Edgar Filing: CORNERSTONE TOTAL RETURN FUND INC

CORNERSTONE TOTAL RETURN FUND, INC.
350 Jericho Turnpike, Suite 206
Jericho, NY 11753

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 16, 2012

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 16, 2012: THE NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS AND PROXY STATEMENT ARE AVAILABLE ON THE INTERNET AT
WWW.PROXYVOTE.COM.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Cornerstone Total Return Fund, Inc., a New York corporation (the "Fund"),
will be held at 11:00 a.m., eastern time, on April 16, 2012 at Fifth Floor
Conference Room, One West Pack Square, Asheville, NC 28801, for the following
purposes:

1. To approve the election of five directors to hold office until the
year 2013 Annual Meeting of Stockholders (Proposal 1); and

2. To approve the elimination of the Fund's fundamental investment
restriction #12 limiting investments in securities issued by other
investment companies

3. To approve the replacement of the Fund's fundamental investment
restriction #15 that the Fund shall not invest more than 5% of its
total assets, taken at market value at time of purchase, in
securities of any one issuer other than the United States Government
or its instrumentalities; or invest in the securities of companies
which (together with the predecessors) have a record of less than
three years continuous operation, or purchase more than 10% of any
class of the outstanding voting securities of any one issuer (the
"current diversification and unseasoned issuer restriction")

4. To consider and vote upon such other matters as may properly come
before said Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on February 17, 2012, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, this Meeting or any adjournment or postponement thereof. The stock
transfer books will not be closed.

Copies of the Fund's most recent annual report may be ordered free of charge by
any stockholder by writing to the Fund, c/o Ultimus Fund Solutions, LLC, 350
Jericho Turnpike, Suite 206, Jericho, NY 11753, or by calling collect (513)
326-3597.

By Order of the Board of Directors

Gary A. Bentz
Secretary

Dated: February 29, 2012

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, DATE,
SIGN AND MAIL THE ENCLOSED PROXY CARD IN THE ENCLOSED REPLY ENVELOPE. YOUR
PROMPT RESPONSE WILL ASSURE A QUORUM AT THE MEETING.

INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.

1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.

2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.

3. Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:

REGISTRATION

CORPORATE ACCOUNTS VALID SIGNATURE

(1) ABC Corp. ABC Corp. (by John Doe, Treasurer)
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee

TRUST ACCOUNTS

(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d/ 12/28/78 Jane B. Doe

CUSTODIAL OR ESTATE ACCOUNTS

(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor

CORNERSTONE TOTAL RETURN FUND, INC.
350 Jericho Turnpike, Suite 206
Jericho, NY 11753

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
to be held on April 16, 2012

GENERAL

This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Cornerstone Total Return Fund, Inc., a New York
corporation (the "Fund") for use at the Annual Meeting of Stockholders for the
year 2012 (the "Meeting") to be held at 11:00 a.m., eastern time, on April 16,
2012 at the Fifth Floor Conference Room, One West Pack Square, Asheville, NC
28801, and at any and all adjournments or postponements thereof. A form of proxy
is enclosed herewith. This Proxy Statement and the accompanying form of proxy
are being first mailed to stockholders of the Fund ("Stockholder(s)") on or
about February 29, 2012.

Any Stockholder who executes and delivers a proxy may revoke it by written
communication to the Secretary of the Fund at any time prior to its use or by
voting in person at the Meeting. Attendance by a Stockholder at the Meeting does
not, in itself, revoke a proxy. Unrevoked proxies will be voted in accordance
with the specifications thereon and, unless specified to the contrary, will be
voted FOR the election of Messrs. Ralph W. Bradshaw, Edwin Meese III, Scott B.
Rogers, Andrew A. Strauss, and Glenn W. Wilcox, Sr. as nominees for Director.

In general, abstentions and broker non-votes, as defined below, count for
purposes of obtaining a quorum but do not count as votes cast with respect to
any proposal requiring that the broker has discretion. With respect to a
proposal requiring the affirmative vote of a majority of the Fund's outstanding
shares of common stock, the effect of abstentions and broker non-votes is the
same as a vote against such proposal. Otherwise, abstentions and broker
non-votes have no effect on the outcome of a proposal. A broker non-vote is a
proxy from a broker or nominee indicating that such person has not received
instructions from the beneficial owner or other person entitled to vote shares
on a particular matter with respect to which the broker or nominee does not have
discretionary voting power.

At least 51% of the Fund's Stockholders must be present at the Meeting in
person or by proxy to constitute a quorum for the transaction of business by the
Fund. In the event that a quorum is not present at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting from time
to time. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Meeting in person or by proxy. The persons named
as proxies will vote those proxies which they are entitled to vote FOR or
AGAINST any such proposal in their discretion.

In Proposal 2 and Proposal 3, stockholders are being asked to change investment
restrictions which are deemed fundamental policies and may be changed only by
the vote of a majority of the Fund's outstanding voting securities. In this
instance, a majority means the lesser of (i) 67% of the Fund's outstanding
shares of common stock present at a meeting of the holders if more than 50% of
the outstanding shares of common stock are present in person or by proxy or (ii)
more than 50% of the Fund's outstanding shares of Common Stock.

Your vote is being solicited by the directors of the Fund. Under the agreement
between The Altman Group ("Altman") and the Fund, Altman provides general
solicitation services to the Fund at an estimated cost of $12,000, including
expenses. The Fund will, upon request, bear the reasonable expenses of brokers,
banks and their nominees who are holders of record of the Fund's voting
securities on the record date, incurred in mailing copies of this Proxy
Statement and the enclosed form of proxy to the beneficial owners of the Fund's
voting securities. The cost of soliciting these proxies will be borne by the
Fund. The Fund reimburses brokerage firms and others for their expenses in
forwarding proxy material to the beneficial owners and soliciting them to
execute proxies.

The directors and officers of the Fund and Ultimus Fund Solutions, LLC, the
administrator to the Fund (the "Administrator") may be involved in the
solicitation of proxies. The Fund does not reimburse such persons for the
solicitation of proxies.

The Fund expects that the solicitation will be primarily by mail, but also may
include telephone, electronic, oral or other means of communication. If the Fund
does not receive your proxy by a certain time, you may receive a telephone call
from a proxy soliciting agent asking you to vote. The cost of soliciting the
proxies will be borne by the Fund.

Only holders of issued and outstanding shares of the Fund's common stock of
record at the close of business on February 17, 2012 are entitled to notice of,
and to vote at, the Meeting. Each such holder is entitled to one vote per share
of common stock so held. The number of shares of common stock outstanding on
February 17, 2012 was 6,598,077. The Fund is a diversified, closed-end
management investment company.

Copies of the Fund's most recent annual report may be ordered free of charge to
any Stockholder by writing to the Fund, c/o Ultimus Fund Solutions, LLC, 350
Jericho Turnpike, Suite 206, Jericho, NY 11753, or by telephone (513) 326-3597.
This report is not to be regarded as proxy-soliciting material.

This Proxy Statement is first being mailed to Stockholders on or about
February 29, 2012.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Board of Directors currently consists of five members. All of the members
were approved by the Stockholders at the Year 2011 Annual Meeting.

