fp0005842_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)
 
225 Pictoria Drive, Suite 450         Cincinnati, Ohio
45246
(Address of principal executive offices)
(Zip code)
 
Theresa M. Bridge
 
Ultimus Fund Solutions, LLC     225 Pictoria Drive, Suite 450  Cincinnati, OH 45246
(Name and address of agent for service)
 
Registrant's telephone number, including area code: (513) 587-3400         
 
Date of fiscal year end:      December 31, 2012         
 
Date of reporting period:    September 30, 2012         
 
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, 2012 (Unaudited)
  
   
Description
  
No. of Shares
    
Value
  
EQUITY SECURITIES - 99.36%
            
CLOSED-END FUNDS - 49.48%
            
CONVERTIBLE SECURITIES - 0.92%
            
Advent Claymore Global Convertible Securities and Income Fund II
     112,916     $ 759,925  
AGIC Equity & Convertible Income Fund
     3,178       55,551  
              815,476  
CORE - 2.34%
                
Adams Express Company (The)
     11,100       125,874  
Advent/Claymore Enhanced Growth & Income Fund
     3,916       37,750  
General American Investors Company, Inc.
     32,041       931,752  
Liberty All-Star Growth Fund, Inc.
     26,884       113,719  
Tri-Continental Corporation
     26,675       432,669  
Zweig Fund, Inc. (The)
     33,767       427,490  
              2,069,254  
CORPORATE DEBT FUNDS INVESTMENT GRADE-RATED - 3.26%
                
Federated Enhanced Treasury Income Fund
     47,044       672,729  
Western Asset/Claymore Inflation-Linked Opportunities & Income Fund
     100,155       1,347,085  
Western Asset/Claymore Inflation-Linked Securities & Income Fund
     65,367       867,420  
              2,887,234  
DEVELOPED MARKET - 1.35%
                
Japan Smaller Capitalization Fund, Inc.
     88,375       635,416  
New Germany Fund, Inc. (The)
     2,235       32,430  
Singapore Fund, Inc. (The)
     22,517       311,185  
Swiss Helvetia Fund, Inc. (The)
     19,647       211,795  
              1,190,826  
EMERGING MARKETS - 1.22%
                
Aberdeen Emerging Markets Telecommunications and Infrastructure Fund, Inc.
     2,700       55,836  
India Fund, Inc. (The)
     19,600       455,504  
Morgan Stanley India Investment Fund, Inc. *
     22,599       394,805  
Templeton Dragon Fund, Inc.
     4,300       110,209  
Templeton Emerging Markets Fund
     3,300       60,786  
              1,077,140  
FLEXIBLE INCOME - 0.67%
                
Putnam Premier Income Trust
     103,693       594,161  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2012 (Unaudited) (Continued)
  
   
Description
  
No. of Shares
    
Value
  
GENERAL & INSURED LEVERAGED - 0.06%
            
Invesco Value Municipal Bond Trust
     3,300     $ 52,635  
                 
GENERAL BOND - 0.17%
                
Nuveen Build America Bond Opportunity Fund
     6,795       149,830  
                 
GLOBAL - 6.13%
                
AGIC Global Equity & Convertible Income Fund
     25,361       340,345  
Alpine Total Dynamic Dividend Fund
     143,228       634,500  
Clough Global Allocation Fund
     32,004       433,014  
Clough Global Equity Fund
     49,799       643,403  
Clough Global Opportunities Fund
     189,110       2,212,587  
Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund
     27,243       538,867  
First Trust Active Dividend Income Fund
     38,918       329,635  
Lazard World Dividend & Income Fund, Inc.
     24,034       292,253  
              5,424,604  
GLOBAL INCOME - 1.43%
                
Global Income & Currency Fund Inc.
     9,115       124,237  
Nuveen Multi-Currency Short-Term Government Income Fund
     86,066       1,136,071  
              1,260,308  
INCOME & PREFERRED STOCK - 1.32%
                
Zweig Total Return Fund, Inc. (The)
     92,536       1,171,506  
                 
OPTION ARBITRAGE/OPTIONS STRATEGIES - 27.68%
                
BlackRock Enhanced Capital & Income Fund, Inc.
     7,093       92,706  
BlackRock Enhanced Equity Dividend Trust
     286,419       2,165,328  
BlackRock Global Opportunities Equity Trust
     154,382       2,104,227  
BlackRock International Growth and Income Trust
     174,713       1,273,658  
Dow 30 Premium & Dividend Income Fund, Inc.
     10,300       143,891  
Eaton Vance Enhanced Equity Income Fund
     108,700       1,204,396  
Eaton Vance Enhanced Equity Income Fund II
     164,200       1,819,336  
Eaton Vance Risk-Managed Diversified Equity Income Fund
     280,148       2,949,958  
Eaton Vance Tax-Managed Buy-Write Opportunities Fund
     95,600       1,243,756  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2012 (Unaudited) (Continued)
  
