fp0002238_nq.htm
 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
 
Investment Company Act file number   811-05150                                
 
 
Cornerstone Strategic Value Fund, Inc.
(Exact name of registrant as specified in charter)
 

350 Jericho Turnpike, Suite 206            Jericho, New York
11753
(Address of principal executive offices)
(Zip code)
 
 
Frank J. Maresca
 
Ultimus Fund Solutions, LLC    350 Jericho Turnpike, Suite 206     Jericho, NY 11753
(Name and address of agent for service)
 
 
Registrant's telephone number, including area code:    (513) 326-3597           
 
 
Date of fiscal year end:         December 31, 2010                           
 
 
Date of reporting period:       September 30, 2010                           
 
Form N-Q is to be used by management investment companies other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to Rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
 
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 
 
 
 
Item 1.  Schedule of Investments.
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2010 (UNAUDITED)
  
   
Description
  
No. of Shares
    
Value
  
EQUITY SECURITIES - 99.60%
  
CLOSED-END FUNDS - 7.23%
  
CORE - 3.71%
        
Adams Express Company (The) (a)
     44,400     $ 442,224  
Gabelli Equity Trust, Inc.
     16,323       82,105  
General American Investors Company, Inc.
     4,000       97,440  
Liberty All-Star Equity Fund
     160,130       706,173  
Liberty All-Star Growth Fund
     43,191       166,285  
Royce Micro-Cap Trust, Inc.
     4,000       33,000  
Royce Value Trust, Inc.
     5,000       60,700  
Tri-Continental Corporation
     22,800       281,124  
              1,869,051  
HIGH CURRENT YIELD (LEVERAGED) - 0.05%
          
First Trust Strategic High Income Fund III
     6,305       27,427  
                 
REAL ESTATE - 2.12%
          
Alpine Global Premier Properties Fund
     29,000       191,690  
Cohen & Steers Quality Income Realty Fund, Inc.
     63,000       495,180  
Cohen & Steers REIT & Preferred Income Fund, Inc.
     23,000       301,530  
LMP Real Estate Income Fund, Inc.
     8,500       79,390  
              1,067,790  
SECTOR EQUITY - 0.94%
          
Cohen & Steers Infrastructure Fund, Inc.
     14,500       230,840  
Macquarie Global Infrastructure Total Return Fund, Inc.
     4,000       66,080  
Petroleum & Resources Corporation (a)
     7,600       175,788  
              472,708  
VALUE - 0.41%
          
Claymore Dividend & Income Fund
     11,960       169,713  
Royce Focus Trust, Inc.
     6,000       38,220  
              207,933  
                 
TOTAL CLOSED-END FUNDS
       3,644,909  
                 
CONSUMER DISCRETIONARY - 10.05%
  
Amazon.com, Inc. *
     3,000       471,180  
Best Buy Company, Inc.
     6,500       265,395  
Comcast Corporation - Class A
     14,555       263,154  
DIRECTV Group, Inc. (The) - Class A *
     4,000       166,520  
Family Dollar Stores, Inc.
     2,000       88,320  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (Continued)
  
   
CONSUMER DISCRETIONARY (Continued)
  
Gap, Inc. (The)
     9,200     $ 171,488  
Home Depot, Inc. (The)
     2,000       63,360  
McDonald's Corporation
     11,400       849,414  
News Corporation - Class A
     10,000       130,600  
NIKE, Inc. - Class B
     4,100       328,574  
Staples, Inc.
     12,800       267,776  
Starbucks Corporation
     2,800       71,624  
Target Corporation
     8,800       470,272  
Time Warner Cable, Inc.
     1,966       106,144  
Time Warner, Inc.
     2,900       88,885  
TJX Companies, Inc. (The)
     7,000       312,410  
Viacom, Inc. - Class B
     5,450       197,236  
Walt Disney Company (The)
     10,200       337,722  
Yum! Brands, Inc.
     9,000       414,540  
              5,064,614  
CONSUMER STAPLES - 10.92%
  
