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<SEC-DOCUMENT>0000909012-07-000518.txt : 20070309
<SEC-HEADER>0000909012-07-000518.hdr.sgml : 20070309
<ACCEPTANCE-DATETIME>20070309120702
ACCESSION NUMBER:		0000909012-07-000518
CONFORMED SUBMISSION TYPE:	N-CSR
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20061231
FILED AS OF DATE:		20070309
DATE AS OF CHANGE:		20070309
EFFECTIVENESS DATE:		20070309

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CORNERSTONE STRATEGIC VALUE FUND INC/ NEW
		CENTRAL INDEX KEY:			0000814083
		IRS NUMBER:				133407699
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-CSR
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05150
		FILM NUMBER:		07683281

	BUSINESS ADDRESS:	
		STREET 1:		BEAR STEARNS FUNDS MANAGEMENT INC.
		STREET 2:		383 MADISON AVENUE - 23RD FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10179
		BUSINESS PHONE:		2122722093

	MAIL ADDRESS:	
		STREET 1:		BEAR STEARNS FUNDS MANAGEMENT INC.
		STREET 2:		383 MADISON AVENUE - 23RD FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10179

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CLEMENTE STRATEGIC VALUE FUND INC
		DATE OF NAME CHANGE:	19990622

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CLEMENTE GLOBAL GROWTH FUND INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-CSR
<SEQUENCE>1
<FILENAME>t303256.txt
<TEXT>


 ==============================================================================

                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)

      383 Madison Avenue, New York, New York                     10179
- -------------------------------------------------------------------------------
     (Address of principal executive offices)                 (Zip code)

                                   Jodi Levine
                  383 Madison Avenue, New York, New York 10179
- -------------------------------------------------------------------------------
                     (Name and address of agent for service)

Registrant's telephone number, including area code: (212) 272-3550

Date of fiscal year end: December 31, 2006

Date of reporting period: December 31, 2006

         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. ss. 3507.





 ==============================================================================
<PAGE>

ITEM 1. REPORTS TO STOCKHOLDERS.

         The report of Cornerstone Strategic Value Fund, Inc. (the "Registrant")
to stockholders for the year ended December 31, 2006 follows.





================================================================================
DIRECTORS AND CORPORATE OFFICERS
Ralph W. Bradshaw           Chairman of the Board of
                            Directors and President
William A. Clark            Director and Vice President
Thomas H. Lenagh            Director
Edwin Meese III             Director
Scott B. Rogers             Director
Andrew A. Strauss           Director
Glenn W. Wilcox, Sr.        Director
Gary A. Bentz               Chief Compliance Officer
Thomas R. Westle            Secretary
Jodi B. Levine              Treasurer

                            STOCK TRANSFER AGENT
INVESTMENT MANAGER          AND REGISTRAR
Cornerstone Advisors, Inc.  American Stock Transfer &
One West Pack Square        Trust Co.
Suite 1650                  59 Maiden Lane
Asheville, NC 28801         New York, NY 10038

                            INDEPENDENT REGISTERED
ADMINISTRATOR               PUBLIC ACCOUNTING FIRM
Bear Stearns Funds          Tait, Weller & Baker LLP
Management Inc.             1818 Market Street
383 Madison Avenue          Suite 2400
New York, NY 10179          Philadelphia, PA 19103

CUSTODIAN                   LEGAL COUNSEL
Custodial Trust Company     Blank Rome LLP
101 Carnegie Center         405 Lexington Avenue
Princeton, NJ 08540         New York, NY 10174

EXECUTIVE OFFICES
383 Madison Avenue
New York, NY 10179

For shareholder inquiries, registered shareholders should call (800) 937-5449.
For general inquiries, please call (212) 272-3550.




<PAGE>


================================================================================

                             CORNERSTONE STRATEGIC
                                VALUE FUND, INC.



















                                  ANNUAL REPORT
                               DECEMBER 31, 2006

================================================================================

<PAGE>



CONTENTS


Portfolio Summary                                                              1

Summary Schedule of Investments                                                2

Statement of Assets and Liabilities                                            4

Statement of Operations                                                        5

Statement of Changes in Net Assets                                             6

Financial Highlights                                                           7

Notes to Financial Statements                                                  8

Report of Independent Registered Public Accounting Firm                       12

Tax Information                                                               13

Additional Information Regarding the Fund's
      Directors and Corporate Officers                                        14

Description of Dividend Reinvestment Plan                                     17

Proxy Voting and Portfolio Holdings Information                               19

Privacy Policy Notice                                                         19

Summary of General Information                                                20

Shareholder Information                                                       20



================================================================================

<PAGE>



- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------

  SECTOR ALLOCATION
                                                                  Percent of
Sector                                                            Net Assets
- --------------------------------------------------------------------------------
Financials                                                          21.4
- --------------------------------------------------------------------------------
Information Technology                                              14.9
- --------------------------------------------------------------------------------
Healthcare                                                          11.8
- --------------------------------------------------------------------------------
Consumer Discretionary                                              10.9
- --------------------------------------------------------------------------------
Industrials                                                         10.7
- --------------------------------------------------------------------------------
Energy                                                               9.8
- --------------------------------------------------------------------------------
Consumer Staples                                                     9.4
- --------------------------------------------------------------------------------
Utilities                                                            3.5
- --------------------------------------------------------------------------------
Telecommunication Services                                           3.1
- --------------------------------------------------------------------------------
Materials                                                            2.5
- --------------------------------------------------------------------------------
Closed-End Funds                                                     1.1
- --------------------------------------------------------------------------------
Other                                                                0.9
- --------------------------------------------------------------------------------


TOP TEN HOLDINGS, BY ISSUER
                                                                     Percent of
     Holding                              Sector                     Net Assets
- --------------------------------------------------------------------------------
1.   Exxon Mobil Corporation              Energy                        4.1
- --------------------------------------------------------------------------------
2.   General Electric Company             Industrials                   2.9
- --------------------------------------------------------------------------------
3.   Microsoft Corporation                Information Technology        2.4
- --------------------------------------------------------------------------------
4.   Bank of America Corporation          Financials                    2.3
- --------------------------------------------------------------------------------
5.   Citigroup Inc.                       Financials                    2.0
- --------------------------------------------------------------------------------
6.   Johnson & Johnson                    Healthcare                    2.0
- --------------------------------------------------------------------------------
7.   Procter & Gamble Company (The)       Consumer Staples              2.0
- --------------------------------------------------------------------------------
8.   EMC Corporation                      Information Technology        1.9
- --------------------------------------------------------------------------------
9.   Cisco Systems, Inc.                  Information Technology        1.7
- --------------------------------------------------------------------------------
10.  American International Group, Inc.   Financials                    1.5
- --------------------------------------------------------------------------------


================================================================================

                                                                               1

<PAGE>

<TABLE>
<CAPTION>


- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2006
- --------------------------------------------------------------------------------

                                                       No. of
Description                                            Shares          Value
- --------------------------------------------------------------------------------
<S>                                                                <C>
EQUITY SECURITIES - 99.59%
  CLOSED-END FUNDS - 1.10%
   Total Closed-End Funds (a)                                      $  1,497,073
                                                                   ------------
CONSUMER DISCRETIONARY - 10.94%
  Comcast Corporation, Special Class A *                  19,037        805,836
  Home Depot, Inc. (The)                                  23,100        927,696
  Time Warner Inc. ^                                      76,000      1,655,280
  Other Consumer Discretionary (a)                                   11,528,546
                                                                   ------------
                                                                     14,917,358
                                                                   ------------
CONSUMER STAPLES - 9.43%
  Altria Group, Inc.                                      22,300      1,913,786
  Coca-Cola Company (The)                                 27,000      1,302,750
  PepsiCo, Inc. ^                                         21,100      1,319,805
  Procter & Gamble Company (The)                          41,297      2,654,158
  Wal-Mart Stores, Inc.                                   21,600        997,488
  Other Consumer Staples (a)                                          4,670,519
                                                                   ------------
                                                                     12,858,506
                                                                   ------------
ENERGY - 9.81%
  Baker Hughes Incorporated                               10,600        791,396
  Chevron Corporation                                     24,532      1,803,838
  ConocoPhillips ^                                        17,974      1,293,229
  Exxon Mobil Corporation                                 73,500      5,632,305
  Occidental Petroleum Corporation                        16,000        781,280
  Schlumberger Limited                                    22,000      1,389,520
  Other Energy (a)                                                    1,688,207
                                                                   ------------
                                                                     13,379,775
                                                                   ------------
FINANCIALS - 21.35%
  American Express Company                                19,600      1,189,132
  American International Group, Inc.                      28,331      2,030,199
  Bank of America Corporation ^                           59,138      3,157,378
  Citigroup Inc. ^                                        49,300      2,746,010




                                                       No. of
Description                                            Shares          Value
- --------------------------------------------------------------------------------
FINANCIALS (CONTINUED)
Goldman Sachs Group, Inc. (The)                            7,300   $  1,455,255
  JPMorgan Chase & Co.                                    40,132      1,938,376
  Metlife, Inc.                                           15,200        896,952
  Morgan Stanley                                          15,500      1,262,165
  Prudential Financial, Inc.                              10,700        918,702
  U.S. Bancorp                                            28,401      1,027,832
  Wachovia Corporation                                    19,600      1,116,220
  Wells Fargo & Company                                   48,400      1,721,104
  Other Financials (a)                                                9,641,202
                                                                   ------------
                                                                     29,100,527
                                                                   ------------
HEALTHCARE - 11.80%
  Abbott Laboratories                                     28,000      1,363,880
  Amgen Inc. *                                            18,900      1,291,059
  Johnson & Johnson                                       40,900      2,700,218
  Medtronic, Inc.                                         19,000      1,016,690
  Merck & Co. Inc.                                        20,000        872,000
  Pfizer Inc.                                             36,060        933,954
  UnitedHealth Group Incorporated                         17,000        913,410
  WellPoint Inc. *                                        11,500        904,935
  Wyeth                                                   20,200      1,028,584
  Other Healthcare (a)                                                5,063,876
                                                                   ------------
                                                                     16,088,606
                                                                   ------------
INDUSTRIALS - 10.73%
  3M Co.                                                   9,400        732,542
  Boeing Company (The)                                     9,200        817,328
  Caterpillar Inc.                                        11,800        723,694
  General Electric Company                               105,400      3,921,934
  Other Industrials (a)                                               8,433,156
                                                                   ------------
                                                                     14,628,654
                                                                   ------------
INFORMATION TECHNOLOGY - 14.93%
  Cisco Systems, Inc. *                                   82,900      2,265,657
  EMC Corporation *                                      200,648      2,648,554
  Google Inc. ^ *                                          2,500      1,151,200
  Hewlett-Packard Company                                 19,900        819,681
  Intel Corporation                                       82,500      1,670,625

