fp0011297_ncsrs.htm
 
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)

7 Dawson Street, Huntington Station, New York
11746
(Address of principal executive offices)
(Zip code)

Frank J. Maresca
AST Fund Solutions, LLC, 7 Dawson Street, Huntington Station, New York 11746
 (Name and address of agent for service)
 
Registrant's telephone number, including area code:     (866) 668-6558

Date of fiscal year end:
December 31, 2014

Date of reporting period:
June 30, 2014
 
 
 
 
 
ITEM 1.
REPORTS TO STOCKHOLDERS.
 
 
Cornerstone Strategic
Value Fund, Inc.
 
 
Semi-Annual Report
June 30, 2014
(Unaudited)
 
 
 
 
 
 
CONTENTS
 
Portfolio Summary
1
   
Schedule of Investments
2
   
Statement of Assets and Liabilities
9
   
Statement of Operations
10
   
Statement of Changes in Net Assets
11
   
Financial Highlights
12
   
Notes to Financial Statements
13
   
Results of Annual Meeting of Stockholders
18
   
Investment Management Agreement Approval Disclosure
19
   
Description of Dividend Reinvestment Plan
21
   
Proxy Voting and Portfolio Holdings Information
23
   
Privacy Policy Notice
24
   
Summary of General Information
27
   
Stockholder Information
27

 
 
 
 
Cornerstone Strategic Value Fund, Inc.
Portfolio Summary – as of June 30, 2014 (unaudited)

SECTOR ALLOCATION
 
Sector
Percent of
Net Assets
Closed-End Funds
43.1
Information Technology
12.0
Financials
10.3
Health Care
6.7
Consumer Discretionary
6.1
Energy
5.9
Industrials
5.4
Consumer Staples
4.1
Materials
1.7
Telecommunication Services
1.4
Exchange-Traded Funds
1.1
Utilities
1.1
Other
1.1
 
TOP TEN HOLDINGS, BY ISSUER
 
 
Holding
Sector
Percent of
Net Assets
1.
CBRE Clarion Global Real Estate Income Fund
Closed-End Funds
2.6
2.
BlackRock Real Asset Equity Trust
Closed-End Funds
2.5
3.
Apple Inc.
Information Technology
2.5
4.
Exxon Mobil Corporation
Energy
2.2
5.
BlackRock Resources & Commodities Strategy Trust
Closed-End Funds
2.1
6.
BlackRock Global Opportunities Equity Trust
Closed-End Funds
2.0
7.
Alpine Total Dynamic Dividend Fund
Closed-End Funds
1.9
8.
Cohen & Steers Preferred Securities and Income Fund, Inc.
Closed-End Funds
1.8
9.
General Electric Company
Industrials
1.8
10.
Microsoft Corporation
Information Technology
1.8

 
1
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited)

Description
  
No. of
Shares
    
Value
  
EQUITY SECURITIES — 98.92%
        
CLOSED-END FUNDS — 43.12%
        
CONVERTIBLE SECURITIES — 0.27%
        
AllianzGI Equity & Convertible Income Fund
     24,051     $ 485,830  
                 
CORE — 1.71%
  
Adams Express Company (The)
     45,300       622,875  
Advent/Claymore Enhanced Growth & Income Fund
     23,466       241,700  
General American Investors Company, Inc.
     33,741       1,242,006  
Guggenheim Equal Weight Enhanced Equity Income Fund
     9,088       182,033  
Source Capital, Inc.
     1,600       111,968  
Tri-Continental Corporation
     33,275       698,109  
              3,098,691  
CORPORATE DEBT INVESTMENT GRADE-RATED — 0.19%
  
Federated Enhanced Treasury Income Fund
     10,774       145,341  
Transamerica Income Shares, Inc.
     9,190       194,644  
              339,985  
DEVELOPED MARKET — 0.21%
  
Aberdeen Israel Fund, Inc.
     3,000       54,030  
Aberdeen Japan Equity Fund, Inc. (The)
     4,262       30,303  
Aberdeen Singapore Fund, Inc.
     22,517       294,072  
              378,405  
EMERGING MARKETS — 1.71%
  
Morgan Stanley India Investment Fund, Inc. *
     46,823       1,083,484  
                 
Description
    
No. of
Shares
      
Value
  
EMERGING MARKETS (continued)
  
Voya Emerging Markets High Dividend Equity Fund
     158,651     $ 2,024,387  
              3,107,871  
EMERGING MARKETS DEBT — 1.18%
  
Western Asset Emerging Markets Income Fund Inc.
     139,120       1,798,822  
Western Asset Worldwide Income Fund Inc.
     26,473       348,120  
              2,146,942  
ENERGY MLP — 1.07%
  
ClearBridge Energy MLP Fund Inc.
     15,611       465,988  
ClearBridge Energy MLP Opportunity Fund Inc.
     20,987       533,070  
First Trust MLP and Energy Income Fund
     29,520       636,451  
Nuveen Energy MLP Total Return Fund
     13,700       304,414  
              1,939,923  
GENERAL & INSURED LEVERAGED — 2.07%
  
BlackRock MuniHoldings Quality Fund, Inc.
     18,406       243,143  
Eaton Vance Tax-Advantaged Bond and Option Strategies Fund
     10,361       143,811  
Invesco Municipal Opportunity Trust
     130,935       1,649,781  
Invesco Municipal Trust
     39,510       494,665  
Invesco Value Municipal Income Trust
     0       6  
Nuveen Dividend Advantage Municipal Fund 2
     9,400       130,660  
Nuveen Dividend Advantage Municipal Fund 3
     55,923       765,027  
 
See accompanying notes to financial statements.
 
