-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fg7ZyLYAb1n6vQqbw4N/b0K4JOGsFqncwnTrfR9pnQAn5NxtgN6y5hTwnaAmBkf8 B7VZbzp8hJpqiXNLRXNGyg== 0000909012-07-001227.txt : 20070831 0000909012-07-001227.hdr.sgml : 20070831 20070831144403 ACCESSION NUMBER: 0000909012-07-001227 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070831 DATE AS OF CHANGE: 20070831 EFFECTIVENESS DATE: 20070831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNERSTONE STRATEGIC VALUE FUND INC/ NEW CENTRAL INDEX KEY: 0000814083 IRS NUMBER: 133407699 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05150 FILM NUMBER: 071094233 BUSINESS ADDRESS: STREET 1: BEAR STEARNS FUNDS MANAGEMENT INC. STREET 2: 383 MADISON AVENUE - 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10179 BUSINESS PHONE: 2122722093 MAIL ADDRESS: STREET 1: BEAR STEARNS FUNDS MANAGEMENT INC. STREET 2: 383 MADISON AVENUE - 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10179 FORMER COMPANY: FORMER CONFORMED NAME: CLEMENTE STRATEGIC VALUE FUND INC DATE OF NAME CHANGE: 19990622 FORMER COMPANY: FORMER CONFORMED NAME: CLEMENTE GLOBAL GROWTH FUND INC DATE OF NAME CHANGE: 19920703 N-CSRS 1 t303681.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-05150 Cornerstone Strategic Value Fund, Inc. (Exact name of registrant as specified in charter) 383 Madison Avenue, New York, New York 10179 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Jodi Levine 383 Madison Avenue, New York, NY 10179 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (212) 272-3550 Date of fiscal year end: December 31, 2007 Date of reporting period: June 30, 2007 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. ================================================================================ CORNERSTONE STRATEGIC VALUE FUND, INC. SEMI-ANNUAL REPORT JUNE 30, 2007 ================================================================================ CONTENTS Portfolio Summary 1 Summary Schedule of Investments 2 Statement of Assets and Liabilities 4 Statement of Operations 5 Statement of Changes in Net Assets 6 Financial Highlights 7 Notes to Financial Statements 8 Result of Annual Meeting of Stockholders 12 Description of Dividend Reinvestment Plan 13 Investment Management Agreement Approval Disclosure 15 Proxy Voting and Portfolio Holdings Information 16 Privacy Policy Notice 16 Summary of General Information 17 Shareholder Information 17 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. PORTFOLIO SUMMARY - AS OF JUNE 30, 2007 (UNAUDITED) - -------------------------------------------------------------------------------- SECTOR ALLOCATION Percent of Sector Net Assets - -------------------------------------------------------------------------------- Financials 20.2 Information Technology 15.0 Healthcare 11.8 Energy 10.8 Consumer Discretionary 10.7 Industrials 10.6 Consumer Staples 9.4 Telecommunication Services 3.6 Utilities 3.5 Materials 2.5 Closed-End Funds 1.2 Other 0.7 - -------------------------------------------------------------------------------- TOP TEN HOLDINGS, BY ISSUER Percent of Holding Sector Net Assets - -------------------------------------------------------------------------------- 1. Exxon Mobil Corporation Energy 4.6 2. General Electric Company Industrials 2.9 3. Citigroup Inc. Financials 2.2 4. Microsoft Corporation Information Technology 2.2 5. Bank of America Corporation Financials 2.2 6. EMC Corporation Information Technology 2.1 7. Johnson & Johnson Healthcare 1.9 8. AT&T Inc. Telecommunication Services 1.8 9. Procter & Gamble Company (The) Consumer Staples 1.7 10. Cisco Systems, Inc. Information Technology 1.6 - -------------------------------------------------------------------------------- 1 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. SUMMARY SCHEDULE OF INVESTMENTS - JUNE 30, 2007 (UNAUDITED) - -------------------------------------------------------------------------------- No. of Description Shares Value - -------------------------------------------------------------------------------- EQUITY SECURITIES - 99.80% CLOSED-END FUNDS - 1.21% Total Closed-End Funds (a) $ 1,612,969 ------------ CONSUMER DISCRETIONARY - 10.69% Home Depot, Inc. (The) 23,100 908,985 NIKE, Inc., Class B 14,600 851,034 Time Warner Inc. 76,000 1,599,040 Walt Disney Company (The) 27,200 928,608 Other Consumer Discretionary (a) 9,947,228 ------------ 14,234,895 ------------ CONSUMER STAPLES - 9.40% Altria Group, Inc. 22,300 1,564,122 Coca-Cola Company (The) 27,000 1,412,370 PepsiCo, Inc. ^ 17,600 1,141,360 Procter & Gamble Company (The) 37,797 2,312,798 Walgreen Co. 18,800 818,552 Other Consumer Staples (a) 5,267,151 ------------ 12,516,353 ------------ ENERGY - 10.77% Baker Hughes Incorporated ^ 10,600 891,778 Chevron Corporation 24,532 2,066,576 ConocoPhillips 10,474 822,209 Exxon Mobil Corporation 73,500 6,165,179 Marathon Oil Corp. 15,000 899,400 Schlumberger Limited ^ 17,500 1,486,450 Other Energy (a) 2,012,989 ------------ 14,344,581 ------------ FINANCIALS - 20.19% American Express Company ^ 19,600 1,199,128 American International Group, Inc. 16,831 1,178,675 Bank of America Corporation 59,138 2,891,257 Citigroup Inc. 57,300 2,938,917 Goldman Sachs Group, Inc. (The) 7,300 1,582,275 JPMorgan Chase & Co. 36,632 1,774,820 Metlife, Inc. 15,200 980,096 Morgan Stanley 15,500 1,300,140 Prudential Financial, Inc. 10,700 1,040,361 Wachovia Corporation 19,600 1,004,500 Wells Fargo & Company ^ 48,400 1,702,228 Other Financials (a) 9,292,190 ------------ 26,884,587 ------------ HEALTHCARE - 11.84% Abbott Laboratories 28,000 1,499,400 Amgen Inc. * 22,400 1,238,496 Johnson & Johnson 40,900 2,520,258 Medtronic, Inc. 21,500 1,114,990 Merck & Co. Inc. 17,500 871,500 Pfizer Inc. ^ 36,060 922,054 UnitedHealth Group Incorporated 22,000 1,125,080 WellPoint Inc. * 14,000 1,117,620 Wyeth ^ 20,200 1,158,268 Other Healthcare (a) 4,198,800 ------------ 15,766,466 ------------ INDUSTRIALS - 10.63% 3M Co. ^ 9,400 815,826 Boeing Company (The) ^ 9,200 884,672 General Electric Company 100,900 3,862,452 Other Industrials (a) 8,589,444 ------------ 14,152,394 ------------ INFORMATION TECHNOLOGY - 15.00% Cisco Systems, Inc. * 77,400 2,155,590 EMC Corporation * 156,648 2,835,329 Google Inc. * 2,500 1,308,450 Hewlett-Packard Company ^ 19,900 887,938 Intel Corporation 60,500 1,437,480 See accompanying notes to financial statements. 