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)

 

225 Pictoria Drive, Suite 450 Cincinnati, OH 45246
(Address of principal executive offices) (Zip code)

 

Paul Leone, Esq.

 

Ultimus Fund Solutions, LLC 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 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  
     
Date of reporting period: June 30, 2023  

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR 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.Reports to Stockholders.

 

(a)

 

Cornerstone Strategic

Value Fund, Inc.

 

June 30, 2023

 

 

 

 

CONTENTS

 

   

Portfolio Summary

1

Schedule of Investments

2

Statement of Assets and Liabilities

9

Statement of Operations

10

Statements 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

Summary of General Information

23

Stockholder Information

23

 

 

Cornerstone Strategic Value Fund, Inc.
Portfolio Summary
- As Of June 30, 2023 (unaudited)

 

SECTOR ALLOCATION

 

Sector

Percent of
Net Assets

Information Technology

22.9

Health Care

11.9

Financials

11.8

Consumer Discretionary

9.2

Closed-End Funds

9.1

Communication Services

7.9

Industrials

7.9

Consumer Staples

6.6

Exchange-Traded Funds

4.6

Energy

2.9

Utilities

2.4

Materials

1.1

Real Estate

1.1

Other

0.6

 

TOP TEN HOLDINGS, BY ISSUER

 

Holding

Sector

Percent of
Net Assets

1.

Apple Inc.

Information Technology

7.8

2.

Microsoft Corporation

Information Technology

6.5

3.

Alphabet Inc. - Class C

Communication Services

4.1

4.

Amazon.com, Inc.

Consumer Discretionary

3.5

5.

NVIDIA Corporation

Information Technology

2.9

6.

Berkshire Hathaway Inc. - Class B

Financials

2.8

7.

JPMorgan Chase & Co.

Financials

1.9

8.

Tesla, Inc.

Consumer Discretionary

1.9

9.

Invesco QQQ TrustSM, Series 1

Exchange-Traded Funds

1.7

10.

Visa, Inc. - Class A

Financials

1.7

 

 

1

 

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments
– June 30, 2023 (Unaudited)

 

 

Description

 

No. of
Shares

   

Value

 

EQUITY SECURITIES — 99.46%

CLOSED-END FUNDS — 9.11%

 

CONVERTIBLE SECURITY FUNDS — 0.16%

Bancroft Fund Ltd.

    11,604     $ 198,312  

Ellsworth Growth and Income Fund Ltd.

    42,063       361,742  

Virtus Convertible & Income Fund

    190,847       664,148  

Virtus Convertible & Income Fund II

    182,262       566,835  

Virtus Diversified Income & Convertible Fund

    36,479       728,850  
              2,519,887  

DEVELOPED MARKET — 0.04%

Japan Smaller Capitalization Fund, Inc.

    99,578       716,962  
                 

DIVERSIFIED EQUITY — 2.36%

Adams Diversified Equity Fund, Inc.

    805,680       13,543,481  

Eaton Vance Tax-Advantaged Dividend Income Fund

    116,701       2,654,948  

Gabelli Dividend & Income Trust (The)

    353,637       7,472,350  

General American Investors Company, Inc.

    178,718       7,456,115  

Liberty All-Star® Growth Fund

    238,849       1,292,173  

Royce Value Trust

    243,468       3,359,858  

Tri-Continental Corporation

    58,300       1,598,586  
              37,377,511  

EMERGING MARKETS — 0.03%

Morgan Stanley India Investment Fund, Inc.

    20,606     446,532  
                 

ENERGY MLP FUNDS — 0.14%

ClearBridge MLP and Midstream Total Return Fund Inc.

    35,100       1,113,722  

Goldman Sachs MLP and Energy Renaissance Fund

    25,953       407,203  

Kayne Anderson Energy Infrastructure Fund, Inc.

    9,100       74,074  

Kayne Anderson NextGen Energy & Infrastructure, Inc.

    33,515       237,957  

PIMCO Energy and Tactical Credit Opportunities Fund

    22,200       349,872  
              2,182,828  

GLOBAL — 0.56%

abrdn Global Dynamic Dividend Fund

    41,841       399,163  

abrdn Total Dynamic Dividend Fund

    7,800       64,428  

Clough Global Dividend and Income Fund

    32,754       181,785  

Clough Global Equity Fund

    75,967       474,034  

Clough Global Opportunities Fund

    77,713       389,342  

Eaton Vance Tax-Advantaged Global Dividend Income Fund

    214,350       3,579,646  

Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund

    72,876       1,673,233  

Gabelli Global Small and Mid Cap Value Trust (The)

    19,701       236,089  
                 

 

 

See accompanying notes to financial statements.

 

 

2

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments –
June 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

GLOBAL (Continued)

GDL Fund (The)

    107,114     $ 840,309  

John Hancock Tax-Advantaged Global Shareholder Yield Fund

    10,799       50,647  

Lazard Global Total Return and Income Fund, Inc.