 
2
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (continued)
 
Description
    
No. of
Shares
      
Value
  
GENERAL & INSURED LEVERAGED (continued)
  
Nuveen Dividend Advantage Municipal Income Fund
     22,955     $ 325,043  
              3,752,136  
GENERAL BOND — 1.26%
  
DWS Multi-Market Income Trust
     199,705       1,891,206  
DWS Strategic Income Trust
     30,461       391,728  
              2,282,934  
GLOBAL — 4.16%
  
Alpine Global Dynamic Dividend Fund
     33,916       356,457  
Alpine Total Dynamic Dividend Fund
     382,249       3,409,661  
Clough Global Allocation Fund
     32,004       494,142  
Delaware Enhanced Global Dividend and Income Fund
     84,859       1,076,861  
First Trust Active Dividend Income Fund
     1,418       13,301  
Nuveen Global Value Opportunities Fund
     5,700       83,961  
Wells Fargo Advantage Global Dividend Opportunity Fund
     250,053       2,122,950  
              7,557,333  
GLOBAL INCOME — 0.51%
  
Legg Mason BW Global Income Opportunities Fund Inc.
     16,469       302,206  
Nuveen Multi-Currency Short-Term Government Income Fund
     56,365       632,979  
              935,185  
HIGH YIELD — 0.28%
  
Credit Suisse Asset Management Income Fund, Inc.
     60,940       222,431  
                 
Description
    
No. of
Shares
      
Value
  
HIGH YIELD (continued)
  
Western Asset High Yield Defined Opportunity Fund Inc.
     12,000     $ 214,920  
Western Asset Managed High Income Fund Inc.
     12,227       70,917  
              508,268  
HIGH CURRENT YIELD (LEVERAGED) — 3.10%
  
BlackRock Corporate High Yield Fund VI, Inc.
     63,000       774,270  
BlackRock Debt Strategies Fund, Inc.
     232,600       953,660  
DWS High Income Opportunities Fund, Inc.
     103,355       1,526,553  
DWS High Income Trust
     18,298       172,184  
First Trust Strategic High Income Fund II
     54,165       885,598  
Franklin Universal Trust
     59,582       448,057  
Neuberger Berman High Yield Strategies Fund Inc.
     48,481       671,462  
Prudential Short Duration High Yield Fund, Inc.
     7,852       141,100  
Western Asset Global Partners Income Fund Inc
     4,991       55,849  
              5,628,733  
HIGH YIELD MUNICIPAL DEBT — 0.02%
  
MFS High Income Municipal Trust
     4,200       20,118  
MFS Municipal Income Trust
     2,777       18,328  
              38,446  
INCOME & PREFERRED STOCK — 0.37%
  
John Hancock Preferred Income Fund 
     20,317       418,327  
John Hancock Premium Dividend Fund
     4,000       54,360  
LMP Capital and Income Fund Inc.
     6,274       111,301  
 
See accompanying notes to financial statements.
 
 
3
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (continued)
 
Description
    
No. of
Shares
      
Value
  
INCOME & PREFERRED STOCK (continued)
  
Nuveen Quality Preferred Income Fund 3
     10,400     $ 90,272  
              674,260  
LOAN PARTICIPATION — 2.91%
  
BlackRock Floating Rate Income Trust
     4,953       70,382  
Blackstone / GSO Senior Floating Rate Term Fund
     16,900       302,679  
Eaton Vance Floating-Rate Income Trust
     31,100       469,299  
Eaton Vance Senior Floating-Rate Trust
     47,964       713,225  
Eaton Vance Senior Income Trust
     22,998       156,616  
Invesco Senior Income Trust
     325,459       1,630,550  
Nuveen Credit Strategies Income Fund
     27,092       253,581  
Nuveen Floating Rate Income Opportunity Fund
     112,907       1,403,434  
Pioneer Floating Rate Trust
     1,135       14,153  
Voya Prime Rate Trust
     46,358       268,413  
              5,282,332  
NATURAL RESOURCES — 6.87%
  
BlackRock Energy and Resources Trust
     24,481       660,253  
BlackRock Real Asset Equity Trust
     484,953       4,553,709  
First Trust Energy Income and Growth Fund
     43,893       1,586,732  
First Trust Energy Infrastructure Fund
     99,811       2,372,507  
GAMCO Natural Resources, Gold & Income Trust
     16,200       186,624  
                 
Description
    
No. of
Shares
      
Value
  
NATURAL RESOURCES (continued)
  
Petroleum & Resources Corporation
     50,609     $ 1,577,989  
Voya Natural Resources Equity Income Fund
     132,592       1,524,808  
              12,462,622  
OPTION ARBITRAGE/OPTIONS STRATEGIES — 4.19%
  
BlackRock Global Opportunities Equity Trust
     245,087       3,688,559  
BlackRock Resources & Commodities Strategy Trust
     303,409       3,765,306  
Voya Asia Pacific High Dividend Equity Income Fund
     11,100       148,185  
              7,602,050  
PACIFIC EX JAPAN — 0.16%
  
Aberdeen Greater China Fund, Inc.
     2,593       27,097  
Asia Tigers Fund, Inc. (The)
     2,200       26,576  
China Fund, Inc. (The)
     5,200       110,084  
Taiwan Fund, Inc. *
     5,800       118,842  
              282,599  
REAL ESTATE — 8.10%
  
Alpine Global Premier Properties Fund
     74,710       555,842  
CBRE Clarion Global Real Estate Income Fund
     512,700       4,670,697  
Cohen & Steers Preferred Securities and Income Fund, Inc.
     181,930       3,280,198  
Cohen & Steers Quality Income Realty Fund, Inc.
     230,114       2,588,782  
Cohen & Steers Total Return Realty Fund, Inc.
     25,311       313,856  
 
See accompanying notes to financial statements.
 