2 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. SUMMARY SCHEDULE OF INVESTMENTS - JUNE 30, 2007 (UNAUDITED) (CONCLUDED) - -------------------------------------------------------------------------------- No. of Description Shares Value - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (CONTINUED) International Business Machines Corporation 12,600 $ 1,326,150 Microsoft Corporation 98,200 2,893,954 Oracle Corporation ^ * 44,272 872,601 Texas Instruments Incorporated 23,900 899,357 Other Information Technology (a) 5,360,048 ------------ 19,976,897 ------------ MATERIALS - 2.50% Total Materials (a) 3,326,658 ------------ REAL ESTATE INVESTMENT TRUST - 0.45% Total Real Estate Investment Trust (a) 604,760 ------------ TELECOMMUNICATION SERVICES - 3.64% AT&T Inc. 56,539 2,346,368 Verizon Communications Inc. 41,300 1,700,321 Other Telecommunication Services (a) 807,542 ------------ 4,854,231 ------------ UTILITIES - 3.48% TXU Corp. 12,400 834,520 Other Utilities (a) 3,805,127 ------------ 4,639,647 ------------ TOTAL EQUITY SECURITIES (cost - $97,627,172) 132,914,438 ------------ Principal Amount Description (000's) Value - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 4.31% REPURCHASE AGREEMENTS - 4.31% Bear, Stearns & Co. Inc. + (Agreements dated 6/29/2007 to be repurchased at $5,738,796) (b) $ 5,737 $ 5,736,895 ------------ TOTAL SHORT-TERM INVESTMENTS (cost - $5,736,895) 5,736,895 ------------ TOTAL INVESTMENTS - 104.11% (cost - $103,364,067) 138,651,333 ------------ LIABILITIES IN EXCESS OF OTHER ASSETS - (4.11)% (5,477,390) ------------ NET ASSETS - 100.00% $133,173,943 ============ - ---------- * Non-income producing security. + Includes investments purchased with collateral received for securities on loan. ^ Security or a portion thereof is out on loan. (a) Represents issues not identified as a top 50 holding in terms of market value and issues or issuers not exceeding 1% of net assets individually or in the aggregate, respectively, as of June 30, 2007. (b) At June 29, 2007, the maturity date for all repurchase agreements held was July 2, 2007, with interest rates ranging from 2.6875% to 5.3750% and collateralized by $5,845,698 in U.S. Treasury Bonds. See accompanying notes to financial statements. 3 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2007 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Investments, at value, including collateral for securities on loan of $5,439,510 (Cost $103,364,067)(1) $138,651,333 Receivables: Dividends 131,585 Interest 2,726 Prepaid expenses 14,484 ------------ Total Assets 138,800,128 ------------ LIABILITIES Payables: Upon return of securities loaned 5,439,510 Investment management fees (net of fee waivers) 103,088 Directors' fees 31,907 Other accrued expenses 49,820 Due to custodian 1,860 ------------ Total Liabilities 5,626,185 ------------ NET ASSETS (applicable to 26,086,455 shares of common stock outstanding) $133,173,943 ============ NET ASSET VALUE PER SHARE ($133,173,943 / 26,086,455) $ 5.11 ============ NET ASSETS CONSISTS OF Capital stock, $0.001 par value; 26,703,891 shares issued and 26,086,455 shares outstanding (100,000,000 shares authorized) $ 26,086 Paid-in capital 120,327,590 Cost of 617,435 shares repurchased (17,153,887) Accumulated net realized loss on investments (5,313,112) Net unrealized appreciation in value of investments 35,287,266 ------------ Net assets applicable to shares outstanding $133,173,943 ============
- ---------- (1) Includes securities out on loan to brokers with a market value of $5,369,277. See accompanying notes to financial statements. 4 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends $ 1,322,381 Interest 21,139 Securities lending 22,148 ------------ Total Investment Income 1,365,668 ------------ Expenses: Investment management fees 665,546 Administration fees 66,554 Directors' fees 54,300 Legal and audit fees 30,002 Printing 24,661 Accounting fees 19,525 Transfer agent fees 12,127 Custodian fees 10,860 Stock exchange listing fees 8,285 Insurance 4,158 ------------ Total Expenses 896,018 Less: Management fee waivers (63,663) Less: Fees paid indirectly (10,860) ------------ Net Expenses 821,495 ------------ Net Investment Income 544,173 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investments 1,766,010 Capital gain distributions from regulated investment companies 495 Net change in unrealized appreciation in value of investments 6,129,486 ------------ Net realized and unrealized gain on investments 7,895,991 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 8,440,164 ============
See accompanying notes to financial statements. 5 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2007 For the Year Ended (unaudited) December 31, 2006 ------------ ------------------ DECREASE IN NET ASSETS Operations: Net investment income $ 544,173 $ 1,150,839 Net realized gain/(loss) from investments 1,766,010 (61,098) Capital gain distributions from regulated investment companies 495 39,515 Net change in unrealized appreciation in value of investments 6,129,486 16,725,100 ------------ ------------ Net increase in net assets resulting from operations 8,440,164 17,854,356 ------------ ------------ Dividends and distributions to shareholders: Net investment income (544,173) (1,150,839) Net realized capital gains (1,766,010) -- Return-of-capital (12,120,607) (25,065,536) ------------ ------------ Total dividends and distributions to shareholders (14,430,790) (26,216,375) ------------ ------------ Capital stock transactions: Proceeds from 443,381 and 932,769 shares newly issued or from treasury in reinvestment of dividends and distributions, respectively 2,820,240 5,000,232 ------------ ------------ Total decrease in net assets (3,170,386) (3,361,787) ------------ ------------ NET ASSETS Beginning of period 136,344,329 139,706,116 ------------ ------------ End of period $133,173,943 $136,344,329 ============ ============
See accompanying notes to financial statements. 6 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for each period indicated. This information has been derived from information provided in the financial statements and market price data for the Fund's shares.
For the Six Months Ended For the Years Ended December 31, June 30, 2007 ------------------------------------------------------------ (unaudited) 2006 2005 2004 2003 2002 ----------- ---- ---- ---- ---- ---- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 5.32 $ 5.65 $ 6.48 $ 6.90 $ 6.41 $ 9.20 -------- -------- -------- -------- -------- -------- Net investment income/(loss) # 0.02 0.05 0.03 0.05 0.04 (0.01) Net realized and unrealized gain/(loss) on investments 0.31 0.66 0.18 0.55 1.44 (2.29) -------- -------- -------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations 0.33 0.71 0.21 0.60 1.48 (2.30) -------- -------- -------- -------- -------- -------- Dividends and distributions to shareholders: Net investment income (0.02) (0.04) (0.04) (0.05) (0.04) -- Net realized capital gains (0.07) -- (1.00) -- -- -- Return-of-capital (0.47) (1.00) -- (0.99) (0.95) (0.50) -------- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders (0.56) (1.04) (1.04) (1.04) (0.99) (0.50) -------- -------- -------- -------- -------- -------- Capital stock transactions: Anti-dilutive effect due to capital stock repurchased -- -- -- -- -- 0.02 Anti-dilutive/(dilutive) effect due to shares issued in reinvestment of dividends and distributions 0.02 -- -- 0.02 -- (0.01) -------- -------- -------- -------- -------- -------- Total capital stock transactions 0.02 -- -- 0.02 -- 0.01 -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 5.11 $ 5.32 $ 5.65 $ 6.48 $ 6.90 $ 6.41 ======== ======== ======== ======== ======== ======== Market value, end of period $ 9.18 $ 8.45 $ 7.05 $ 8.51 $ 9.00 $ 5.85 ======== ======== ======== ======== ======== ======== Total investment return (a) 18.30% 45.36% (1.32)% 8.38% 77.69% (20.85)% ======== ======== ======== ======== ======== ======== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $133,174 $136,344 $139,706 $154,690 $ 26,565 $ 24,376 Ratio of expenses to average net assets, net of fee waivers, if any (b) 1.22%(d) 1.22% 1.20% 1.28% 1.20% 1.80% Ratio of expenses to average net assets, excluding fee waivers, if any (c) 1.32%(d) 1.32% 1.36% 1.50% 1.59% 2.17% Ratio of expenses to average net assets, net of fee waivers, if any (c) 1.24%(d) 1.25% 1.26% 1.36% 1.25% 1.86% Ratio of net investment income/(loss) to average net assets 0.81%(d) 0.85% 0.58% 0.73% 0.68% (0.13)% Portfolio turnover rate 2.82% 10.59% 21.60% 39.05% 11.88% 29.63%