    46,284       722,493  

Miller/Howard High Income Equity Fund

    13,283       134,557  

Royce Global Value Trust

    6,050       55,902  
              8,801,628  

INCOME & PREFERRED STOCK — 0.24%

Calamos Long/Short Equity & Dynamic Income Trust

    116,549       1,803,013  

LMP Capital and Income Fund Inc.

    142,372       1,823,785  

RiverNorth Opportunities Fund, Inc.

    16,558       189,424  
              3,816,222  

NATURAL RESOURCES — 0.54%

Adams Natural Resources Fund, Inc.

    334,232       6,958,710  

First Trust Energy Income and Growth Fund

    74,904       1,043,413  

NXG NextGen Infrastructure Income Fund

    12,268       471,705  

Tortoise Energy Independence Fund, Inc.

    3,763       108,186  
              8,582,014  

OPTION ARBITRAGE/OPTIONS STRATEGIES — 1.42%

BlackRock Enhanced Global Dividend Trust

    200,334       2,017,363  

Eaton Vance Enhanced Equity Income Fund

    40,387       665,982  

Eaton Vance Enhanced Equity Income Fund II

    241,490       4,320,255  

Eaton Vance Risk-Managed Diversified Equity Income Fund

    84,790     696,974  

Eaton Vance Tax-Managed Buy-Write Income Fund

    84,217       1,169,774  

Eaton Vance Tax-Managed Buy-Write Opportunities Fund

    210,100       2,685,078  

Eaton Vance Tax-Managed Diversified Equity Income Fund

    72,500       903,350  

Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund

    208,546       1,714,248  

Eaton Vance Tax-Managed Global Diversified Equity Income Fund

    402,464       3,187,515  

First Trust Enhanced Equity Income Fund

    20,516       359,645  

Nuveen Core Equity Alpha Fund

    27,633       352,597  

Nuveen Dow 30SM Dynamic Overwrite Fund

    99,902       1,409,617  

Nuveen S&P 500 Dynamic Overwrite Fund

    10,144       159,058  

Virtus Dividend, Interest & Premium Strategy Fund

    227,018       2,771,891  

Voya Global Equity Dividend and Premium Opportunity Fund

    20,891       107,380  
              22,520,727  

 

 

See accompanying notes to financial statements.

 

3

 

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments –
June 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

REAL ESTATE — 0.35%

Cohen & Steers Quality Income Realty Fund, Inc.

    274,764     $ 3,187,262  

Cohen & Steers Real Estate Opportunities and Income Fund

    65,384       900,992  

Cohen & Steers Total Return Realty Fund, Inc.

    61,496       702,284  

Neuberger Berman Real Estate Securities Income Fund Inc.

    110,747       336,671  

Nuveen Real Estate Income Fund

    53,840       400,031  
              5,527,240  

SECTOR EQUITY — 2.81%

BlackRock Health Sciences Trust II

    689,490       11,321,425  

BlackRock Innovation & Growth Trust

    1,872,302       14,697,570  

Gabelli Healthcare & WellnessRx Trust (The)

    150,097       1,494,966  

GAMCO Natural Resources, Gold & Income Trust

    68,377       343,253  

Neuberger Berman Next Generation Connectivity Fund Inc.

    656,000       7,156,960  

Nuveen Real Asset Income and Growth Fund

    274,155       3,130,850  

Tekla Healthcare Investors

    152,212       2,595,215  

Tekla Healthcare Opportunities Fund

    129,737       2,474,085  

Tekla Life Sciences Investors

    89,099       1,206,400  

Virtus Artificial Intelligence & Technology Opportunities Fund

    3,547       65,265  
              44,485,989  

UTILITY — 0.46%

abrdn Global Infrastructure Income Fund

    115,496     2,054,674  

Allspring Utilities and High Income Fund

    12,935       130,902  

BlackRock Utilities, Infrastructure & Power Opportunities Trust

    23,870       526,095  

Cohen & Steers Infrastructure Fund, Inc.

    190,260       4,493,941  

Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund

    13,732       107,110  
              7,312,722  
                 

TOTAL CLOSED-END FUNDS

    144,290,262  
                 

COMMUNICATION SERVICES — 7.95%

Alphabet Inc. - Class C *

    540,600       65,396,382  

Comcast Corporation - Class A

    209,700       8,713,035  

Meta Platforms, Inc. - Class A *

    89,500       25,684,710  

Netflix, Inc. *

    17,600       7,752,624  

T-Mobile US, Inc. *

    50,000       6,945,000  

Verizon Communications Inc.

    122,000       4,537,180  

Walt Disney Company (The) *

    76,900       6,865,632  
              125,894,563  

CONSUMER DISCRETIONARY — 9.23%

Amazon.com, Inc. *

    425,600       55,481,216  

AutoZone, Inc. *

    1,700       4,238,712  

Booking Holdings Inc. *

    2,100       5,670,693  

Chipotle Mexican Grill, Inc. *

    1,100       2,352,900  

eBay Inc.

    38,000       1,698,220  

General Motors Company

    51,000       1,966,560  

 

 

See accompanying notes to financial statements.

