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)
383 MADISON AVENUE
NEW YORK, NEW YORK 10179
(Address of principal executive offices) (Zip code)
JODI B. LEVINE, TREASURER
383 MADISON AVENUE
NEW YORK, NEW YORK 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, 2004
Date of reporting period: SEPTEMBER 30, 2004
ITEM 1: SCHEDULE OF INVESTMENTS
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
EQUITY SECURITIES - 99.52%
CLOSED-END DOMESTIC FUNDS - 2.12%
Adams Express Co. 49,500 $ 628,155
General American Investors Co., Inc. 3,000 88,590
Salmon Brothers Fund, Inc. (The) 11,900 141,729
Tri Continental Corp. 77,000 1,278,970
Zweig Fund, Inc. 176,600 943,044
------------
3,080,488
------------
CONSUMER DISCRETIONARY - 14.40%
Bed Bath & Beyond Inc. + 4,200 155,862
Best Buy Co., Inc. 4,750 257,640
Carnival Corp. 11,800 558,022
Circuit City Stores, Inc. 1,000 15,340
Clear Channel Communications, Inc. 8,800 274,296
Comcast Corp., Class A + 31,537 890,605
Comcast Corp., Special Class A + 4,100 114,472
Costco Wholesale Corp. 6,500 270,140
CVS Corp. 2,500 105,325
Delphi Corp. 7,600 70,604
Eastman Kodak Co. 1,400 45,108
Federated Deparment Stores, Inc. 1,000 45,430
Ford Motor Co. 26,300 369,515
Fortune Brands, Inc. 1,000 74,090
Furniture Brands International, Inc. 52,200 1,309,176
Gannett Co., Inc. 2,000 167,520
Gap, Inc. (The) 12,200 228,140
General Motors Corp. 6,500 276,120
Gildan Activewear Inc., Class A + 44,300 1,249,260
Goodyear Tire & Rubber Co. (The) + 4,500 48,330
Harley-Davidson, Inc. 4,400 261,536
Hilton Hotels Corp. 3,200 60,288
Home Depot, Inc. (The) 30,600 1,199,520
J.C. Penney Co., Inc. 4,500 158,760
Kohl's Corp. + 5,000 240,950
Lowe's Companies, Inc. 11,200 608,720
Marriott International, Inc., Class A 2,100 109,116
Mattel, Inc. 5,500 99,715
May Department Stores Co. (The) 4,900 125,587
McDonald's Corp. 17,600 493,328
Monsanto Co. 580 21,124
NIKE, Inc., Class B 2,300 181,240
Omnicom Group Inc. 1,600 116,896
Reebok International Ltd. 1,500 55,080
Rockwell Automation, Inc. 2,500 96,750
Sears, Roebuck & Co. 1,600 63,760
Staples, Inc. 7,200 214,704
Starbucks Corp. + 5,400 245,484
Target Corp. 11,800 533,950
Time Warner Inc. + 57,750 932,085
TJX Companies, Inc. (The) 7,000 154,280
Toys R Us, Inc. + 1,000 17,740
United Natural Foods, Inc. + 138,200 3,676,120
Viacom Inc., non-voting Class B 23,900 802,084
Wal-Mart Stores, Inc. 59,800 3,181,360
Walt Disney Co. (The) 29,200 658,460
Yum! Brands, Inc. + 3,000 121,980
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20,955,612
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
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CONSUMER STAPLES - 6.20%
Albertson's, Inc. 2,500 59,825
Altria Group, Inc. 29,300 1,378,272
Anheuser-Busch Companies, Inc. 8,700 434,565
Archer-Daniels-Midland Co. 5,460 92,711
Campbell Soup Co. 2,000 52,580
Coca-Cola Co. (The) 21,800 873,090
Coca-Cola Enterprises Inc. 6,500 122,850
Colgate-Palmolive Co. 8,400 379,512
ConAgra Foods, Inc. 4,400 113,124
General Mills, Inc. 2,500 112,250
Gillette Co. (The) 12,600 525,924
H.J. Heinz Co. 1,600 57,632
Kimberly-Clark Corp. 6,900 445,671
Kroger Co. (The) + 4,800 74,496
Pepsi Bottling Group, Inc. (The) 4,000 108,600
PepsiCo, Inc. 24,800 1,206,520
Procter & Gamble Co. (The) 37,600 2,034,912
Sara Lee Corp. 11,500 262,890
Sysco Corp. 5,800 173,536
Walgreen Co. 14,300 512,369
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9,021,329
------------