# Based on average shares outstanding. (a) Total investment return at market value is based on the changes in market price of a share during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Fund's dividend reinvestment plan. Total investment return does not reflect brokerage commissions. (b) Expenses are net of fees paid indirectly. (c) Expenses exclude the reduction for fees paid indirectly. (d) Annualized. See accompanying notes to financial statements. 7 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE A. SIGNIFICANT ACCOUNTING POLICIES Cornerstone Strategic Value Fund, Inc. (the "Fund") was incorporated in Maryland on May 1, 1987 and commenced investment operations on June 30, 1987. Its investment objective is to seek long-term capital appreciation through investment primarily in equity securities of U.S. and non-U.S. companies. The Fund is registered under the Investment Company Act of 1940, as amended, as a closed-end, diversified management investment company. The following is a summary of significant accounting policies consistently followed by the Fund: MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires management to make certain estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. PORTFOLIO VALUATION: Investments are stated at value in the accompanying financial statements. All equity securities shall be valued at the closing price on the exchange or market on which the security is primarily traded ("Primary Market"). If the security did not trade on the Primary Market, it shall be valued at the closing price on another exchange where it trades. If there are no such sale prices, the value shall be the most recent bid, and if there is no bid, the security shall be valued at the most recent asked. If no pricing service is available and there are more than two dealers, the value shall be the mean of the highest bid and lowest ask. If there is only one dealer, then the value shall be the mean if bid and ask are available, otherwise the value shall be the bid. All other securities and assets are valued as determined in good faith by the Board of Directors. Short-term investments having a maturity of 60 days or less are valued on the basis of amortized cost. Securities and assets for which market quotations are not readily available are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of financial and non-financial information about the company; comparisons to the valuation and changes in valuation of similar securities, including reference to special reports prepared by analysts and or reports published in the financial press, the financial conditions and prospects of the issuer available, including considering any recent management or capital structure changes or other recent events that may impact the price of the security; and evaluation of any other information that could be indicative of the value of the security. At June 30, 2007, the Fund held no securities valued in good faith by the Board of Directors. The net asset value per share of the Fund is calculated weekly and on the last business day of the month with the exception of those days on which the American Stock Exchange, LLC is closed. On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years, beginning after November 15, 2007 and interim periods within those fiscal years. At this time, the Fund is evaluating the implication of FAS 157 and its impact on the financial statements has not yet been determined. REPURCHASE AGREEMENTS: The Fund has agreed to purchase securities from financial institutions subject to the seller's agreement to repurchase them at an agreed-upon time and price ("repurchase agreements"). The financial institutions with whom the Fund enters into repurchase agreements are banks and broker/dealers, which Cornerstone Advisors, Inc. (the Fund's "Investment Manager" or "Cornerstone") considers creditworthy. The seller under a repurchase agreement will be required to maintain the value of the securities as collateral, subject to the agreement at not less than the 8 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- repurchase price plus accrued interest. Cornerstone monitors daily, the mark-to-market of the value of the collateral, and, if necessary, requires the seller to maintain additional securities, so that the value of the collateral is not less than the repurchase price. Default by or bankruptcy of the seller would, however, expose the Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on an accrual basis; dividend income is recorded on the ex- dividend date. TAXES: No provision is made for U.S. federal income or excise taxes as it is the Fund's intention to continue to qualify as a regulated investment company and to make the requisite distributions to its shareholders which will be sufficient to relieve it from all or substantially all U.S. federal income and excise taxes. In July 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an interpretation of FASB Statement No. 109. FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more likely than not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is effective during the first required financial reporting period for fiscal years beginning after December 15, 2006. Management adopted FIN 48 on June 29, 2007. There was no material impact to the financial statements or disclosures thereto as a result of the adoption of this pronouncement. DISTRIBUTIONS TO SHAREHOLDERS: Effective June 25, 2002, the Fund initiated a fixed, monthly distribution to shareholders. On November 29, 2006, this distribution policy was updated to provide for the annual resetting of the monthly distribution amount per share, beginning in 2007, based on the Fund's net asset value on the last business day in each October. The terms of the distribution policy will be reviewed and approved at least annually by the Fund's Board of Directors and can be modified at their discretion. To the extent that these distributions exceed the current earnings of the Fund, the balance will be generated from sales of portfolio securities held by the Fund, which will either be short-term or long-term capital gains or a tax-free return-of-capital. To the extent these distributions are not represented by net investment