 
4
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (continued)
 
Description
    
No. of
Shares
      
Value
  
REAL ESTATE (continued)
  
LMP Real Estate Income Fund Inc.
     68,052     $ 783,278  
Neuberger Berman Real Estate Securities Income Fund Inc.
     298,333       1,491,665  
Nuveen Diversified Dividend and Income Fund
     3,122       38,276  
RMR Real Estate Income Fund
     49,206       969,358  
              14,691,952  
SECTOR EQUITY — 0.08%
  
First Trust Specialty Finance and Financial Opportunities Fund
     8,514       69,049  
John Hancock Financial Opportunities Fund 
     3,100       71,734  
              140,783  
U.S. MORTGAGE — 0.01%
  
First Trust Mortgage Income Fund
     1,600       25,376  
                 
UTILITY — 2.69%
  
BlackRock EcoSolutions Investment Trust
     96,430       799,405  
BlackRock Utility and Infrastructure Trust
     38,290       801,793  
Duff & Phelps Global Utility Income Fund Inc.
     68,140       1,498,399  
Gabelli Global Utility & Income Trust (The)
     17,200       358,792  
Reaves Utility Income Fund
     47,514       1,423,519  
              4,881,908  
TOTAL CLOSED-END FUNDS
       78,244,564  
                 
CONSUMER DISCRETIONARY — 6.13%
  
CBS Corporation - Class B
     5,000       310,700  
Comcast Corporation - Class A
     27,655       1,484,520  
                 
Description
    
No. of
Shares
      
Value
  
CONSUMER DISCRETIONARY (continued)
  
Delphi Automotive PLC
     3,000     $ 206,220  
DIRECTV *
     5,000       425,050  
Ford Motor Company
     40,000       689,600  
Gap, Inc. (The)
     4,000       166,280  
Home Depot, Inc. (The)
     19,600       1,586,816  
Johnson Controls, Inc.
     8,500       424,405  
Macy's, Inc.
     6,000       348,120  
McDonald's Corporation
     12,000       1,208,880  
News Corporation - Class B *
     1,250       21,813  
Time Inc. *
     1,362       32,988  
Time Warner Cable Inc.
     2,000       294,600  
Time Warner Inc.
     10,900       765,725  
TJX Companies, Inc. (The)
     14,000       744,100  
Twenty-First Century Fox, Inc.
     5,000       171,150  
Viacom Inc. - Class B
     3,950       342,584  
Walt Disney Company (The)
     22,200       1,903,428  
              11,126,979  
CONSUMER STAPLES — 4.14%
  
Altria Group, Inc.
     20,800       872,352  
Archer-Daniels-Midland Company
     8,000       352,880  
Coca-Cola Company (The)
     20,000       847,200  
CVS Caremark Corporation
     10,430       786,109  
Kellogg Company
     5,000       328,500  
Kroger Co. (The)
     7,000       346,010  
PepsiCo, Inc.
     12,000       1,072,080  
Wal-Mart Stores, Inc.
     38,700       2,905,209  
              7,510,340  
ENERGY — 5.94%
  
Anadarko Petroleum Corporation
     7,000       766,290  
ConocoPhillips
     13,974       1,197,991  
Devon Energy Corporation
     7,000       555,800  
 
See accompanying notes to financial statements.
 
 
5
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (continued)
 
Description
    
No. of
Shares
      
Value
  
ENERGY (continued)
  
EOG Resources, Inc.
     7,000     $ 818,020  
Exxon Mobil Corporation
     39,936       4,020,756  
Marathon Oil Corporation
     10,000       399,200  
Phillips 66
     7,487       602,179  
Schlumberger Limited
     18,000       2,123,100  
Valero Energy Corporation
     5,000       250,500  
WPX Energy, Inc. *
     1,666       39,834  
              10,773,670  
EXCHANGE-TRADED FUNDS — 1.08%
  
iShares Core S&P 500 ETF
     5,000       985,000  
SPDR S&P 500 ETF Trust
     5,000       978,600  
              1,963,600  
FINANCIALS — 10.32%
  
AFLAC, Inc.
     5,500       342,375  
Allstate Corporation (The)
     5,000       293,600  
American International Group, Inc.
     19,000       1,037,020  
Aon plc
     5,500       495,495  
Bank of America Corporation
     120,000       1,844,400  
Bank of New York Mellon Corporation (The)
     15,000       562,200  
BB&T Corporation
     9,000       354,870  
Berkshire Hathaway Inc. - Class B *
     11,000       1,392,160  
BlackRock, Inc. - Class A
     1,500       479,400  
Capital One Financial Corporation
     4,500       371,700  
Citigroup, Inc.
     38,000       1,789,800  
Fifth Third Bancorp
     11,500       245,525  
Goldman Sachs Group, Inc. (The)
     7,000       1,172,080  
JPMorgan Chase & Co.
     34,132       1,966,686  
Marsh & McLennan Companies, Inc.
     5,000       259,100  
MetLife, Inc.
     14,000       777,840  
Morgan Stanley
     23,000       743,590  
                 
Description
    
No. of
Shares
      
Value
  
FINANCIALS (continued)
  
PNC Financial Services Group, Inc. (The)
     8,000     $ 712,400  
Principal Financial Group, Inc.
     4,000       201,920  
Prudential Financial, Inc.
     6,000       532,620  
SunTrust Banks, Inc.
     6,000       240,360  
T. Rowe Price Group, Inc.
     2,000       168,820  
Wells Fargo & Company
     47,800       2,512,368  
Weyerhaeuser Company
     7,000       231,630  
              18,727,959  
HEALTH CARE — 6.68%
  
Abbott Laboratories
     13,200       539,880  
AbbVie Inc.
     13,200       745,008  
Actavis plc *
     2,000       446,100  
Aetna Inc.
     5,000       405,400  
Allergan, Inc.
     4,500       761,490  
Amgen Inc.
     9,800       1,160,026  
Boston Scientific Corporation *
     17,000       217,090  
Cigna Corporation
     2,500       229,925  
Express Scripts Holding Company *
     12,000       831,960  
Johnson & Johnson
     20,000       2,092,400  
McKesson Corporation
     1,800       335,178  
Merck & Company, Inc.
     35,267       2,040,196  
Pfizer Inc.
     30,000       890,400  
St. Jude Medical, Inc.
     5,000       346,250  
Thermo Fisher Scientific Inc.
     5,000       590,000  
Wellpoint, Inc.
     4,500       484,245  
              12,115,548  
INDUSTRIALS — 5.35%
  
Caterpillar Inc.
     8,000       869,360  
CSX Corporation
     12,000       369,720  
Deere & Company
     6,500       588,575  
Delta Air Lines, Inc.
     9,000       348,480  
General Dynamics Corporation
     3,000       349,650  
 
See accompanying notes to financial statements.
 