At the Meeting, Stockholders will be asked to vote for the election of Messrs.
Ralph W. Bradshaw, Edwin Meese III, Scott B. Rogers, Andrew A. Strauss, and
Glenn W. Wilcox, Sr., as directors to serve until the year 2013 Annual Meeting
of Stockholders or thereafter until each of their successors are duly elected
and qualified. Each nominee was considered and recommended by the Fund's
Nominating and Corporate Governance Committee.

The persons named in the accompanying form of proxy intend to vote at the
Meeting (unless directed not to vote) FOR the election of Messrs. Ralph W.
Bradshaw, Edwin Meese III, Scott B. Rogers, Andrew A. Strauss, and Glenn W.
Wilcox, Sr. Each nominee has indicated that he will serve if elected, and
the Board of Directors has no reason to believe that any of the nominees
named above will become unavailable for election as a director, but if any
nominee should be unable to serve, the proxy will be voted for any other
person determined by the persons named in the proxy in accordance with
their judgment.

The following table sets forth the names, addresses, birth dates and principal
occupations of each of the nominees for election as Directors:

NOMINEES
Number of
Portfolios
in Fund Directorships Held
Name and Position(s) Term of Complex by Nominee for
Address(1) with Office Principal Occupation Over Overseen Director Outside of
(Birth Date) Fund Since Past 5 Years by Director Fund Complex*
---------------------------------------------------------------------------------------------------------------------------

NON-INTERESTED NOMINEES

Edwin Meese III Director; Audit, 2001 Distinguished Fellow, The Heritage 3 None
(Dec. 1931) Nominating Foundation Washington D.C.;
and Corporate Distinguished Visiting Fellow at
Governance the Hoover Institution, Stanford
Committee University; Senior Adviser,
Member Revelation L.P.; Director/Trustee of
Cornerstone Strategic Value Fund,
Inc. and Cornerstone Progressive
Return Fund

Scott B. Rogers Director; Audit, 2001 Director, Board of Health
(July 1955) Nominating Partners, Inc.; Chief Executive 3 None
and Corporate Officer, Asheville Buncombe
Governance Community Christian Ministry;
Committee and President, ABCCM Doctor's
Member Medical Clinic; Director/
Trustee of Cornerstone Strategic
Value Fund, Inc. and Cornerstone
Progressive Return Fund

NOMINEES (continued)

Number of
Portfolios
in Fund Directorships Held
Name and Position(s) Term of Complex by Nominee for
Address(1) with Office Principal Occupation Over Overseen Director Outside of
(Birth Date) Fund Since Past 5 Years by Director Fund Complex*
---------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED NOMINEES (continued)

Andrew A. Strauss Director; 2001 Attorney and senior member 3 None
(Nov. 1953) Chairman of of Strauss & Associates,P.A.,
Nominating Attorneys; Director/Trustee of
and Corporate Cornerstone Strategic Value Fund,
Governance Inc. and Cornerstone Progressive
Committee and Return Fund
Audit Committee
Member

Glenn W. Wilcox, Sr. Director; 2001 Chairman of the Board of Tower 3 Director of Champion
(Dec. 1931) Chairman of Associates, Inc.; Chairman of the Industries, Inc.
Audit Committee Board of Wilcox Travel Agency, Inc.;
and Nominating Director of Champion Industries, Inc.;
and Corporate Director/Trustee of Cornerstone
Governance Strategic Value Fund, Inc. and
Committee Cornerstone Progressive Return
Member Fund

INTERESTED NOMINEE

Ralph W. Bradshaw Chairman of 2001 President, Cornerstone Advisors, 3 None
(Dec. 1950)** the Board of Inc.; Financial Consultant;
Directors and President and Director/Trustee of
President Cornerstone Strategic Value Fund,
Inc. and Cornerstone Progressive
Return Fund

(1) The mailing address of each Nominee/Director with respect to Fund
operations is 350 Jericho Turnpike, Suite 206, Jericho, NY 11753.

* As of December 31, 2011, the Fund Complex is comprised of the Fund,
Cornerstone Strategic Value Fund, Inc., and Cornerstone Progressive Return
Fund, all of which are managed by Cornerstone Advisors, Inc. Each of the
above Nominees oversee all of the Funds in the Fund Complex.

** Mr. Bradshaw is an "interested person" as defined in the Investment
Company Act of 1940 because of his affiliation with Cornerstone Advisors,
Inc.

The Board believes that the significance of each Director's experience,
qualifications, attributes or skills is an individual matter (meaning that
experience that is important for one Director may not have the same value for
another) and that these factors are best evaluated at the Board level, with no
single Director, or particular factor, being indicative of the Board's
effectiveness. The Board determined that each of the Directors is qualified to
serve as a Director of the Fund based on a review of the experience,
qualifications, attributes and skills of each Director. In reaching this
determination, the Board has considered a variety of criteria, including, among
other things: character and integrity; ability to review critically, evaluate,
question and discuss information provided, to exercise effective business
judgment in protecting shareholder interests and to interact effectively with
the other Directors, the Investment Adviser, other service providers, counsel
and the independent registered accounting firm ("independent auditors"); and
willingness and ability to commit the time necessary to perform the duties of a
Director. Each Director's ability to perform his duties effectively is evidenced
by his experience or achievements in the following areas: management or board
experience in the investment management industry or companies or organizations
in other fields, educational background and professional training; and
experience as a Director of the Fund. In addition, the Board values the diverse
skill sets and experiences that each Director contributes. The Board considers
that its diversity as a whole is as a result of a combination of Directors who
are working in the private, as opposed to public, sector, those that are retired
from professional work and the various perspectives that each Director provides
as a result of his present experiences and his background. Information as of
December 31, 2011 discussing the specific experience, skills, attributes and
qualifications of each Director which led to the Board's determination that the
Director should serve in this capacity is provided below.

RALPH W. BRADSHAW. Mr. Bradshaw is co-founder of Cornerstone Advisors, Inc. and
has served as its President since its inception in 2001. He brings over 18 years
of extensive investment management experience and also formerly served as a
Director of several other closed-end funds. Prior to founding the Adviser, he
served in consulting and management capacities for registered investment
advisory firms specializing in closed-end fund investments. His experiences
included developing and implementing successful trading strategies with a
variety of underlying portfolios containing domestic and international equity
and fixed-income investments. In addition, he has been a financial consultant
and has held managerial positions and operated small businesses in several
industries. Mr. Bradshaw holds a B.S. in Chemical Engineering and an M.B.A. Mr.
Bradshaw provides the Board with effective business judgment and an ability to
interact effectively with the other Directors, as well as with the other service
providers, counsel and the Fund's independent auditor. Mr. Bradshaw commits a
significant amount of time to the Fund as a Director, in addition to in his
capacity as President of the Investment Adviser. The Board values his strong
moral character and integrity.

EDWIN MEESE III. Mr. Meese holds the Ronald Reagan Chair in Public Policy at The
Heritage Foundation and is also the Chairman of The Heritage Foundation's Center
for Legal and Judicial Studies. He is the former chairman of the governing board
of George Mason University in Virginia and serves on the board of several civic
and educational organizations. Previously, Mr. Meese served as the 75th Attorney
General of the United States and immediately prior to that as Counsellor to the
President of the United States for Ronald Reagan. Mr. Meese provides the Board
with effective business judgment and an ability to interact effectively with the
other Directors, as well as with the Investment Adviser, other service
providers, counsel and the Fund's independent auditor. Mr. Meese has
demonstrated a willingness to commit the time necessary to serve as an effective
Director. The Board values his strong moral character and integrity.