income and capital gains, they will not represent yield or investment return on the Fund's investment portfolio. The Fund plans to maintain this distribution policy even if regulatory requirements would make part of a return-of-capital, necessary to maintain the distribution, taxable to shareholders and to disclose that portion of the distribution that is classified as ordinary income. Although it has no current intention to do so, the Board may terminate this distribution policy at any time and such termination may have an adverse effect on the market price for the Fund's common shares. The Fund determines annually whether to distribute any net realized long-term capital gains in excess of net realized short-term capital losses, including capital loss carryovers, if any. To the extent that the Fund's taxable income in any calendar year exceeds the aggregate amount distributed pursuant to this distribution policy, an additional distribution may be made to avoid the payment of a 4% U.S. federal excise tax, and to the extent that the aggregate amount distributed in any calendar year exceeds the Fund's taxable income, the amount of that excess may 9 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- constitute a return-of-capital for tax purposes. A return-of-capital distribution reduces the cost basis of an investor's shares in the Fund. Dividends and distributions to shareholders are recorded by the Fund on the ex-dividend date. NOTE B. AGREEMENTS Cornerstone serves as the Fund's Investment Manager with respect to all investments. As compensation for its investment management services, Cornerstone receives from the Fund, an annual fee, calculated weekly and paid monthly, equal to 1.00% of the Fund's average weekly net assets. For the year 2007, Cornerstone voluntarily agreed to waive its management fees from the Fund to the extent that the Fund's net monthly operating expenses (including basic legal fees but excluding other legal expenses) exceed a rate of 0.10% of average net assets. For the six months ended June 30, 2007, Cornerstone earned $665,546 for investment management services, of which it waived $63,663. The Investment Manager may discontinue such undertaking at any time during the fiscal year without notice to fund shareholders. Included in the Statement of Operations, under the caption Fees paid indirectly, are expense offsets of $10,860 arising from credits earned on portfolio transactions executed with a broker, pursuant to a directed brokerage arrangement. The Fund paid or accrued approximately $19,410 for the six months ended June 30, 2007 for legal services to Blank Rome LLP ("Blank"), counsel to the Fund. Thomas R. Westle, partner of Blank, serves as Secretary of the Fund. NOTE C. INVESTMENT IN SECURITIES For the six months ended June 30, 2007, purchases and sales of securities, other than short-term investments, were $3,776,432 and $14,540,402 respectively. NOTE D. SHARE REPURCHASE PROGRAM As has been done in the past to enhance shareholder value, pursuant to Section 23 of the Investment Company Act of 1940, as amended, the Fund may again in the future purchase shares of its common stock on the open market from time to time, at such times, and in such amounts as may be deemed advantageous to the Fund. Nothing herein shall be considered a commitment to purchase such shares. The Fund had no repurchases during the six months ended June 30, 2007. No limit has been placed on the number of shares to be repurchased by the Fund other than those imposed by federal securities laws. All purchases are made in accordance with federal securities laws, with shares repurchased held in treasury effective January 1, 2002, for future use by the Fund. NOTE E. SECURITIES LENDING To generate additional income, the Fund may lend up to 33 1/3% of its total assets. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn interest on the investment of cash collateral. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Loans of securities are required at all times to be secured by collateral equal to at least 100% of the market value of securities on loan. However, in the event of default or bankruptcy of the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. In the event that the borrower fails to return securities, and collateral maintained by the lender is insufficient to cover the value of loaned securities, the borrower is obligated to pay the amount of the shortfall (and interest thereon) to the Fund. However, there can be no assurance the Fund can recover this amount. 10 - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED) - -------------------------------------------------------------------------------- The value of securities on loan to brokers at June 30, 2007, was $5,369,277. During the six months ended June 30, 2007, the Fund earned $22,148 in securities lending income which is included under the caption Securities lending in the Statement of Operations. NOTE F. FEDERAL INCOME TAXES Income and capital gains distributions are deter- mined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of losses deferred due to wash sales and Post-October losses (as later defined), and excise tax regulations. The tax character of dividends and distributions paid during the years ended December 31, for the Fund were as follows: ORDINARY INCOME RETURN-OF-CAPITAL --------------- ----------------- 2006 2005 2006 2005 ---- ---- ---- ---- $1,150,839 $980,195 $25,065,536 -- LONG-TERM CAPITAL GAINS ----------------------- 2006 2005 ---- ---- -- $24,369,995 Under current tax law, certain capital losses realized after October 31 within a taxable year may be deferred and treated as occurring on the first day of the following tax year ("Post-October losses"). For the tax period ended December 31, 2006, the Fund did not incur Post-October losses. At December 31, 2006, the Fund had a capital loss carryforward for U.S. federal income tax purposes of $5,257,673 of which $2,513,030 expires in 2008, $1,281,365 expires in 2009, $693,207 expires in 2010, $635,700 expires in 2011, and $134,371 expires in 2012. At June 30, 2007, 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 $103,420,001, $35,818,433, $(587,101) and $35,231,332, respectively. 