 
6
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (continued)
 
Description
    
No. of
Shares
      
Value
  
INDUSTRIALS (continued)
  
General Electric Company
     124,000     $ 3,258,720  
Honeywell International Inc.
     10,000       929,500  
Lockheed Martin Corporation
     4,000       642,920  
Norfolk Southern Corporation
     3,000       309,090  
Northrop Grumman Corporations
     2,000       239,260  
Precision Castparts Corporation
     2,000       504,800  
Union Pacific Corporation
     13,000       1,296,750  
              9,706,825  
INFORMATION TECHNOLOGY — 11.99%
  
Apple Inc.
     48,300       4,488,519  
Cisco Systems, Inc.
     60,000       1,491,000  
Cognizant Technology Solutions Corporation *
     10,000       489,100  
eBay Inc. *
     10,000       500,600  
EMC Corporation
     20,000       526,800  
Facebook, Inc. *
     25,000       1,682,250  
Google Inc. - Class A *
     2,000       1,169,340  
Google Inc. - Class C *
     2,000       1,150,560  
Hewlett-Packard Company
     22,000       740,960  
Intel Corporation
     46,000       1,421,400  
International Business Machines Corporation
     13,100       2,374,637  
Microsoft Corporation
     76,800       3,202,560  
Oracle Corporation
     56,272       2,280,704  
Yahoo! Inc. *
     7,000       245,910  
              21,764,340  
MATERIALS — 1.68%
  
Air Products & Chemicals, Inc.
     2,000       257,240  
Dow Chemical Company (The)
     15,000       771,900  
Ecolab Inc.
     2,500       278,350  
                 
Description
    
No. of
Shares
      
Value
  
MATERIALS (continued)
  
International Paper Company
     4,000     $ 201,880  
LyondellBasell Industries N.V.
     4,000       390,600  
Newmont Mining Corporation
     5,000       127,200  
PPG Industries, Inc.
     2,000       420,300  
Praxair, Inc.
     4,500       597,780  
              3,045,250  
TELECOMMUNICATION SERVICES — 1.43%
  
AT&T, Inc.
     25,039       885,379  
Verizon Communications, Inc.
     35,000       1,712,550  
              2,597,929  
UTILITIES — 1.06%
  
AES Corporation (The)
     8,000       124,400  
American Electric Power Company, Inc.
     4,000       223,080  
Consolidated Edison, Inc.
     3,000       173,220  
Entergy Corporation
     2,000       164,180  
Exelon Corporation
     10,000       364,800  
PPL Corporation
     6,000       213,180  
Public Service Enterprises Group, Inc.
     6,500       265,135  
Southern Company (The)
     6,000       272,280  
Xcel Energy Inc.
     4,000       128,920  
              1,929,195  
TOTAL EQUITY SECURITIES
  
(cost - $147,781,158)
             179,506,199  
                 
SHORT-TERM INVESTMENTS — 1.00%
  
MONEY MARKET FUNDS — 1.00%
  
Fidelity Institutional Money Market Government Portfolio - Class I, 0.01%^ (cost - $1,827,299)
     1,827,299       1,827,299  
 
See accompanying notes to financial statements.
 
 
7
 
 
Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – June 30, 2014 (unaudited) (concluded)
 
Description
    
No. of
Shares
      
Value
  
TOTAL INVESTMENTS — 99.92%
  
(cost - $149,608,457)
           $ 181,333,498  
                 
OTHER ASSETS IN EXCESS OF LIABILITIES — 0.08%
       137,561  
                 
NET ASSETS — 100.00%
           $ 181,471,059  
 
*
Non-income producing security.
 
^
The rate shown is the 7-day effective yield as of June 30, 2014.
 
See accompanying notes to financial statements.
 
 
8
 
 
Cornerstone Strategic Value Fund, Inc.
Statement of Assets and Liabilities – June 30, 2014 (unaudited)

ASSETS
      
Investments, at value (cost – $149,608,457) (Notes B and C)
   $ 181,333,498  
Cash
     8,465  
Receivables:
        
Investments sold
     1,420,584  
Dividends
     205,648  
Prepaid expenses
     11,793  
Total Assets
     182,979,988  
         
LIABILITIES
        
Payables:
        
Investments purchased
     1,269,054  
Investment management fees (Note D)
     147,230  
Directors’ fees and expenses
     20,902  
Administration fees (Note D)
     10,624  
Other accrued expenses
     61,119  
Total Liabilities
     1,508,929  
         
NET ASSETS (applicable to 32,432,748 shares of common stock)
   $ 181,471,059  
         
NET ASSET VALUE PER SHARE ($181,471,059 ÷ 32,432,748)
   $ 5.60  
         
NET ASSETS CONSISTS OF
        
Common stock, $0.001 par value; 32,432,748 shares issued and outstanding (100,000,000 shares authorized)
   $ 32,433  
Paid-in Capital
     149,713,585  
Net unrealized appreciation in value of investments
     31,725,041  
Net assets applicable to shares outstanding
   $ 181,471,059  
 
See accompanying notes to financial statements.
 
