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
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Cornerstone Strategic Value Fund, Inc.
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(Exact name of registrant as specified in charter)
237 Park Avenue, New York, NY 10017
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(Address of principal executive offices) (Zip code)
Kayadti A. Madison
Cornerstone Strategic Value Fund, Inc., 237 Park Avenue, New York, NY 10017
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 272-3550
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Date of fiscal year end: December 31, 2008
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Date of reporting period: September 30, 2008
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ITEM 1: SCHEDULE OF INVESTMENTS
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
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EQUITY SECURITIES - 99.67%
CLOSED-END FUNDS - 1.42%
Adams Express Company (a) 49,500 $ 533,610
Dreman/Claymore Dividend & Income Fund 4,300 22,403
General American Investors Company, Inc. ^ 3,000 77,610
Liberty All-Star Equity Fund 96,330 434,448
Zweig Fund, Inc. 29,000 103,820
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1,171,891
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CONSUMER DISCRETIONARY - 8.57%
Amazon.com, Inc. * 5,500 400,180
Comcast Corporation, Class A 28,555 560,535
DIRECTV Group, Inc. (The) * 4,000 104,680
Gap, Inc. (The) 12,200 216,916
Home Depot, Inc. (The) 4,000 103,560
Johnson Controls, Inc. 7,500 227,475
Lowe's Companies, Inc. 11,900 281,911
McDonald's Corporation ^ 18,600 1,147,620
News Corporation, Class A ^ 18,000 215,820
NIKE, Inc., Class B ^ 6,100 408,090
Omnicom Group Inc. ^ 6,200 239,072
Staples, Inc. ^ 10,800 243,000
Starbucks Corporation * 2,800 41,636
Target Corporation 6,800 333,540
Time Warner Inc. 23,500 308,085
TJX Companies, Inc. (The) 3,000 91,560
Toyota Motor Corporation ADR 2,500 214,500
Viacom Inc., Class B * 5,450 135,378
Walt Disney Company (The) ^ 59,200 1,816,848
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7,090,406
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CONSUMER STAPLES - 13.02%
Altria Group, Inc. 13,300 263,872
Anheuser-Busch Companies, Inc. 6,200 402,256
Archer-Daniels-Midland Company ^ 3,960 86,764
Coca-Cola Company (The) 41,000 2,168,080
Colgate-Palmolive Company 8,900 670,615
ConAgra Foods, Inc. 10,900 212,114
CVS Caremark Corporation 10,430 351,074
General Mills, Inc. 2,500 171,800
H.J. Heinz Company 4,000 199,640
Kimberly-Clark Corporation 2,500 162,100
Kraft Foods Inc, Class A 10,932 358,023
Kroger Co. (The) 13,800 379,224
PepsiCo, Inc. 7,100 506,017
Philip Morris International Inc. 7,300 351,130
Procter & Gamble Company (The) 34,797 2,425,003
Sysco Corporation 9,800 302,134
Walgreen Co. 4,800 148,608
Wal-Mart Stores, Inc. ^ 27,100 1,623,019
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10,781,473
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ENERGY - 13.08%
Baker Hughes Incorporated 10,600 641,724
BJ Services Company 3,500 66,955
Chevron Corporation 24,032 1,982,159
ConocoPhillips 10,474 767,221
ENSCO International Incorporated 2,500 144,075
Exxon Mobil Corporation 50,000 3,883,000
Halliburton Company 13,200 427,548
Marathon Oil Corp. 15,000 598,050
Noble Corporation 2,500 109,750
Occidental Petroleum Corporation 10,500 739,725
Schlumberger Limited 11,500 898,035
Transocean Inc. 2,500 274,600
XTO Energy, Inc. 6,250 290,750
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10,823,592
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FINANCIALS - 15.03%
AFLAC Incorporated 7,000 411,250
Allstate Corporation (The) ^ 6,800 313,616
American Express Company 9,400 333,042
Bank of America Corporation ^ 25,138 879,830
Bank of New York Mellon Corporation ^ 8,254 268,915
Capital One Financial Corporation ^ 5,000 255,000
Charles Schwab Corporation (The) 22,000 572,000
Chubb Corporation (The) 4,100 225,090
Citigroup Inc. 5,800 118,958
Goldman Sachs Group, Inc. (The) 2,800 358,400
Hartford Financial Services Group, Inc. (The) 3,000 122,970
Hudson City Bancorp, Inc. ^ 9,000 166,050
JPMorgan Chase & Co. 47,632 2,224,415
Loews Corporation ^ 5,000 197,450
Marsh & McLennan Companies, Inc. 10,000 317,600
MetLife, Inc. 15,200 851,200
Morgan Stanley 7,000 161,000
PNC Financial Services Group, Inc. 7,600 567,720
Prudential Financial, Inc. 4,200 302,400
State Street Corporation 3,500 199,080
SunTrust Banks, Inc. 5,000 224,950
T. Rowe Price Group Inc. 11,000 590,810
Travelers Companies, Inc. (The) 12,476 563,915
U.S. Bancorp 16,901 608,774
Wells Fargo & Company 42,900 1,610,037
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12,444,472
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HEALTHCARE - 12.66%