 

 

4

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments –
June 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

CONSUMER DISCRETIONARY (Continued)

       

Hilton Worldwide Holdings Inc.

    22,000     $ 3,202,100  

Home Depot, Inc. (The)

    29,000       9,008,560  

Lowe’s Companies, Inc.

    28,000       6,319,600  

McDonald’s Corporation

    21,000       6,266,610  

NIKE, Inc. - Class B

    44,100       4,867,317  

O’Reilly Automotive, Inc. *

    3,600       3,439,080  

Ross Stores, Inc.

    24,200       2,713,546  

Starbucks Corporation

    33,500       3,318,510  

Tesla, Inc. *

    115,000       30,103,550  

TJX Companies, Inc. (The)

    66,000       5,596,140  
              146,243,314  

CONSUMER STAPLES — 6.63%

Coca-Cola Company (The)

    345,000       20,775,900  

Costco Wholesale Corporation

    40,500       21,804,390  

Dollar General Corporation

    19,000       3,225,820  

Hershey Company (The)

    9,000       2,247,300  

Monster Beverage Corporation *

    60,000       3,446,400  

PepsiCo, Inc.

    101,100       18,725,742  

Philip Morris International Inc.

    127,400       12,436,788  

Procter & Gamble Company (The)

    37,800       5,735,772  

Walmart Inc.

    106,000       16,661,080  
              105,059,192  

ENERGY — 2.87%

Chevron Corporation

    55,000       8,654,250  

ConocoPhillips

    40,000       4,144,400  

Devon Energy Corporation

    50,000       2,417,000  

Exxon Mobil Corporation

    188,000       20,163,000  

Kinder Morgan, Inc. - Class P

    160,000       2,755,200  

Occidental Petroleum Corporation

    60,000       3,528,000  

Pioneer Natural Resources Company

    18,000     3,729,240  
              45,391,090  

EXCHANGE-TRADED FUNDS — 4.63%

Energy Select Sector SPDR® Fund (The)

    87,500       7,102,375  

Invesco QQQ TrustSM, Series 1

    73,200       27,041,544  

iShares Core S&P 500 ETF

    5,000       2,228,550  

SPDR S&P 500® ETF Trust

    18,000       7,979,040  

Technology Select Sector SPDR® Fund (The)

    141,500       24,601,190  

Vanguard Information Technology Index Fund ETF

    10,000       4,421,600  
              73,374,299  

FINANCIALS — 11.77%

Aon plc - Class A

    14,000       4,832,800  

Arthur J. Gallagher & Co.

    13,000       2,854,410  

Bank of America Corporation

    466,100       13,372,409  

Berkshire Hathaway Inc. - Class B *

    127,900       43,613,900  

Charles Schwab Corporation (The)

    145,000       8,218,600  

Fiserv, Inc. *

    20,800       2,623,920  

JPMorgan Chase & Co.

    210,000       30,542,400  

Mastercard Incorporated - Class A

    50,000       19,665,000  

Moody’s Corporation

    10,800       3,755,376  

Morgan Stanley

    120,000       10,248,000  

MSCI Inc.

    7,000       3,285,030  

PayPal Holdings, Inc. *

    52,700       3,516,671  

Progressive Corporation (The)

    52,000       6,883,240  

Visa, Inc. - Class A

    112,000       26,597,760  

Wells Fargo & Company

    149,000       6,359,320  
              186,368,836  

 

 

See accompanying notes to financial statements.

 

5

 

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments –
June 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

HEALTH CARE — 11.99%

               

Abbott Laboratories

    47,000     $ 5,123,940  

AbbVie Inc.

    53,000       7,140,690  

Amgen Inc.

    14,000       3,108,280  

Biogen Inc. *

    12,000       3,418,200  

Boston Scientific Corporation *

    100,000       5,409,000  

Bristol-Myers Squibb Company

    123,000       7,865,850  

Cigna Group (The)

    18,000       5,050,800  

Danaher Corporation

    44,900       10,776,000  

DexCom, Inc. *

    32,000       4,112,320  

Elevance Health, Inc.

    14,000       6,220,060  

Eli Lilly and Company

    33,000       15,476,340  

Gilead Sciences, Inc.

    87,100       6,712,797  

HCA Healthcare, Inc.

    17,000       5,159,160  

Humana Inc.

    10,000       4,471,300  

Intuitive Surgical, Inc. *

    5,800       1,983,252  

IQVIA Holdings Inc. *

    16,000       3,596,320  

Johnson & Johnson

    72,300       11,967,096  

McKesson Corporation

    14,000       5,982,340  

Medtronic plc

    36,000       3,171,600  

Merck & Co., Inc.

    132,700       15,312,253  

Mettler-Toledo International Inc. *

    2,000       2,623,280  

Pfizer Inc.

    152,000       5,575,360  

Regeneron Pharmaceuticals, Inc. *

    10,000       7,185,400  

Stryker Corporation

    26,000       7,932,340  

Thermo Fisher Scientific Inc.