================================================================================
See accompanying notes to financial statements

2

<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2006 (CONCLUDED)
- --------------------------------------------------------------------------------

                                                       No. of
Description                                            Shares          Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
  International Business Machines Corporation             12,600   $  1,224,090
  Microsoft Corporation                                  109,200      3,260,712
  Oracle Corporation *                                    44,272        758,822
  Other Information Technology (a)                                    6,559,429
                                                                   ------------
                                                                     20,358,770
                                                                   ------------
MATERIALS - 2.46%
  Total Materials (a)                                                 3,350,348
                                                                   ------------
REAL ESTATE INVESTMENT TRUST - 0.48%
  Total Real Estate Investment Trust (a)                                658,385
                                                                   ------------
TELECOMMUNICATION SERVICES - 3.05%
  AT&T Inc.                                               31,364      1,121,263
  BellSouth Corporation                                   19,000        895,090
  Verizon Communications Inc.                             35,600      1,325,744
  Other Telecommunication Services (a)                                  817,045
                                                                   ------------
                                                                      4,159,142
                                                                   ------------
UTILITIES - 3.51%
  Total Utilities (a)                                                 4,785,770
                                                                   ------------
TOTAL EQUITY SECURITIES
  (cost - $106,625,134)                                             135,782,914
                                                                   ------------


                                                     Principal
                                                      Amount
Description                                           (000's)          Value
- --------------------------------------------------------------------------------

SHORT-TERM INVESTMENTS - 2.46%
  REPURCHASE AGREEMENTS - 2.46%
   Bear, Stearns & Co. Inc. +
    (Agreements dated 12/29/2006 to be
    repurchased at $3,356,577)(b)                        $ 3,355   $  3,355,249
                                                                   ------------
TOTAL SHORT-TERM INVESTMENTS
  (cost - $3,355,249)                                                 3,355,249
                                                                   ------------
TOTAL INVESTMENTS - 102.05%
  (cost - $109,980,383)                                             139,138,163
                                                                   ------------

LIABILITIES IN EXCESS OF
  OTHER ASSETS - (2.05)%                                             (2,793,834)
                                                                   ------------

NET ASSETS - 100.00%                                               $136,344,329
<FN>
                                                                   ------------
- ----------
*    Non-income producing security.

^    Security or a portion thereof is out on loan.

+    Includes investments purchased with cash collateral received for securities
     on loan.

(a)  Represents issues not identified as a top 50 holding in terms of market
     value and issues or issuers not exceeding 1% of net assets individually or
     in the aggregate, respectively, as of December 31, 2006.

(b)  At December 29, 2006, the maturity date for all repurchase agreements held
     was January 2, 2007, with interest rates ranging from 2.6565% to 5.3130%
     and collateralized by $3,455,445 in U.S. Treasury Bond Strips.



================================================================================
                                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                                                               3

<PAGE>

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2006
- --------------------------------------------------------------------------------
ASSETS

<S>                                                              <C>
Investments, at value, including collateral for securities
  on loan of $2,748,824 (Cost $109,980,383)(1)                    $ 139,138,163
Receivables:
  Securities sold                                                     2,313,478
  Dividends                                                             174,261
  Interest                                                                4,917
Prepaid expenses                                                          2,116
                                                                  -------------
Total Assets                                                        141,632,935
                                                                  -------------

LIABILITIES

Payables:
  Upon return of securities loaned                                    2,748,824
  Securities purchased                                                2,332,902
  Investment management fees                                            103,285
  Directors' fees                                                        30,993
  Other accrued expenses                                                 67,544
  Due to custodian                                                        5,058
                                                                  -------------
Total Liabilities                                                     5,288,606
                                                                  -------------
NET ASSETS (applicable to 25,643,074 shares of
  common stock outstanding)                                       $ 136,344,329
                                                                  =============

NET ASSET VALUE PER SHARE ($136,344,329 / 25,643,074)             $        5.32
                                                                  =============

NET ASSETS CONSISTS OF

Capital stock, $0.001 par value; 25,643,074 shares
  issued and outstanding (100,000,000 shares authorized)          $      25,643
Paid-in capital                                                     132,448,640
Cost of 1,060,821 shares repurchased                                (19,974,127)
Accumulated net realized loss on investments                         (5,313,607)
Net unrealized appreciation in value of investments                  29,157,780
                                                                  -------------
Net assets applicable to shares outstanding                       $ 136,344,329
                                                                  =============

(1)  Includes securities out on loan to brokers with a market value of
     $2,730,234.


================================================================================
See accompanying notes to financial statements.
</TABLE>

4

<PAGE>

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME

Income:
<S>                                                                <C>
  Dividends                                                        $  2,726,475
  Interest                                                               44,799
  Securities lending                                                     33,496
                                                                   ------------
  Total Investment Income                                             2,804,770
                                                                   ------------

Expenses:
  Investment management fees                                          1,352,257
  Administration fees                                                   135,224
  Directors' fees                                                       109,900
  Legal and audit fees                                                   63,577
  Printing                                                               51,001
  Accounting fees                                                        39,475
  Custodian fees                                                         23,190
  Transfer agent fees                                                    19,899
  Stock exchange listing fees                                            15,993
  Insurance                                                               8,202
  Miscellaneous                                                           2,500
                                                                   ------------
  Total Expenses                                                      1,821,218
  Less: Management fee waivers                                         (134,059)
  Less: Fees paid indirectly                                            (33,228)
                                                                   ------------
    Net Expenses                                                      1,653,931
                                                                   ------------
  Net Investment Income                                               1,150,839
                                                                   ------------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investments                                      (61,098)
Capital gain distributions from regulated investment companies           39,515
Net change in unrealized appreciation in value of investments        16,725,100
                                                                   ------------
Net realized and unrealized gain on investments                      16,703,517
                                                                   ------------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS               $ 17,854,356
                                                                   ============


================================================================================
                                  See accompanying notes to financial statements
</TABLE>
                                                                               5

<PAGE>

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

                                                                      For the Years Ended
                                                                           December 31,
                                                                 ------------------------------
                                                                       2006            2005
                                                                 -------------    -------------
DECREASE IN NET ASSETS

Operations:
<S>                                                              <C>              <C>
  Net investment income                                          $   1,150,839    $     834,753
  Net realized gain/(loss) from investments                            (61,098)      27,008,793
  Capital gain distributions from regulated investment companies        39,515             --
  Net change in unrealized appreciation in value of investments     16,725,100      (22,438,516)
                                                                 -------------    -------------
    Net increase in net assets resulting from operations            17,854,356        5,405,030
                                                                 -------------    -------------

Dividends and distributions to shareholders:
  Net investment income                                             (1,150,839)        (980,195)
  Net realized capital gains                                              --        (24,369,995)
  Return-of-capital                                                (25,065,536)            --
                                                                 -------------    -------------
    Total dividends and distributions to shareholders              (26,216,375)     (25,350,190)
                                                                 -------------    -------------

Capital stock transactions:
  Proceeds from 932,769 and 832,602 shares newly issued
    or from treasury in reinvestment of dividends
    and distributions, respectively                                  5,000,232        4,961,290
                                                                 -------------    -------------

    Total decrease in net assets                                    (3,361,787)     (14,983,870)
                                                                 -------------    -------------


NET ASSETS

Beginning of year                                                  139,706,116      154,689,986
                                                                 -------------    -------------

End of year                                                      $ 136,344,329    $ 139,706,116
                                                                 =============    =============


================================================================================
See accompanying notes to financial statements.
</TABLE>
6



<PAGE>

<TABLE>
<CAPTION>


- --------------------------------------------------------------------------------
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 year indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- --------------------------------------------------------------------------------

                                                                         For the Years Ended December 31,
                                                         ------------------------------------------------------------
                                                            2006        2005          2004         2003         2002
                                                            ----        ----          ----         ----         ----
PER SHARE OPERATING
PERFORMANCE
<S>                                                      <C>          <C>          <C>          <C>          <C>
Net asset value, beginning of year                       $   5.65     $   6.48     $   6.90     $   6.41     $   9.20
                                                         --------     --------     --------     --------     --------
Net investment income/(loss) #                               0.05         0.03         0.05         0.04        (0.01)
Net realized and unrealized gain/(loss)
  on investments                                             0.66         0.18         0.55         1.44        (2.29)
                                                         --------     --------     --------     --------     --------
Net increase/(decrease) in net assets
  resulting from operations                                  0.71         0.21         0.60         1.48        (2.30)
                                                         --------     --------     --------     --------     --------
Dividends and distributions to shareholders:
  Net investment income                                     (0.04)       (0.04)       (0.05)       (0.04)     --
  Net realized gain on investments                           --          (1.00)     --           --           --
  Return-of-capital                                         (1.00)     --             (0.99)       (0.95)       (0.50)
                                                         --------     --------     --------     --------     --------
Total dividends and distributions to shareholders           (1.04)       (1.04)       (1.04)       (0.99)       (0.50)
                                                         --------     --------     --------     --------     --------
Capital stock transactions:
  Anti-dilutive effect due to capital
    stock repurchased                                        --           --           --           --           0.02
  Anti-dilutive/(dilutive) effect due to shares issued
    in reinvestment of dividends and distributions           --           --           0.02      --             (0.01)
                                                         --------     --------     --------     --------     --------
Total capital stock transactions                             --           --           0.02      --              0.01
                                                         --------     --------     --------     --------     --------
Net asset value, end of year                             $   5.32     $   5.65     $   6.48     $   6.90     $   6.41
                                                         ========     ========     ========     ========     ========
Market value, end of year                                $   8.45     $   7.05     $   8.51     $   9.00     $   5.85
                                                         ========     ========     ========     ========     ========
Total investment return (a)                                 45.36%       (1.32)%       8.38%       77.69%      (20.85)%
                                                         ========     ========     ========     ========     ========

