fp0001102_nq.htm
 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
 
 
Investment Company Act file number ___811-05150________________________
 
 
Cornerstone Strategic Value Fund, Inc. 

(Exact name of registrant as specified in charter)
 
 
260 Madison Avenue, 8th Floor            New York, New York
10016
(Address of principal executive offices)
(Zip code)
 
 
Frank J. Maresca
 
 
Ultimus Fund Solutions, LLC    260 Madison Avenue, 8th Floor     New York, NY 10016 

(Name and address of agent for service)
 
 
Registrant's telephone number, including area code:  (212) 652-6155   
 
Date of fiscal year end:         December 31, 2009   
 
Date of reporting period:       September 30, 2009   
 
Form N-Q is to be used by management investment companies other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to Rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
 
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q 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. § 3507.
 

 
Item 1.  Schedule of Investments.

CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED)
 
   
Description
 
No. of Shares
   
Value
 
EQUITY SECURITIES - 99.37%
 
CLOSED-END FUNDS - 7.28%
 
Adams Express Company (The) (a)
    26,400     $ 257,928  
Advent/Claymore Enhanced Growth & Income Fund
    33,561       363,801  
BlackRock Dividend Achievers Trust
    8,000       67,200  
Liberty All-Star Equity Fund
    302,030       1,277,587  
Liberty All-Star Growth Fund
    283,601       896,179  
Tri-Continental Corporation
    22,800       251,256  
Zweig Fund, Inc. (The)
    323,850       1,039,559  
              4,153,510  
CONSUMER DISCRETIONARY - 8.86%
 
Amazon.com, Inc. ^ *
    3,000       280,080  
Best Buy Company, Inc.
    4,500       168,840  
Comcast Corporation - Class A
    11,555       195,164  
DIRECTV Group, Inc. (The) ^ *
    4,000       110,320  
Family Dollar Stores, Inc. ^
    2,000       52,800  
Gap, Inc. (The) ^
    9,200       196,880  
Home Depot, Inc. (The) ^
    2,000       53,280  
Lowe's Companies, Inc. ^
    5,900       123,546  
McDonald's Corporation ^
    14,900       850,343  
News Corporation - Class A ^
    10,000       119,900  
NIKE, Inc. - Class B
    6,100       394,670  
Omnicom Group, Inc.
    6,200       229,028  
Staples, Inc. ^
    12,800       297,216  
Starbucks Corporation *
    2,800       57,820  
Target Corporation
    10,300       480,804  
Time Warner Cable, Inc.*
    1,966       84,715  
TJX Companies, Inc. (The)
    7,000       260,050  
Toyota Motor Corporation - ADR
    2,500       196,425  
Viacom, Inc. - Class B *
    5,450       152,818  
Walt Disney Company (The) ^
    24,200       664,532  
Yum! Brands, Inc. ^
    2,500       84,400  
              5,053,631  
CONSUMER STAPLES - 11.01%
 
Altria Group, Inc.
    13,300       236,873  
Archer-Daniels-Midland Company ^
    3,960       115,711  
Coca-Cola Company (The)
    15,000       805,500  
Colgate-Palmolive Company ^
    4,400       335,632  
ConAgra Foods, Inc.
    3,400       73,712  
CVS Caremark Corporation ^
    10,430       372,768  
 
See accompanying notes to schedule of investments.
 

 
CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED) (Continued)
 
   
CONSUMER STAPLES (Continued)
 
General Mills, Inc.
    2,500     $ 160,950  
H.J. Heinz Company
    4,000       159,000  
Kimberly-Clark Corporation
    2,500       147,450  
Kraft Foods, Inc. - Class A
    10,932       287,184  
Kroger Company (The) ^
    8,800       181,632  
PepsiCo, Inc.
    7,100       416,486  
Philip Morris International, Inc. ^
    9,800       477,652  
Procter & Gamble Company (The)
    22,297       1,291,442  
Sysco Corporation
    9,800       243,530  
Walgreen Company ^
    4,800       179,856  
Wal-Mart Stores, Inc.
    16,100       790,349  
              6,275,727  
ENERGY - 11.27%
 