9
 
 
Cornerstone Strategic Value Fund, Inc.
Statement of Operations – for the Six Months Ended June 30, 2014 (unaudited)

INVESTMENT INCOME
      
Income:
      
Dividends
   $ 3,553,940  
         
Expenses:
        
Investment management fees (Note D)
     881,087  
Administration fees (Note D)
     66,081  
Directors’ fees and expenses
     43,530  
Accounting fees
     25,076  
Printing
     24,456  
Custodian fees
     23,021  
Legal and audit fees
     20,898  
Transfer agent fees
     12,621  
Stock exchange listing fees
     5,350  
Insurance
     3,470  
Miscellaneous
     5,623  
Total Expenses
     1,111,213  
Net Investment Income
     2,442,727  
         
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
        
Net realized gain from investments
     4,987,505  
Capital gain distributions from regulated investment companies
     41,388  
Net change in unrealized appreciation in value of investments
     8,280,532  
Net realized and unrealized gain on investments
     13,309,425  
         
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
   $ 15,752,152  
 
See accompanying notes to financial statements.
 
 
10
 
 
Cornerstone Strategic Value Fund, Inc.
Statement of Changes in Net Assets

   
For the Six
Months Ended
June 30, 2014 (Unaudited)
    
For the
Year Ended December 31,
2013
  
             
INCREASE IN NET ASSETS
            
Operations:
            
Net investment income
   $ 2,442,727     $ 1,869,677  
Net realized gain from investments
     5,028,893       8,732,115  
Net change in unrealized appreciation in value of investments
     8,280,532       10,911,290  
                 
Net increase in net assets resulting from operations
     15,752,152       21,513,082  
                 
Dividends and distributions to stockholders (Note B):
                
Net investment income
     (2,442,727 )     (1,869,677 )
Net realized gains
     (5,028,893 )     (8,732,115 )
Return-of-capital
     (10,979,088 )     (13,777,354 )
                 
Total dividends and distributions to stockholders
     (18,450,708 )     (24,379,146 )
                 
Common stock transactions:
                
 Proceeds from rights offering of 0 and 12,633,136 shares of newly issued common stock, respectively
     —       74,788,165  
 Offering expenses associated with rights offering
     —       (91,545 )
 Proceeds from 688,556 and 504,586 shares newly issued in reinvestment of dividends and distributions, respectively
     3,797,564       2,837,329  
                 
Net increase in net assets from common stock transactions
     3,797,564       77,533,949  
                 
Total increase in net assets
     1,099,008       74,667,885  
                 
NET ASSETS
                
Beginning of period
     180,372,051       105,704,166  
End of period
   $ 181,471,059     $ 180,372,051  
 
See accompanying notes to financial statements.
 
 
11
 
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 June
30, 2014
    
For the Years Ended December 31,
  
   
(Unaudited)
     2013     2012     2011     2010     2009  
PER SHARE OPERATING PERFORMANCE
                                    
Net asset value, beginning of period
   $ 5.68     $ 5.68     $ 6.13     $ 7.55     $ 8.24     $ 8.71  
Net investment income #
     0.08       0.10       0.11       0.07       0.06       0.06  
Net realized and unrealized gain/(loss) on investments
     0.42       0.95       0.69       (0.04 )     0.76       1.52  
Net increase in net assets resulting from operations
     0.50       1.05       0.80       0.03       0.82       1.58  
                                                 
Dividends and distributions to stockholders:
                                                
Net investment income
     (0.08 )     (0.10 )     (0.37 )     (0.13 )     (0.07 )     (0.06 )
Net realized capital gains
     (0.16 )     (0.44 )     (0.19 )     —       —       —  
Return-of-capital
     (0.34 )     (0.69 )     (0.77 )     (1.40 )     (1.61 )     (2.03 )
Total dividends and distributions to stockholders
     (0.58 )     (1.23 )     (1.33 )     (1.53 )     (1.68 )     (2.09 )
                                                 
Common stock transactions:
                                                
Anti-dilutive effect due to shares issued:
                                                
Rights offering
     —       0.18       0.08       0.05       0.13       —  
Reinvestment of dividends and distributions
     0.00 +     0.00 +     0.00 +     0.03       0.04       0.04  
Total common stock transactions
     0.00 +     0.18       0.08       0.08       0.17       0.04  
                                                 
Net asset value, end of period
   $ 5.60     $ 5.68     $ 5.68     $ 6.13     $ 7.55     $ 8.24  
Market value, end of period
   $ 6.09     $ 6.60     $ 6.00     $ 6.59     $ 8.84     $ 11.61  
Total investment return (a)
     2.32 %(b)     36.67 %     13.33 %     (11.11 )%     (10.19 )%     89.55 %
                                                 
RATIOS/SUPPLEMENTAL DATA
                                                
Net assets, end of period (000 omitted)
   $ 181,471     $ 180,372     $ 105,704     $ 88,111     $ 64,266     $ 57,447  
Ratio of expenses to average net assets, net of fee waivers and fees paid indirectly, if any (c)
     1.26 %(e)     1.33 %     1.40 %     1.55 %     1.73 %     1.80 %
Ratio of expenses to average net assets, excluding fee waivers and fees paid indirectly, if any (c)
     1.26 %(e)     1.33 %     1.40 %     1.55 %     1.74 %     2.01 %
Ratio of net investment income to average net assets (d)
     2.78 %(e)     1.69 %     1.83 %     0.98 %     0.77 %     0.79 %
Portfolio turnover rate
     26.09 %(b)     48.46 %     40.75 %     38.08 %     25.28 %     10.81 %
 

#
Based on average shares outstanding.
 
+
Amount rounds to less than $0.01.
 
(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)
Not annualized.
 
(c)
Expenses do not include expenses of investments companies in which the Fund invests.
 
(d)
Recognition of net investment income by the Fund may be affected by the timing of the declaration of dividends, if any, by investment companies in which the Fund invests.
 
(e)
Annualized.
 
See accompanying notes to financial statements.
 
 
12
 
 
Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements (unaudited)

NOTE A. ORGANIZATION
 
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.
 
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
 
Management Estimates: The preparation of financial statements in conformity 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.
 