    10,000       5,217,500  

UnitedHealth Group Incorporated

    46,500       22,349,760  

Vertex Pharmaceuticals Incorporated *

    20,000       7,038,200  
              189,979,438  

INDUSTRIALS — 7.85%

               

Boeing Company (The) *

    52,000     10,980,320  

Caterpillar Inc.

    40,000       9,842,000  

CSX Corporation

    206,000       7,024,600  

Deere & Company

    22,000       8,914,180  

Emerson Electric Co.

    50,000       4,519,500  

General Dynamics Corporation

    24,000       5,163,600  

General Electric Company

    20,200       2,218,970  

Honeywell International Inc.

    60,000       12,450,000  

Illinois Tool Works Inc.

    23,000       5,753,680  

Lockheed Martin Corporation

    21,000       9,667,980  

Norfolk Southern Corporation

    21,000       4,761,960  

PACCAR Inc.

    43,500       3,638,775  

Raytheon Technologies Corporation

    120,000       11,755,200  

Rockwell Automation, Inc.

    12,000       3,953,400  

TransDigm Group Incorporated

    3,000       2,682,510  

Union Pacific Corporation

    60,000       12,277,200  

United Parcel Service, Inc. - Class B

    13,500       2,419,875  

Waste Management, Inc.

    36,000       6,243,120  
              124,266,870  

INFORMATION TECHNOLOGY — 22.87%

Accenture plc - Class A

    19,000       5,863,020  

Adobe Inc. *

    23,000       11,246,770  

Advanced Micro Devices, Inc. *

    46,500       5,296,815  

Analog Devices, Inc.

    12,000       2,337,720  

Apple Inc.

    634,300       123,035,171  

Applied Materials, Inc.

    41,000       5,926,140  

Autodesk, Inc. *

    14,000       2,864,540  

Broadcom Inc.

    12,400       10,756,132  

Cisco Systems, Inc.

    118,000       6,105,320  
                 

 

 

See accompanying notes to financial statements.

 

 

6

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments –
June 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

INFORMATION TECHNOLOGY (Continued)

       

Intuit Inc.

    12,000     $ 5,498,280  

Lam Research Corporation

    7,700       4,950,022  

Microsoft Corporation

    302,700       103,081,458  

NVIDIA Corporation

    109,800       46,447,596  

Oracle Corporation

    78,000       9,289,020  

Roper Technologies, Inc.

    10,000       4,808,000  

Salesforce, Inc. *

    47,000       9,929,220  

Texas Instruments Incorporated

    26,500       4,770,530  
              362,205,754  

MATERIALS — 1.14%

               

Albemarle Corporation

    10,000       2,230,900  

Corteva, Inc.

    35,200       2,016,960  

DuPont de Nemours, Inc.

    23,700       1,693,128  

Freeport-McMoRan Inc.

    72,500       2,900,000  

Linde plc

    24,300       9,260,244  
              18,101,232  

REAL ESTATE — 1.07%

               

AvalonBay Communities, Inc.

    13,000       2,460,510  

CBRE Group, Inc. - Class A *

    27,000       2,179,170  

Equinix, Inc.

    3,800       2,978,972  

Equity Residential

    15,100       996,147  

Public Storage

    13,000       3,794,440  

Realty Income Corporation

    27,600       1,650,204  

SBA Communications Corporation - Class A

    9,000       2,085,840  

Ventas, Inc.

    15,800       746,866  
              16,892,149  

UTILITIES — 2.35%

               

American Electric Power Company, Inc.

    46,000       3,873,200  

American Water Works Company, Inc.

    22,000       3,140,500  

Constellation Energy Corporation

    18,333     1,678,386  

Dominion Energy, Inc.

    33,900       1,755,681  

Duke Energy Corporation

    30,800       2,763,992  

Exelon Corporation

    88,000       3,585,120  

NextEra Energy, Inc.

    81,600       6,054,720  

Sempra Energy

    30,000       4,367,700  

Southern Company (The)

    92,000       6,463,000  

WEC Energy Group, Inc.

    22,000       1,941,280  

Xcel Energy Inc.

    25,000       1,554,250  
              37,177,829  

TOTAL EQUITY SECURITIES

       

(cost - $1,342,383,396)

            1,575,244,828  

 

 

See accompanying notes to financial statements.

 

7

 

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Schedule of Investments – J
une 30, 2023 (unaudited) (continued)

 

 

Description

 

No. of
Shares

   

Value

 

SHORT-TERM INVESTMENT — 0.58%

MONEY MARKET FUND — 0.58%

Fidelity Institutional Money Market Government Portfolio - Class I, 4.99% ^ (cost - $9,226,720)

    9,226,720     $ 9,226,720  
                 

TOTAL INVESTMENTS — 100.04% (cost - $1,350,799,386)

    1,584,471,548  
                 

LIABILITIES IN EXCESS OF OTHER ASSETS — (0.04%)

    (641,530 )
                 

NET ASSETS — 100.00%

  $ 1,583,830,018  

 

 
 

*

Non-income producing security.

 

 

^

The rate shown is the 7-day effective yield as of June 30, 2023.

 

 

plc

Public Limited Company.