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted)                    $136,344     $139,706     $154,690     $ 26,565     $ 24,376
Ratio of expenses to average net assets,
  net of fee waivers, if any (b)                             1.22%        1.20%        1.28%        1.20%        1.80%
Ratio of expenses to average net assets,
  excluding fee waivers, if any (c)                          1.32%        1.36%        1.50%        1.59%        2.17%
Ratio of expenses to average net assets,
  net of fee waivers, if any (c)                             1.25%        1.26%        1.36%        1.25%        1.86%
Ratio of net investment income/(loss) to
  average net assets                                         0.85%        0.58%        0.73%        0.68%       (0.13)%
Portfolio turnover rate                                     10.59%       21.60%       39.05%       11.88%       29.63%

- -------------------------------------------------------------------------------------------------------------------------
<FN>

     #    Based on average shares outstanding.
     (a)  Total investment return at market value is based on the changes in
          market price of a share during the year 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)  Expenses are net of fees paid indirectly.
     (c)  Expenses exclude the reduction for fees paid indirectly.
</FN>

                                 See accompanying notes to financial statements.
</TABLE>
                                                                               7

<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE A. SIGNIFICANT ACCOUNTING POLICIES

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.

The following is a summary of significant accounting policies consistently
followed by the Fund:

MANAGEMENT ESTIMATES: The preparation of financial statements in accordance 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.

PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All equity securities shall be valued at the closing price
on the exchange or market on which the security is primarily traded ("Primary
Market"). If the security did not trade on the Primary Market, it shall be
valued at the closing price on another exchange where it trades. If there are no
such sale prices, the value shall be the most recent bid, and if there is no
bid, the security shall be valued at the most recent asked. If no pricing
service is available and there are more than two dealers, the value shall be the
mean of the highest bid and lowest ask. If there is only one dealer, then the
value shall be the mean if bid and ask are available, otherwise the value shall
be the bid. All other securities and assets are valued as determined in good
faith by the Board of Directors. Short-term investments having a maturity of 60
days or less are valued on the basis of amortized cost. Securities and assets
for which market quotations are not readily available are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Board. Fair valuation methodologies and procedures
may include, but are not limited to: analysis and review of financial and
non-financial information abut the company; comparisons to the valuation and
changes in valuation of similar securities, including reference to special
reports prepared by analysts and or reports published in the financial press,
the financial conditions and prospects of the issuer available, including
considering any recent management or capital structure changes or other recent
events that may impact the price of the security; and evaluation of any other
information that could be indicative of the value of the security. At December
31, 2006, the Fund held no securities valued in good faith by the Board of
Directors. The net asset value per share of the Fund is calculated weekly and on
the last business day of the month with the exception of those days on which the
American Stock Exchange, LLC is closed.

In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 157, Fair Value Measurements, which
clarifies the definition of fair value and requires companies to expand their
disclosure about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. Adoption of SFAS
157 requires the use of the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. At this time, the Fund is in the
process of reviewing SFAS 157 against its current valuation policies to
determine future applicability.

REPURCHASE AGREEMENTS: The Fund has agreed to purchase securities from financial
institutions subject to the seller's agreement to repurchase them at an
agreed-upon time and price ("repurchase agreements"). The financial institutions
with whom the Fund enters into repurchase agreements are banks

================================================================================
8

<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

and broker/dealers, which Cornerstone Advisors, Inc. (the Fund's "Investment
Manager" or "Cornerstone") considers creditworthy. The seller under a repurchase
agreement will be required to maintain the value of the securities as
collateral, subject to the agreement at not less than the repurchase price plus
accrued interest. Cornerstone monitors daily, the mark-to-market of the value of
the collateral, and, if necessary, requires the seller to maintain additional
securities, so that the value of the collateral is not less than the repurchase
price. Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with the
disposition of the underlying securities.

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.

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 shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.

In June 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. ("FIN") 48, Accounting for Uncertainty in Income Taxes. FIN
48 is effective for financial statements issued for fiscal years beginning after
December 15, 2006. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise's financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. The Fund does not expect the
FASB's issuance of FIN 48 to materially impact the Fund's financial condition or
results of operations.

DISTRIBUTIONS TO SHAREHOLDERS: Effective June 25, 2002, the Fund initiated a
fixed, monthly distribution to shareholders. On November 29, 2006, this
distribution policy was updated to provide for the annual resetting of the
monthly distribution amount per share, beginning in 2007, 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
shareholders 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 shareholders are recorded by the Fund
on the ex-dividend date.

================================================================================
                                                                               9
<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

NOTE B. AGREEMENTS

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. During the year ended December
31, 2006, Cornerstone voluntarily agreed to waive its management fees from the
Fund to the extent that the Fund's net monthly operating expenses (including
basic legal fees but excluding other legal expenses) exceed a rate of 0.10% of
average net assets. For the year ended December 31, 2006, Cornerstone earned
$1,352,257 for investment management services, of which it waived $134,059. The
Investment Manager may discontinue such undertaking at any time during the
fiscal year without notice to fund shareholders.

Included in the Statement of Operations, under the caption FEES PAID INDIRECTLY,
are expense offsets of $33,228 arising from credits earned on portfolio
transactions executed with a broker, pursuant to a directed brokerage
arrangement.

The Fund paid or accrued approximately $44,878 for the year ended December 31,
2006 for legal services to Blank Rome LLP ("Blank"), counsel to the Fund. Thomas
R. Westle, partner of Blank, serves as Secretary of the Fund.

NOTE C. INVESTMENT IN SECURITIES

For the year ended December 31, 2006, purchases and sales of securities, other
than short-term investments, were $14,329,537 and $34,033,824 respectively.

NOTE D. SECURITIES LENDING

To generate additional income, the Fund may lend up to 33-1/3% of its total
assets. The Fund receives payments from borrowers equivalent to the dividends
and interest that would have been earned on securities lent while simultaneously
seeking to earn interest on the investment of cash collateral. Loans are subject
to termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments. Loans of securities are required at all
times to be secured by collateral equal to at least 100% of the market value of
securities on loan. However, in the event of default or bankruptcy of the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. In the event that the borrower fails to return
securities, and collateral maintained by the lender is insufficient to cover the
value of loaned securities, the borrower is obligated to pay the amount of the
shortfall (and interest thereon) to the Fund. However, there can be no assurance
the Fund can recover this amount. The value of securities on loan to brokers at
December 31, 2006, was $2,730,234. During the year ended December 31, 2006, the
Fund earned $33,496 in securities lending income which is included under the
caption SECURITIES LENDING in the Statement of Operations.

NOTE E. 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 and
Post-October losses (as later defined), and excise tax regulations. The tax
character of dividends and distributions paid during the years ended December
31, for the Fund were as follows:

             ORDINARY INCOME                    RETURN-OF-CAPITAL
             ---------------                    -----------------
           2006           2005                2006            2005
           ----           ----                ----            ----
       $1,150,839       $980,195           $25,065,536         --

                              LONG-TERM CAPITAL GAINS
                              -----------------------
                            2006                   2005
                            ----                   ----
                             --                 $24,369,995


================================================================================

10

<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------

At December 31, 2006 the components of distributable earnings on a tax basis,
for the Fund were as follows:

Accumulated net realized loss          $ (5,257,673)
Unrealized appreciation                  29,101,846
                                       ------------
Total distributable earnings           $ 23,844,173
                                       ============

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"). For the tax period ended December
31, 2006, the Fund did not incur Post-October losses.

At December 31, 2006, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $5,257,673 of which $2,513,030 expires in 2008,
$1,281,365 expires in 2009, $693,207 expires in 2010, $635,700 expires in 2011,
and $134,371 expires in 2012.

At December 31, 2006, the identified cost for federal income tax purposes, as
well as the gross unrealized appreciation from investments for those securities
having an excess of value over cost, gross unrealized depreciation from
investments for those securities having an excess of cost over value and the net
unrealized appreciation from investments were $110,036,317, $30,273,165,
$1,171,319 and $29,101,846, respectively.













================================================================================

                                                                              11

<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
Cornerstone Strategic Value Fund, Inc.
New York, New York

We have audited the accompanying statement of assets and liabilities of
Cornerstone Strategic Value Fund, Inc., including the schedule of investments as
of December 31, 2006, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of the Fund's
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2006, by correspondence with the custodian
and brokers. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Cornerstone Strategic Value Fund, Inc. as of December 31, 2006, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.



TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania
February 7, 2007









================================================================================

12

<PAGE>

2006 TAX INFORMATION (UNAUDITED)

Cornerstone Strategic Value Fund, Inc. (the "Fund") is required by Subchapter M
of the Internal Revenue Code of 1986, as amended, to advise its shareholders
within 60 days of the Fund's year end (December 31, 2006) as to the U.S. federal
tax status of the dividends and distributions received by the Fund's
shareholders in respect of such fiscal year. As indicated in this notice,
significant portions of the Fund's distributions for 2006 were comprised of a
return-of-capital; accordingly these distributions do NOT represent yield or
investment return on the Fund's portfolio.