Altria Group, Inc.
     20,800       499,616  
Archer-Daniels-Midland Company
     3,960       126,403  
Coca-Cola Company (The)
     13,500       790,020  
Colgate-Palmolive Company
     3,400       261,324  
ConAgra Foods, Inc.
     3,400       74,596  
Costco Wholesale Corporation
     2,500       161,225  
CVS Caremark Corporation
     8,430       265,292  
General Mills, Inc.
     5,000       182,700  
H.J. Heinz Company
     4,000       189,480  
Kimberly-Clark Corporation
     4,500       292,725  
Kraft Foods, Inc. - Class A
     10,932       337,362  
PepsiCo, Inc.
     5,600       372,064  
Philip Morris International, Inc.
     2,500       140,050  
Procter & Gamble Company (The)
     16,297       977,331  
Sysco Corporation
     10,300       293,756  
Wal-Mart Stores, Inc.
     10,100       540,552  
              5,504,496  
ENERGY - 9.77%
  
Chevron Corporation
     10,732       869,829  
Conocophillips
     14,974       859,957  
Exxon Mobil Corporation
     29,936       1,849,745  
Halliburton Company
     9,700       320,779  
Marathon Oil Corporation
     11,500       380,650  
Occidental Petroleum Corporation
     3,500       274,050  
Schlumberger Ltd.
     6,000       369,660  
              4,924,670  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (Continued)
  
   
FINANCIALS - 12.45%
  
AFLAC, Inc.
     5,500     $ 284,405  
Allstate Corporation (The)
     6,800       214,540  
American Express Company
     6,400       268,992  
Bank of America Corporation
     25,138       329,559  
Bank of New York Mellon Corporation (The)
     7,754       202,612  
BB&T Corporation
     3,500       84,280  
Capital One Financial Corporation
     2,500       98,875  
Chubb Corporation (The)
     3,500       199,465  
Goldman Sachs Group, Inc. (The)
     5,000       722,900  
Hudson City Bancorp, Inc.
     15,500       190,030  
JPMorgan Chase & Company
     30,132       1,147,125  
Marsh & McLennan Companies, Inc.
     10,000       241,200  
MetLife, Inc.
     5,700       219,165  
Morgan Stanley
     11,500       283,820  
PNC Financial Services Group, Inc.
     7,600       394,516  
T. Rowe Price Group, Inc.
     3,000       150,195  
Travelers Companies, Inc. (The)
     9,476       493,700  
U.S. Bancorp
     9,901       214,060  
Wells Fargo & Company
     21,400       537,782  
              6,277,221  
HEALTH CARE - 11.20%
  
Abbott Laboratories
     9,200       480,608  
Aetna, Inc.
     5,000       158,050  
Allergan, Inc.
     2,500       166,325  
Amgen, Inc. *
     6,700       369,237  
Baxter International, Inc.
     5,000       238,550  
Becton, Dickinson and Company
     3,900       288,990  
Biogen Idec, Inc. *
     4,000       224,480  
Bristol-Myers Squibb Company
     19,000       515,090  
Cardinal Health, Inc.
     7,950       262,668  
Covidien PLC
     2,599       104,454  
Eli Lilly & Company
     4,700       171,691  
Express Scripts, Inc. *
     3,000       146,100  
Gilead Sciences, Inc. *
     6,000       213,660  
Johnson & Johnson
     13,400       830,264  
McKesson Corporation
     1,800       111,204  
Medtronic, Inc.
     6,000       201,480  
Merck & Company, Inc.
     15,267       561,978  
Stryker Corporation
     2,000       100,100  
UnitedHealth Group, Inc.
     11,000       386,210  
WellPoint, Inc. *
     2,000       113,280  
              5,644,419  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (Continued)
  