 

See accompanying notes to financial statements.

 

 

8

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Statement of Assets and Liabilities
– JUNE 30, 2023 (unaudited)

 

 

ASSETS

       

Investments, at value (cost – $1,350,799,386) (Notes B and C)

  $ 1,584,471,548  

Receivables:

       

Investments sold

    319,180  

Dividends

    933,279  

Prepaid expenses

    47,520  

Total Assets

    1,585,771,527  
         

LIABILITIES

       

Payables:

       

Investment management fees (Note D)

    1,271,458  

Investments purchased

    351,243  

Administration and fund accounting fees (Note D)

    102,504  

Directors’ fees and expenses

    74,997  

Other accrued expenses

    141,307  

Total Liabilities

    1,941,509  
         

NET ASSETS (applicable to 224,612,511 shares of common stock)

  $ 1,583,830,018  
         

NET ASSET VALUE PER SHARE ($1,583,830,018 ÷ 224,612,511)

  $ 7.05  
         

NET ASSETS CONSISTS OF

       

Common stock, $0.001 par value; 224,612,511 shares issued and outstanding (400,000,000 shares authorized)

  $ 224,613  

Paid-in capital

    1,351,503,934  

Accumulated earnings

    232,101,471  

Net assets applicable to shares outstanding

  $ 1,583,830,018  

 

 

See accompanying notes to financial statements.

 

9

 

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Statement of Operations
– for the Six Months Ended June 30, 2023 (unaudited)

 

 

INVESTMENT INCOME

       

Income:

       

Dividends

  $ 13,081,919  
         

Expenses:

       

Investment management fees (Note D)

    7,332,638  

Administration and fund accounting fees (Note D)

    313,719  

Directors’ fees and expenses

    156,540  

Printing

    99,699  

Custodian fees

    77,341  

Transfer agent fees

    29,919  

Legal and audit fees

    27,814  

Stock exchange listing fees

    16,826  

Insurance

    14,615  

Miscellaneous

    22,486  

Total Expenses

    8,091,597  
         

Net Investment Income

    4,990,322  
         

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS

       

Net realized gain from investments

    52,135,920  

Long-term capital gain distributions from regulated investment companies

    14,997  

Net change in unrealized appreciation/(depreciation) in value of investments

    230,336,749  

Net realized and unrealized gain on investments

    282,487,666  
         

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 287,477,988  

 

 

See accompanying notes to financial statements.

 

 

10

 

 

 

 

Cornerstone Strategic Value Fund, Inc.
Statements of Changes in Net Assets

 

 

   

For the Six
Months Ended
June 30, 2023
(unaudited)

     

For the
Year Ended
December 31,
2022

 
                   

INCREASE/(DECREASE) IN NET ASSETS

                 

Operations:

                 

Net investment income

  $ 4,990,322       $ 4,125,484  

Net realized gain from investments

    52,150,917         34,016,048  

Net change in unrealized appreciation/(depreciation) in value of investments

    230,336,749         (288,712,210 )
                   

Net increase (decrease) in net assets resulting from operations

    287,477,988         (250,570,678 )
                   

Distributions to stockholders (Note B):

                 

From earnings

    (55,474,626 )       (40,820,693 )

Return-of-capital

    (106,365,963 )       (317,520,276 )
                   

Total distributions to stockholders

    (161,840,589 )       (358,340,969 )
                   

Common stock transactions:

                 

Proceeds from rights offering of 0 and 81,023,152 shares of newly issued common stock, respectively

            670,061,467  

Offering expenses associated with rights offering

            (586,873 )

Proceeds from 8,600,942 and 14,992,021 shares newly issued in reinvestment of dividends and distributions, respectively

    57,852,645         112,405,550  
                   

Net increase in net assets from common stock transactions

    57,852,645         781,880,144  
                   

Total increase in net assets

    183,490,044         172,968,497  
                   

NET ASSETS

                 

Beginning of period

    1,400,339,974         1,227,371,477  

End of period

  $ 1,583,830,018       $ 1,400,339,974  

 

 

 

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

   

For the Years Ended December 31,

 
   

2023
(Unaudited)

   

2022

   

2021

   

2020

   

2019

   

2018

 

PER SHARE OPERATING PERFORMANCE

                                               

Net asset value, beginning of period

  $ 6.48     $ 10.23     $ 9.93     $ 10.80     $ 10.50     $ 13.55  

Net investment income #

    0.02       0.02       0.01       0.05       0.10       0.11  

Net realized and unrealized gain/(loss) on investments

    1.29       (2.20 )     1.86       1.31       2.66       (0.85 )

Net increase/(decrease) in net assets resulting from operations

    1.31       (2.18 )     1.87       1.36       2.76       (0.74 )
                                                 

Dividends and distributions to stockholders:

                                               

Net investment income

    (0.02 )     (0.03 )     (0.01 )     (0.05 )     (0.10 )     (0.11 )

Net realized capital gains

    (0.23 )     (0.22 )     (0.92 )     (0.78 )     (0.52 )     (0.26 )