During the year ended December 31, 2006 the following dividends and
distributions per share were paid by the Fund:


<TABLE>
<CAPTION>


                                           SOURCES OF DIVIDENDS AND DISTRIBUTIONS
                                                      (PER SHARE AMOUNTS)

PAYMENT DATES:              1/31/06        2/28/06       3/31/06       4/28/06       5/31/06       6/30/06
                           --------       --------      --------      --------      --------      --------
<S>                       <C>            <C>           <C>           <C>           <C>           <C>
Ordinary Income(1)         $ 0.0038       $ 0.0038      $ 0.0038      $ 0.0038      $ 0.0038      $ 0.0038
Return-of-Capital(2)       $ 0.0832       $ 0.0832      $ 0.0832      $ 0.0832      $ 0.0832      $ 0.0832
                           --------       --------      --------      --------      --------      --------
Total:                     $ 0.0870       $ 0.0870      $ 0.0870      $ 0.0870      $ 0.0870      $ 0.0870
                           ========       ========      ========      ========      ========      ========

PAYMENT DATES:              7/31/06        8/31/06       9/29/06      10/31/06      11/30/06      12/29/06
                           --------       --------      --------      --------      --------      --------
Ordinary Income(1)         $ 0.0038       $ 0.0038      $ 0.0038      $ 0.0038      $ 0.0038      $ 0.0038
Return-of-Capital(2)       $ 0.0832       $ 0.0832      $ 0.0832      $ 0.0832      $ 0.0832      $ 0.0832
                           --------       --------      --------      --------      --------      --------
Total:                     $ 0.0870       $ 0.0870      $ 0.0870      $ 0.0870      $ 0.0870      $ 0.0870
                           ========       ========      ========      ========      ========      ========

- ----------------------------------------------------------------------------------------------------------
<FN>

     (1)  ORDINARY INCOME DIVIDENDS - This is the total per share amount of
          ordinary income dividends and short-term capital gain distributions
          (if applicable) included in the amount reported in Box 1a on Form
          1099-DIV.
     (2)  RETURN-OF-CAPITAL - This is the per share amount of return-of-capital,
          or sometimes called nontaxable distributions reported in Box 3 - under
          the title "Nondividend distributions" - on Form 1099-DIV. This amount
          should NOT be reported as taxable income on your current return.
          Rather, it should be treated as a reduction in the original cost basis
          of your investment in the Fund.
</FN>
</TABLE>

The Fund has met the requirements to pass through all of its (100%) ordinary
income dividends as qualified dividends, which are subject to a maximum federal
tax rate of 15%. This is reported in Box 1b on Form 1099-DIV. Ordinary income
dividends should be reported as dividend income on Form 1040. Please note that
to utilize the lower tax rate for qualifying dividend income, shareholders
generally must have held their shares in the Fund for at least 61 days during
the 121 day period beginning 60 days before the ex-dividend date.

Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of the actual ordinary income dividend paid by the Fund.

In general, distributions received by tax-exempt recipients (e.g., IRA's and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.

Shareholders are strongly advised to consult their own tax advisers with respect
to the tax consequences of their investment in the Fund.


================================================================================

                                                                              13

<PAGE>


ADDITIONAL INFORMATION REGARDING THE FUND'S DIRECTORS
AND CORPORATE OFFICERS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                     NUMBER OF
                                                                                                     PORTFOLIOS IN
NAME AND                                                                               POSITION      FUND COMPLEX
ADDRESS*             POSITION(S)           PRINCIPAL OCCUPATION                        WITH FUND     OVERSEEN BY
(BIRTH DATE)         HELD WITH FUND        OVER LAST 5 YEARS                           SINCE         DIRECTORS
- -------------------------------------------------------------------------------------------------------------------
<S>                   <C>                   <C>                                     <C>            <C>
Ralph W.             Chairman of the       President, Cornerstone Advisors, Inc.;      1998          2
Bradshaw**           Board of              Financial Consultant; President and
(Dec. 1950)          Directors and         Director of Cornerstone Total Return
                     President             Fund, Inc.
William A.           Director and Vice     Director and Stockholder of Cornerstone     2004          2
Clark**              President             Advisors, Inc.; Director and Vice
(Oct. 1945)                                President of Cornerstone Total Return
                                           Fund, Inc.; former financial consultant of
                                           Deep Discount Advisors, Inc.
Glenn W.             Director; Audit       Chairman of the Board and Chief             2000          2
Wilcox, Sr.          Committee             Executive Officer of Wilcox Travel
(Dec. 1931)          Chairman,             Agency, Inc.; Director of Cornerstone
                     Nominating and        Total Return Fund, Inc.
                     Corporate
                     Governance
                     Committee
                     Member
Thomas H.            Director; Audit,      Independent Financial Adviser; Director     1987          2
Lenagh               Nominating and        of Photonics Products Group; Director
(Nov. 1924)          Corporate             of Cornerstone Total Return Fund, Inc.;
                     Governance            Director of Adams Express and
                     Committee             Petroleum and Resources; Retired
                     Member                Treasurer and Investment Manager of
                                           Ford Foundation.
Edwin                Director; Audit,      Distinguished Fellow, The Heritage          2001          2
Meese III            Nominating and        Foundation Washington D.C.;
(Dec. 1931)          Corporate             Distinguished Visiting Fellow at the
                     Governance            Hoover Institution, Stanford University;
                     Committee             Senior Adviser, Revelation L.P.; formerly
                     Member                U.S. Attorney General under President
                                           Ronald Reagan; Director of Cornerstone
                                           Total Return Fund, Inc.


</TABLE>

================================================================================

14

<PAGE>

ADDITIONAL INFORMATION REGARDING THE FUND'S DIRECTORS
AND CORPORATE OFFICERS (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                     NUMBER OF
                                                                                                     PORTFOLIOS IN
NAME AND                                                                              POSITION       FUND COMPLEX
ADDRESS*               POSITION(S)         PRINCIPAL OCCUPATION                       WITH FUND      OVERSEEN BY
(BIRTH DATE)           HELD WITH FUND      OVER LAST 5 YEARS                          SINCE          DIRECTORS
- -------------------------------------------------------------------------------------------------------------------
<S>                    <C>                <C>                                       <C>            <C>
Scott B. Rogers        Director; Audit,    Chairman, Board of Health Partners,        2000           2
(July 1955)            Nominating and      Inc.; Chief Executive Officer, Asheville
                       Corporate           Buncombe Community Christian
                       Governance          Ministry; and President, ABCCM
                       Committee           Doctor's Medical Clinic; Appointee, NC
                       Member              Governor's Commission on Welfare to
                                           Work; Director of Cornerstone Total
                                           Return Fund, Inc.

Andrew A.              Director;           Attorney and senior member of Strauss      2000           2
Strauss                Chairman of         & Associates, P.A., Attorneys, Asheville
(Nov. 1953)            Nominating and      and Hendersonville, NC; previous
                       Corporate           President of White Knight Healthcare,
                       Governance          Inc. and LMV Leasing, Inc., a wholly
                       Committee and       owned subsidiary of Xerox Credit
                       Audit Committee     Corporation; Director of Cornerstone
                       Member              Total Return Fund, Inc.

</TABLE>








================================================================================

                                                                              15

<PAGE>

ADDITIONAL INFORMATION REGARDING THE FUND'S DIRECTORS
AND CORPORATE OFFICERS (UNAUDITED) (CONCLUDED)

<TABLE>
<CAPTION>

NAME AND                                                                                            POSITION
ADDRESS*                    POSITION              PRINCIPAL OCCUPATION                              WITH FUND
(BIRTH DATE)                HELD WITH FUND        OVER LAST 5 YEARS                                 SINCE
- --------------------------------------------------------------------------------------------------------------
<S>                          <C>                  <C>                                              <C>
Gary A. Bentz               Chief Compliance      Chairman and Chief Financial Officer of           2004
(June 1956)                 Officer               Cornerstone Advisors, Inc.; previous Director,
                                                  Vice President and Treasurer of the Fund and
                                                  Cornerstone Total Return Fund, Inc.; Financial
                                                  Consultant, C.P.A., Chief Compliance Officer
                                                  of Cornerstone Total Return Fund, Inc.
Thomas R. Westle            Secretary             Partner, Blank Rome LLP, a law firm;              2000
405 Lexington Avenue                              previous partner, Spitzer & Feldman P.C.,
New York, NY 10174                                a law firm; Secretary of Cornerstone
(Dec. 1953)                                       Total Return Fund, Inc.
Jodi B. Levine              Treasurer             Associate Director, Bear, Stearns & Co. Inc.;     2004
(Aug. 1969)                                       Treasurer of Cornerstone Total Return
                                                  Fund, Inc.

- ------------------------------------------------------------------------------------------------------------------
*  The mailing address of each Director and/or Officer with respect to the Fund's operation is 383 Madison Ave.
   -23rd Floor, New York, NY 10179 unless otherwise indicated.
** Designates a director who is an "interested person" of the Fund as defined by the Investment Company Act of 1940,
   as amended. Messrs. Bradshaw and Clark are interested persons of the Fund by virtue of their current positions
   with the Investment Manager of the Fund.
</TABLE>











================================================================================

16
<PAGE>

DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED)

Cornerstone Strategic Value Fund, Inc. operates a Dividend Reinvestment Plan
(the "Plan"), sponsored and administered by American Stock Transfer & Trust
Company (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. American Stock Transfer & Trust Company serves as the Agent
that administers the Plan for the shareholders in the Plan.

Shareholders automatically participate in the Fund's Plan, unless and until an
election is made to withdraw from the Plan on behalf of such participating
shareholder. Shareholders 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
shareholders are reinvested in full and fractional shares as described below.

When the Fund declares a Distribution the Agent, on the shareholder's behalf,
will (i) receive additional authorized shares from the Fund either newly issued
or repurchased from shareholders by the Fund and held as treasury stock ("Newly
Issued Shares") or (ii) purchase outstanding shares on the open market, on the
American Stock Exchange, LLC or elsewhere, with cash allocated to it by the Fund
("Open Market Purchases").