Baker Hughes, Inc. ^
    8,100       345,546  
Chevron Corporation
    17,032       1,199,564  
Conocophillips ^
    10,474       473,006  
Exxon Mobil Corporation
    35,500       2,435,655  
Halliburton Company
    9,700       263,064  
Marathon Oil Corporation
    11,500       366,850  
Occidental Petroleum Corporation
    5,000       392,000  
Schlumberger Ltd.
    8,000       476,800  
Transocean Ltd. *
    2,500       213,825  
XTO Energy, Inc.
    6,250       258,250  
              6,424,560  
FINANCIALS - 12.67%
 
AFLAC, Inc.
    5,500       235,070  
Allstate Corporation (The)
    6,800       208,216  
American Express Company
    6,400       216,960  
Bank of America Corporation
    16,138       273,055  
Bank of New York Mellon Corporation (The) ^
    7,754       224,788  
BB&T Corporation
    3,500       95,340  
Capital One Financial Corporation
    2,500       89,325  
Charles Schwab Corporation (The) ^
    22,000       421,300  
Chubb Corporation (The)
    3,500       176,435  
Goldman Sachs Group, Inc. (The)
    3,000       553,050  
Hudson City Bancorp, Inc.
    15,500       203,825  
JPMorgan Chase & Company
    35,132       1,539,484  
Marsh & McLennan Companies, Inc.
    10,000       247,300  
MetLife, Inc.
    5,700       216,999  
Morgan Stanley
    7,000       216,160  
PNC Financial Services Group, Inc. ^
    7,600       369,284  
 
See accompanying notes to schedule of investments.
 

 
CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED) (Continued)
 
   
FINANCIALS (Continued)
 
T. Rowe Price Group, Inc. ^
    5,000     $ 228,500  
Travelers Companies, Inc. (The)
    9,476       466,504  
U.S. Bancorp
    9,901       216,436  
Wells Fargo & Company
    36,400       1,025,752  
              7,223,783  
HEALTH CARE - 12.44%
 
Abbott Laboratories
    9,200       455,124  
Aetna, Inc.
    5,000       139,150  
Amgen, Inc. *
    6,700       403,541  
Baxter International, Inc. ^
    5,000       285,050  
Becton, Dickinson and Company
    5,400       376,650  
Biogen Idec, Inc. *
    4,000       202,080  
Bristol-Myers Squibb Company
    23,500       529,220  
Cardinal Health, Inc. ^
    7,950       213,060  
Covidien PLC
    2,599       112,433  
Eli Lilly & Company ^
    4,700       155,241  
Gilead Sciences, Inc. *
    7,000       326,060  
Johnson & Johnson
    20,400       1,242,156  
McKesson Corporation
    2,800       166,740  
Medtronic, Inc.
    10,000       368,000  
Merck & Company, Inc.
    12,500       395,375  
Pfizer, Inc.
    23,560       389,918  
Schering-Plough Corporation ^
    10,000       282,500  
Stryker Corporation
    3,500       159,005  
UnitedHealth Group, Inc. ^
    11,000       275,440  
WellPoint, Inc. ^ *
    3,500       165,760  
Wyeth
    9,200       446,936  
              7,089,439  
INDUSTRIALS - 9.57%
 
3M Company
    4,400       324,720  
Boeing Company (The)
    2,200       119,130  
Burlington Northern Santa Fe Corporation
    5,400       431,082  
Caterpillar, Inc.
    6,800       349,044  
CSX Corporation
    6,500       272,090  
Deere & Company
    6,500       278,980  
Emerson Electric Company
    6,000       240,480  
General Dynamics Corporation ^
    3,200       206,720  
General Electric Company
    56,900       934,298  
Honeywell International, Inc.
    5,000       185,750  
Illinois Tool Works, Inc.
    2,800       119,588  
Lockheed Martin Corporation
    3,000       234,240  
 
See accompanying notes to schedule of investments.
 