SCOTT B. ROGERS. Reverend Rogers has been the Executive Director of a regional
community ministry organization for over 30 years. In addition to the leadership
and management skills obtained through this work, he contributes a non-profit
perspective and community insight to the Board's discussions and deliberations,
which provides desirable diversity. Mr. Rogers provides the Board with effective
business judgment and an ability to interact effectively with the other
Directors, as well as with the Investment Adviser, other service providers,
counsel and the Fund's independent auditor. Mr. Rogers has demonstrated a
willingness to commit the time necessary to serve as an effective Director. The
Board values his strong moral character and integrity.

ANDREW A. STRAUSS. Mr. Strauss is an experienced attorney with a securities law
background. He currently manages a law firm specializing in estate planning,
probate and estate administration. In addition, Mr. Strauss served in an
executive capacity with a large public company for over nine years. He is a
graduate of the Wharton School of the University of Pennsylvania and Georgetown
University Law Center. Mr. Strauss provides the Board with effective business
judgment and an ability to interact effectively with the other Directors, as
well as with the Investment Adviser, other service providers, counsel and the
Fund's independent auditor. Mr. Strauss has demonstrated a willingness to commit
the time necessary to serve as an effective Director. The Board values his
strong moral character and integrity.

GLENN W. WILCOX, SR. Mr. Wilcox has been a business owner for over 55 years. He
has previous business experience in the real estate development, radio and oil
and gas exploration industries. He serves on the Board of Directors and Audit
Committee of another public company. From 1996 until 2004, Mr. Wilcox was a
member of the Board of Appalachian State University, and was Chairman of the
Board from 2001-2003. He has been a private investor in public equities for over
50 years. Mr. Wilcox provides the Board with effective business judgment and an
ability to interact effectively with the other Directors, as well as with the
Investment Adviser, other service providers, counsel and the Fund's independent
auditor. Mr. Wilcox has demonstrated a willingness to commit the time necessary
to serve as an effective Director. The Board values his strong moral character
and integrity.

Specific details regarding each Director's principal occupations during the past
five years are included in the table above.

The following table sets forth, for each Director, the aggregate dollar range
of equity securities owned of the Fund and of all Funds overseen by each
Director in the Fund Complex as of December 31, 2011. The information as to
beneficial ownership is based on statements furnished to the Fund by each
Director.

Aggregate Dollar Range of Equity
Dollar Range of Equity In All Funds Overseen by
Name Securities in the Fund Directors in Fund Complex
---------------------------------------------------------------------------------------------

NON-INTERESTED DIRECTORS

Edwin Meese III 0 0

Scott B. Rogers 0 Over $100,000

Andrew A. Strauss 0 0

Glenn W. Wilcox Sr. $10,001-$50,000 $10,001-$50,000

INTERESTED DIRECTOR

Ralph W. Bradshaw $10,001-$50,000 Over $100,000

EXECUTIVE OFFICERS

In addition to Mr. Bradshaw, the current principal officers of the Fund are:

Name and
Address (1) Term of
(Birth Date) Position with Fund Office Since Principal Occupation Over Past 5 Years
-------------------------------------------------------------------------------------------------------------------------

Gary A. Bentz Chief Compliance 2004, 2008, 2009 Chairman and Chief Financial Officer of
(June 1956) Officer; Secretary, and Cornerstone Advisors, Inc.; Financial
Assistant Treasurer Consultant, C.P.A.; Chief Compliance Officer,
Secretary, and Assistant Treasurer of Cornerstone
Strategic Value Fund, Inc. and Cornerstone
Progressive Return Fund

Theresa Bridge Treasurer 2012 Vice President and Mutual Fund Controller of Ultimus
(December 1969) Fund Solutions, LLC (since September 2000); Treasurer
of Cornerstone Strategic Value Fund, Inc. and
Cornerstone Progressive Return Fund (since 2012)

(1) The officers' address with respect to Fund operations is the same as the
Fund's.

Under the federal securities laws, the Fund is required to provide to
Stockholders in connection with the Meeting information regarding compensation
paid to Directors by the Fund as well as by the various other U.S. registered
investment companies advised by the Fund's investment adviser during its prior
calendar year. The following table provides information concerning the
compensation paid during the year ended December 31, 2011, to each Director of
the Fund in their capacities solely as a Director of the Fund. This information
does not reflect any additional monies received for a named individual serving
in any other capacity to the Fund. Please note that the Fund has no bonus,
profit sharing, pension or retirement plans.

Aggregate Compensation Total Compensation From Fund and
Name of Director Director Since From Fund Fund Complex* Paid to Director
--------------------------------------------------------------------------------------------------------------------

Glenn W. Wilcox, Sr. 2001 $10,000 $45,000

Andrew A. Strauss 2001 $10,000 $45,000

Edwin Meese III 2001 $10,000 $45,000

Scott B. Rogers 2001 $10,000 $45,000

Ralph W. Bradshaw 2001 0 0

* For compensation purposes, Fund Complex refers to the Fund, Cornerstone
Strategic Value Fund, Inc., and Cornerstone Progressive Return Fund, all
of which were managed by Cornerstone Advisors, Inc. during the year ended
December 31, 2011.

Director Transactions with Fund Affiliates. As of December 31, 2011, neither
the Independent Directors nor members of their immediate family owned securities
beneficially or of record in Cornerstone Advisers, Inc., or an affiliate of
Cornerstone Advisors, Inc. Furthermore, over the past five years, neither the
Independent Directors nor members of their immediate family have any direct or
indirect interest, the value of which exceeds $120,000, in Cornerstone Advisors,
Inc. or any of its affiliates. In addition, since the beginning of the last two
fiscal years, neither the Independent Directors nor members of their immediate
family have conducted any transactions (or series of transactions) or maintained
any direct or indirect relationship in which the amount involved exceeds
$120,000 and to which Cornerstone Advisors, Inc. or any affiliate thereof was a
party.

BOARD COMPOSITION AND LEADERSHIP STRUCTURE

The Board consists of five individuals, one of whom is an Interested Director.
The Chairman of the Board, Mr. Bradshaw, is the Interested Director and is the
President of the Fund, the President of the Investment Adviser, and is the
President and a director or trustee of Cornerstone Strategic Value Fund, Inc.
and Cornerstone Progressive Return Fund, respectively. The Board does not have a
lead independent director.

The Board believes that its structure facilitates the orderly and efficient flow
of information to the Directors from the Investment Adviser and other service
providers with respect to services provided to the Fund, potential conflicts of
interest that could arise from these relationships and other risks that the Fund
may face. The Board further believes that its structure allows all of the
Directors to participate in the full range of the Board's oversight
responsibilities. The Board believes that the orderly and efficient flow of
information and the ability to bring each Director's talents to bear in
overseeing the Fund's operations is important, in light of the size and
complexity of the Fund and the risks that the Fund faces. The Board and its
committees review their structure regularly, to help ensure that it remains
appropriate as the business and operations of the Fund and the environment in
which the Fund operates changes.

Currently, the Board has an Audit Committee and a Nominating and Corporate
Governance Committee. The responsibilities of each committee and its members are
described below. Each of the Directors attended at least seventy-five (75%)
percent of the five (5) meetings of the Board of Directors and four (4) meetings
of its committees (including regularly scheduled and special meetings) held
during the period for which he was a member. The Board does not have a policy
regarding Directors' attendance at the annual stockholders meeting, but all are
invited to attend. Last year, two Directors attended the annual meeting.