   
Description
  
No. of Shares
    
Value
  
OPTION ARBITRAGE/OPTIONS STRATEGIES (Continued)
            
Eaton Vance Tax-Managed Diversified Equity Income Fund
     371,208     $ 3,530,188  
Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund
     296,975       3,296,422  
Eaton Vance Tax-Managed Global Diversified Equity Income Fund
     455,011       4,008,647  
First Trust Enhanced Equity Income Fund
     16,800       205,128  
Madison Strategic Sector Premium Fund
     11,612       138,880  
Nuveen Equity Premium Advantage Fund
     24,237       306,840  
              24,483,361  
PACIFIC EX JAPAN - 0.96%
                
Morgan Stanley China A Share Fund, Inc.
     45,347       847,082  
                 
REAL ESTATE - 0.12%
                
Neuberger Berman Real Estate Securities Income Fund Inc.
     21,816       102,972  
                 
SECTOR EQUITY - 1.85%
                
BlackRock EcoSolutions Investment Trust
     24,379       212,341  
Gabelli Healthcare & WellnessRx Trust (The)
     9,221       84,003  
ING Risk Managed Natural Resources Fund
     65,307       793,480  
Petroleum & Resources Corporation
     20,809       546,028  
              1,635,852  
                 
TOTAL CLOSED-END FUNDS
       43,762,241  
                 
CONSUMER DISCRETIONARY - 5.31%
                
CBS Corporation - Class B
     5,000       181,650  
Comcast Corporation - Class A
     20,655       738,829  
DIRECTV *
     7,000       367,220  
Family Dollar Stores, Inc.
     2,000       132,600  
Home Depot, Inc. (The)
     6,600       398,442  
McDonald's Corporation
     3,400       311,950  
Starbucks Corporation
     2,800       142,100  
Target Corporation
     8,800       558,536  
Time Warner Cable, Inc.
     1,966       186,888  
Time Warner, Inc.
     4,900       222,117  
TJX Companies, Inc. (The)
     14,000       627,060  
Viacom Inc. - Class B
     5,450       292,066  
Walt Disney Company (The)
     10,200       533,256  
              4,692,714  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2012 (Unaudited) (Continued)
  
   
Description
  
No. of Shares
    
Value
  
CONSUMER STAPLES - 5.44%
            
Altria Group, Inc.
     20,800     $ 694,512  
Coca-Cola Company (The)
     27,000       1,024,110  
Costco Wholesale Corporation
     2,500       250,312  
CVS Caremark Corporation
     10,430       505,021  
Philip Morris International, Inc.
     7,400       665,556  
Wal-Mart Stores, Inc.
     22,700       1,675,260  
              4,814,771  
ENERGY - 6.04%
                
Chevron Corporation
     15,732       1,833,722  
ConocoPhillips
     4,974       284,414  
Exxon Mobil Corporation
     26,936       2,463,297  
Halliburton Company
     7,000       235,830  
Marathon Oil Corporation
     5,000       147,850  
Phillips 66
     7,487       347,172  
WPX Energy, Inc. *
     1,666       27,639  
              5,339,924  
FINANCIALS - 6.45%
                
AFLAC, Inc.
     5,500       263,340  
American Express Company
     6,400       363,904  
Aon plc
     3,500       183,015  
BB&T Corporation
     5,000       165,800  
Capital One Financial Corporation
     4,500       256,545  
Discover Financial Services
     6,000       238,380  
Fifth Third Bancorp
     9,000       139,590  
Franklin Resources, Inc.
     1,500       187,605  
JPMorgan Chase & Co.
     30,132       1,219,744  
Marsh & McLennan Companies, Inc.
     10,000       339,300  
MetLife, Inc.
     7,000       241,220  
U.S. Bancorp
     16,401       562,554  
Wells Fargo & Company
     44,800       1,546,944  
              5,707,941  
HEALTH CARE - 6.74%
                
Abbott Laboratories
     13,200       904,992  
Aetna, Inc.
     2,500       99,000  
Amgen Inc.
     7,800       657,696  
Biogen Idec, Inc. *
     4,000       596,920  
Bristol-Myers Squibb Company
     19,000       641,250  
Cardinal Health, Inc.
     7,950       309,811  
Covidien plc
     4,099       243,563  
Express Scripts Holding Company *
     3,240       203,051  
Gilead Sciences, Inc. *
     5,500       364,815  
McKesson Corporation
     1,800       154,854  
Merck & Company, Inc.
     22,267       1,004,242  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2012 (Unaudited) (Continued)
  
   
Description
  
No. of Shares
    
Value
  
HEALTH CARE (Continued)
            
Thermo Fisher Scientific Inc.
     3,000     $ 176,490  
UnitedHealth Group, Inc.
     11,000       609,510  
              5,966,194  
INDUSTRIALS - 4.80%
                