ENERGY - 7.25%
Anadarko Petroleum Corp. 900 59,724
Baker Hughes Inc. 1,100 48,092
CenterPoint Energy, Inc. 3,900 40,404
ChevronTexaco Corp. 19,330 1,036,861
ConocoPhillips 6,237 516,736
Exxon Mobil Corp. 71,000 3,431,430
FMC Technologies, Inc. + 105,800 3,533,720
Marathon Oil Corp. 1,500 61,920
Reliant Energy Inc. + 1,104 10,300
Schlumberger Ltd. 4,600 309,625
Unocal Corp. 1,200 51,600
Western Gas Resources, Inc. 50,800 1,452,372
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10,552,784
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FINANCIALS - 19.39%
Affiliated Managers Group, Inc. + 30,300 1,622,262
AFLAC Inc. 7,000 274,470
Allstate Corp. (The) 9,300 446,307
American Express Co. 15,600 802,776
American International Group, Inc. 37,531 2,551,733
Aon Corp. 4,900 140,826
Bank of America Corp. 55,616 2,409,841
Bank of New York Co., Inc. (The) 11,800 344,206
Charles Schwab Corp. (The) 12,000 110,280
Citigroup Inc. 74,300 3,278,116
Direct General Corp. 6,500 187,980
Fannie Mae 13,000 824,200
Fifth Third Bancorp 9,000 442,980
First Marblehead Corp. (The) + 73,300 3,401,120
Franklin Resources, Inc. 3,700 206,312
Freddie Mac 9,500 619,780
Goldman Sachs Group, Inc. (The) 7,300 680,652
Hartford Financial Services Group, Inc. (The) 6,000 371,580
HSBC Holdings plc, ADR 2,300 183,540
J.P. Morgan Chase & Co. 30,332 1,205,090
Lehman Brothers Holdings Inc. 3,600 286,992
Manulife Financial Corp. 2,963 129,750
Marsh & McLennan Companies, Inc. 4,100 187,616
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
MBNA Corp. 12,600 317,520
Merrill Lynch & Co., Inc. 14,400 715,968
MetLife, Inc. 10,200 394,230
Morgan Stanley 15,500 764,150
National City Corp. 9,700 374,614
Northern Trust Corp. 3,500 142,800
Piper Jaffray Companies., Inc. + 104 4,117
PNC Financial Services Group 4,100 221,810
Prudential Financial, Inc. 8,200 385,728
St. Paul Travelers Companies, Inc. (The) 9,476 313,277
State Street Corp. 3,500 149,485
SunTrust Banks, Inc. 3,600 253,476
UnumProvident Corp. 1,100 17,259
U.S. Bancorp 25,401 734,089
Wachovia Corp. 17,600 826,320
Washington Mutual, Inc. 11,550 451,374
Wells Fargo & Co. 24,200 1,443,046
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28,217,672
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HEALTHCARE - 12.86%
Abbott Laboratories 21,000 889,560
Allergan Inc. 1,000 72,550
Amgen Inc. + 18,900 1,071,252
Becton, Dickinson & Co. 3,900 201,630
Boston Scientific Corp. + 12,300 488,679
Bristol-Myers Squibb Co. 14,400 340,848
Cardinal Health, Inc. 2,950 129,122
Cooper Companies, Inc. (The) 60,000 4,113,000
Edwards Lifesciences Corp. + 53,000 1,775,500
Eli Lilly & Co. 14,500 870,725
Guidant Corp. 1,400 92,456
HCA Inc. 3,500 133,525
HEALTHSOUTH Corp. + 4,300 21,715
Hospira, Inc. + 700 21,420
Johnson & Johnson 40,900 2,303,897
McKesson Corp. 2,300 58,995
Medco Health Solutions, Inc. + 1,687 52,128
Medtronic, Inc. 16,300 845,970
Merck & Co. Inc. 20,500 676,500
Pfizer Inc. 99,660 3,049,596
Schering-Plough Corp. 7,500 142,950
Tenet Healthcare Corp. + 2,250 24,277
UnitedHealth Group Inc. 8,500 626,790
Wyeth 19,200 718,080
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18,721,165
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INDUSTRIALS - 8.86%
3M Co. 4,400 351,868
Automatic Data Processing, Inc. 4,900 202,468
Boeing Co. (The) 11,700 603,954
Caterpillar Inc. 2,900 233,305
Cendant Corp. 6,000 129,600
CSX Corp. 1,000 33,200
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