THE AUDIT COMMITTEE

The Fund has a standing Audit Committee (the "Committee"), which is comprised
of Messrs. Wilcox, Sr., Meese, Rogers and Strauss, all of whom are
directors who are not interested persons of the Fund, as such term is defined in
Section 2(a)(19) of the Investment Company Act. The Committee has a written
charter. The principal functions of the Audit Committee include but are not
limited to, (i) the oversight of the accounting and financial reporting
processes of the Fund and its internal control over financial reporting; (ii)
the oversight of the quality and integrity of the Fund's financial statements
and the independent audit thereof; and (iii) the approval, prior to the
engagement of, the Fund's independent registered public accounting firm and, in
connection therewith, to review and evaluate the qualifications, independence
and performance of the Fund's independent registered public accounting firm. The
Audit Committee convened four (4) times during the 2011 calendar year.

The Audit Committee currently does not have an Audit Committee Financial
Expert, as such term is defined in Section 407 of the Sarbanes-Oxley Act of
2002. Rather, the Audit Committee members believe that each of their individual
experiences provide the Audit Committee with sufficient experience and expertise
to allow them to perform their duties as members of the Audit Committee.

THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

The Fund has a standing Nominating and Corporate Governance Committee (the
"Committee"), which is comprised of Messrs. Wilcox, Sr., Meese, Rogers
and Strauss, all of whom are directors who are not interested persons of the
Fund, as such term is defined in Section 2(a)(19) of the Investment Company Act.
The Committee has a written charter. In addition to its responsibility to
oversee the corporate governance of the Fund, the Committee is appointed to
identify and select qualified candidates that have exhibited strong decision
making ability, substantial business experience, relevant knowledge of the
investment company industry (including closed-end funds), skills or
technological expertise and exemplary personal integrity and reputation. In
addition, the Committee seeks candidates that have experience and knowledge
involving all of the service providers of a registered investment company.

The Committee will consider all nominees recommended by Stockholders of the
Fund, so long as Stockholders send their recommendations in writing to the
Secretary of the Fund in a manner consistent with the Fund's By-laws. The
Committee will seek candidates for the Board that have exhibited strong
decision-making ability, substantial business experience, relevant knowledge,
skills or technological expertise, and exemplary personal integrity and
reputation. Specifically, the Committee assesses all director nominees taking
into account several factors, including, but not limited to, issues such as the
current needs of the Board and the nominee's: (i) integrity, honesty, and
accountability; (ii) successful leadership experience and strong business
acumen; (iii) forward-looking, strategic focus; (iv) collegiality; (v)
independence and absence of conflicts of interests; and (vi) ability to devote
necessary time to meet director responsibilities. The Committee does not have a
policy with regard to considering diversity when identifying candidates for
election, but would expect to consider racial, gender and professional
experience diversity when identifying future candidates. The Committee will
ultimately recommend nominees that it believes will enhance the Board's ability
to oversee, in an effective manner, the affairs and business of the Fund. The
Committee will consider and evaluate Stockholder-recommended candidates by
applying the same criteria used to evaluate director- recommended candidates.
The deadline for submitting a Stockholder proposal for inclusion in the Fund's
proxy statement for the Fund's 2013 annual meeting of Stockholders
pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, is
November 1, 2012. Stockholders wishing to submit proposals or director
nominations that are to be included in such proxy statement and proxy must
deliver notice to the Secretary at the principal executive offices of the Fund
no later than the close of business on November 1, 2012. Stockholders are also
advised to review the Fund's By-laws, which contain additional requirements with
respect to advance notice of stockholder proposals and director nominations.

In 2012, the Committee met and discussed the nomination of the Directors of the
Fund for the 2012 Annual Meeting of Stockholders. Each Nominee was recommended
by the non-interested Directors. The Nominating and Corporate Governance
Committee convened four (4) times during the 2011 calendar year.

BOARD'S ROLE IN RISK OVERSIGHT OF THE FUND

The Board oversees risk management for the Fund directly and, as to certain
matters, through its Audit and Nominating and Corporate Governance Committees.
The Board exercises its oversight in this regard primarily through requesting
and receiving reports from and otherwise working with the Fund's senior officers
(including the Fund's Chief Compliance Officer), portfolio management personnel
of the Adviser, the Fund's independent auditors, legal counsel and personnel
from the Fund's other service providers. The Board has adopted, on behalf of the
Fund, and periodically reviews with the assistance of Fund personnel, policies
and procedures designed to address certain risks associated with the Fund's
activities. In addition, the Adviser and the Fund's other service providers also
have adopted policies, processes and procedures designed to identify, assess and
manage certain risks associated with the Fund's activities, and the Board
receives reports from service providers with respect to the operation of these
policies, processes and procedures as required and/or as the Board deems
appropriate. The Board does not believe that a separate Risk Oversight Committee
is necessary for effective risk oversight at this time, but intends to
continuously evaluate how it assesses risk and consider whether any changes to
the current structure are prudent.

REQUIRED VOTE

Directors are elected by a plurality (a simple majority of the votes cast at
the meeting) of the votes cast by the holders of shares of common stock of the
Fund present in person or represented by proxy at a meeting with a quorum
present. For purposes of the election of Directors, abstentions and broker
non-votes will be counted as shares present for quorum purposes, may be
considered votes cast, and may affect the plurality vote required for Directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF MESSRS. RALPH W. BRADSHAW, EDWIN MEESE III, SCOTT B.ROGERS, ANDREW A.
STRAUSS, AND GLENN W. WILCOX, SR. AS DIRECTORS OF THE FUND.

PROPOSAL NO. 2

ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION #12 LIMITING
INVESTMENTS IN SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES

As described below, the Board is proposing that Stockholders approve the
elimination of the Fund's fundamental investment restriction #12, which limits
investments in securities issued by other investment companies, pursuant to this
Proposal 2. The Adviser believes and the Board concurs that it would be in the
best interest of Stockholders to approve such proposed change in order to allow
the Fund greater flexibility regarding its investment in other closed-end funds
and securities that have attractive risk/reward characteristics.

WHY ARE STOCKHOLDERS BEING ASKED TO APPROVE THE ELIMINATION OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION #12 LIMITING INVESTMENTS IN SECURITIES ISSUED
BY OTHER INVESTMENT COMPANIES?

The restriction adopted by the Fund that limits its ability to invest in the
securities of other investment companies is fundamental, which means that it may
not be changed or eliminated without Stockholder approval. The Board believes
that it is in the best interest of Stockholders to eliminate this fundamental
investment restriction.

WHAT ARE THE BENEFITS OF THE FUND'S ELIMINATION OF ITS FUNDAMENTAL INVESTMENT
RESTRICTION #12 LIMITING INVESTMENTS IN SECURITIES ISSUED BY OTHER INVESTMENT
COMPANIES?

Under the 1940 Act, the Fund's investments in the securities of other investment
companies are restricted by Section 12(d) and the rules promulgated thereunder.
The Fund is not required to adopt any additional restrictions applicable to such
investments, nor is any restriction that is adopted required to be fundamental.
The current restriction #12 reads as follows:

The Fund may not:

(12) Purchase the securities of any other investment company, except (a) in
connection with a merger, consolidation, acquisition of assets or other
reorganization approved by the Fund's shareholders, and (b) in the case of
securities of closed-end investment companies only, in the open market where
no commission other than the ordinary broker's commission is paid; provided,
however, that in no event may investments in securities of other investment
companies exceed 10% of the Fund's total assets taken at market value at time
of purchase.