 
CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED) (Continued)
 
   
INDUSTRIALS (Continued)
 
Norfolk Southern Corporation
    5,500     $ 237,105  
Northrop Grumman Corporation
    2,500       129,375  
Raytheon Company
    6,000       287,820  
Union Pacific Corporation
    4,000       233,400  
United Parcel Service, Inc. - Class B
    4,100       231,527  
United Technologies Corporation
    6,000       365,580  
Waste Management, Inc.
    9,300       277,326  
              5,458,255  
INFORMATION TECHNOLOGY - 17.45%
 
Adobe Systems, Inc. *
    4,200       138,768  
Apple, Inc. *
    5,900       1,093,683  
Applied Materials, Inc.
    14,800       198,320  
Automatic Data Processing, Inc.
    4,400       172,920  
Cisco Systems, Inc. *
    38,900       915,706  
Corning, Inc. ^
    11,500       176,065  
Dell, Inc. ^ *
    2,700       41,202  
eBay, Inc. *
    2,500       59,025  
EMC Corporation *
    27,148       462,602  
Google, Inc. - Class A *
    2,000       991,700  
Hewlett-Packard Company
    16,900       797,849  
Intel Corporation
    62,500       1,223,125  
International Business Machines Corporation
    9,100       1,088,451  
Microsoft Corporation
    56,200       1,455,018  
Nortel Networks Corporation *
    660       57  
Oracle Corporation
    22,272       464,149  
QUALCOMM, Inc.
    10,000       449,800  
Texas Instruments, Inc. ^
    6,400       151,616  
Yahoo!, Inc. *
    4,000       71,240  
              9,951,296  
MATERIALS - 2.92%
 
Alcoa, Inc. ^
    11,400       149,568  
Dow Chemical Company (The)
    5,400       140,778  
E.I. Du Pont de Nemours & Company
    9,500       305,330  
Freeport-McMoRan Copper & Gold, Inc. ^*
    5,000       343,050  
Monsanto Company
    4,660       360,684  
Praxair, Inc. ^
    4,500       367,605  
              1,667,015  
REAL ESTATE INVESTMENT TRUST - 0.00%
 
Simon Property Group, Inc.
    14       972  
 
See accompanying notes to schedule of investments.
 

 
CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED) (Continued)
 
   
TELECOMMUNICATION SERVICES - 2.70%
 
AT&T, Inc.
    37,039     $ 1,000,423  
Verizon Communications, Inc.
    17,800       538,806  
              1,539,229  
UTILITIES - 3.20%
 
American Electric Power Company, Inc.
    5,000       154,950  
Dominion Resources, Inc. ^
    7,700       265,650  
Duke Energy Corporation
    15,800       248,692  
Edison International
    3,500       117,530  
Exelon Corporation
    3,000       148,860  
FirstEnergy Corporation
    3,000       137,160  
FPL Group, Inc. ^
    4,000       220,920  
PG&E Corporation ^
    3,000       121,470  
Public Service Enterprises Group, Inc. ^
    4,500       141,480  
Southern Company (The) ^
    8,400       266,028  
              1,822,740  
                 
TOTAL EQUITY SECURITIES (cost - $55,119,320)
    $ 56,660,157  
                 
                 
SHORT-TERM INVESTMENTS - 8.09%
               
MONEY MARKET SECURITY - 0.73%
               
JPMorgan U.S. Government Money Market Fund
    415,430     $ 415,430  
                 
   
Principal
Amount (000's)
         
REPURCHASE AGREEMENTS - 7.36%
               
J.P. Morgan Securities, Inc.†‡
               
(Agreement dated 9/30/2009 to be repurchased at $499,160, 0.05%, 10/1/2009, collateralized by $516,487 in United States Treasury Bonds)
  $ 499       499,160  
J.P. Morgan Securities, Inc.†‡
               
(Agreement dated 9/30/2009 to be repurchased at $3,696,348, 0.1%, 10/1/2009, collateralized by $3,805,693 in United States Treasury Bonds)
    3,696       3,696,348  
                 
              4,195,508  
                 
TOTAL SHORT-TERM INVESTMENTS (cost - $4,610,938)
      4,610,938  
                 
TOTAL INVESTMENTS - 107.46% (cost - $59,730,258)
      61,271,095  
 
See accompanying notes to schedule of investments.
 

