N-Q 1 t304622.txt CLM 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) 237 Park Avenue, New York, NY 10017 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Kayadti A. Madison Cornerstone Strategic Value Fund, Inc., 237 Park Avenue, New York, NY 10017 ----------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (212) 272-3550 -------------------- Date of fiscal year end: December 31, 2008 ----------------- Date of reporting period: September 30, 2008 ------------------ ITEM 1: SCHEDULE OF INVESTMENTS ================================================================================ CORNERSTONE STRATEGIC VALUE FUND, INC. SCHEDULE OF INVESTMENTS -- SEPTEMBER 30, 2008 (UNAUDITED) ================================================================================ NO. OF DESCRIPTION SHARES VALUE ---------------------------------------------------- ------- ------------ 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 ----------- 1,171,891 ----------- 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 ----------- 7,090,406 ----------- 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 ----------- 10,781,473 ----------- 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 ----------- 10,823,592 ----------- 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 ----------- 12,444,472 ----------- 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 ----------- 10,479,351 ----------- 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 ----------- 8,813,141 ----------- 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 ----------- 12,685,070 ----------- 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 ----------- 2,598,601 ----------- REAL ESTATE INVESTMENT TRUST - 0.47% Simon Property Group, Inc. ^ 4,000 388,000 ----------- TELECOMMUNICATION SERVICES - 2.69% AT&T Inc. 56,539 1,578,569 Verizon Communications Inc. 20,300 651,427 ----------- 2,229,996 ----------- 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 ----------- 2,999,571 ----------- TOTAL EQUITY SECURITIES (cost - $73,491,294) 82,505,564 ----------- SHORT-TERM INVESTMENTS - 8.79% MONEY MARKET SECURITY - 0.72% JPMorgan U.S. Government Money Market Fund 592,086 592,086 ----------- PRINCIPAL AMOUNT (000's) ----------- 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 ------------ 6,683,673 ------------ TOTAL SHORT-TERM INVESTMENTS (cost - $7,275,759) 7,275,759 ------------ TOTAL INVESTMENTS - 108.46% (cost - $80,767,053) 89,781,323 ------------ LIABILITIES IN EXCESS OF OTHER ASSETS - (8.46)% (7,001,545) ------------ NET ASSETS - 100.00% $ 82,779,778 ============ ------------------------------ (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* --------------------------------------------- ------------- --------------- Level 1 - Quoted Prices $ 82,505,564 $ - Level 2 - Other Significant Observable Inputs 7,275,759 - Level 3 - Significant Unobservable Inputs - - ------------- --------------- TOTAL $ 89,781,323 $ - ============= =============== * 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 --------------------- 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 --------------------- Name: Ralph W. Bradshaw Title: Principal Executive Officer Date: November 26, 2008 /s/ Kayadti A. Madison ------------------ Name: Kayadti A. Madison Title: Principal Financial Officer Date: November 26, 2008