Return-of-capital

    (0.49 )     (1.91 )     (0.99 )     (1.40 )     (1.84 )     (2.47 )

Total dividends and distributions to stockholders

    (0.74 )     (2.16 )     (1.92 )     (2.23 )     (2.46 )     (2.84 )
                                                 

Common stock transactions:

                                               

Anti-dilutive effect due to shares issued:

                                               

Rights offering

          0.59       0.35                   0.53  

Reinvestment of dividends and distributions

    0.00 +      0.00 +      0.00 +      0.00 +      0.00 +      0.00 + 

Common stock repurchases

                      0.00 +            0.00 + 

Total common stock transactions

    0.00 +      0.59       0.35       0.00 +      0.00 +      0.53  
                                                 

Net asset value, end of period

  $ 7.05     $ 6.48     $ 10.23     $ 9.93     $ 10.80     $ 10.50  

Market value, end of period

  $ 8.38     $ 7.37     $ 14.29     $ 11.73     $ 11.21     $ 11.18  

Total investment return (a)

    26.74 %(b)     (32.21 )%     47.04 %     31.58 %     25.42 %     (9.44 )%
                                                 

RATIOS/SUPPLEMENTAL DATA

                                               

Net assets, end of period (000 omitted)

  $ 1,583,830     $ 1,400,340     $ 1,227,371     $ 769,031     $ 810,598     $ 762,236  

Ratio of net expenses to average net assets (c)

    1.10 %(d)     1.11 %     1.12 %     1.14 %     1.13 %(e)     1.14 %

Ratio of net investment income to average net assets (f)

    0.68 %(d)     0.31 %     0.14 %     0.47 %     0.95 %(e)     0.84 %

Portfolio turnover rate

    29 %(b)     39 %     72 %     95 %     45 %     58 %

 

 

#

Based on average shares outstanding.

 

+

Amount rounds to less than $0.01 per share.

 

(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 investment companies in which the Fund invests.

 

(d)

Annualized.

 

(e)

Includes the reimbursement of proxy solicitation costs by the investment manager. If these costs had not been reimbursed by the investment manager, the ratio of expenses to average net assets would have been 1.14% for the year ended December 31, 2019

 

(f)

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

 

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” or “CLM”) 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 (the “1940 Act”), as a closed-end, diversified management investment company. As an investment company, the Fund follows the accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, “Financial Services–Investment Companies.”

 

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 of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of increase (decrease) in net assets from operations during the reporting period. 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, LLC (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, 2023, 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, 2023, the Fund did not invest in derivative instruments or engage in hedging activities.

 

13

 

 

 

Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements
(unaudited) (continued)

 

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.

 

The Fund holds certain investments which pay distributions to their stockholders based upon available funds from operations. It is possible for these dividends to exceed the underlying investments’ taxable earnings and profits resulting in the excess portion of such dividends being designated as a return of capital. Distributions received from investments in securities that represent a return of capital or long-term capital gains are treated as a reduction of the cost of investments or as a realized gain, respectively.

 

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, 2023, 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 2020 through 2022, and for the six months ended June 30, 2023. 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.

 

 

14

 

 

Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements
(unaudited) (continued)

 

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.

 

Securities or other assets that are not publicly traded or for which a market price is not otherwise readily available will be valued at a price that reflects such security’s fair value, as determined by the Investment Manager and ratified by the Board in accordance with the Fund’s Policy for Valuation of Portfolio Securities. In making such fair value determinations, the Investment Manager is required to consider all appropriate factors relevant to the value of securities for which other pricing sources are not available or reliable as described above. No single method exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of a security being valued by the Investment Manager would be the amount that the Fund might reasonably expect to receive upon the current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debit issues, or a combination of these and other methods. Fair-value pricing is permitted if, in the Investment Manager’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before the Fund’s NAV calculation that may affect a security’s value, or the Investment Manager is aware of any other data that calls into question the reliability of market quotations.

 

The following is a summary of the Fund’s investments and the inputs used as of June 30, 2023, in valuing the investments carried at value:

 

Valuation Inputs

 

Investments
in Securities

   

Other
Financial
Instruments*

 

Level 1 – Quoted Prices

               

Equity Securities

  $ 1,575,244,828     $  

Short-Term Investment

    9,226,720        

Level 2 – Other Significant Observable Inputs

           

Level 3 – Significant Unobservable Inputs

           

Total

  $ 1,584,471,548     $  

 

 

*

Other financial instruments include futures, forwards and swap contracts, if any.

 

15

 

 

 

Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements
(unaudited) (continued)

 

The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.

 

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, 2023.

 

NOTE D. AGREEMENTS WITH AFFILIATES

 

At June 30, 2023, certain officers of the Fund are also officers of Cornerstone or Ultimus Fund Solutions, LLC (“Ultimus”). 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, 2023, Cornerstone earned $7,332,638 for investment management services.

 

Fund Accounting and Administration Agreement

 

Under the fund accounting and administration agreement with the Fund, Ultimus is responsible for generally managing the administrative affairs of the Fund, including supervising the preparation of reports to stockholders, reports to and filings with the Securities and Exchange Commission (“SEC”) and materials for meetings of the Board.