The method for determining the number of shares to be received when
Distributions are reinvested will vary depending upon whether the net asset
value of the Fund's shares is higher or lower than its market price. If the net
asset value of the Fund's shares is lower than its market price, the number of
Newly Issued Shares received will be determined by dividing the amount of the
Distribution either by the Fund's net asset value per share or by 95% of its
market price, whichever is higher. If the net asset value of the Fund's shares
is higher than its market price, shares acquired by the Agent in Open Market
Purchases will be allocated to the reinvesting shareholders based on the average
cost of such Open Market Purchases.

Whenever the Fund declares a Distribution and the 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 shareholders who do not wish to have their Distributions
automatically reinvested should so notify the Fund in writing. If a shareholder
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 shareholder 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 shareholder accounts in the Plan and furnish written
confirmations of all transactions in the accounts, including information needed
by shareholders for personal and tax records.

================================================================================

                                                                              17

<PAGE>


DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED) (CONCLUDED)


The Agent will hold shares in the account of the Plan participant in
non-certificated form in the name of the participant, and each shareholder'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 shareholders.

In the case of shareholders, 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 shareholder as representing the total amount of
shares registered in the shareholder'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.

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 877-864-4833.










================================================================================

18

<PAGE>


PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

Information regarding how the Cornerstone Strategic Value Fund, Inc. (the
"Fund") voted proxies related to its portfolio securities during the 12-month
period ended June 30 of each year as well as the policies and procedures that
the Fund uses to determine how to vote proxies relating to its portfolio
securities are available by calling (212) 272-3550 or on the website of the
Securities and Exchange Commission, http://www.sec.gov.

This report incorporates a Summary Schedule of Investments for the Fund. A
complete Schedule of Investments for the Fund may be obtained free of charge by
contacting the Fund at (212) 272-3550.

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 (202)
551-8090.

PRIVACY POLICY NOTICE (UNAUDITED)

The following is a description of Cornerstone Strategic Value Fund, Inc.'s (the
"Fund") policies regarding disclosure of nonpublic personal information that you
provide to the Fund or that the Fund collects from other sources. In the event
that you hold shares of the Fund through a broker-dealer or other financial
intermediary, the privacy policy of the financial intermediary would govern how
your nonpublic personal information would be shared with unaffiliated third
parties.

CATEGORIES OF INFORMATION THE FUND COLLECTS. The Fund collects the following
nonpublic personal information about you:

     1.   Information from the Consumer: this category includes information the
          Fund receives from you on or in applications or other forms,
          correspondence, or conversations (such as your name, address phone
          number, social security number, assets, income and date of birth); and

     2.   Information about the Consumer's transactions: this category includes
          information about your trans- actions with the Fund, its affiliates,
          or others (such as your account number and balance, payment history,
          parties to transactions, cost basis information, and other financial
          information).

CATEGORIES OF INFORMATION THE FUND DISCLOSES. The Fund does not disclose any
nonpublic personal information about their current or former shareholders to
unaffiliated third parties, except as required or permitted by law. The Fund is
permitted by law to disclose all of the information it collects, as described
above, to its service providers (such as the Fund's custodian, administrator and
transfer agent) to process your transactions and otherwise provide services to
you.

CONFIDENTIALITY AND SECURITY. The Fund restricts access to your nonpublic
personal information to those persons who require such information to provide
products or services to you. The Fund maintains physical, electronic and
procedural safeguards that comply with federal standards to guard your nonpublic
personal information.


================================================================================

                                                                              19

<PAGE>




SUMMARY OF GENERAL INFORMATION (UNAUDITED)

Cornerstone Strategic Value Fund, Inc. is a closed-end, diversified investment
company whose shares trade on the American Stock Exchange, LLC. 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 managed by
Cornerstone Advisors, Inc.

SHAREHOLDER INFORMATION (UNAUDITED)

The Fund is listed on the American Stock Exchange, LLC (symbol "CLM"). The share
price is published in: THE NEW YORK TIMES (daily) under the designation
"CornerStrt" and THE WALL STREET JOURNAL (daily) and BARRON'S (each Monday)
under the designation "CornstnStrat." The net asset value per share is available
weekly and may be obtained by contacting the Fund at the general inquiry phone
number.

- --------------------------------------------------------------------------------
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 CAPITAL STOCK IN THE OPEN MARKET.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. 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.
- --------------------------------------------------------------------------------






================================================================================

20

<PAGE>
















                     CORNERSTONE STRATEGIC VALUE FUND, INC.



<PAGE>

ITEM 2. CODE OF ETHICS.

(a) As of the end of the period covered by this report, the Registrant has
adopted a code of ethics that applies to the Registrant's principal executive
officer, principal accounting officer, and persons performing similar functions.

(c) and (d). During the period covered by this report, there was no amendment
to, and no waiver granted from, any provision of the code of ethics that applies
to the Registrant's principal executive officer, principal accounting officer,
and persons performing similar functions.

(f)(1) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit
(EX-99.CODE ETH) a copy of its code of ethics that applies to its principal
executive officer, principal financial officer, and persons performing similar
functions.

(f)(3) The Registrant undertakes to provide to any person without charge, upon
request, a copy of its code of ethics. This can be accomplished by calling the
Registrant at (212)272-3550.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The registrant's board of directors has determined that it does not have
an audit committee financial expert serving on its audit committee.

(a)(2) Not applicable

(a)(3) At this time, the registrant believes that the experience provided by
each member of the audit committee together offer the registrant adequate
oversight for the registrant's level of financial complexity.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) through (d). The information
in the table below is provided for services rendered to the registrant by its
independent registered public accounting firm, Tait, Weller & Baker LLP for the
Registrant's fiscal years ended December 31, 2006 and December 31, 2005.

                                                       2006          2005
                                                     -------       -------
Audit Fees                                           $16,400       $15,600
Audit-related Fees                                        --            --
Tax Fees (1)                                         $ 3,300       $ 3,100
All Other Fees                                            --            --
                                                     -------       -------
Total                                                $19,700       $18,700
                                                     =======       =======

(1) Tax services in connection with the registrant's excise tax calculations and
review of the registrant's applicable tax returns.

(e)(1) Audit Committee Pre-Approval Policies and Procedures.

         Before the auditor is (i) engaged by the Registrant to render audit,
audit related or permissible non-audit services to the Registrant or (ii) with
respect to non-audit services to be provided by the auditor to the Registrant's
investment adviser or any entity in the investment Registrant complex, if the
nature of the services provided relate directly to the operations or financial
reporting of the Registrant, either: (a) the Audit Committee shall pre-approve
such engagement; or (b) such engagement shall be entered into pursuant to
pre-approval policies and procedures established by the Audit Committee. Any
such policies and procedures must be detailed as to the particular service and
not involve any delegation of the Audit Committee's responsibilities to the
Registrant's investment adviser. The Audit Committee may delegate to one or more
of its members the authority to grant pre-approvals. The pre-approval policies
and procedures shall include the requirement that the decisions of any member to
whom authority is delegated under this provision shall be presented to the full
Audit Committee at its next scheduled meeting. Under certain limited
circumstances, pre-approvals are not required if certain de minimis thresholds
are not exceeded, as such thresholds are set forth by the Audit Committee and in
accordance with applicable SEC rules and regulations.

(e)(2) None of the services provided to the Registrant described in paragraphs

(b)-(d) of Item 4 were pre-approved by the Audit Committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) There were no non-audit fees billed by Tait, Weller & Baker LLP for services
rendered to the Registrant, the Registrant's investment advisor (not including
any sub-advisor whose role is primarily portfolio management and is
subcontracted with or overseen by another investment advisor) or any entity
controlling, controlled by, or under common control with the investment advisor
that provides ongoing services to the Registrant for the Registrant's last two
fiscal years (December 31, 2005 and December 31, 2006).

(h) No disclosures are required by this Item 4(h).

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

(a) The Registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Securities and
Exchange Act of 1934, as amended. Glenn Wilcox (Chair), Edwin Meese, Thomas
Lenagh, Andy Strauss and Scott Rogers are the members of the Registrant's audit
committee.

(b) Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.


- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2006
- --------------------------------------------------------------------------------

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------

EQUITY SECURITIES - 99.59%
CLOSED-END FUNDS - 1.10%
  Adams Express Company                                    49,500   $   686,565
  General American Investors Company                        3,000       111,360
  Liberty All-Star Equity Fund                             67,300       557,917
  Liberty All-Star Growth Fund, Inc.                       26,300       141,231
                                                                    -----------
                                                                      1,497,073
                                                                    -----------
CONSUMER DISCRETIONARY - 10.94%
  Amazon.com, Inc. *                                        5,500       217,030
  Bed Bath & Beyond Inc. ^ *                                4,200       160,020
  Best Buy Co., Inc. ^                                      3,625       178,314
  Black & Decker Corporation (The)                          3,000       239,910
  Carnival Corporation                                     11,800       578,790
  Clear Channel Communications, Inc. ^                      6,300       223,902
  Coach, Inc. *                                             3,500       150,360
  Comcast Corporation, Special Class A *                   19,037       805,836
  D.R. Horton, Inc.                                         7,000       185,430
  Federated Department Stores, Inc.                        11,052       421,413
  Fortune Brands, Inc. ^                                    3,500       298,865
  Gannett Co., Inc.                                         3,500       211,610
  Gap, Inc. (The)                                          12,200       237,900
  Goodyear Tire & Rubber Company (The) *                    4,500        94,455
  Harley-Davidson, Inc.                                     4,400       310,068
  Hilton Hotels Corporation                                 6,200       216,380
  Home Depot, Inc. (The)                                   23,100       927,696
  J.C. Penney Company, Inc.                                 4,500       348,120
  Johnson Controls, Inc.                                    2,500       214,800
  Kohl's Corporation *                                      2,500       171,075
  Lowe's Companies, Inc.                                   22,400       697,760
  Marriott International, Inc., Class A                     4,200       200,424
  Mattel, Inc.                                              5,500       124,630
  McDonald's Corporation                                   15,100       669,383
  News Corporation, Class A                                23,000       494,040
  NIKE, Inc., Class B                                       7,300       722,919
  Omnicom Group Inc. ^                                      4,100       428,614
  Sears Holdings Corporation *                                503        84,469
  Staples, Inc.                                            10,800       288,360
  Starbucks Corporation *                                  10,800       382,536
  Target Corporation                                       11,800       673,190
  Time Warner Inc. ^                                       76,000     1,655,280
  TJX Companies, Inc. (The)                                 3,000        85,440
  Toyota Motor Corporation ADR                              2,500       335,775
  Univision Communications Inc., Class A *                  7,000       247,940
  Viacom Inc., Class B *                                   11,950       490,308