Abbott Laboratories 11,200 644,896
Aetna Inc. 6,000 216,660
Amgen Inc. * 9,900 586,773
Baxter International Inc. 5,000 328,150
Becton, Dickinson and Company 4,400 353,144
Biogen Idec Inc. * 3,000 150,870
Bristol-Myers Squibb Company ^ 25,500 531,675
Cardinal Health, Inc. ^ 2,950 145,376
Covidien Limited 2,599 139,722
Eli Lilly and Company ^ 4,700 206,941
Gilead Sciences, Inc. * 7,000 319,060
Johnson & Johnson 40,900 2,833,552
McKesson Corporation ^ 2,800 150,668
Medtronic, Inc. 14,500 726,450
Merck & Co. Inc. 17,500 552,300
Pfizer Inc. ^ 23,560 434,446
Schering-Plough Corporation ^ 29,000 535,630
Stryker Corporation ^ 3,500 218,050
UnitedHealth Group Incorporated ^ 19,500 495,105
WellPoint Inc. * 3,500 163,695
Wyeth 20,200 746,188
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10,479,351
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INDUSTRIALS - 10.65%
3M Co. 6,900 471,339
Boeing Company (The) 4,200 240,870
Burlington Northern Santa Fe Corporation 5,400 499,122
Caterpillar Inc. 6,800 405,280
CSX Corporation 6,500 354,705
Danaher Corporation 3,500 242,900
Deere & Company 8,000 396,000
Emerson Electric Co. 16,500 673,035
FedEx Corp. 2,000 158,080
General Dynamics Corporation ^ 3,200 235,584
General Electric Company 61,900 1,578,450
Honeywell International Inc. 5,000 207,750
Illinois Tool Works Inc. 7,300 324,485
Lockheed Martin Corporation 4,000 438,680
Norfolk Southern Corporation ^ 5,500 364,155
Northrop Grumman Corporation 2,500 151,350
Precision Castparts Corp. 2,500 196,950
Raytheon Company 11,000 588,610
Union Pacific Corporation ^ 4,000 284,640
United Parcel Service, Inc., Class B 4,100 257,849
United Technologies Corporation 7,500 450,450
Waste Management, Inc. 9,300 292,857
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8,813,141
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INFORMATION TECHNOLOGY - 15.32%
Adobe Systems Incorporated * 4,200 165,774
Agilent Technologies Inc. * 4,000 118,640
Apple, Inc. * 8,500 966,110
Applied Materials, Inc. 17,800 269,314
Automatic Data Processing, Inc. 4,400 188,100
Cisco Systems, Inc. * 47,900 1,080,624
Corning Incorporated 16,500 258,060
Dell Inc. * 4,700 77,456
eBay Inc. * 2,500 55,950
EMC Corporation ^ * 68,648 821,030
Google Inc. ^ * 4,500 1,802,340
Hewlett-Packard Company 19,900 920,176
Intel Corporation 60,500 1,133,165
International Business Machines Corporation ^ 12,600 1,473,696
Microsoft Corporation 65,200 1,740,188
Nortel Networks Corporation * 660 1,478
Oracle Corporation * 39,772 807,769
QUALCOMM Inc. 13,000 558,610
Texas Instruments Incorporated 6,400 137,600
Yahoo! Inc. ^ * 6,300 108,990
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12,685,070
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MATERIALS - 3.14%
Alcoa Inc. 20,400 460,632
Dow Chemical Company (The) 5,400 171,612
E. I. du Pont de Nemours and Company 13,500 544,050
Freeport-McMoRan Copper & Gold, Inc. ^ 5,000 284,250
International Paper Company ^ 7,000 183,260
Monsanto Company ^ 5,660 560,227
Praxair, Inc. 5,500 394,570
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2,598,601
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REAL ESTATE INVESTMENT TRUST - 0.47%
Simon Property Group, Inc. ^ 4,000 388,000
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TELECOMMUNICATION SERVICES - 2.69%
AT&T Inc. 56,539 1,578,569
Verizon Communications Inc. 20,300 651,427
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2,229,996
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UTILITIES - 3.62%
American Electric Power Company, Inc. 8,000 296,640
Dominion Resources, Inc. 11,200 479,136
Duke Energy Corporation 15,800 275,394
Edison International ^ 9,000 359,100
Exelon Corporation ^ 3,000 187,860
FirstEnergy Corp. 5,000 334,950
FPL Group, Inc. ^ 4,000 201,200
PG&E Corporation 5,000 187,250
Public Service Enterprise Group Incorporated ^ 7,000 229,530
Southern Company (The) ^ 11,900 448,511
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2,999,571
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TOTAL EQUITY SECURITIES
(cost - $73,491,294) 82,505,564
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SHORT-TERM INVESTMENTS - 8.79%
MONEY MARKET SECURITY - 0.72%
JPMorgan U.S. Government Money Market Fund 592,086 592,086
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PRINCIPAL
AMOUNT
(000's)
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REPURCHASE AGREEMENTS - 8.07%
Bear, Stearns & Co. Inc. + ++
(Agreements dated 9/30/2008 to be
repurchased at $4,767,441, 3.50%, 10/1/2008,
collateralized by $4,908,014 in United States
Treasury Bonds) $ 4,767 4,766,978
Bear, Stearns & Co. Inc. + ++
(Agreements dated 9/30/2008 to be
repurchased at $1,917,068, 7.00%, 10/1/2008,
collateralized by $1,973,384 in United States
Treasury Bonds) 1,917 1,916,695