 

Ultimus is also responsible for calculating the net asset value per share and maintaining the financial books and records of the Fund. Ultimus is entitled to receive a fee in accordance with the agreements. For the six months ended June 30, 2023, Ultimus earned $313,719 as fund accounting agent and administrator.

 

NOTE E. INVESTMENT IN SECURITIES

 

For the six months ended June 30, 2023, purchases and sales of securities, other than short-term investments, were $428,567,310 and $527,555,827, respectively.

 

NOTE F. SHARES OF COMMON STOCK

 

The Fund has 400,000,000 shares of common stock authorized and 224,612,511 shares issued and outstanding at June 30, 2023. Transactions in common stock for the six months ended June 30, 2023, were as follows:

 

Shares at beginning of period

    216,011,569  

Shares newly issued from rights offering

     

Shares issued in reinvestment of dividends and distributions

    8,600,942  

Shares at end of period

    224,612,511  

 

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 periods ended June 30, 2023 and December 31, 2022 was as follows:

 

   

June 30,
2023

   

December 31,
2022

 

Ordinary Income

  $ 4,990,322     $ 5,492,773  

Long-Term Capital Gains

    50,484,304       35,327,920  

Return-of-Capital

    106,365,963       317,520,276  

Total Distributions

  $ 161,840,589     $ 358,340,969  

 

 

16

 

 

Cornerstone Strategic Value Fund, Inc.
Notes to Financial Statements
(unaudited) (concluded)

 

At December 31, 2022, the components of accumulated earnings on a tax basis for the Fund were as follows:

 

Net unrealized appreciation

  $ 98,109  

Total accumulated earnings

  $ 98,109  

 

The following information is computed on a tax basis for each item as of June 30, 2023:

 

Cost of portfolio investments

  $ 1,352,370,077  

Gross unrealized appreciation

  $ 277,638,906  

Gross unrealized depreciation

    (45,537,435 )

Net unrealized appreciation

  $ 232,101,471  

 

17

 

 

 

Results of Annual Meeting of Stockholders (unaudited)

 

On April 11, 2023, the Annual Meeting of Stockholders of the Fund was held and the following matter was voted upon based on 217,448,477 shares of common stock outstanding on the record date of February 15, 2023:

 

(1) To approve the election of three Class I Directors to hold office until the year 2026 Annual Meeting of Stockholders and one Class II Director to hold office until the year 2024 Annual Meeting of Stockholders.

 

Name of
Directors

 

For

 

Withheld

Daniel W. Bradshaw (Class I)

 

125,057,681

 

5,078,379

Robert E. Dean (Class I)

 

125,380,267

 

4,755,793

Marcia E. Malzahn (Class I)

 

125,475,737

 

4,660,323

Ralph W. Bradshaw (Class II)

 

125,297,767

 

4,838,293

 

 

18

 

 

Investment Management Agreement Approval Disclosure (unaudited)

 

The Board of Directors (the “Board”) of Cornerstone Strategic Value Fund, Inc. (the “Fund”), including those members of the Board who are not “interested persons,” as such term is defined by the 1940 Act (the “Independent Directors”), considers the approval of the continuation of the Investment Management Agreement (the “Agreement”) between Cornerstone Advisors, LLC (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 10, 2023.

 

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, extent, 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 15(c) of the 1940 Act, as amended, the Investment Manager provided certain information to the independent members of the Board in advance of the meeting held on February 10, 2023. 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 for the one-year, three-year, five-year and since inception periods ending November 30, 2022 with the performance of comparable closed-end funds for the same periods 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 Independent Directors met in executive session to discuss the information provided and was advised by independent legal counsel with respect to their deliberations and their duties when considering the Agreement’s continuance. Based on their review of the information requested and provided, the Independent Directors determined that: (i) the Investment Manager is expected to continue to provide a high-caliber quality of service to the Fund for the benefit of its stockholders; (ii) the Fund’s performance was satisfactory; (iii) the management

 

19

 

 

 

Investment Management Agreement Approval Disclosure (unaudited)
(Concluded)

 

fees payable to the Investment Manager under the Agreement, in light of the services to be provided, were not unreasonable; and (iv) the Investment Manager’s estimated profitability with respect to the Fund was not excessive. The Independent Directors concluded that the Fund’s fee structure was not unreasonable and that the renewal of the Agreement with respect to the Fund was in the best interests of its stockholders. In considering the Agreement’s renewal, the Independent Directors considered a variety of factors, including those discussed above, and also considered other factors (including conditions and trends prevailing generally in the economy and the securities markets). The Independent Directors did not identify any one factor as determinative, and each Independent Director may have weighed each factor differently. The Independent Directors’ noted that their conclusions may be based in part on the Board’s ongoing regular review of the Fund’s performance and operations throughout the year. 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 the Independent Directors) 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”), administered by Equiniti 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 6201 15th Avenue, Brooklyn, NY 11219. 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 American 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 the average closing price of the Fund over the five trading days preceding the payment date of the Distribution ice (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. Upon notice from the Fund, the Agent will receive the distribution in cash and will purchase shares of common stock in the open market, on the NYSE American or elsewhere, for the participants’ accounts, except that the Agent will endeavor to terminate purchases in the open market and cause the Fund to issue the remaining shares if, following the commencement of the purchases, the market value of the shares, including brokerage commissions, exceeds the net asset value at the time of valuation. These remaining shares will be issued by the Fund at a price equal to the net asset value at the time of valuation.