This restriction limits the Fund's ability to invest in other investment
companies such that all such investments, in the aggregate, do not exceed 10% of
the Fund's total assets. The Adviser has determined, and the Board agrees, that
it would be beneficial to the Fund to permit it to operate in accordance with
Section 12(d)(1)(F) which permits a fund to invest without limitation in the
securities of other investment companies, so long as such investment does not
exceed 3% of such underlying investment company's securities. If this
restriction #12 was eliminated, the Fund's investments in other investment
companies, in the aggregate, could represent more than 10% of the Fund's total
assets. By allowing an increase in the percentage of the Fund's investments in
other investment companies rather than be restricted by its current fundamental
investment restriction #12, and by relying on the Adviser's investment expertise
with respect to the purchase and sale of registered investment companies, the
Adviser would be in a better position to manage the Fund with enhanced
investment management flexibility. There can be no assurance that the investment
objective of any closed-end investment company or ETF in which the Fund may
invest will be achieved or that the securities that the Fund invests in will not
decrease in value.

WHAT ARE THE MATERIAL DIFFERENCES THAT MAY BE CAUSED BY ELIMINATING THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION #12 LIMITING INVESTMENTS IN SECURITIES ISSUED
BY OTHER INVESTMENT COMPANIES?

If Proposal 2 is approved by Stockholders, the Adviser intends to increase the
percentage of the Fund's assets that are invested in the securities of other
investment companies. In accordance with Section 12(d)(1)(F) of the 1940 Act,
and in reliance upon Rule 12d-3 promulgated thereunder, the Fund will limit the
amount invested in any single investment company to 3% of that investment
company's total outstanding stock. The Adviser currently expects that under
normal circumstances, the Fund would invest between 20-30% of its assets in the
securities of other investment companies, if restriction #12 is eliminated.

As a stockholder in an investment company, the Fund will bear its ratable share
of the investment company's expenses and would remain subject to payment of the
Fund's advisory and administrative fees with respect to the assets so invested.
Therefore, a Stockholder in the Fund will bear not only his proportionate share
of the expenses of the Fund, but also, indirectly, the expenses of the purchased
investment company. However, the Fund expects its investments will be in other
closed-end funds and ETFs that will not charge any sales loads on purchases by
the Fund. The pro forma fee table set forth below is based on actual expenses
for the year ended December 31, 2011, but includes estimated amounts for
Acquired Fund Fees and Expenses based upon investment of approximately 30% of
the Fund's assets in other investment companies.

The following table shows Fund expenses as a percentage of net assets
attributable to common shares.

Stockholder Transaction Expenses
Sales load None
Dividend Reinvestment Plan fees None
Annual Expenses (as a percentage of net assets attributable to common shares)
Management fees 1.00%
Other expenses (1) 0.88%
Acquired Fund fees and expenses (2) 0.20%
Total Annual Expenses 2.08%

Example (3)

The following example illustrates the hypothetical expenses that you would pay
on a $1,000 investment in common shares, assuming (i) annual expenses of 2.08%
of net assets attributable to common shares and (ii) a 5% annual return:

1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------
You would pay $21.22 $65.75 $112.93 $243.46
the following
expenses on a
$1,000 investment,
assuming a 5%
annual return

------------------------
(1) "Other Expenses" include, among other expenses, administration and fund
accounting fees. The Fund has no current intention to borrow money for
investment purposes or to sell securities short.

(2) The Fund invests in other closed-end investment companies and ETFs
(collectively, the "Acquired Funds"). The Fund's stockholders indirectly
bear a pro rata portion of the fees and expenses of the Acquired Funds in
which the Fund invests. Acquired Fund fees and expenses are based on
estimated amounts for the current fiscal year.

(3) The example assumes that the estimated "Other Expenses" set forth in the
Annual Expenses table remain the same each year and that all dividends and
distributions are reinvested at net asset value. Actual expenses may be
greater or less than those assumed. The example further assumes that the
Fund uses no leverage, as currently intended. Moreover, the Fund's actual
rate of return will vary and may be greater or less than the hypothetical
5% annual return.

To the extent the Fund invests a portion of its assets in investment company
securities, those assets will be subject to the risks of the purchased
investment company's portfolio securities. In addition to the factors the
Adviser considers when selecting other securities for investment, when making
purchases and sales of securities of closed-end funds, the Adviser will consider
a fund's net asset value relative to its current market price and any existing
inefficiencies the Adviser perceives between NAV and market price. The Fund's
investment objectives will not be affected by this Proposal #2 and the Fund will
continue to seek capital appreciation with current income as a secondary
objective. There can be no assurance that the investment objective of any
closed-end investment company or ETF in which the Fund invests will be achieved
or that the securities that the Fund invests in will not decrease in value.

The Fund will comply with the applicable provisions of the 1940 Act as in
effect, which currently require that, on any matter upon which the Fund is
solicited to vote as a stockholder in an investment company in which it invests,
the Adviser will vote such shares in the same general proportion as shares held
by other stockholders of that investment company (also known as "mirror
voting").

The requested change is primarily designed to provide greater flexibility to the
Adviser in managing the Fund's assets. It is not expected that the requested
change would necessarily result in a significant change in the securities in
which the Fund invests, but from time to time, the percentage of Fund assets
invested in investment company securities may be materially greater than would
have been permitted if the Fund's current fundamental investment restriction
limiting its investments in the securities of other investment companies had not
been eliminated. Under normal circumstances, the Adviser's current intention is
to invest between 20% and 30% of the Fund's assets. However, elimination of this
restriction would permit, with Board approval to, invest up to 100%.

CONSIDERATION AND APPROVAL BY THE BOARD OF DIRECTORS.

The Board met in person on February 10, 2012 to consider, among other things,
elimination of the Fund's fundamental investment restriction #12 limiting
investments in securities issued by other investment companies. At the Board
meeting, the Board reviewed materials furnished by the Adviser and information
provided by representatives of the Adviser regarding the potential impact of
eliminating this restriction. The Directors, including all of the independent
Directors, unanimously approved the proposed elimination and recommended that
Stockholders of the Fund approve elimination of the Fund's fundamental
investment restriction #12 limiting investments in securities issued by other
investment companies. The Board considered numerous factors in approving the
elimination of the Fund's fundamental investment restriction limiting
investments in securities issued by other investment companies and making its
recommendation, including: (1) the Adviser's demonstrated experience and
capabilities with respect to investing in the securities of other investment
companies; (2) comparative performance with respect to other funds managed by
the Adviser that invest in other investment companies in excess of 10% of those
funds' assets; and (3) consideration of the indirect fees that may be incurred
by the Fund through its increased investment in other investment companies.
Based upon a review of the above factors, the Board concluded that eliminating
the Fund's fundamental investment restriction #12 limiting investments in
securities issued by other investment companies would be in the best interests
of the Fund and its Stockholders.