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6,683,673
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TOTAL SHORT-TERM INVESTMENTS
(cost - $7,275,759) 7,275,759
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TOTAL INVESTMENTS - 108.46%
(cost - $80,767,053) 89,781,323
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LIABILITIES IN EXCESS OF OTHER ASSETS - (8.46)% (7,001,545)
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NET ASSETS - 100.00% $ 82,779,778
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(a) Affiliated investment. The Fund holds 0.64% (based on net assets) of Adams
Express Company. A director of the Fund also serves as a director to such
company. During the nine months ended September 30, 2008 there were no
purchases or sales of this security.
^ Security or a portion thereof is out on loan.
* Non-income producing security.
ADR American Depositary Receipt
+ Stated interest rate, before rebate earned by borrower of securities on
loan.
++ Represents investment purchased with collateral received for securities on
loan.
Federal Income Tax Cost: At September 30, 2008 the identified cost for federal
income tax purposes, as well as the gross unrealized appreciation from
investments for those securities having an excess of value over cost, gross
unrealized depreciation from investments for those securities having an excess
of cost over value and the net unrealized appreciation from investments were
$80,767,053, $14,997,570, $(5,983,300), and $9,014,270, respectively.
The Fund adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective
January 1, 2008. In accordance with FAS 157, fair value is defined as the price
that the Fund would receive upon selling an investment in a timely transaction
to an independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure
purposes. Inputs refer broadly to the assumptions that market participants would
use in pricing the asset or liability, including assumptions about risk, for
example, the risk inherent in a particular valuation technique used to measure
fair value including such a pricing model and/or the risk inherent in the inputs
to the valuation technique. Inputs may be observable or unobservable. Observable
inputs are inputs 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 September 30, 2008 in
valuing the Fund's investments carried at value:
INVESTMENTS OTHER FINANCIAL
VALUATION INPUTS IN SECURITIES INSTRUMENTS*
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Level 1 - Quoted Prices $ 82,505,564 $ -
Level 2 - Other Significant Observable Inputs 7,275,759 -
Level 3 - Significant Unobservable Inputs - -
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TOTAL $ 89,781,323 $ -
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* Other financial instruments include futures, forwards and swap contracts.
The Fund did not have any assets or liabilities that were measured at fair value
on a recurring basis using significant unobservable inputs (Level 3) at
September 30, 2008.
Securities valuation policies and other investment related disclosures are
hereby incorporated by reference to the Fund's semi-annual report previously
filed with the Securities and Exchange Commission on the Form N-CSR on September
8, 2008 with a file number 811-05150.
Other information regarding the Fund is available in the Fund's most recent
semi-annual report filed with the Securities and Exchange Commission on Form
N-CSR on September 8, 2008, file number 811-05150. This information is also
available to registered shareholders by calling (800) 937-5449. For general
inquiries, please call (212) 272-3550. This information is also available on the
website of the Securities and Exchange Commission - http://www.sec.gov
ITEM 2: CONTROLS AND PROCEDURES
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")), were effective based on
their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities and
Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred
during the registrant's last fiscal quarter that have materially affected, or
are reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 3: EXHIBITS
1. The certifications of the registrant as required by Rule 30a-2(a) under
the Act are exhibits to this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Cornerstone Strategic Value Fund, Inc.
/s/ Ralph W. Bradshaw
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Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: November 26, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Ralph W. Bradshaw
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Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: November 26, 2008
/s/ Kayadti A. Madison
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Name: Kayadti A. Madison
Title: Principal Financial Officer
Date: November 26, 2008