 
CORNERSTONE STRATEGIC VALUE FUND, INC.
 
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2009 (UNAUDITED) (Continued)
 
   
       
LIABILITIES IN EXCESS OF OTHER ASSETS - (7.46)%
    (4,254,844 )
         
NET ASSETS - 100.00%
  $ 57,016,251  
 

ADR - American Depositary Receipt.
(a) Affiliated investment.  The Fund holds 0.45% (based on net assets) of Adams Express Company.  A director of the Fund also serves as a director to such company.  During the quarter ended September 30, 2009 the fund sold 13,700 shares of this security.  There were no purchases during this period.
^ Security or a portion thereof is out on loan.
* Non-income producing security.
Represents investment purchased with collateral received for securities on loan.
Stated interest rate, before rebate earned by borrower of securities on loan.
 
See accompanying notes to schedule of investments.
 


CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO SCHEDULES OF INVESTMENTS
September 30, 2009 (UNAUDITED)

 
Federal Income Tax Cost: At September 30, 2009 the identified cost for federal income tax purposes, as well as the gross unrealized appreciation from investments for those securities having an excess of value over cost, gross unrealized depreciation from investments for those securities having an excess of cost over value and the net unrealized appreciation from investments were $59,730,257, $8,487,386, $(6,946,549) and $1,540,837 respectively.
 
Fair Value Measurements 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.  Fair Value Measurements 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.
 
·  
Level 1 – quoted prices in active markets for identical investments
·  
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risks, etc.)
·  
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
The following is a summary of the inputs used as of September 30, 2009 in valuing the Fund’s investments carried at value:
 
Valuation Inputs
 
INVESTMENTS IN SECURITIES
   
OTHER FINANCIAL INSTRUMENTS*
 
             
Level 1 – Quoted Prices
  $ 61,271,094     $ -  
Level 2 – Other Significant Observable Inputs
    -       -  
Level 3 – Significant Unobservable Inputs
    -       -  
Total
  $ 61,271,094     $ -  
 
* Other financial instruments include futures, forwards and swap contracts.
 
The Fund did not have any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2009.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio.  For the period ended September 30, 2009, the Fund did not engage in derivative instruments and other hedging activities.
 
Securities valuation policies and other investment related disclosures are herby incorporated by reference to the Fund’s semi-annual report previously filed with the Securities and Exchange Commission on the Form N-CSR on September 4, 2009 with a file number 811-22066.
 
Other information regarding the Fund is available in the Fund’s most recent semi-annual report filed with the Securities and Exchange Commission on the Form N-CSR on September 4, 2009, file number 811-22066.  This information is also available to registered shareholders by calling (800) 937-5449.  For general inquiries, please call (513) 326-3597.  This information is also available on the website of the Securities and Exchange Commission – http://www.sec.gov.
 

 
Item 2. Controls and Procedures.
 
(a)    Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that such information is recorded, processed, summarized, and reported on a timely basis.
 
(b)   There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 3. Exhibits.
 
File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)):  Attached hereto
 

 
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.
 
(Registrant)   Cornerstone Strategic Value Fund, Inc.      
 
 
By (Signature and Title)*
/s/ Ralph W. Bradshaw            
 
Ralph W. Bradshaw, President and Chairman
 
(Principal Executive Officer)
 
Date          November 23, 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.
 
 
By (Signature and Title)*
/s/ Ralph W. Bradshaw            
 
Ralph W. Bradshaw, President and Chairman
 
(Principal Executive Officer)
 
Date          November 23, 2009   
 
 
By (Signature and Title)*
/s/ Frank J. Maresca               
 
Frank J. Maresca, Treasurer
 
(Principal Financial Officer)
 
Date          November 23, 2009   
 
 
* Print the name and title of each signing officer under his or her signature.