REQUIRED VOTE

Approval of Proposal 2 requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. Under the 1940 Act, the vote of a
"majority of the outstanding voting securities" means the affirmative vote of
the lesser of (a) 67% or more of the shares present at the Meeting or
represented by proxy if the holders of 50% of the outstanding shares are present
or represented by proxy or (b) more than 50% of the outstanding voting shares.

THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2 TO APPROVE THE ELIMINATION OF THE
FUND'S FUNDAMENTAL INVESTMENT RESTRICTION #12 LIMITING INVESTMENTS IN SECURITIES
ISSUED BY OTHER INVESTMENT COMPANIES. ANY SIGNED BUT UNMARKED PROXIES WILL BE SO
VOTED "FOR" THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
LIMITING INVESTMENTS IN SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES.

PROPOSAL NO. 3

REPLACEMENT OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION #15 THAT THE
FUND SHALL NOT INVEST MORE THAN 5% OF ITS TOTAL ASSETS, TAKEN AT MARKET VALUE AT
TIME OF PURCHASE, IN SECURITIES OF ANY ONE ISSUER OTHER THAN THE UNITED STATES
GOVERNMENT OR ITS INSTRUMENTALITIES; OR INVEST IN THE SECURITIES OF COMPANIES
WHICH (TOGETHER WITH THE PREDECESSORS) HAVE A RECORD OF LESS THAN THREE YEARS
CONTINUOUS OPERATION, OR PURCHASE MORE THAN 10% OF ANY CLASS OF THE OUTSTANDING
VOTING SECURITIES OF ANY ONE ISSUER (THE "CURRENT DIVERSIFICATION AND UNSEASONED
ISSUER RESTRICTION")

As described below, the Board is proposing that Stockholders approve the
replacement of the Fund's Current Diversification and Unseasoned Issuer
Fundamental Restriction with a fundamental restriction that aligns more directly
with the requirements of Section 5(b)(1) of the Investment Company Act of 1940,
as amended, for a "diversified" company. The Current Diversification and
Unseasoned Issuer Fundamental Restriction is overly broad as compared to the
statutory requirement to qualify as a diversified company. The Adviser believes
and the Board concurs that it would be in the best interest of Stockholders to
approve such proposed change in order to allow the Fund greater flexibility
regarding its investments, while still maintaining its diversified
sub-classification.

WHY ARE STOCKHOLDERS BEING ASKED TO APPROVE THE REPLACEMENT OF THE FUND'S
FUNDAMENTAL CURRENT DIVERSIFICATION AND UNSEASONED ISSUERS FUNDAMENTAL
RESTRICTION?

The Current Diversification and Unseasoned Issuers Fundamental Restriction
adopted by the Fund is fundamental, which means that it may not be changed,
replaced or eliminated without Stockholder approval. The Board believes that it
is in the best interest of Stockholders to replace the Current Diversification
and Unseasoned Issuers Fundamental Restriction with the following (the "New
Diversification Fundamental Restriction"):

With respect to 75% of its total assets, the Fund may not purchase a
security, other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and securities of other
investment companies, if as a result of such purchase, more than 5% of the
value of the Fund's total assets would be invested in the securities of
any one issuer, or the Fund would own more than 10% of the voting
securities of any one issuer.

WHAT ARE THE BENEFITS OF THE FUND'S REPLACEMENT OF ITS FUNDAMENTAL CURRENT
DIVERSIFICATION AND UNSEASONED ISSUERS FUNDAMENTAL RESTRICTION?

The Fund is sub-classified as a diversified company pursuant to Section 5(b)(1)
under the 1940 Act, which requires that, with respect to 75% of its total
assets, the Fund may not purchase a security, other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
securities of other investment companies, if as a result of such purchase, more
than 5% of the value of the Fund's total assets would be invested in the
securities of any one issuer, or the Fund would own more than 10% of the voting
securities of any one issuer. The Fund's current restriction applies to 100%,
rather than 75%, of the Fund's assets. Therefore, the Fund's current limitation
is more restrictive than the statute requires. The Board values the Fund's
sub-classification as a diversified company, but believes that permitting the
Fund to invest in accordance with the requirements of Section 5 (b)(1) provides
sufficient diversification among the Fund's investments. The Adviser believes
and the Board concurs that it is advisable to permit the Fund to have a limited
amount of its assets invested in a single issuer in excess of 5% of the Fund's
assets and more than 10% of the voting securities of any one issuer.

The Adviser does not expect to frequently invest more than 5% of the Fund's
assets in any single issuer or for the Fund's investments to frequently
represent more than 10% of an issuer's voting securities. However, it believes,
and the Board concurs, that it is advantageous to the Fund and its stockholders
to eliminate the absolute restriction and permit a small amount of the Fund's
assets to be so invested from time to time.

Securities issued by other investment companies, as well as those issued by the
U.S. Government, its agencies and instrumentalities, are permitted to be
excluded from the calculations relating to compliance with the diversification
restrictions. If Proposal 2 is approved by stockholders, it is expected that the
Fund's investment in other investment companies would increase. If Proposal 3 is
approved by stockholders, the Fund's investments in any investment company may
represent more than 5% of its assets. The Adviser notes that, under Section
12(d) of the 1940 Act, the Fund's investments in the securities of other
investment companies will continue to be capped at no more than 3% of the voting
securities of any single investment company issuer, regardless of whether or not
the Stockholders approve Proposal 2 above, Proposal 3 or both. The combined
effect of Proposal 2, Proposal 3 and Section 12(d)(1)(F) would be that the Fund
could invest an unlimited percentage of its assets in the securities of other
investment companies, could invest more than 5% of its assets in the securities
of any single investment company, and would be limited so that its investments
in other investment companies do not exceed 3% of such investment companies'
voting securities.

In addition, the Current Diversification and Unseasoned Issuers Fundamental
Restriction prohibits the Fund from investing in any issuer that (together with
its predecessor) has less than three years of continuous operation. This
prohibition is not required by any applicable statute or regulation and the
Adviser believes and the Board concurs that to eliminate this absolute
prohibition would be in the Stockholders best interest in that it would permit
the Adviser flexibility to consider a broader pool of issuers when determining
potential investments for the Fund. In particular, elimination of this
restriction would permit the Adviser to consider investments in other closed-end
funds that are offered by fund complexes with extensive operating histories, but
which funds themselves may have commenced operations fewer than three years
earlier. If Proposal 3 is adopted, the Adviser does not expect that investments
in issuers with less than three years of continuous operation will represent a
material portion of the Fund's portfolio, but that, from time to time, certain
issuers may be deemed appropriate investments despite having fewer than three
years of continuous operations.

WHAT ARE THE MATERIAL DIFFERENCES THAT MAY BE CAUSED BY REPLACING THE FUND'S
FUNDAMENTAL CURRENT DIVERSIFICATION AND UNSEASONED ISSUERS FUNDAMENTAL
RESTRICTION WITH THE NEW DIVERSIFICATION FUNDAMENTAL RESTRICTION?

If Proposal 3 is approved by Stockholders, the Adviser does not expect that the
Fund's investments will change materially. The Adviser intends to rely upon the
flexibility to invest in issuers with continuous operations shorter than three
years only where other factors dictate the advisability of the investment.
Similarly, the Adviser intends that the Fund's investments in any single issuer
will not typically exceed more than 5% of the Fund's net assets nor represent
more than 10% of an issuer's voting securities. However, the Adviser believes
that, from time to time, such flexibility to exceed such limitations with regard
to no more than 25% of the Fund's assets is beneficial to the Adviser's
management of the Fund's assets.