                                        1
<PAGE>

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------
  Walt Disney Company (The)                                20,200       692,254
  Wyndham Worldwide Corp *                                  3,100        99,262
  Yum! Brands, Inc.                                         6,000       352,800
                                                                    -----------
                                                                     14,917,358
                                                                    -----------
CONSUMER STAPLES - 9.43%
  Altria Group, Inc.                                       22,300     1,913,786
  Anheuser-Busch Companies, Inc.                            6,200       305,040
  Archer-Daniels-Midland Company                            9,460       302,342
  Campbell Soup Company                                     2,000        77,780
  Coca-Cola Company (The)                                  27,000     1,302,750
  Colgate-Palmolive Company                                 5,900       384,916
  ConAgra Foods, Inc.                                       4,400       118,800
  Costco Wholesale Corporation                              6,500       343,655
  CVS Corporation                                          14,000       432,740
  General Mills, Inc.                                      12,000       691,200
  H.J. Heinz Company                                        4,000       180,040
  Kimberly-Clark Corporation                                5,500       373,725
  Kroger Co. (The)                                         13,800       318,366
  PepsiCo, Inc. ^                                          21,100     1,319,805
  Procter & Gamble Company (The)                           41,297     2,654,158
  Sara Lee Corporation                                     16,000       272,480
  Sysco Corporation ^                                       5,800       213,208
  Walgreen Co.                                             14,300       656,227
  Wal-Mart Stores, Inc.                                    21,600       997,488
                                                                    -----------
                                                                     12,858,506
                                                                    -----------
ENERGY - 9.81%
  Anadarko Petroleum Corp.                                  2,600       113,152
  Baker Hughes Incorporated                                10,600       791,396
  BJ Services Company                                       3,500       102,620
  Chevron Corporation                                      24,532     1,803,838
  ConocoPhillips ^                                         17,974     1,293,229
  Devon Energy Corporation                                  5,000       335,400
  Exxon Mobil Corporation                                  73,500     5,632,305
  Halliburton Company                                       6,700       208,035
  Marathon Oil Corp.                                        7,500       693,750
  Occidental Petroleum Corporation                         16,000       781,280
  Schlumberger Limited                                     22,000     1,389,520
  XTO Energy, Inc.                                          5,000       235,250
                                                                    -----------
                                                                     13,379,775
                                                                    -----------
FINANCIALS - 21.35%
  AFLAC Incorporated                                        7,000       322,000
  Allstate Corporation (The)                                9,300       605,523
  American Express Company                                 19,600     1,189,132
  American International Group, Inc.                       28,331     2,030,199
  Aon Corporation                                           4,900       173,166
  Bank of America Corporation ^                            59,138     3,157,378
  Bank of New York Company, Inc. (The)                     11,400       448,818
  BB&T Corporation                                          4,000       175,720



                                        2

<PAGE>

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------
  Bear Stearns Companies, Inc. (The)                        2,500       406,950
  Charles Schwab Corporation (The)                          6,000       116,040
  Chubb Corporation (The)                                   4,100       216,931
  Citigroup Inc. ^                                         49,300     2,746,010
  Fannie Mae                                                9,300       552,327
  Franklin Resources, Inc.                                  3,700       407,629
  Freddie Mac                                              10,400       706,160
  Goldman Sachs Group, Inc. (The)                           7,300     1,455,255
  Hartford Financial Services Group, Inc. (The)             6,000       559,860
  JPMorgan Chase & Co.                                     40,132     1,938,376
  Lehman Brothers Holdings Inc.                             7,200       562,464
  Marsh & McLennan Companies, Inc. ^                        6,000       183,960
  Merrill Lynch & Co., Inc.                                 7,200       670,320
  Metlife, Inc.                                            15,200       896,952
  Morgan Stanley                                           15,500     1,262,165
  National City Corporation                                12,700       464,312
  PNC Financial Services Group, Inc.                        4,600       340,584
  Prudential Financial, Inc.                               10,700       918,702
  Realogy Corporation *                                     7,000       212,240
  St. Paul Travelers Companies, Inc. (The)                  9,476       508,766
  State Street Corporation                                  3,500       236,040
  SunTrust Banks, Inc.                                      7,600       641,820
  U.S. Bancorp                                             28,401     1,027,832
  UnumProvident Corporation                                 8,100       168,318
  Wachovia Corporation                                     19,600     1,116,220
  Washington Mutual, Inc.                                  15,550       707,370
  Wells Fargo & Company                                    48,400     1,721,104
  Western Union Company ^                                  11,324       253,884
                                                                    -----------
                                                                     29,100,527
                                                                    -----------
HEALTHCARE - 11.80%
  Abbott Laboratories                                      28,000     1,363,880
  Aetna Inc. ^                                              6,000       259,080
  Amgen Inc. *                                             18,900     1,291,059
  Applera Corporation                                       8,000       293,520
  Baxter International Inc.                                 5,000       231,950
  Becton, Dickinson and Company                             6,900       484,035
  Biogen Idec Inc. *                                        5,500       270,545
  Boston Scientific Corporation *                          15,551       267,166
  Bristol-Myers Squibb Company                             25,500       671,160
  Cardinal Health, Inc.                                     5,450       351,144
  Caremark Rx, Inc.                                         9,000       513,990
  Eli Lilly and Company                                     4,700       244,870
  Gilead Sciences, Inc. *                                   3,500       227,255
  Hospira, Inc. *                                           3,700       124,246
  IMS Health Incorporated                                   7,400       203,352
  Johnson & Johnson                                        40,900     2,700,218
  McKesson Corporation                                      5,300       268,710
  Medco Health Solutions, Inc. ^ *                          6,687       357,353
  Medtronic, Inc.                                          19,000     1,016,690



                                        3

<PAGE>

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------
  Merck & Co. Inc.                                         20,000       872,000
  Pfizer Inc.                                              36,060       933,954
  Schering-Plough Corporation ^                            12,500       295,500
  UnitedHealth Group Incorporated                          17,000       913,410
  WellPoint Inc. *                                         11,500       904,935
  Wyeth                                                    20,200     1,028,584
                                                                    -----------
                                                                     16,088,606
                                                                    -----------
INDUSTRIALS - 10.73%
  3M Co.                                                    9,400       732,542
  Boeing Company (The)                                      9,200       817,328
  Burlington Northern Santa Fe Corporation                  2,900       214,049
  Caterpillar Inc.                                         11,800       723,694
  CSX Corporation                                          14,300       492,349
  Danaher Corporation ^                                     3,500       253,540
  Emerson Electric Co.                                     12,000       528,840
  FedEx Corp.                                               4,500       488,790
  General Dynamics Corporation                              6,200       460,970
  General Electric Company                                105,400     3,921,934
  Honeywell International Inc.                             12,500       565,500
  Illinois Tool Works Inc.                                 13,300       614,327
  Ingersoll-Rand Company Ltd. Class A                       7,000       273,910
  Lockheed Martin Corporation                               4,000       368,280
  Masco Corporation ^                                       4,200       125,454
  Norfolk Southern Corporation                             10,000       502,900
  Northrop Grumman Corporation                              5,000       338,500
  Rockwell Automation, Inc.                                 2,500       152,700
  Southwest Airlines Co.                                    5,700        87,324
  Textron Inc.                                              4,500       421,965
  Tyco International Ltd.                                  10,397       316,069
  Union Pacific Corporation                                 2,000       184,040
  United Parcel Service, Inc., Class B                      9,600       719,808
  United Technologies Corporation ^                        11,000       687,720
  Waste Management, Inc.                                   17,300       636,121
                                                                    -----------
                                                                     14,628,654
                                                                    -----------
INFORMATION TECHNOLOGY - 14.93%
  Adobe Systems Incorporated *                              6,700       275,504
  Agilent Technologies Inc. *                               4,500       156,825
  Analog Devices, Inc.                                      3,500       115,045
  Apple Computer, Inc. *                                    3,000       254,520
  Applied Materials, Inc. ^                                33,800       623,610
  Automatic Data Processing, Inc.                          12,400       610,700
  Cisco Systems, Inc. *                                    82,900     2,265,657
  Corning Incorporated *                                    8,000       149,680
  Dell Inc. *                                               4,700       117,923
  eBay Inc. *                                              17,000       511,190
  Electronic Arts Inc. *                                    5,000       251,800
  Electronic Data Systems Corporation                       5,000       137,750
  EMC Corporation *                                       200,648     2,648,554
  First Data Corporation                                   15,824       403,828