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NO. OF
DESCRIPTION SHARES VALUE
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Emerson Electric Co. 3,500 216,615
FedEx Corp. 4,500 385,605
General Dynamics Corp. 3,100 316,510
General Electric Co. 52,700 1,769,666
Heartland Express, Inc. 57,535 1,061,521
Honeywell International Inc. 12,500 448,250
Illinois Tool Works Inc. 2,400 223,608
IMS Health Inc. 1,400 33,488
Lockheed Martin Corp. 4,000 223,120
Masco Corp. 4,200 145,026
Paychex, Inc. 4,200 126,630
Shuffle Master, Inc. + 32,200 1,206,212
Southwest Airlines Co. 6,450 87,849
Tyco International Ltd. 8,397 257,452
Union Pacific Corp. 2,000 117,200
United Parcel Service, Inc., Class B 16,300 1,237,496
United Technologies Corp. 7,200 672,336
USF Corp. 72,600 2,605,614
Waste Management, Inc. 4,200 114,828
Transocean Inc. + 2,500 89,450
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12,892,871
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INFORMATION TECHNOLOGY - 14.42%
Adobe Systems Inc. 1,100 54,417
Agere Systems Inc., Class A + 240 252
Agilent Technologies, Inc. + 3,300 71,181
Altera Corp. + 3,400 66,538
Analog Devices, Inc. 2,700 104,706
Apple Computer, Inc. + 1,500 58,125
Applied Materials, Inc. + 7,800 128,622
CACI International Inc., Class A + 9,800 517,244
Cisco Systems, Inc. + 96,400 1,744,840
Corning Inc. + 3,000 33,240
Dell Inc. + 29,700 1,057,320
eBay Inc. + 9,500 873,430
Electronic Arts Inc. + 2,000 91,980
Electronic Data Systems Corp. 1,000 19,390
EMC Corp. + 271,848 3,137,126
Fairchild Semiconductor International, Inc. + 201,600 2,856,672
First Data Corp. 7,324 318,594
Hewlett-Packard Co. 27,900 523,125
Intel Corp. 80,600 1,616,836
International Business Machines Corp. 21,000 1,800,540
Linear Technology Corp. 2,500 90,600
Maxim Integrated Products, Inc. 2,300 97,267
Micron Technology, Inc. + 2,500 30,075
Microsoft Corp. 142,100 3,929,065
Motorola, Inc. 13,700 247,148
Oracle Corp. + 26,100 294,408
QUALCOMM Inc. 17,000 663,680
Sanmina-SCI Corp. + 2,500 17,625
Siebel Systems, Inc. + 2,500 18,850
Solectron Corp. + 3,000 14,850
Sun Microsystems, Inc. + 7,500 30,300
Texas Instruments Inc. 8,800 187,264
Yahoo! Inc. + 8,800 298,408
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20,993,718
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
--------------------------------------------------------------------------------
NO. OF
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
MATERIALS - 10.07%
Air Products & Chemicals, Inc. 1,000 54,380
Alcoa Inc. 4,200 141,078
Dow Chemical Co. (The) 5,400 243,972
E.I. Du Pont de Nemours & Co. 8,500 363,800
Georgia-Pacific Corp. 2,000 71,900
International Paper Co. 4,500 181,845
Joy Global Inc. 114,100 3,922,758
Packaging Corp. of America 105,500 2,581,585
Peabody Energy Corp. 67,000 3,986,500
Praxair, Inc. 3,000 128,220
Rohm & Haas Co. 1,000 42,970
Steel Dynamics, Inc. + 74,300 2,869,466
Weyerhaeuser Co. 1,000 66,480
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14,654,954
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REAL ESTATE INVESTMENT TRUSTS - 0.15%
Simon Property Group Inc. 4,000 214,520
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TELECOMMUNICATIONS SERVICES - 2.34%
ALLTEL Corp. 1,500 82,365
AT&T Corp. 9,320 133,462
AT&T Wireless Services Inc. + 26,056 385,108
BellSouth Corp. 20,000 542,400
Lucent Technologies Inc. + 10,700 33,919
Nextel Communications, Inc., Class A + 11,000 262,240