11 RESULTS OF ANNUAL MEETING OF STOCKHOLDERS (UNAUDITED) On April 16, 2007, the Annual Meeting of Stockholders of Cornerstone Strategic Value Fund, Inc. was held and the following matter was voted upon based on 25,739,422 shares of common stock outstanding on February 16, 2007: (1) To approve the re-election of two Class III Directors until the 2010 Annual Meeting. NAME OF CLASS III DIRECTORS FOR WITHHOLD Andrew A. Strauss 24,097,615 299,467 Glenn W. Wilcox, Sr. 24,100,656 296,427 12 DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED) Cornerstone Strategic Value Fund, Inc. operates a Dividend Reinvestment Plan (the "Plan"), sponsored and administered by American Stock Transfer & Trust Company (the "Agent"), pursuant to which the Fund's income dividends or capital gains or other distributions (each, a "Distribution" and collectively, "Distributions"), net of any applicable U.S. withholding tax, are reinvested in shares of the Fund. American Stock Transfer & Trust Company serves as the Agent that administers the Plan for the shareholders in the Plan. Shareholders automatically participate in the Fund's Plan, unless and until an election is made to withdraw from the Plan on behalf of such participating share- holder. Shareholders who do not wish to have Distributions automatically reinvested should so notify the Agent at P.O. Box 922, Wall Street Station, New York, New York 10269-0560. Under the Plan, the Fund's Distributions to shareholders are reinvested in full and fractional shares as described below. When the Fund declares a Distribution the Agent, on the shareholder's behalf, will (i) receive additional authorized shares from the Fund either newly issued or repurchased from shareholders by the Fund and held as treasury stock ("Newly Issued Shares") or (ii) purchase outstanding shares on the open market, on the American Stock Exchange, LLC or elsewhere, with cash allocated to it by the Fund ("Open Market Purchases"). The method for determining the number of shares to be received when Distributions are reinvested will vary depending upon whether the net asset value of the Fund's shares is higher or lower than its market price. If the net asset value of the Fund's shares is lower than its market price, the number of Newly Issued Shares received will be determined by dividing the amount of the Distribution either by the Fund's net asset value per share or by 95% of its market price, whichever is higher. If the net asset value of the Fund's shares is higher than its market price, shares acquired by the Agent in Open Market Purchases will be allocated to the reinvesting share- holders based on the average cost of such Open Market Purchases. Whenever the Fund declares a Distribution and the net asset value of the Fund's shares is higher than its market price, the Agent will apply the amount of such Distribution payable to Plan participants of the Fund in Fund shares (less such Plan participant's pro rata share of brokerage commissions incurred with respect to Open Market Purchases in connection with the reinvestment of such Distribution) to the purchase on the open market of Fund shares for such Plan participant's account. Such purchases will be made on or after the payable date for such Distribution, and in no event more than 30 days after such date except where temporary curtailment or suspension of purchase is necessary to comply with applicable provisions of federal securities laws. The Agent may aggregate a Plan participant's purchases with the purchases of other Plan participants, and the average price (including brokerage commissions) of all shares purchased by the Agent shall be the price per share allocable to each Plan participant. Registered shareholders who do not wish to have their Distributions automatically reinvested should so notify the Fund in writing. If a shareholder has not elected to receive cash Distributions and the Agent does not receive notice of an election to receive cash Distributions prior to the record date of any Distribution, the shareholder will automatically receive such Distributions in additional shares. Participants in the Plan may withdraw from the Plan by providing written notice to the Agent at least 30 days prior to the applicable Distribution payment date. When a Participant withdraws from the Plan, or upon suspension or termination of the Plan at the sole discretion of the Fund's Board of Directors, certificates for whole shares credited to his or her account under the Plan will, upon request, be issued. Whether or not a participant requests that certificates for whole shares be issued, a cash payment will be made for any fraction of a share credited to such account. The Agent will maintain all shareholder accounts in the Plan and furnish written confirmations of all transactions in the accounts, including information needed by shareholders for personal and tax records. 13 DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED) (CONCLUDED) The Agent will hold shares in the account of the Plan participant in non-certificated form in the name of the participant, and each shareholder's proxy will include those shares purchased pursuant to the Plan. Each participant, nevertheless, has the right to receive certificates for whole shares owned. The Agent will distribute all proxy solicitation materials to participating shareholders. In the case of shareholders, such as banks, brokers or nominees, that hold shares for others who are beneficial owners participating in the Plan, the Agent will administer the Plan on the basis of the number of shares certified from time to time by the record shareholder as representing the total amount of shares registered in the shareholder's name and held for the account of beneficial owners participating in the Plan. Neither the Agent nor the Fund shall have any responsibility or liability beyond the exercise of ordinary care for any action taken or omitted pursuant to the Plan, nor shall they have any duties, responsibilities or liabilities except such as expressly set forth herein. Neither shall they be liable hereunder for any act done in good faith or for any good faith omissions to act, including, without limitation, failure to terminate a participants account prior to receipt of written notice of his or her death or with respect to prices at which shares are purchased or sold for the participants account and the terms on which such purchases and sales are made, subject to applicable provisions of the federal securities laws. All correspondence concerning the Plan should be directed to the Agent at P.O. Box 922, Wall Street Station, New York, New York 10269-0560. Certain transactions can be performed online at www.amstock.com or by calling the toll free number 877-864-4833. 14 INVESTMENT MANAGEMENT AGREEMENT APPROVAL DISCLOSURE (UNAUDITED) The Board of Directors including, the Independent Directors, (the "Board") of Cornerstone Strategic Value Fund, Inc.