Subsequent Events: The Fund has evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date its financial statements were issued. Based on this evaluation, no additional disclosures or adjustments were required to such financial statements.
 
Portfolio Valuation: Investments are stated at value in the accompanying financial statements. Readily marketable portfolio securities listed on the New York Stock Exchange (“NYSE”) are valued, except as indicated below, at the last sale price reflected on the consolidated tape at the close of the NYSE on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. If no bid or asked prices are quoted on such day or if market prices may be unreliable because of events occurring after the close of trading, then the security is valued by such method as the Board of Directors shall determine in good faith to reflect its fair market value. Readily marketable securities not listed on the NYSE but listed on other domestic or foreign securities exchanges are valued in a like manner. Portfolio securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined as reflected on the consolidated tape at the close of the exchange representing the principal market for such securities. Securities trading on the Nasdaq Stock Market, Inc. (“NASDAQ”) are valued at the NASDAQ Official Closing Price.
 
Readily marketable securities traded in the over-the counter market, including listed securities whose primary market is believed by Cornerstone Advisors, Inc. (the “Investment Manager” or “Cornerstone”) to be over-the-counter, are valued at the mean of the current bid and asked prices as reported by the NASDAQ or, in the case of securities not reported by the NASDAQ or a comparable source, as the Board of Directors deem appropriate to reflect their fair market value. Where securities are traded on more than one exchange and also over-the-counter, the securities will generally be valued using the quotations the Board of Directors believes reflect most closely the value of such securities. At June 30, 2014, 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 NYSE is closed.
 
The Fund is exposed to financial market risks, including the valuations of its investment portfolio. During the six months ended June 30, 2014, the Fund did not invest in derivative instruments or engage in hedging activities.
 
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.
 
 
13
 
 
Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements (unaudited) (continued)

Risks Associated with Investments in Other Closed-end Funds: Closed-end investment companies are subject to the risks of investing in the underlying securities. The Fund, as a holder of the securities of the closed-end investment company, will bear its pro rata portion of the closed-end investment company’s expenses, including advisory fees. These expenses are in addition to the direct expenses of the Fund’s own operations.
 
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 stockholders which will be sufficient to relieve it from all or substantially all U.S. federal income and excise taxes.
 
The Accounting for Uncertainty in Income Taxes Topic of the FASB Accounting Standards Codification defines the threshold for recognizing the benefits of tax-return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50 percent likely to be realized. The Fund’s policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of June 30, 2014, the Fund does not have any interest or penalties associated with the under-payment of any income taxes. Management reviewed any uncertain tax positions for open tax years 2010 through 2013, and for the six months ended June 30, 2014. There was no material impact to the financial statements.
 
Distributions to Stockholders: Effective June 25, 2002, the Fund initiated a fixed, monthly distribution to stockholders. On November 29, 2006, this distribution policy was updated to provide for the annual resetting of the monthly distribution amount per share 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 stockholders 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 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 stockholders are recorded by the Fund on the ex-dividend date.
 
Managed Distribution Risk: Under the managed distribution policy, the Fund makes monthly distributions to stockholders at a rate that may include periodic distributions of its net income and net capital gains (“Net Earnings”), or from return-of-capital. If, for any fiscal year where total cash distributions exceeded Net Earnings (the “Excess”), the Excess would decrease the Fund’s total assets and, as a result, would have the likely effect of
 
 
14
 
 
Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements (unaudited) (continued)

increasing the Fund’s expense ratio. There is a risk that the total Net Earnings from the Fund’s portfolio would not be great enough to offset the amount of cash distributions paid to Fund stockholders. If this were to be the case, the Fund’s assets would be depleted, and there is no guarantee that the Fund would be able to replace the assets. In addition, in order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action. Furthermore, such assets used to make distributions will not be available for investment pursuant to the Fund’s investment objective.
 
NOTE C. FAIR VALUE
 
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 June 30, 2014 in valuing the Fund’s investments carried at value:
 
Valuation Inputs
  
Investments
in Securities
    
Other
Financial
Instruments*
  
Level 1 – Quoted Prices
            
Equity Investments
   $ 179,506,199     $ —  
Short-Term Investments
     1,827,299       —  
Level 2 – Other Significant Observable Inputs
     —       —  
Level 3 – Significant Unobservable Inputs
     —       —  
Total
   $ 181,333,498     $ —  
 
*
Other financial instruments include futures, forwards and swap contracts.

The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.
 
During the six months ended June 30, 2014 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 June 30, 2014.
 
It is the Fund’s policy to recognize transfers into and out of any Level at the end of the reporting period.
 
In June 2013, FASB issued Accounting Standards Update 2013-08 Financial Services – Investment Companies (Topic 946) – Amendments to the Scope, Measurement and Disclosure Requirements (“ASU 2013-08”) which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2013. ASU 2013-08 sets forth a methodology for determining whether an entity should be characterized as an investment
 
 
15
 
 
Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements (unaudited) (continued)

company and prescribes fair value accounting for an investment company’s non-controlling ownership interest in another investment company. FASB has determined that a fund registered under the Investment Company Act of 1940 automatically meets ASU 2013-08’s criteria for an investment company. Although still evaluating the potential impacts of ASU 2013-08 to the Fund, the Investment Manager does not expect the adoption of the ASU to have an effect on the Fund.
 
NOTE D. AGREEMENTS WITH AFFILIATES
 
At June 30, 2014, certain officers of the Fund are also officers of Cornerstone or AST Fund Solutions, LLC (“AFS”). Such officers are paid no fees by the Fund for serving as officers of the Fund.
 
Investment Management Agreement
 
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 six months ended June 30, 2014, Cornerstone earned $881,087 for investment management services.
 
Administration Agreement
 
Under the terms of the administration agreement, AFS supplies executive, administrative and regulatory services for the Fund. AFS supervises the preparation of reports to stockholders for the Fund, reports to and filings with the Securities and Exchange Commission and materials for meetings of the Board of Directors. For these services, the Fund pays AFS a monthly fee at an annual rate of 0.075% of its average daily net assets, subject to an annual minimum fee of $50,000. For the six months ended June 30, 2014, AFS earned $66,081 as administrator.
 