Caterpillar Inc.
     5,300       456,012  
CSX Corporation
     10,500       217,875  
Deere & Company
     6,500       536,185  
General Dynamics Corporation
     3,200       211,584  
General Electric Company
     35,000       794,850  
Honeywell International Inc.
     5,000       298,750  
Illinois Tool Works, Inc.
     2,500       148,675  
Lockheed Martin Corporation
     3,000       280,140  
Norfolk Southern Corporation
     3,000       190,890  
Northrop Grumman Corporation
     3,000       199,290  
Raytheon Company
     3,500       200,060  
Union Pacific Corporation
     4,000       474,800  
United Technologies Corporation
     3,000       234,870  
              4,243,981  
INFORMATION TECHNOLOGY - 9.63%
                
Apple Inc.
     6,900       4,604,094  
International Business Machines Corporation
     8,100       1,680,345  
Microsoft Corporation
     41,800       1,244,804  
Oracle Corporation
     31,272       984,755  
              8,513,998  
MATERIALS - 1.50%
                
Air Products & Chemicals, Inc.
     2,000       165,400  
Dow Chemical Company (The)
     5,000       144,800  
E.I. du Pont de Nemours and Company
     9,500       477,565  
International Paper Company
     2,000       72,640  
Praxair, Inc.
     4,500       467,460  
              1,327,865  
TELECOMMUNICATION SERVICES - 2.10%
                
AT&T, Inc.
     30,039       1,132,470  
Verizon Communications, Inc.
     16,000       729,120  
              1,861,590  
UTILITIES - 1.87%
                
American Electric Power Company, Inc.
     2,000       87,880  
Duke Energy Corporation
     7,879       510,559  
Exelon Corporation
     3,000       106,740  
FirstEnergy Corporation
     3,000       132,300  
NextEra Energy, Inc.
     4,000       281,320  
Public Service Enterprises Group, Inc.
     4,500       144,810  
Southern Company (The)
     6,000       276,540  
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
  
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2012 (Unaudited) (Concluded)
  
   
Description
  
No. of Shares
    
Value
  
UTILITIES (Continued)
            
Xcel Energy, Inc.
     4,000     $ 110,840  
              1,650,989  
                 
TOTAL EQUITY SECURITIES (cost - $72,616,871)
       87,882,208  
                 
SHORT-TERM INVESTMENTS - 0.85%
                
MONEY MARKET FUNDS - 0.85%
                
Fidelity Institutional Money Market Government Portfolio - Class I, 0.01%^ (cost - $750,985)
     750,985       750,985  
                 
TOTAL INVESTMENTS - 100.21% (cost - $73,367,856)
       88,633,193  
                 
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.21)%
       (190,108 )
                 
NET ASSETS - 100.00%
     $ 88,443,085  

*   Non-income producing security.
^   Variable rate security.  The rate shown is the 7-day effective yield as of September 30, 2012.
 
See accompanying notes to schedule of investments.
 
 
 
 
 
CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
September 30, 2012 (UNAUDITED)
 
Federal Income Tax Cost: The following information is computed on a tax basis for each item as of September 30, 2012:
 
Cost of portfolio investments
   $ 73,367,856  
Gross unrealized appreciation
   $ 16,252,694  
Gross unrealized depreciation
     (987,357 )
Net unrealized appreciation
   $ 15,265,337  

As required by the Fair Value Measurement and Disclosures Topic of the Financial Accounting Standards Board (“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, 2012 in valuing the Fund’s investments carried at value:
 
VALUATION INPUTS
  
INVESTMENTS
IN
SECURITIES
    
OTHER
FINANCIAL
INSTRUMENTS*
  
             
Level 1 - Quoted Prices
            
  Equity Investments
  
$
       87,882,208
    
$
                     -
  
  Short-Term Investments
    
            750,985
      
                     -
  
Level 2 - Other Significant Observable Inputs
    
                    -
      
                     -
  
Level 3 – Significant Unobservable Inputs
    
                    -
      
                     -
  
Total
  
$
       88,633,193
    
$
                     -
  
 
* Other financial instruments include futures, forwards and swap contracts, if any.
 
 
 
 
 
The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.
 
As of September 30, 2012, the Fund did not have any transfers in and out of any Level.
 
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, 2012.
 
The disclosures for the Fund’s fiscal year beginning January 1, 2012 relate to presenting separately any Level 3 purchases, sales, issuances and settlements on a gross basis instead of one net amount.  Management will continue to evaluate the impact of ASU No. 2010-6 for the required disclosures.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio.  During the nine months ended September 30, 2012, the Fund did not engage in derivative instruments and other hedging activities.
 
The Fund has evaluated the need for additional disclosures and/or adjustments resulting through the date its financial statements were issued.  Based on this evaluation, no additional disclosures or adjustments were required to such Schedule of Investments.
 
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 4, 2012 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 4, 2012, 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 26, 2012
    
       
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 26, 2012
    
       
By (Signature and Title)*
/s/ Theresa M. Bridge
  
   
Theresa M. Bridge, Treasurer
(Principal Financial Officer)
  
       
Date
November 26, 2012
    
 
* Print the name and title of each signing officer under his or her signature.