CONSIDERATION AND APPROVAL BY THE BOARD OF DIRECTORS.

The Board met in person on February 10, 2012 to consider, among other things,
replacing the Current Diversification and Unseasoned Issuer Fundamental
Restriction with the New Diversification Fundamental Restriction. At the Board
meeting, the Board reviewed materials furnished by the Adviser and discussed
with representatives of the Adviser the potential impact of replacing this
restriction. The Directors, including all of the independent Directors,
unanimously approved the proposed replacement and recommended that Stockholders
of the Fund approve replacement of the Fund's Current Diversification and
Unseasoned Issuers Restriction with the New Diversification Fundamental
Restriction. The Board considered certain factors in approving the replacement
of the Fund's Current Diversification and Unseasoned Issuers Fundamental
Restriction with the New Diversification Restriction, including: (1) the
statutory requirements for being sub-classified as a diversified investment
company; (2) the Adviser's projections regarding the non-material impact on the
Fund's portfolio composition resulting from replacing the Current
Diversification and Unseasoned Issuers Fundamental Restriction; (3) the
Adviser's discussion regarding the type of issuers that may be potential
investments for the Fund despite having less than three years continuous
operation; (4) the Adviser's description of certain scenarios where an absolute
prohibition against any portion of the Fund's assets in a single issuer to
exceed 5% of the Fund's net assets would not be in the best interest of the Fund
or its stockholders; (5) the Adviser's description of certain scenarios where
the Fund's investment may represent more than 10% of the voting securities of
any one issuer and continue to be in the best interest of the Fund and its
stockholders; and (6) the fact that the New Diversification Restriction
continues to be fundamental. Based upon a review of the above factors, the Board
concluded that replacing the Fund's Current Diversification and Unseasoned
Issuers Fundamental Restriction with the New Diversification Restriction would
be in the best interests of the Fund and its Stockholders.

REQUIRED VOTE

Approval of Proposal 3 requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. Under the 1940 Act, the vote of a
"majority of the outstanding voting securities" means the affirmative vote of
the lesser of (a) 67% or more of the shares present at the Meeting or
represented by proxy if the holders of 50% of the outstanding shares are present
or represented by proxy or (b) more than 50% of the outstanding voting shares.

THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3 TO APPROVE THE REPLACEMENT OF THE
FUND'S FUNDAMENTAL INVESTMENT RESTRICTION THAT THE FUND SHALL NOT INVEST MORE
THAN 5% OF ITS TOTAL ASSETS, TAKEN AT MARKET VALUE AT TIME OF PURCHASE, IN
SECURITIES OF ANY ONE ISSUER OTHER THAN THE UNITED STATES GOVERNMENT OR ITS
INSTRUMENTALITIES; OR INVEST IN THE SECURITIES OF COMPANIES WHICH (TOGETHER WITH
THE PREDECESSORS) HAVE A RECORD OF LESS THAN THREE YEARS CONTINUOUS OPERATION,
OR PURCHASE MORE THAN 10% OF ANY CLASS OF THE OUTSTANDING VOTING SECURITIES OF
ANY ONE ISSUER.

AUDIT COMMITTEE REPORT

In 2012, the Audit Committee met with the Fund's Administrator, Ultimus Fund
Solutions, LLC, and the Fund's independent registered public accounting firm,
Tait, Weller & Baker LLP, to discuss and review the Fund's audited financial
statements for the calendar year ended December 31, 2011. The Fund's independent
registered public accounting firm represented to the Audit Committee that the
Fund's financial statements were prepared in accordance with U.S. generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the financial statements with the Fund's Administrator and its
independent registered public accounting firm. The Audit Committee also
discussed with the independent registered public accounting firm matters
required to be discussed by Statement on Auditing Standards No. 61.

The Fund's independent registered public accounting firm also provided to the
Audit Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent registered public accounting firm their
independence, in light of the services they were providing.

Based upon the Audit Committee's discussion with the Fund's Administrator and
the independent registered public accounting firm and the Audit Committee's
review of the representations and report of the independent registered public
accounting firm to the Audit Committee, the Audit Committee recommended that the
Board of Directors include the audited financial statements in the Fund's Annual
Report for the calendar year ended December 31, 2011 filed with the Securities
and Exchange Commission ("SEC").

This Audit Committee report shall not be deemed incorporated by reference in
any document previously or subsequently filed with the SEC that incorporates by
reference all or any portion of this proxy statement except to the extent that
the Fund specifically requests that the report be specifically incorporated by
reference.

The Audit Committee of the Board of Directors has selected Tait, Weller & Baker
LLP to be employed as the Fund's independent registered public accounting firm
to make the annual audit and to report on, as may be required, the financial
statements which may be filed by the Fund with the SEC during the ensuing year.

Respectfully submitted,

Glenn W. Wilcox, Sr.
Andrew A. Strauss
Scott B. Rogers
Edwin Meese III

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Fund's independent registered public accounting firm for the calendar year
ended December 31, 2011, was the firm of Tait, Weller & Baker LLP. The Audit
Committee has selected Tait, Weller & Baker LLP to be the Fund's registered
public accounting firm for the calendar year ending December 31, 2012.

A representative of Tait, Weller & Baker LLP is not expected to be present at
the Annual Meeting of Stockholders or make a statement, but may be available by
telephone to respond to appropriate questions from Stockholders.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Aggregate fees for professional services rendered for the Fund by Tait, Weller
& Baker LLP as of or for the year ended December 31, 2011 and 2010 were:

Service 2011 2010
--------------------------------------------------------------------------------
Audit Fees $ 14,500 $ 14,100

Audit-Related Fees 0 0

Tax Fees (1) 3,500 3,000

All Other Fees (2) 1,500 0
-------- --------
Total $ 19,500 $ 17,100
-------- --------

(1) Tax services in connection with the Fund's excise tax calculations and
review of the Fund's applicable tax returns.

(2) All Other Fees represents charges for review of the Fund's rights offering
documents.

All of the services performed by the Fund's independent registered public
accounting firm, including audit related and non-audit related services, were
pre-approved by the Audit Committee, as required under the Audit Committee
Charter. Audit Fees for the years ended December 31, 2011 and 2010 were for
professional services rendered for the audits of the financial statements of the
Fund, reviews, and issuances of consents, and assistance with review of
documents filed with the SEC. Tax Fees for the years ended December 31, 2011 and
2010 were for services performed in connection with income and excise tax
services other than those directly related to the audit of the income tax
accrual. All Other Fees for the year 2011 relate to charges for review of
the Fund's rights offering documents.

The Audit Committee has considered and determined that the services provided by
Tait, Weller & Baker LLP are compatible with maintaining Tait, Weller & Baker
LLP's independence. The aggregate fees included in Audit Fees are fees billed
for the calendar year for the audit of the Fund's annual financial statements.
Of the time expended by the Fund's independent registered public accounting firm
to audit the Fund's financial statements for the calendar year ended December
31, 2011, less than 50% of such time involved work performed by persons other
than the independent registered public accounting firm's full time, permanent
employees. Tait, Weller & Baker LLP did not perform any services on behalf of
Cornerstone Advisors, Inc.