NOTE E. INVESTMENT IN SECURITIES
 
For the six months ended June 30, 2014, purchases and sales of securities, other than short-term investments, were $46,520,113 and $45,742,420, respectively.
 
NOTE F. SHARES OF COMMON STOCK
 
The Fund has 100,000,000 shares of common stock authorized and 32,432,748 shares issued and outstanding at June 30, 2014. Transactions in common stock for the six months ended June 30, 2014 were as follows:
 
Shares at beginning of period
     31,744,192  
Shares newly issued in reinvestment of dividends and distributions
     688,556  
Shares at end of period
     32,432,748  
 
NOTE G. FEDERAL INCOME TAXES
 
Income and capital gains distributions are determined 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.
 
The tax character of dividends and distributions paid to stockholders during the year ended December 31, 2013 for the Fund was ordinary income of $3,415,616, long-term capital gains of $7,186,176 and return-of-capital of $13,777,354.
 
GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. 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”). The Fund incurred no such losses during the year ended December 31, 2013.
 
 
16
 
 
Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements (unaudited) (concluded)

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after December 31, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses. Therefore, there may be a greater likelihood that all or a portion of the Funds’ pre-enactment capital loss carryovers may expire without being utilized.
 
The following information is computed on a tax basis for each item as of June 30, 2014:
 
Cost of portfolio investments
   $ 149,608,457  
Gross unrealized appreciation
   $ 32,501,357  
Gross unrealized depreciation
     (776,316 )
Net unrealized appreciation
   $ 31,725,041  
 
 
17
 
 
Results of Annual Meeting of Stockholders (unaudited)
 
On April 15, 2014, the Annual Meeting of Stockholders of the Fund was held and the following matters were voted upon based on 31,881,591 shares of common stock outstanding on the record date of February 18, 2014.
 
(1)
To approve the election of two directors to hold office until the year 2017 Annual Meeting of Stockholders.
 
Name of Directors
  
For
  
Withhold
  
Broker Non-Votes
Edwin Meese III
  
25,098,721
  
1,164,437
  
484,020
Ralph W. Bradshaw
  
25,466,138
  
794,020
  
487,020

 
18
 
 
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 continuation 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 continuation of the Agreement occurred at an in person meeting of the Board held on February 7, 2014.
 
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 the Board’s review of the materials and information as well as discussions with management of the Investment Manager, the Board determined that the approval of the continuation of the Agreement was consistent with the best interests of the Fund and its stockholders. The Board decided that the continuation of the Agreement 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 stockholders. 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 companies 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.
 
In response to a questionnaire distributed by Fund counsel to the Investment Manager in accordance with Section 15c of the Investment Company Act of 1940, as amended, the Investment Manager provided certain information to the independent members of the Board in advance of the meeting held on February 7, 2014. The materials provided by the Investment Manager described the services offered by the Investment Manager to the Fund and included an overview of the Investment Manager’s investment philosophy, management style and plan, including the Investment Manager’s extensive knowledge and experience in the closed-end fund industry. The Board noted that the Investment Manager provides quarterly reviews of the performance of the Fund and the Investment Manager’s services for the Fund. The Board also discussed the experience and 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 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 of comparable funds. Additionally, the Investment Manager presented an analysis of its profitability based on its contractual relationship with the Fund and the other investment companies 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. The Board met in executive session to discuss the information provided and was advised by independent legal counsel with respect to its deliberations and its duties when considering the Agreement’s continuance. 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 performance of the Fund, the profitability of the Investment Manager’s relationship with the Fund, the comparability of the proposed fee to fees paid by closed-end funds in the Fund’s peer group, and the level of quality of the investment management personnel. The Board determined that the Agreement is consistent with the best interests of the Fund and its stockholders, and enables the
 
 
19
 
 
Investment Management Agreement Approval Disclosure (unaudited)
 
Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its stockholders. Accordingly, in light of the above considerations and such other factors and information it considered relevant, the Board by a unanimous vote (including a separate vote of all the Independent Directors present in person at the meeting) approved the continuance of the Agreement with respect to the Fund.
 
 
20
 
 
Description of Dividend Reinvestment Plan (unaudited)
 
Cornerstone Strategic Value Fund, Inc. (the “Fund”) operates a Dividend Reinvestment Plan (the “Plan”), sponsored and administered by American Stock Transfer & Trust Company, LLC (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.
 
Stockholders automatically participate in the Fund’s Plan, unless and until an election is made to withdraw from the Plan on behalf of such participating stockholder. Stockholders 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 stockholders are reinvested in full and fractional shares as described below.
 
When the Fund declares a Distribution the Agent, on the stockholder’s behalf, will (i) receive additional authorized shares from the Fund either newly issued or repurchased from stockholders by the Fund and held as treasury stock (“Newly Issued Shares”) or (ii) purchase outstanding shares on the open market, on the NYSE MKT or elsewhere, with cash allocated to it by the Fund (“Open Market Purchases”).
 
The method for determining the number of Newly Issued Shares received when Distributions are reinvested will be determined by dividing the amount of the Distribution either by the Fund’s last reported net asset value per share or by a price equal to the average closing price of the Fund over the five trading days preceding the payment date of the Distribution, whichever is lower. However, if the last reported net asset value of the Fund’s shares is higher than its market price (i.e., the Fund is selling at a discount), shares may be acquired by the Agent in Open Market Purchases and allocated to the reinvesting stockholders based on the average cost of such Open Market Purchases.
 