                                        4

<PAGE>

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------
  Google Inc., Class A ^ *                                  2,500     1,151,200
  Hewlett-Packard Company                                  19,900       819,681
  Intel Corporation                                        82,500     1,670,625
  International Business Machines Corporation              12,600     1,224,090
  Linear Technology Corporation ^                           4,000       121,280
  Micron Technology, Inc. *                                11,500       160,540
  Microsoft Corporation                                   109,200     3,260,712
  Motorola, Inc.                                           34,700       713,432
  Oracle Corporation *                                     44,272       758,822
  QUALCOMM Inc.                                            17,000       642,430
  Sun Microsystems, Inc. *                                  7,500        40,650
  Symantec Corporation *                                    5,000       104,250
  Texas Instruments Incorporated                           23,900       688,320
  Yahoo! Inc. *                                            18,800       480,152
                                                                    -----------
                                                                     20,358,770
                                                                    -----------
MATERIALS - 2.46%
  Air Products & Chemicals, Inc.                            1,000        70,280
  Alcoa Inc.                                               16,900       507,169
  Dow Chemical Company (The)                               15,400       615,076
  E. I. du Pont de Nemours and Company                     14,800       720,908
  International Paper Company                              10,500       358,050
  Monsanto Company                                         10,160       533,705
  Newmont Mining Corporation                                7,000       316,050
  Praxair, Inc.                                             3,000       177,990
  Rohm and Hass Company                                     1,000        51,120
                                                                    -----------
                                                                      3,350,348
                                                                    -----------
REAL ESTATE INVESTMENT TRUST - 0.48%
  Simon Property Group, Inc. ^                              6,500       658,385
                                                                    -----------
                                                                        658,385
                                                                    -----------
TELECOMMUNICATIONS SERVICES - 3.05%
  ALLTEL Corporation                                        4,000       241,920
  AT&T Inc.                                                31,364     1,121,263
  BellSouth Corporation                                    19,000       895,090
  Sprint Nextel Corporation ^                              30,446       575,125
  Verizon Communications Inc.                              35,600     1,325,744
                                                                    -----------
                                                                      4,159,142
                                                                    -----------
UTILITIES - 3.51%
  American Electric Power Company, Inc.                     5,500       234,190
  CenterPoint Energy, Inc.                                 10,000       165,800
  Dominion Resources, Inc.                                  4,600       385,664
  Duke Energy Corporation ^                                15,800       524,718
  Edison International ^                                    6,500       295,620
  Exelon Corporation                                        6,000       371,340
  FirstEnergy Corp.                                         5,000       301,050
  FPL Group, Inc.                                           4,000       217,680
  PG&E Corporation ^                                        9,000       425,970
  Progress Energy, Inc. ^                                   3,500       171,780
  Public Service Enterprise Group Incorporated              6,000       398,280



                                        5

<PAGE>

                                                           NO. OF
DESCRIPTION                                                SHARES         VALUE
- --------------------------------------------------------------------------------
  Southern Company (The)                                   11,900       438,634
  TXU Corp.                                                12,400       672,204
  Williams Companies, Inc. (The)                            7,000       182,840
                                                                    -----------
                                                                      4,785,770
                                                                    -----------
TOTAL EQUITY SECURITIES
  (cost - $106,625,134)                                             135,782,914
                                                                    -----------

                                                       PRINCIPAL
                                                       AMOUNT
                                                       (000'S)
SHORT-TERM INVESTMENTS - 2.46%
REPURCHASE AGREEMENTS - 2.46%
  Bear, Stearns and Co., Inc. + ++
  (Agreement dated 12/29/2006 to be
  repurchased at $2,107,246), 2.6565%,
  1/2/2007, collateralized by $2,169,076
  in U.S. Treasury Bond Strips)                       $ 2,107         2,106,624

  Bear, Stearns and Co., Inc. + ++
  (Agreement dated 12/29/2006 to be
  repurchased at $642,579), 5.3130%,
  1/2/2007, collateralized by $661,422
  in U.S. Treasury Bond Strips)                          642            642,200

  Bear, Stearns and Co., Inc.
  (Agreement dated 12/29/2006 to be
  repurchased at $606,752), 4.8500%,
  1/2/2007, collateralized by $624,947
  in U.S. Treasury Bond Strips)                          606            606,425
                                                                   ------------
                                                                      3,355,249
                                                                   ------------
TOTAL SHORT-TERM INVESTMENTS
  (cost - $3,355,249)                                                 3,355,249
                                                                   ------------

TOTAL INVESTMENTS - 102.05%                                         139,138,163
  (cost - $109,980,383)                                             139,138,163
                                                                   ------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.05)%                      (2,793,834)
                                                                   ------------
NET ASSETS - 100.00%                                               $136,344,329
                                                                   ============


- --------------
ADR American Depositary Receipt
*    Non-income producing security.
+    Stated interest rate, before rebate earned by borrower of securities on
     loan.
++   Represents investment purchased with collateral received for securities on
     loan.
^    Security or a portion thereof is out on loan.




                                       6

<PAGE>






             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
CORNERSTONE STRATEGIC VALUE FUND, INC.
NEW YORK, NEW YORK

We have audited the accompanying statement of assets and liabilities of
Cornerstone Strategic Value Fund, Inc., including the schedule of investments as
of December 31, 2006, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of the Fund's
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2006, by correspondence with the custodian
and brokers. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Cornerstone Strategic Value Fund, Inc. as of December 31, 2006, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of investments in securities
as of December 31, 2006 appearing in Item 6 of this Form N-CSR is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements. This additional information is the responsibility of the
Fund's management. Such information has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


                                                      TAIT, WELLER & BAKER LLP
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 7, 2007



<PAGE>

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

         The Registrant and Cornerstone Advisors, Inc. share the same Proxy
Voting Policies and Procedures. The respective Proxy Voting Policies and
Procedures of the Registrant and Adviser are attached as EXHIBIT99.VOTEREG


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

(a)(1) All information contained in this item and its subparts is as of the date
of this filing, unless otherwise noted. Ralph W. Bradshaw and William A. Clark
are employees of Cornerstone Advisors, Inc. (the Investment Manager) and
portfolio managers of the Fund. Mr. Bradshaw has acted as the portfolio manager
since 2001. Mr. Clark has acted as the portfolio manager since 2003. Ralph W.
Bradshaw's occupation for the last five years is President of Cornerstone
Advisors, Inc. and a Financial Consultant. William A. Clark's occupation for the
last five years is Director and Stockholder of Cornerstone Advisors, Inc. and a
former financial consultant of Deep Discount Advisors, Inc.

(a)(2)(i) Ralph W. Bradshaw and William A. Clark

(a)(2)(ii)(A) Registered Investment Companies - Ralph W. Bradshaw and William A.
Clark each manage one other registered closed-end fund (Cornerstone Total Return
Fund, Inc.) As of December 31, 2006, the total assets of Cornerstone Total
Return Fund, Inc. was $53.4 million.

(a)(2)(ii)(B) Not applicable

(a)(2)(ii)(C) Not applicable

(a)(2)(iii) None. Ralph W. Bradshaw and William A. Clark manage no accounts
where the Advisory Fee is based on the performance of the account.

(a)(2)(iv) None.

(a)(3) As of the most recent fiscal year end December 31, 2006, the compensation
paid to both Ralph W. Bradshaw and William A. Clark was fixed.

(a)(4) The dollar range of equity securities owned in the registrant
beneficially by each portfolio manager is as follows: for Ralph W. Bradshaw it
is in the range of $50,001-$100,000 and for William A. Clark it is over
$100,000.

(b) None.


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

None.

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

None.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The Registrant's principal executive officer and principal financial officer
have evaluated the Registrant's disclosure controls and procedures as of a date
within 90 days of this filing and have concluded that the Registrant's
disclosure controls and procedures are effective, as of such date, in ensuring
that information required to be disclosed by the registrant in this Form N-CSR
was recorded, processed, summarized, and reported timely.

(b) The Registrant's principal executive officer and principal financial officer
are aware of no changes in the Registrant's internal control over financial
reporting that occurred during the Registrant's last fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Code of Ethics attached as EX-99.CODE ETH.

(a)(2) Separate certifications of Principal Executive and Financial Officers
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 attached as
EX-99.CERT.

(b) Certification of Principal Executive and Financial Officers pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 furnished as EX-99.906 CERT.

(99) Proxy Voting Policies of the Registrant and Adviser attached as
     EX-99.VOTEREG.
<PAGE>

                                   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.

By: /S/ RALPH W. BRADSHAW
- -------------------------
Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: March 9, 2007


         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.

Cornerstone Strategic Value Fund, Inc.

By: /S/ RALPH W. BRADSHAW
- -------------------------
Name: Ralph W. Bradshaw
Title: Principal Executive Officer
Date: March 9, 2007

By: /S/ JODI B. LEVINE
- ----------------------
Name: Jodi B. Levine
Title: Principal Financial Officer
Date: March 9, 2007
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CODE ETH
<SEQUENCE>2
<FILENAME>exh99codeeth.txt
<TEXT>

                     CORNERSTONE STRATEGIC VALUE FUND, INC.

                       CORNERSTONE TOTAL RETURN FUND, INC.

                       CODE OF ETHICS FOR SENIOR OFFICERS


Preamble

      Section 406 of the Sarbanes-Oxley Act of 2002 directs that rules be
adopted disclosing whether a company has a code of ethics for senior financial
officers. The U.S. Securities and Exchange Commission (the "SEC") has adopted
rules requiring annual disclosure of an investment company's code of ethics
applicable to the company's principal executive as well as principal financial
officers, if such a code has been adopted. In response, the Cornerstone
Strategic Value Fund, Inc. and Cornerstone Total Return Fund, Inc. (the "Funds")
have each adopted this Code of Ethics.

Statement of Policy

      It is the obligation of the senior officers of each Fund to provide full,
fair, timely and comprehensible disclosure--financial and otherwise--to the
Fund's shareholders, regulatory authorities and the general public. In
fulfilling that obligation, senior officers must act ethically, honestly and
diligently. This Code is intended to enunciate guidelines to be followed by
persons who serve each Fund in senior officer positions. No Code of Ethics can
address every situation that a senior officer might face; however, as a guiding
principle, senior officers should strive to implement the spirit as well as the
letter of applicable laws, rules and regulations, and to provide the type of
clear and complete disclosure and information each Fund's shareholders have a
right to expect.

      The purpose of this Code of Ethics (the "Code") is to promote high
standards of ethical conduct by Covered Persons (as defined below) in their
capacities as officers of the Funds, to instruct them as to what is considered
to be inappropriate and unacceptable conduct or activities for officers and to
prohibit such conduct or activities. This Code supplements other policies that
the Funds and its adviser have adopted or may adopt in the future with which
Fund officers are also required to comply (e.g., code of ethics relating to
personal trading and conduct).

Covered Persons

      This Code applies to those persons appointed by the each Fund's Board of
Directors as Chief Executive Officer, President, Chief Financial Officer and
Chief Accounting Officer, or persons performing similar functions.