(the "Fund") considers the approval of the Investment Management Agreement (the "Agreement") between Cornerstone Advisors, Inc. (the "Investment Manager") and the Fund on an annual basis. The most recent approval of the Agreement occurred at a meeting of the Board held on February 16, 2007. In determining whether to approve the Agreement, the Board requested and received extensive materials and information from the Investment Manager to assist them in considering the approval of the continuance of the Agreement. Based on their review of the information requested and provided, and the discussions with management of the Investment Manager, the Board determined that the approval of the Agreement was consistent with the best interests of the Fund and its shareholders, and would enable the Fund to continue to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its shareholders. The Board made these determinations on the basis of the following factors, among others: (1) the nature and quality of the services provided by the Investment Manager; (2) the cost to the Investment Manager for providing such services, with special attention to the Investment Manager's profitability (and whether the Investment Manager realizes any economies of scale); (3) the direct and indirect benefits received by the Investment Manager from its relationship with the Fund and the other investment company advised by the Investment Manager; and (4) comparative information as to the management fees, expense ratios and performance of other similarly situated closed-end investment companies. The materials provided by the Investment Manager to the Board described the services provided by the Investment Manager to the Fund and included an overview of the Investment Manager and its investment process and policies, including the Investment Manager's extensive knowledge and experience in the closed-end fund industry. The Board also discussed the knowledge of the Investment Manager with respect to managing the Fund's monthly distribution policy and the extent to which such policy contributes to the market's positive valuation of the Fund. The Board also favorably received the Investment Manager's continued commitment to voluntarily waive its management fees from the Fund to the extent that monthly operating expenses exceed 0.10% of average net assets calculated monthly (including basic legal fees but excluding other extraordinary legal expenses). The Board also reviewed and discussed a comparison of the Fund's performance with comparable closed-end funds and a comparison of the Fund's expense ratios and management fees with those comparable funds. Additionally, the Investment Manager presented an analysis of its profitability based on its contractual relationship with the Fund and the other investment company advised by the Investment Manager. The Board carefully evaluated this information, taking into consideration many factors including, the overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of the Investment Manager, and was advised by independent legal counsel with respect to its deliberations. Based on its review of the information requested and provided, the Board determined that the management fees payable to the Investment Manager under the Agreement are fair and reasonable in light of the services to be provided, the anticipated costs of these services, the profitability of the Investment Manager's relationship with the Fund, and the comparability of the proposed fee to fees paid by comparable closed-end funds. The Board determined that the Agreement is consistent with the best interests of the Fund and its share- holders, and enables the Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its shareholders. Accordingly, in light of the above considerations and such other factors and information it considered relevant, the Board by a unanimous vote of those present in person at the meeting (including a separate vote of the Independent Directors present in person at the meeting) approved the continuance of the Agreement with respect to the Fund. 15 PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED) Information regarding how Cornerstone Strategic Value Fund, Inc. (the "Fund") voted proxies related to its portfolio securities during the 12-month period ended June 30 of each year as well as the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities are available by calling (212) 272-3550 or on the website of the Securities and Exchange Commission, http://www.sec.gov. This report incorporates a Summary Schedule of Investments for the Fund. A complete Schedule of Investments for the Fund may be obtained free of charge by contacting the Fund at (212) 272-3550. The Fund files a complete schedule of its portfolio holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling (202) 551-8090. PRIVACY POLICY NOTICE (UNAUDITED) The following is a description of Cornerstone Strategic Value Fund, Inc.'s (the "Fund") policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how your nonpublic personal information would be shared with unaffiliated third parties. CATEGORIES OF INFORMATION THE FUND COLLECTS. The Fund collects the following nonpublic personal information about you: 1. Information from the Consumer: this category includes information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address phone number, social security number, assets, income and date of birth); and 2. Information about the Consumer's transactions: this category includes information about your trans- actions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information). CATEGORIES OF INFORMATION THE FUND DISCLOSES. The Fund does not disclose any nonpublic personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund's custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you. CONFIDENTIALITY AND SECURITY. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information. 16 SUMMARY OF GENERAL INFORMATION (UNAUDITED) Cornerstone Strategic Value Fund, Inc. is a closed-end, diversified investment company whose shares trade on the American Stock Exchange, LLC. Its investment objective is to seek long-term capital appreciation through investment primarily in equity securities of U.S. and non-U.S. companies. The Fund is managed by Cornerstone Advisors, Inc. SHAREHOLDER INFORMATION (UNAUDITED) The Fund is listed on the American Stock Exchange, LLC (symbol "CLM"). The share price is published in: The New York Times (daily) under the designation "CornerStrt" and The Wall Street Journal (daily) and Barron's (each Monday) under the designation "CornstnStrat." The net asset value per share is available weekly and may be obtained by contacting the Fund at the general inquiry phone number. - -------------------------------------------------------------------------------- Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that Cornerstone Strategic Value Fund, Inc. may from time to time purchase shares of its capital stock in the open market. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This report, including the financial statements herein, is sent to the shareholders of the Fund for their information. The financial information from the records of the Fund without examination by independent registered public accountants who do not express an opinion thereon. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. - -------------------------------------------------------------------------------- 17 CORNERSTONE STRATEGIC VALUE FUND, INC. DIRECTORS AND CORPORATE OFFICERS Ralph W. Bradshaw Chairman of the Board of Directors and President William A. Clark Director and Vice President Thomas H. Lenagh Director Edwin Meese III Director Scott B. Rogers Director Andrew A. Strauss Director Glenn W. Wilcox, Sr. Director Gary A. Bentz Chief Compliance Officer Thomas R. Westle Secretary Jodi B. Levine Treasurer INVESTMENT MANAGER Cornerstone Advisors, Inc. One West Pack Square Suite 1650 Asheville, NC 28801 ADMINISTRATOR Bear Stearns Funds Management Inc. 383 Madison Avenue New York, NY 10179 CUSTODIAN Custodial Trust Company 101 Carnegie Center Princeton, NJ 08540 EXECUTIVE OFFICES 383 Madison Avenue New York, NY 10179 STOCK TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Co. 59 Maiden Lane New York, NY 10038 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street Suite 2400 Philadelphia, PA 19103 LEGAL COUNSEL Blank Rome LLP 405 Lexington Avenue New York, NY 10174 For shareholder inquiries, registered shareholders should call (800) 937-5449. For general inquiries, please call (212) 272-3550. [AMEX LOGO] LISTED CLM(TM) ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. - -------------------------------------------------------------------------------- CORNERSTONE STRATEGIC VALUE FUND, INC. SCHEDULE OF INVESTMENTS -- JUNE 30, 2007 (UNAUDITED) - -------------------------------------------------------------------------------- NO. OF DESCRIPTION SHARES VALUE - -------------------------------------------------------------------------------- EQUITY SECURITIES - 99.80% CLOSED-END FUNDS - 1.21% Adams Express Company 49,500 $ 737,055 General American Investors Company ^ 3,000 121,650 Liberty All-Star Equity Fund 67,300 604,354 Liberty All-Star Growth Fund, Inc. 26,300 149,910 ------------ 1,612,969 ------------ CONSUMER DISCRETIONARY - 10.69% Amazon.com, Inc. ^ * 5,500 376,255 Bed Bath & Beyond Inc. * 4,200 151,158 Best Buy Co., Inc. ^ 3,625 169,179 Carnival Corporation ^ 11,800 575,486 Citadel Broadcasting Corporation 2,088 13,468 Clear Channel Communications, Inc. 3,300 124,806 Coach, Inc. * 3,500 165,865 Comcast Corporation, Class A * 28,555 802,967 Fortune Brands, Inc. 3,500 288,295 Gannett Co., Inc. 3,500 192,325 Gap, Inc. (The) 12,200 233,020 Goodyear Tire & Rubber Company (The) * 4,500 156,420 Harley-Davidson, Inc. 4,400 262,284 Hilton Hotels Corporation 6,200 207,514 Home Depot, Inc. (The) 23,100 908,985 J.C. Penney Company, Inc. 4,500 325,710 Johnson Controls, Inc. 2,500 289,425 Kohl's Corporation * 2,500 177,575 Lowe's Companies, Inc. 22,400 687,456 Macy's, Inc. 11,052 439,649 Marriott International, Inc., Class A 4,200 181,608 Mattel, Inc. 5,500 139,095 McDonald's Corporation 15,100 766,476 News Corporation, Class A 23,000 487,830 NIKE, Inc., Class B 14,600 851,034 Omnicom Group Inc. ^ 13,200 698,544 Sears Holdings Corporation * 503 85,258 Staples, Inc. 10,800 256,284 Starbucks Corporation * 5,800 152,192 Target Corporation 11,800 750,480 Time Warner Inc. 76,000 1,599,040 TJX Companies, Inc. (The) 3,000 82,500 Toyota Motor Corporation ADR ^ 2,500 314,700 Viacom Inc., Class B * 9,450 393,404 Walt Disney Company (The) 27,200 928,608 ------------ 14,234,895 ------------ CONSUMER STAPLES - 9.40% Altria Group, Inc. 22,300 1,564,122 Anheuser-Busch Companies, Inc. 6,200 323,392 Archer-Daniels-Midland Company 9,460 313,031 Coca-Cola Company (The) 27,000 1,412,370 Colgate-Palmolive Company 3,400 220,490 ConAgra Foods, Inc. 6,900 185,334 Costco Wholesale Corporation ^ 4,000 234,080 CVS Corporation 18,430 671,774 General Mills, Inc. ^ 12,000 701,040 H.J. Heinz Company 4,000 189,880 Kimberly-Clark Corporation 5,500 367,895 Kraft Foods Inc, Class A 15,432 543,978 Kroger Co. (The) 13,800 388,194 PepsiCo, Inc. ^ 17,600 1,141,360 Procter & Gamble Company (The) 37,797 2,312,798 Sara Lee Corporation 4,500 78,300 Sysco Corporation 9,800 323,302 Walgreen Co. 18,800 818,552 Wal-Mart Stores, Inc. 15,100 726,461 ------------ 12,516,353 ------------ ENERGY - 10.77% Anadarko Petroleum Corp. 2,600 135,174 Baker Hughes Incorporated ^ 10,600 891,778 BJ Services Company 3,500 99,540 Chevron Corporation 24,532 2,066,576 ConocoPhillips 10,474 822,209 Devon Energy Corporation 2,500 195,725 Exxon Mobil Corporation 73,500 6,165,179 Halliburton Company 6,700 231,150 Marathon Oil Corp. 15,000 899,400 Occidental Petroleum Corporation 10,500 607,740 Schlumberger Limited ^ 17,500 1,486,450 Valero Energy Corporation 6,000 443,160 XTO Energy, Inc. 5,000 300,500 ------------ 14,344,581 ------------ FINANCIALS - 20.19% AFLAC Incorporated 7,000 359,800 Allstate Corporation (The) 9,300 572,043 American Express Company ^ 19,600 1,199,128 American International Group, Inc. 16,831 1,178,675 Aon Corporation 4,900 208,789 Bank of America Corporation 59,138 2,891,257 Bank of New York Company, Inc. (The) 11,400 472,416 BB&T Corporation 4,000 162,720 Bear Stearns Companies, Inc. (The) 2,500 350,000 Broadridge Financial Solutions Inc. 3,850 73,612 CB Richard Ellis Group, Inc., Class A ^ * 6,500 237,250 Charles Schwab Corporation (The) 6,000 123,120 Chubb Corporation (The) 4,100 221,974 Citigroup Inc. 57,300 2,938,917 Fannie Mae 4,000 261,320 Franklin Resources, Inc. ^ 3,700 490,139 Freddie Mac 2,900 176,030 Goldman Sachs Group, Inc. (The) 7,300 1,582,275 Hartford Financial Services Group, Inc. (The) 6,000 591,060 JPMorgan Chase & Co. 36,632 1,774,820 Lehman Brothers Holdings Inc. ^ 7,200 536,544 Marsh & McLennan Companies, Inc. ^ 6,000 185,280 Merrill Lynch & Co., Inc. 7,200 601,776 Metlife, Inc. 15,200 980,096 Morgan Stanley 15,500 1,300,140 National City Corporation 12,700 423,164 PNC Financial Services Group, Inc. ^ 4,600 329,268 Prudential Financial, Inc. 10,700 1,040,361 State Street Corporation ^ 3,500 239,400 SunTrust Banks, Inc. 7,600 651,624 Travelers Companies, Inc. (The) ^ 9,476 506,966 U.S. Bancorp ^ 21,901 721,638 UnumProvident Corporation 2,600 67,886 Wachovia Corporation 19,600 1,004,500 Washington Mutual, Inc. ^ 11,550 492,492 Wells Fargo & Company ^ 48,400 1,702,228 Western Union Company ^ 11,324 235,879 ------------ 26,884,587 ------------ HEALTHCARE - 11.84% Abbott Laboratories 28,000 1,499,400 Aetna Inc. 6,000 296,400 Amgen Inc. * 22,400 1,238,496 Applera Corporation 8,000 244,320 Baxter International Inc. 5,000 281,700 Becton, Dickinson and Company 6,900 514,050 Biogen Idec Inc. * 3,000 160,500 Bristol-Myers Squibb Company 18,500 583,860 Cardinal Health, Inc. 2,950 208,388 Eli Lilly and Company 4,700 262,636 Gilead Sciences, Inc. * 7,000 271,390 IMS Health Incorporated ^ 3,000 96,390 Johnson & Johnson 40,900 2,520,258 McKesson Corporation 5,300 316,092 Medco Health Solutions, Inc. * 2,687 209,559 Medtronic, Inc. 21,500 1,114,990 Merck & Co. Inc. 17,500 871,500 Pfizer Inc. ^ 36,060 922,054 Schering-Plough Corporation 17,500 532,700 Stryker Corporation 3,500 220,815 UnitedHealth Group Incorporated 22,000 1,125,080 WellPoint Inc. * 14,000 1,117,620 Wyeth ^ 20,200 1,158,268 ------------ 15,766,466 ------------ INDUSTRIALS - 10.63% 3M Co. ^ 9,400 815,826 Boeing Company (The) ^ 9,200 884,672 Burlington Northern Santa Fe Corporation 2,900 246,906 Caterpillar Inc. 6,800 532,440 CSX Corporation 10,000 450,800 Danaher Corporation 3,500 264,250 Emerson Electric Co. 12,000 561,600 FedEx Corp. ^ 4,500 499,365 General Dynamics Corporation ^ 6,200 484,964 General Electric Company 100,900 3,862,452 Honeywell International Inc. ^ 12,500 703,500 Illinois Tool Works Inc. 13,300 720,727 Ingersoll-Rand Company Ltd., Class A 4,500 246,690 Lockheed Martin Corporation 4,000 376,520 Norfolk Southern