SBC Communications Inc. 30,600 794,070
Sprint Corp. (FON Group) 10,800 217,404
Verizon Communications Inc. 24,100 949,058
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3,400,026
------------
UTILITIES - 1.46%
American Electric Power Co., Inc. 2,700 86,292
Dominion Resources, Inc. 2,100 137,025
Duke Energy Corp. 5,300 121,317
Edison International 4,000 106,040
Exelon Corp. 8,000 293,520
FirstEnergy Corp. 5,000 205,400
FPL Group, Inc. 3,500 239,120
Progress Energy, Inc. 3,500 148,190
Public Service Enterprise Group Inc. 1,000 42,600
Scottish Power plc, ADR 4,000 123,360
Southern Co. (The) 8,400 251,832
TXU Corp. 4,700 225,224
Xcel Energy, Inc. 8,200 142,024
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2,121,944
------------
TOTAL EQUITY SECURITIES - 99.52%
(Cost - $123,994,078) 144,827,083
============
PRINCIPAL
AMOUNT
(000'S) VALUE
--------- ------------
SHORT-TERM INVESTMENTS - 5.74%
REPURCHASE AGREEMENTS - 5.74%
Bear, Stearns & Co. Inc.
(Agreement dated 09/30/04 to be repurchased
at $830,629), 1.68%, 10/01/04 $ 831 830,606
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CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2004 (UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000'S) VALUE
--------------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
(Agreement dated 09/30/04 to be repurchased
at $1,561,259), 0.94%*, 10/01/04,
collateralized by U.S. Treasury Bonds** 1,516 1,516,220
Bear, Stearns & Co. Inc.
(Agreement dated 09/30/04 to be repurchased
at $6,166,677), 1.88%*, 10/01/04,
collateralized by U.S. Treasury Bonds** 6,002 6,002,364
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost - $8,349,190) 8,349,190
------------
TOTAL INVESTMENTS - 105.26%
(cost - $132,343,268) 153,176,273
------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (5.26)% (7,648,273)
------------
NET ASSETS - 100.00% $145,528,000
============
----------
+ Non-income producing security.
* Stated interest rate, before rebate earned by borrower of securities
on loan.
** Represents investment purchased with cash collateral received.
ADR American Depositary Receipts.
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 sales 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 the 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. The Board of
Directors has established general guidelines for calculating fair value of not
readily marketable securities. At September 30, 2004, 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.
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 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 underlying securities.
Federal Income Tax Cost - At September 30, 2004, 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 depreciation from investments for those
securities having an excess of cost over value and the net unrealized
appreciation from investments were $132,343,268, $26,849,126, $(6,016,121) and
$20,833,005, respectively.
Other information regarding the Fund is available in the Fund's most recent
Report to Shareholders. This information is 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.
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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 22, 2004
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 22, 2004
/s/ Jodi B. Levine
---------------------
Name: Jodi B. Levine
Title: Principal Financial Officer
Date: November 22, 2004