   
INDUSTRIALS - 10.00%
  
3M Company
     4,400     $ 381,524  
Boeing Company (The)
     2,200       146,388  
Caterpillar, Inc.
     5,300       417,004  
CSX Corporation
     3,500       193,620  
Deere & Company
     6,500       453,570  
Emerson Electric Company
     6,000       315,960  
General Dynamics Corporation
     3,200       200,992  
General Electric Company
     46,900       762,125  
Honeywell International, Inc.
     5,000       219,700  
Illinois Tool Works, Inc.
     4,800       225,696  
Lockheed Martin Corporation
     3,000       213,840  
Northrop Grumman Corporation
     2,500       151,575  
Raytheon Company
     3,500       159,985  
Union Pacific Corporation
     4,000       327,200  
United Parcel Service, Inc. - Class B
     4,100       273,429  
United Technologies Corporation
     5,000       356,150  
Waste Management, Inc.
     6,800       243,032  
              5,041,790  
INFORMATION TECHNOLOGY - 18.25%
  
Apple, Inc. *
     5,900       1,674,125  
Cisco Systems, Inc. *
     45,400       994,260  
Cognizant Technology Solutions Corporation - CLASS A *
     2,500       161,175  
Corning, Inc.
     4,000       73,120  
eBay, Inc. *
     2,500       61,000  
EMC Corporation *
     12,148       246,726  
Google, Inc. - Class A *
     2,000       1,051,580  
Hewlett-Packard Company
     11,400       479,598  
Intel Corporation
     39,500       759,585  
International Business Machines Corporation
     8,100       1,086,534  
Microsoft Corporation
     51,200       1,253,888  
Oracle Corporation
     25,272       678,553  
QUALCOMM, Inc.
     10,000       451,200  
Texas Instruments, Inc.
     6,400       173,696  
Yahoo!, Inc. *
     4,000       56,680  
              9,201,720  
MATERIALS - 3.53%
  
Alcoa, Inc.
     5,400       65,394  
Dow Chemical Company (The)
     5,400       148,284  
E.I. Du Pont de Nemours & Company
     9,500       423,890  
Freeport-McMoRan Copper & Gold, Inc.
     5,000       426,950  
Monsanto Company
     2,660       127,494  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (Continued)
  
   
MATERIALS (Continued)
  
Praxair, Inc.
     6,500     $ 586,690  
              1,778,702  
REAL ESTATE INVESTMENT TRUST - 0.00%
  
Simon Property Group, Inc.
     14       1,298  
                 
TELECOMMUNICATION SERVICES - 2.88%
  
AT&T, Inc.
     37,039       1,059,315  
Frontier Communications Corporation
     0       4  
Verizon Communications, Inc.
     12,000       391,080  
              1,450,399  
UTILITIES - 3.32%
  
Dominion Resources, Inc.
     7,700       336,182  
Duke Energy Corporation
     15,800       279,818  
Exelon Corporation
     3,000       127,740  
FirstEnergy Corporation
     3,000       115,620  
Nextera Energy, Inc.
     4,000       217,560  
PG&E Corporation
     3,000       136,260  
Public Service Enterprises Group, Inc.
     4,500       148,860  
Southern Company (The)
     8,400       312,816  
              1,674,856  
                 
TOTAL EQUITY SECURITIES (cost - $46,216,290)
       50,209,094  
                 
                 
SHORT-TERM INVESTMENT - 0.53%
                
MONEY MARKET FUND - 0.53%
                
JPMorgan U.S. Government Money Market Fund (cost - $265,154)
     265,154       265,154  
                 
TOTAL INVESTMENTS - 100.13% (cost - $46,481,444)
       50,474,248  
                 
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.13)%
       (65,363 )
                 
NET ASSETS - 100.00%
     $ 50,408,885  
 
(a) Affiliated investment. Of its net assets, the Fund holds 0.88% and 0.35% of Adams Express Company and Petroleum & Resources Corporation, respectively. A director of the Fund also serves as a director to such companies. During the nine months ended September 30, 2010 there were additional purchases of 18,000 shares of Adams Express and 7,600 shares of Petroleum & Resources Corporation with a cost of $177,460 and $168,587, respectively. There were no sales for either of these securities.
 
* Non-income producing security.

See accompanying notes to schedule of investments.