INFORMATION PERTAINING TO THE FUND'S INVESTMENT ADVISER AND ADMINISTRATOR

THE INVESTMENT ADVISER

Cornerstone Advisors, Inc. has acted as the Fund's Investment Adviser
("Investment Adviser") since January 2, 2002, and has its principal office at
1075 Hendersonville Road, Suite 250, Asheville, NC 28803. Cornerstone Advisors,
Inc. was organized in February, 2001, to provide investment management services
to closed-end investment companies and is registered with the SEC under the
Investment Advisers Act of 1940, as amended. Cornerstone Advisors, Inc. is the
Investment Adviser to two other closed-end funds, Cornerstone Strategic Value
Fund, Inc. and Cornerstone Progressive Return Fund. Messrs. Bradshaw and Bentz
are the only stockholders of the Investment Adviser.

Mr. Bradshaw is President and Chairman of the Board of Directors of the Fund.
Mr. Bentz is Chief Compliance Officer, Secretary, and Assistant Treasurer of the
Fund.

THE ADMINISTRATOR

Ultimus Fund Solutions, LLC, whose address is 350 Jericho Turnpike, Suite 206,
Jericho, NY 11753, currently acts as the Administrator of the Fund.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Section 30(h) of the Investment Company Act in combination require the Fund's
directors and officers, persons who own more than ten (10%) of the Fund's Common
Stock, and the Fund's Investment Adviser and its directors and officers, to file
reports of ownership and changes in ownership with the SEC. The Fund believes
that the Fund's directors and officers, the Fund's Investment Adviser and its
directors and officers have complied with all applicable filing requirements
during the year ended December 31, 2011.

INFORMATION PERTAINING TO CERTAIN STOCKHOLDERS

The following table sets forth the beneficial ownership of shares of the Fund
by each person known to the Fund to be deemed the beneficial owner of more than
five (5%) percent of the outstanding shares of the Fund at the close of business
on December 31, 2011:

Name and Address of Beneficial Owner Shares of Common Stock Beneficially Owned
------------------------------------ -----------------------------------------
None

Additionally, on February 17, 2012 Cede & Co., a nominee for participants in
the Depository Trust Company, held of record 6,392,000 shares of the Fund, equal
to approximately 96.9% of the outstanding shares of the Fund. All the directors
and executive officers of the Fund, as of the date of this proxy, owned less
than 1% of the outstanding shares of the Fund.

ADDITIONAL INFORMATION

The Proxy Statement does not contain all of the information set forth in the
registration statements and the exhibits relating thereto which the Funds have
filed with the SEC, under the Exchange Act and the Investment Company Act, to
which reference is hereby made.

The Fund is subject to the informational requirements of the Exchange Act and
in accordance therewith, files reports and other information with the SEC.
Reports, proxy statements, registration statements and other information filed
by the Fund can be inspected and copied at the public reference facilities of
the SEC in Washington, DC. Copies of such materials also can be obtained by mail
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, 100 F Street, NE, Washington, DC 20594, at prescribed rates.

OTHER BUSINESS

The Board of Directors of the Fund does not know of any other matter which may
come before the Meeting, but should any other matter requiring a vote of
Stockholders arise, including any questions as to the adjournment of the
Meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter in the interest of the
Fund.

PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS

All proposals by Stockholders of the Fund which are intended to be presented at
the Fund's next Annual Meeting of Stockholders, to be held in the year 2013,
must be received by the Fund addressed to Cornerstone Total Return Fund, Inc.,
c/o Ultimus Fund Solutions, LLC, 350 Jericho Turnpike, Suite 206, Jericho, NY
11753,in advance of the meeting as set forth in this document.

CORNERSTONE TOTAL RETURN FUND, INC.

Gary A. Bentz, Secretary

Dated: February 29, 2012

CORNERSTONE TOTAL RETURN FUND, INC.
PROXY CARD FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 16, 2012

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Cornerstone Total Return Fund, Inc. (the
"Fund") hereby constitutes and appoints Messrs. Ralph W. Bradshaw, Andrew A.
Strauss, Scott B. Rogers, and Glenn W. Wilcox, Sr., or any of them, the action
of a majority of them voting to be controlling, as proxy of the undersigned,
with full power of substitution, to vote all shares of common stock of the Fund
standing in his or her name on the books of the Fund at the Annual Meeting of
Stockholders of the Fund to be held at Fifth Floor Conference Room, One West
Pack Square, Asheville, NC 28801, on April 16, 2012 at 11:00 a.m., Eastern
Time, or at any adjournment or postponement thereof, with all the powers which
the undersigned would possess if personally present, as designated on the
reverse hereof.

The undersigned hereby revokes any proxy previously given and instructs the
said proxies to vote in accordance with the instructions with respect to the
election of the directors and the consideration and vote of such other matters
as may properly come before the Annual Meeting of Stockholders or any
adjournment or postponement thereof.

This proxy, when properly executed, will be voted in the manner directed
herein by the stockholder. If no such direction is made, the said proxies will
vote FOR Proposal 1, FOR Proposal 2, FOR Proposal 3, and in their discretion
with respect to such other matters as may properly come before the Annual
Meeting of Stockholders, in the interest of the Fund.

(Continued and to be dated and signed on reverse side)

ANNUAL MEETING OF STOCKHOLDERS OF
CORNERSTONE TOTAL RETURN FUND, INC.
APRIL 16, 2012

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:

The Notice of Meeting, proxy statement and proxy card are available at
http://www.proxyvote.com

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PLEASE SIGN, DATE AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1 (THE ELECTION OF
DIRECTORS), "FOR" PROPOSAL 2, "FOR" PROPOSAL 3, AND "FOR" PROPOSAL 4.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]

1. To approve the election of five (5) Directors:

NOMINEES:
/ / FOR ALL NOMINEES / / Ralph W. Bradshaw

WITHHOLD AUTHORITY / / Edwin Meese III
/ / FOR ALL NOMINEES / / Scott B. Rogers
/ / Andrew A. Strauss
/ / FOR ALL EXCEPT / / Glenn W. Wilcox, Sr.
(See instructions below)

INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark

"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: o

2. To approve the elimination of the Fund's fundamental investment restriction
limiting investments in securities issued by other investment companies

FOR AGAINST ABSTAIN
/ / / / / /

3. To approve the replacement of the Fund's fundamental investment restriction
that the Fund shall not invest more than 5% of its total assets, taken at market
value at time of purchase, in securities of any one issuer other than the United
States Government or its instrumentalities; or invest in the securities of
companies which (together with the predecessors) have a record of less than
three years continuous operation, or purchase more than 10% of any class of the
outstanding voting securities of any one issuer (the "current diversification
and unseasoned issuer restriction")

FOR AGAINST ABSTAIN
/ / / / / /

4.______ In their discretion, the proxies are authorized to consider and vote
upon such other matters as may properly come before the said Meeting or any
adjournment thereof.

FOR AGAINST ABSTAIN
/ / / / / /

Your proxy is important to assure a quorum at the Annual Meeting of
Stockholders, whether or not you plan to attend the meeting in person. You may
revoke this proxy at anytime, and the giving of it will not affect your right to
attend the Annual Meeting of Stockholders and vote in person.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

To change the address on your account, please check the box at right and
indicate your new address in the address space above. [ ] Please note that
changes to the registered name(s) on the account may not be submitted by this
method.

SIGNATURE OF STOCKHOLDER_____________________________ DATE______________________

NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.