 

In a case where the Agent has terminated open market purchases and caused the issuance of remaining shares by the Fund, the number of shares received by the participant in respect of the cash dividend or distribution will be based on the weighted average of prices paid for shares purchased in the open market, including brokerage commissions, and the price at which the Fund issues the remaining shares. To the extent that the Agent is unable to terminate purchases in the open market before the Agent has completed its purchases, or remaining shares cannot be issued by the Fund because the Fund declared a dividend or distribution payable only in cash, and the market price exceeds the net asset value of the shares, the average share purchase price paid by the Agent may exceed the net asset value of the shares, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund.

 

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

 

21

 

 

 

Description of Dividend Reinvestment Plan (unaudited) (concluded)

 

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. The Agent will maintain all stockholder accounts in the Plan and furnish written confirmations of all transactions in the accounts, including information 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. 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.

 

Participants may at any time sell some or all their shares though the Agent. Shares may be sold via the internet at www.equiniti.com or through the toll free number. Participants can also use the tear off portion attached to the bottom of their statement and mail the request to Equiniti Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219. There is a commission of $0.05 per share.

 

All correspondence concerning the Plan should be directed to the Agent 6201 15th Avenue, Brooklyn, NY 11219. Certain transactions can be performed online at www.equiniti.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 SEC, www.sec.gov.

 

Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling toll-free (866) 668-6558, and on the SEC’s website at 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 as an exhibit to Form N-PORT. The Fund’s Form N-PORT is available on the SEC’s website at www.sec.gov.

 

Summary of General Information (unaudited)

 

Cornerstone Strategic Value Fund, Inc. is a closed-end, diversified investment company whose shares trade on the NYSE American. Its investment objective is to seek capital appreciation with current income as a secondary objective. The Fund is managed by Cornerstone Advisors, LLC.

 

Stockholder Information (unaudited)

 

The Fund is listed on the NYSE American (symbol “CLM”). The previous week’s net asset value per share, market price, and related premium or discount 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.

 

23

 

 

 

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Cornerstone Strategic Value Fund, Inc.

 

 

(b)Not applicable

 

Item 2.Code of Ethics.

 

Not applicable

 

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 applicable [schedule filed with Item 1]

 

(b)       Not applicable

 

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.Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

 

The Registrant does not engage in securities lending activities.

 

Item 13.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: Attached hereto

 

(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

 

(1)Not applicable

 

(2)Not applicable

 

(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

 

(a)(4) Change in the registrant’s independent public accountants: 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 August 18, 2023      
         
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 August 18, 2023      
         
By (Signature and Title)*   /s/ Brian J. Lutes  
      Brian J. Lutes, Treasurer and Principal Financial Officer  
         
Date August 18, 2023      

 

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

 

EX-99.CERT

 

CERTIFICATIONS

 

I, Ralph W. Bradshaw, certify that:

 

1. I have reviewed this report on Form N-CSR of Cornerstone Strategic Value Fund, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 18, 2023   /s/ Ralph W. Bradshaw  
  Ralph W. Bradshaw, Chairman and President  
  (Principal Executive Officer)  

 

 

 

 

 

CERTIFICATIONS

 

I, Brian J. Lutes, certify that:

 

1. I have reviewed this report on Form N-CSR of Cornerstone Strategic Value Fund, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 18, 2023   /s/ Brian J. Lutes  
  Brian J. Lutes, Treasurer and Principal Financial Officer  

 

 

EX-99.906CERT

 

CERTIFICATIONS

 

Ralph W. Bradshaw, Principal Executive Officer, and Brian J. Lutes, Principal Financial Officer, of Cornerstone Strategic Value Fund, Inc. (the “Registrant”), each certify to the best of his knowledge that:

 

1.The Registrant’s periodic report on Form N-CSR for the period ended June 30, 2023 (the “Form N-CSR”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

PRINCIPAL EXECUTIVE OFFICER   PRINCIPAL FINANCIAL OFFICER  
       
Cornerstone Strategic Value Fund, Inc.   Cornerstone Strategic Value Fund, Inc.  
       
/s/ Ralph W. Bradshaw   /s/ Brian J. Lutes  
Ralph W. Bradshaw, Chairman and President (Principal Executive Officer)   Brian J. Lutes, Treasurer and Principal Financial Officer  
       
Date: August 18, 2023   Date: August 18, 2023  

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cornerstone Strategic Value Fund, Inc. and will be retained by Cornerstone Strategic Value Fund, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. 1350 and is not being filed as part of the Form N-CSR filed with the Commission.


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