
----------
464,400
----------
TELECOMMUNICATION SERVICES - 3.15%
AT&T Inc. 48,636 1,386,126
Qwest Communications International Inc. 2,312 8,416
Verizon Communications Inc. 21,000 711,900
----------
2,106,442
----------
UTILITIES - 3.29%
American Electric Power Company, Inc. 7,000 232,960
Dominion Resources, Inc. 9,000 322,560
Duke Energy Corporation 20,000 300,200
Entergy Corporation 2,000 166,260
Exelon Corporation 3,128 173,948
FPL Group, Inc. 7,000 352,310
Questar Corporation ^ 4,000 130,760
Southern Company (The) 14,000 518,000
----------
2,196,998
----------
TOTAL EQUITY SECURITIES
(cost - $94,500,544) 66,368,719
----------
SHORT-TERM INVESTMENTS - 4.35%
MONEY MARKET SECURITY - 0.82%
JPMorgan U.S. Government Money Market Fund 546,252 546,252
----------
PRINCIPAL
AMOUNT
(000'S)
-----------
REPURCHASE AGREEMENTS - 3.53%
J.P. Morgan Securities Inc.+ ++ $2,360 2,360,045
(Agreements dated 12/31/2008 to be
repurchased at $2,360,050, 0.04%, 01/02/2009,
collateralized by $2,430,442 in United States
Treasury Bonds)
J.P. Morgan Securities Inc.+ ++ 3 2,650
(Agreements dated 12/31/2008 to be
repurchased at $2,650, 0.02%, 01/02/2009,
collateralized by $5,011 in United States
Treasury Bonds)
----------
2,362,695
----------
TOTAL SHORT-TERM INVESTMENTS
(cost - $2,908,947) 2,908,947
----------
TOTAL INVESTMENTS - 103.69%
(cost - $97,409,491) 69,277,666
----------
LIABILITIES IN EXCESS OF OTHER ASSETS - (3.69)% (2,466,969)
----------
NET ASSETS - 100.00% $66,810,697
============
^ 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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
CORNERSTONE PROGRESSIVE RETURN FUND
NEW YORK, NEW YORK
We have audited the accompanying statement of assets and liabilities of
Cornerstone Progressive Return Fund, including the schedule of investments as of
December 31, 2008, and the related statement of operations for the year then
ended, the statement of changes in net assets, and the financial highlights for
the year then ended and for the period September 10, 2007 (commencement of
operations) to December 31, 2007. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2008, by correspondence with the custodian
and brokers. We believe that our audits provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Cornerstone Progressive Return Fund as of December 31, 2008, the results of its
operations, the changes in its net assets, and the financial highlights for the
year then ended and for the period September 10, 2007 (commencement of
operations) to December 31, 2007, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of investments in securities
as of December 31, 2008 appearing in Item 6 of this Form N-CSR is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements. This additional information is the responsibility of the
Fund's management. Such information has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
TAIT, WELLER & BAKER LLP
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 24, 2009
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Registrant and Cornerstone Advisors, Inc. share the same Proxy Voting
Policies and Procedures. The respective Proxy Voting Policies and Procedures of
the Registrant and Adviser are attached as EXHIBIT99.VOTEREG
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) All information contained in this item and its subparts is as of the date
of this filing, unless otherwise noted. Ralph W. Bradshaw and William A. Clark
are employees of Cornerstone Advisors, Inc. (the Investment Manager) and
portfolio managers of the Fund. Mr. Bradshaw and Mr. Clark have acted as the
portfolio managers since 2007. Ralph W. Bradshaw's occupation for the last five
years is President of Cornerstone Advisors, Inc. and a Financial Consultant.
William A. Clark's occupation for the last five years is Director and
Stockholder of Cornerstone Advisors, Inc. and Vice President and former Director
of Cornerstone Strategic Value Fund, Inc. and Cornerstone Total Return Fund,
Inc.
(a)(2)(i) Ralph W. Bradshaw and William A. Clark
(a)(2)(ii)(A) Registered Investment Companies - Ralph W. Bradshaw and
William A. Clark each manage two other registered closed-end funds (Cornerstone
Strategic Value Fund, Inc. and Cornerstone Total Return Fund, Inc.). As of
December 31, 2008, the total assets of Cornerstone Strategic Value Fund, Inc.
was $60.7 million. As of December 31, 2008, the total assets of Cornerstone
Total Return Fund, Inc. was $22.5 million.
(a)(2)(ii)(B) Not applicable
(a)(2)(ii)(C) Not applicable
(a)(2)(iii) None. Ralph W. Bradshaw and William A. Clark manage no accounts
where the Advisory Fee is based on the performance of the account.
(a)(2)(iv) None.
(a)(3) As of the most recent fiscal year end December 31, 2008, the compensation
paid to both Ralph W. Bradshaw and William A. Clark was fixed.
(a)(4) The dollar range of equity securities owned in the registrant
beneficially by each portfolio manager is as follows: for Ralph W. Bradshaw it
is in the range of $10,001-$50,000 and for William A. Clark it is $0.
(b) None.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive officer and principal financial officer
have evaluated the Registrant's disclosure controls and procedures as of a date
within 90 days of this filing and have concluded that the Registrant's
disclosure controls and procedures are effective, as of such date, in ensuring
that information required to be disclosed by the registrant in this Form N-CSR
was recorded, processed, summarized, and reported timely.
(b) The Registrant's principal executive officer and principal financial officer
are aware of no changes in the Registrant's internal control over financial
reporting that occurred during the Registrant's last fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics attached as EX-99.CODE ETH.
(a)(2) Separate certifications of Principal Executive and Financial Officers
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 attached as
EX-99.CERT.
(b) Certification of Principal Executive and Financial Officers pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 furnished as EX-99.906 CERT.
(99) Proxy Voting Policies of the Registrant and Adviser attached as
EX-99.VOTEREG.
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.
By: /S/ RALPH W. BRADSHAW
-------------------------
Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: March 6, 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.
Cornerstone Progressive Return Fund
By: /S/ RALPH W. BRADSHAW
-------------------------
Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: March 6, 2009
By: /S/ GARY A. BENTZ
----------------------
Name: Gary A. Bentz
Title: Principal Financial Officer
Date: March 6, 2009