Whenever the Fund declares a Distribution and the last reported 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 stockholders who do not wish to have their Distributions automatically reinvested should so notify the Fund in writing. If a stockholder 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 stockholder 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 stockholder accounts in the Plan and furnish written confirmations of all transactions in the accounts, including information
 
 
21
 
 
Description of Dividend Reinvestment Plan (unaudited) (concluded)
 
needed by stockholders for personal and tax records The Agent will hold shares in the account of the Plan participant in non-certificated form in the name of the participant, and each stockholder’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 stockholders.
 
In the case of stockholders, 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 stockholder as representing the total amount of shares registered in the stockholder’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.
 
The automatic reinvestment of Distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Distributions. The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan.
 
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 (866) 668-6558.
 
 
22
 
 
Proxy Voting and Portfolio Holdings Information (unaudited)
 
The policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities are available:
 
 
•
without charge, upon request, by calling toll-free (866) 668-6558; and
 
 
•
on the website of the Securities and Exchange Commission, http://www.sec.gov.
 
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent period ended June 30 is available without charge, upon request, by calling toll-free (866) 668-6558 on the website of the Securities and Exchange Commission, http://www.sec.gov or on the Fund’s website at www.cornerstonestrategicvaluefund.com (See Form N-PX).
 
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 toll-free 1-800-SEC-0330.
 
 
23
 
 
Privacy Policy Notice (unaudited)
 
FACTS
WHAT DOES CORNERSTONE STRATEGIC VALUE FUND, INC. (THE “FUND”) DO WITH YOUR PERSONAL INFORMATION?
Why?
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?
The types of personal information we, and our service providers, on our behalf, collect and share depend on the product or service you have with us. This information can include:
   •   Social Security number
   •   account balances
   •   account transactions
   •   transaction history
   •   wire transfer instructions
   •   checking account information
When you are no longer our customer, we continue to share your information as described in this notice.
How?
All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons the Fund, and our service providers, on our behalf, choose to share; and whether you can limit this sharing.

 
24
 
 
Privacy Policy Notice (unaudited) (continued)
 
Reasons we can share your personal information
Does the Fund share?
Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
Yes
No
For our marketing purposes – to offer our products and services to you
No
We don’t share
For joint marketing with other financial companies
No
We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences
Yes
No
For our affiliates’ everyday business purposes – information about your creditworthiness
No
We don’t share
For our affiliates to market to you
No
We don’t share
For nonaffiliates to market to you
No
We don’t share
 
What we do
Who is providing this notice?
Cornerstone Strategic Value Fund, Inc. (the “Fund”)
How does the Fund and the Fund’s service providers, on the Fund’s behalf protect my personal information?
To protect your personal information from unauthorized access and use, we and our service providers use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
How does the Fund and the Fund’s service providers, on the Fund’s behalf collect my personal information?
We collect your personal information, for example, when you:
   •   open an account
   •   provide account information
   •   give us your contact information
   •   make a wire transfer
We also collect your information from others, such as credit bureaus, affiliates, or other companies.
 
 
25
 
 
Privacy Policy Notice (unaudited) (concluded)
 
Why can’t I limit all sharing?
Federal law gives you the right to limit only
   •   sharing for affiliates’ everyday business purposes – information about your
        creditworthiness
   •   affiliates from using your information to market to you
   •   sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing.
 
Definitions
Affiliates
 
Companies related by common ownership or control. They can be financial and nonfinancial companies.
   •   Cornerstone Advisors, Inc.
Nonaffiliates
Companies not related by common ownership or control. They can be financial and nonfinancial companies.
   •   The Fund does not share with nonaffiliates so they can market to you.
Joint marketing
A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
   •   The Fund does not jointly market.

Questions?
Call (866) 668-6558
 
 
26
 
 
Summary of General Information (unaudited)
 
Cornerstone Strategic Value Fund, Inc. is a closed-end, diversified investment company whose shares trade on the NYSE MKT. Its investment objective is to seek long-term capital appreciation through investment in equity securities of U.S. and non-U.S. companies. The Fund is managed by Cornerstone Advisors, Inc.
 
Stockholder Information (unaudited)
 
The Fund is listed on the NYSE MKT (symbol “CLM”). The previous week’s net asset value per share, market price, and related premium or discount, as well as certain other Fund information, are available on the Fund’s website at www.cornerstonestrategicvaluefund.com.
 
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 common stock in the open market.

This report, including the financial statements herein, is sent to the stockholders of the Fund for their information. The financial information included herein is taken from the records of the Fund without examination by the 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.

 
27
 
 
 
 
Cornerstone Strategic Value Fund, Inc.
 
 
 
 
 
 
 
ITEM 2.
CODE OF ETHICS.

Not required

ITEM 3.
AUDIT COMMITTEE FINANCIAL EXPERT.

Not required

ITEM 4.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not required
 
ITEM 5.
AUDIT COMMITTEE OF LISTED REGISTRANTS.
 
Not required
 
ITEM 6.
SCHEDULE OF INVESTMENTS.
 
(a)
Not required
 
ITEM 7.
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not required

ITEM 8.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a)
Not required
 
(b)
There has not been a change in any of the Portfolio Managers identified in response to this Item in the registrant's most recent annual report on Form N-CSR.

ITEM 9.
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

None

ITEM 10.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors that have been implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) or this Item.
 
 
 
 
 
ITEM 11.
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 the information required in filings on Form N-CSR 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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
 
ITEM 12.
EXHIBITS.

File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not required

(a)(2) 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

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable

(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): Attached hereto

Exhibit 99.CERT
Certifications required by Rule 30a-2(a) under the Act

Exhibit 99.906CERT
Certifications required by Rule 30a-2(b) under the Act
 
 
 
 
 
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, Chairman and President
  
   
(Principal Executive Officer)
  
       
Date
September 2, 2014
    
 
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, Chairman and President
  
   
(Principal Executive Officer)
  
       
Date
September 2, 2014
    
       
     
By (Signature and Title)*
/s/ Frank J. Maresca
  
   
Frank J. Maresca, Treasurer
  
   
(Principal Financial Officer)
  
       
Date
September 2, 2014
    

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