Corporation ^ 5,500 289,135 Northrop Grumman Corporation ^ 5,000 389,350 Southwest Airlines Co. 5,700 84,987 Tyco International Ltd. ^ 10,397 351,315 Union Pacific Corporation 2,000 230,300 United Parcel Service, Inc., Class B 9,600 700,800 United Technologies Corporation 11,000 780,230 Waste Management, Inc. ^ 17,300 675,565 ------------ 14,152,394 ------------ INFORMATION TECHNOLOGY - 15.00% Adobe Systems Incorporated * 4,200 168,630 Agilent Technologies Inc. * 8,000 307,520 Analog Devices, Inc. 3,500 131,740 Apple Computer, Inc. ^ * 3,000 366,120 Applied Materials, Inc. ^ 33,800 671,606 Automatic Data Processing, Inc. ^ 15,400 746,438 Cisco Systems, Inc. * 77,400 2,155,590 Corning Incorporated * 8,000 204,400 Dell Inc. * 4,700 134,185 eBay Inc. * 8,500 273,530 Electronic Data Systems Corporation 5,000 138,650 EMC Corporation * 156,648 2,835,329 First Data Corporation ^ 15,824 516,970 Google Inc. * 2,500 1,308,450 Hewlett-Packard Company ^ 19,900 887,938 Intel Corporation 60,500 1,437,480 International Business Machines Corporation 12,600 1,326,150 Micron Technology, Inc. ^ * 11,500 144,095 Microsoft Corporation 98,200 2,893,954 Motorola, Inc. 15,200 269,040 Oracle Corporation ^ * 44,272 872,601 QUALCOMM Inc. 17,000 737,630 Sun Microsystems, Inc. * 7,500 39,450 Texas Instruments Incorporated 23,900 899,357 Yahoo! Inc. * 18,800 510,044 ------------ 19,976,897 ------------ MATERIALS - 2.50% Alcoa Inc. 16,900 684,957 Dow Chemical Company (The) 10,400 459,888 E. I. du Pont de Nemours and Company 14,800 752,432 International Paper Company ^ 10,500 410,025 Monsanto Company 10,160 686,206 Newmont Mining Corporation ^ 3,000 117,180 Praxair, Inc. 3,000 215,970 ------------ 3,326,658 ------------ REAL ESTATE INVESTMENT TRUST - 0.45% Simon Property Group, Inc. ^ 6,500 604,760 ------------ TELECOMMUNICATION SERVICES - 3.64% ALLTEL Corporation 4,000 270,200 AT&T Inc. 56,539 2,346,368 Sprint Nextel Corporation ^ 25,946 537,342 Verizon Communications Inc. 41,300 1,700,321 ------------ 4,854,231 ------------ UTILITIES - 3.48% American Electric Power Company, Inc. ^ 8,000 360,320 CenterPoint Energy, Inc. 10,000 174,000 Dominion Resources, Inc. ^ 4,600 397,026 Duke Energy Corporation ^ 15,800 289,140 Edison International 6,500 364,780 Exelon Corporation 6,000 435,600 FirstEnergy Corp. 5,000 323,650 FPL Group, Inc. ^ 4,000 226,960 PG&E Corporation 9,000 407,700 Public Service Enterprise Group Incorporated 3,500 307,230 Southern Company (The) 11,900 408,051 TXU Corp. 12,400 834,520 Williams Companies, Inc. (The) 3,500 110,670 ------------ 4,639,647 ------------ TOTAL EQUITY SECURITIES (cost - $97,627,172) 132,914,438 ------------ PRINCIPAL AMOUNT (000'S) --------- SHORT-TERM INVESTMENTS - 4.31% REPURCHASE AGREEMENTS - 4.31% Bear, Stearns & Co. Inc. + ++ (Agreements dated 6/29/2007 to be repurchased at $2,867,452, 2.6875%, 7/2/2007, collateralized by $2,920,214 in United States Treasury Bonds) $ 2,867 $ 2,866,810 Bear, Stearns & Co. Inc. + ++ (Agreements dated 6/29/2007 to be repurchased at $2,573,852, 5.3750%, 7/2/2007, collateralized by $2,619,758 in United States Treasury Bonds) 2,573 2,572,700 Bear, Stearns & Co. Inc. (Agreements dated 6/29/2007 to be repurchased at $297,491, 4.3000%, 7/2/2007, collateralized by $305,726 in United States Treasury Bonds) 297 297,385 ------------ TOTAL SHORT-TERM INVESTMENTS (cost - $5,736,895) 5,736,895 ------------ TOTAL INVESTMENTS - 104.11% (cost - $103,364,067) 138,651,333 ------------ LIABILITIES IN EXCESS OF OTHER ASSETS - (4.11)% (5,477,390) ------------ NET ASSETS - 100.00% $133,173,943 ============ - --------- ADR American Depositary Receipt * Non-income producing security. + Stated interest rate, before rebate earned by borrower of securities on loan. ++ Represents investment purchased with collateral received for securities on loan. ^ Security or a portion thereof is out on loan. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANIES AND AFFILIATED PURCHASERS. None. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 11. CONTROLS AND PROCEDURES. (a) The Registrant's principal executive officer and principal financial officer have evaluated the Registrant's disclosure controls and procedures as of a date within 90 days of this filing and have concluded that the Registrant's disclosure controls and procedures are effective, as of such date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The Registrant's principal executive officer and principal financial officer are aware of no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (a)(2) Separate certifications of Principal Executive and Financial Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 attached as EX-99.CERT. (b) Certification of Principal Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished as EX-99.906 CERT. 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. By: /s/ RALPH W. BRADSHAW --------------------- Name: Ralph W. Bradshaw Title: Principal Executive Officer Date: August 31, 2007 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: /s/ RALPH W. BRADSHAW --------------------- Name: Ralph W. Bradshaw Title: Principal Executive Officer Date: August 31, 2007 By: /s/ JODI B. LEVINE ------------------ Name: Jodi B. Levine Title: Principal Financial Officer Date: August 31, 2007 EX-99.CERT 2 exh99cert.txt EX-99.CERT CERTIFICATIONS I, Ralph A. Bradshaw, certify that: 1. I have reviewed this report on Form N-CSR of Cornerstone Strategic Value Fund, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) the registrant and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosures controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 31, 2007 /s/ Ralph W. Bradshaw - ------------------------ Ralph W. Bradshaw Chairman and President (Principal Executive Officer) Exhibit 12(a)(2) EX-99.CERT CERTIFICATIONS I, Jodi B. Levine, certify that: 1. I have reviewed this report on Form N-CSR of Cornerstone Strategic Value Fund, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) the registrant and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosures controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 31, 2007 /s/ Jodi B. Levine - ------------------------ Jodi B. Levine Treasurer (Principal Financial Officer) EX-99.906CERT 3 exh99-906cert.txt EX-99.906 CERT SECTION 906 CERTIFICATIONS SECTION 906 CERTIFICATIONS Ralph W. Bradshaw, Principal Executive Officer, and Jodi B. Levine, Principal Financial Officer, of the Cornerstone Strategic Value Fund, Inc. (the "Fund"), each certify to his knowledge that: (1) The Fund's periodic report on Form N-CSR for the period ended June 30, 2007 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Fund. /s/ Ralph W. Bradshaw /s/ Jodi B. Levine - --------------------- ------------------- Ralph W. Bradshaw Jodi B. Levine Chairman and President Treasurer (Principal Executive Officer) (Principal Financial Officer) Date: August 31, 2007 Date: August 31, 2007 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Fund and will be retained by the Fund and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----