 
 
 
 
CORNERSTONE  STRATEGIC VALUE FUND, INC.
NOTES TO SCHEDULES OF INVESTMENTS
September 30, 2010 (UNAUDITED)
 
Federal Income Tax Cost: At September 30, 2010 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 $46,481,444, $7,514,682, $(3,521,878) and $3,992,804 respectively.
 
As required by the Fair Value Measurement and Disclosures Topic of the FASB Accounting Standards Codification, the Fund has performed an analysis of all assets and liabilities measured at fair value to determine the significance and character of all inputs to their fair value determination.
 
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories.
 
·  
Level 1 – quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement.
 
·  
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
 
·  
Level 3 – model derived valuations in which one or more significant inputs or significant value drivers are unobservable.  Unobservable inputs are those inputs that reflect the Fund’s own assumptions that market participants would use to price the asset or liability based on the best available information.

The following is a summary of the inputs used as of September 30, 2010 in valuing the Fund’s investments carried at value:
 
Valuation Inputs
  
INVESTMENTS
IN
SECURITIES
    
OTHER
FINANCIAL
INSTRUMENTS*
  
             
Level 1 - Quoted Prices
  
 
    
 
  
  Equity Investments
   $ 50,209,094     $ -  
  Short-Term Investments
     265,154       -  
Level 2 - Other Significant Observable Inputs
     -       -  
Level 3 – Significant Unobservable Inputs
     -       -  
Total
   $ 50,474,248     $ -  
 
* Other financial instruments include futures, forwards and swap contracts.
 
During the period ended September 30, 2010, the Fund did not have any significant transfers in and out of Level 1 or Level 2.
 
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 2010.
 
Recent Accounting Pronouncement: In January 2010, the FASB Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2010-06 “Improving Disclosures about Fair Value Measurements”. ASU 2010-06 amends FASB Accounting Standards Codification Topic, Fair Value Measurements and Disclosures, to require additional disclosures regarding fair value measure­ments. Certain disclosures required by ASU No. 2010-06 are
 
 
 
 
 
effective for interim and annual reporting periods beginning after December 15, 2009 and have been reflected herein while other required disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management has evaluated the impact ASU No. 2010-06 and has determined that it is not expected to have a significant impact on its financial statement disclosures.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio.  For the nine months ended September 30, 2010, the Fund did not engage in derivative instruments and other hedging activities.
 
Management has evaluated the impact of all subsequent events on the Fund through the date the Schedule of Investments were issued, and has determined that there were no subsequent events requiring adjustment or disclosure in the Schedule of Investments.
 
Securities valuation policies and other investment related disclosures are herby incorporated by reference to the Fund’s semi-annual report previously filed with the Securities and Exchange Commission on the Form N-CSR on September 2, 2010 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 the Form N-CSR on September 2, 2010, file number 811-05150.  This information is also available to registered shareholders by calling (800) 937-5449.  For general inquiries, please call (513) 326-3597.  This information is also available on the website of the Securities and Exchange Commission – http://www.sec.gov.
 
 
 
 
 
Item 2.  Controls and Procedures.
 
(a)  Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that such information is recorded, processed, summarized, and reported on a timely basis.
 
(b)  There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 3.  Exhibits.
 
File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)):  Attached hereto
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
(Registrant)   Cornerstone Strategic Value Fund, Inc.                             
 
 
By (Signature and Title)*
/s/ Ralph W. Bradshaw
  
 
Ralph W. Bradshaw, President and Chairman
(Principal Executive Officer)
  
     
     
Date
November 12, 2010
    
 

 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
By (Signature and Title)*
/s/ Ralph W. Bradshaw
  
 
Ralph W. Bradshaw, President and Chairman
(Principal Executive Officer)
  
     
     
Date
November 12, 2010
    
     
By (Signature and Title)*
/s/ Frank J. Maresca
  
 
Frank J. Maresca, Treasurer
(Principal Financial Officer)
  
     
     
Date
November 12, 2010
    

 
* Print the name and title of each signing officer under his or her signature.