Promotion of Honest and Ethical Conduct

      In serving as an officer of a Fund, each Covered Person must maintain high
standards of honesty and ethical conduct and must encourage his colleagues who
provide services to a Fund, whether directly or indirectly, to do the same.


                                      -1-
<PAGE>

      Each Covered Person understands that as an officer of a Fund, he has a
duty to act in the best interests of the Fund and its shareholders. The
interests of the Covered Person's personal interests should not be allowed to
compromise the Covered Person from fulfilling his duties as an officer of the
Fund.

      If a Covered Person believes that his personal interests are likely to
materially compromise his objectivity or his ability to perform the duties of
his role as an officer of a Fund, he should consult with the Fund's chief legal
officer or outside counsel. Under appropriate circumstances, a Covered Person
should also consider whether to present the matter to the Directors of a Fund or
a committee thereof.

      No Covered Person shall suggest that any person providing, or soliciting
to be retained to provide, services to a Fund give a gift or an economic benefit
of any kind to him in connection with the person's retention or the provision of
services.

Promotion of Full, Fair, Accurate, Timely and Understandable Disclosure

      No Covered Person shall create or further the creation of false or
misleading information in any SEC filing or report to Fund shareholders. No
Covered Person shall conceal or fail to disclose information within the Covered
Person's possession legally required to be disclosed or necessary to make the
disclosure made not misleading. If a Covered Person shall become aware that
information filed with the SEC or made available to the public contains any
false or misleading information or omits to disclose necessary information, he
shall promptly report it to Fund counsel, who shall advise such Covered Person
whether corrective action is necessary or appropriate.

      Each Covered Person, consistent with his responsibilities, shall exercise
appropriate supervision over, and shall assist, Fund service providers in
developing financial information and other disclosure that complies with
relevant law and presents information in a clear, comprehensible and complete
manner. Each Covered Person shall use his best efforts within his area of
expertise to assure that Fund reports reveal, rather than conceal, each Fund's
financial condition.

      Each Covered Person shall seek to obtain additional resources if he
believes that available resources are inadequate to enable the Fund to provide
full, fair and accurate financial information and other disclosure to regulators
and Fund shareholders.

      Each Covered Person shall inquire of other Fund officers and service
providers, as appropriate, to assure that information provided is accurate and
complete and presented in an understandable format using comprehensible
language.

      Each Covered Person shall diligently perform his services to the Fund, so
that information can be gathered and assessed early enough to facilitate timely
filings and issuance of reports and required certifications.


                                      -2-
<PAGE>

Promotion of Compliance with Applicable Government Laws, Rules and Regulations

      Each Covered Person shall become and remain knowledgeable concerning the
laws and regulations relating to each Fund and their operations and shall act
with competence and due care in serving as an officer of a Fund. Each Covered
Person with specific responsibility for financial statement disclosure will
become and remain knowledgeable concerning relevant auditing standards,
generally accepted accounting principles, FASB pronouncements and other
accounting and tax literature and developments.

      Each Covered Person shall devote sufficient time to fulfilling his
responsibilities to the Funds.

      Each Covered Person shall cooperate with each Fund's independent auditors,
regulatory agencies and internal auditors in their review or inspection of the
Fund and its operations.

      No Covered Person shall knowingly violate any law or regulation relating
to a Fund or their operations or seek to illegally circumvent any such law or
regulation.

      No Covered Person shall engage in any conduct involving dishonesty, fraud,
deceit or misrepresentation involving a Fund or its operations.

Promoting Prompt Internal Reporting of Violations

      Each Covered Person shall promptly report his own violations of this Code
and violations by other Covered Persons of which he is aware to the Chairman of
the Fund's Audit Committee.

      Any requests for a waiver from or an amendment to this Code shall be made
to the Chairman of the Fund's Audit Committee. All waivers and amendments shall
be disclosed as required by law.

Sanctions

      Failure to comply with this Code will subject the violator to appropriate
sanctions, which will vary based on the nature and severity of the violation.
Such sanctions may include censure, suspension or termination of position as an
officer of the Fund. Sanctions shall be imposed by the Fund's Audit Committee,
subject to review by the entire Board of Directors of the Fund.

      Each Covered Person shall be required to certify annually whether he has
complied with this Code.

No Rights Created

      This Code of Ethics is a statement of certain fundamental principles,
policies and procedures that govern the Fund's senior officers in the conduct of
the Fund's business. It is not intended to and does not create any rights in any
employee, investor, supplier, competitor, shareholder or any other person or
entity.


                                      -3-
<PAGE>

Recordkeeping

      Each Fund will maintain and preserve for a period of not less than six (6)
years from the date such action is taken, the first two (2) years in an easily
accessible place, a copy of the information or materials supplied to the Board
(i) that provided the basis for any amendment or waiver to this Code and (ii)
relating to any violation of the Code and sanctions imposed for such violation,
together with a written record of the approval or action taken by the Board.

Amendments

      The Directors will make and approve such changes to this Code of Ethics as
they deem necessary or appropriate to effectuate the purposes of this Code.


                                      -4-
<PAGE>

                       CODE OF ETHICS FOR SENIOR OFFICERS

I HEREBY CERTIFY THAT:


      (1)   I have read and I understand the Code of Ethics for Senior Officers
            adopted by the Cornerstone Strategic Value Fund, Inc. and the
            Cornerstone Total Return Fund, Inc.(the "Code of Ethics");

      (2)   I recognize that I am subject to the Code of Ethics;

      (3)   I have complied with the requirements of the Code of Ethics during
            the calendar year ending December 31, _______; and

      (4)   I have reported all violations of the Code of Ethics required to be
            reported pursuant to the requirements of the Code during the
            calendar year ending December 31, _____.

      Set forth below exceptions to items (3) and (4), if any:

      __________________________________________________________________________

      __________________________________________________________________________

      __________________________________________________________________________

      __________________________________________________________________________

      __________________________________________________________________________

      __________________________________________________________________________

Name: _________________

Date: _________________
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CERT
<SEQUENCE>3
<FILENAME>exh99.txt
<TEXT>



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 officers 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) the registrant and have:

          (a)Designed such disclosure controls and procedures or caused such
disclosures 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 disclosures
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 registrant's second
fiscal quarter of 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 officers 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: March 9, 2007

/s/Ralph W. Bradshaw
- ------------------------
Ralph W. Bradshaw
Chairman and President (Principal Executive Officer)


<PAGE>


Exhibit 12(a)(2)
EX-99.CERT
CERTIFICATIONS

I, Jodi B. Levine, 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 officers 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) the registrant and have:

          (a)Designed such disclosure controls and procedures or caused such
disclosures 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 disclosures
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 registrant's second
fiscal quarter of 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 officers 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: March 9, 2007
/s/ Jodi B. Levine
- ------------------------
Jodi B. Levine
Treasurer (Principal Financial Officer)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.906CERT
<SEQUENCE>4
<FILENAME>exh906.txt
<TEXT>

EX-99.906CERT
SECTION 906 CERTIFICATIONS


                           SECTION 906 CERTIFICATIONS

Ralph W. Bradshaw, Principal Executive Officer, and Jodi B. Levine, Principal
Financial Officer, of the Cornerstone Strategic Value Fund, Inc. (the "Fund"),
each certify to his knowledge that:

(1)The Fund's periodic report on Form N-CSR for the period ended December 31,
2006 (the "Report") fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Fund.



/S/ RALPH W. BRADSHAW                            /S/ JODI B. LEVINE
- ---------------------                            ------------------
Ralph W. Bradshaw                                Jodi B. Levine
Chairman and President                           Treasurer
(Principal Executive Officer)                    (Principal Financial Officer)
March 9, 2007                                    March 9, 2007

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 the Fund and will be retained by
the Fund and furnished to the Securities and Exchange Commission or its staff
upon request.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.VOTEREG
<SEQUENCE>5
<FILENAME>ex99-votereg.txt
<TEXT>


- --------------------------------------------------------------------------------
                                     ISS 2007 US Proxy Voting Guidelines
                                                                 Summary
- --------------------------------------------------------------------------------



                                                        (LOGO) ISS
                                              INSTITUTIONAL SHAREHOLDER SERVICES

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                                                                       SUITE 501
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Copyright (C) 2006 by Institutional Shareholder Services.

All rights reserved. No part of this publication may be reproduced or
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to:
Institutional Shareholder Services
Marketing Department
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ISS is a trademark used herein under license.



<PAGE>

================================================================================

                    ISS 2007 Proxy Voting Guidelines Summary
                       Effective for Meetings Feb 1, 2007
                           Updated December 15, 2006


The following is a condensed version of the proxy voting recommendations
contained in the ISS Proxy Voting Manual.

1. OPERATIONAL ITEMS ......................................................    6
    Adjourn Meeting .......................................................    6
    Amend Quorum Requirements .............................................    6
    Amend Minor Bylaws ....................................................    6
    Auditor Indemnification and Limitation of Liability ...................    6
    Auditor Ratification ..................................................    6
    Change Company Name ...................................................    7
    Change Date, Time, or Location of Annual Meeting ......................    7
    Transact Other Business ...............................................    7

2. BOARD OF DIRECTORS: ....................................................    8
    Voting on Director Nominees in Uncontested Elections ..................    8
    2007 Classification of Directors ......................................   10
    Age Limits ............................................................   11
    Board Size ............................................................   11
    Classification/Declassification of the Board ..........................   11
    Cumulative Voting .....................................................   11
    Director and Officer Indemnification and Liability Protection .........   12
    Establish/Amend Nominee Qualifications ................................   12
    Filling Vacancies/Removal of Directors ................................   12
    Independent Chair (Separate Chair/CEO) ................................   13
    Majority of Independent Directors/Establishment of Committees .........   13
    Majority Vote Shareholder Proposals ...................................   13
    Office of the Board ...................................................   14
    Open Access ...........................................................   14
    Performance Test for Directors ........................................   14
    Stock Ownership Requirements ..........................................   15
    Term Limits ...........................................................   15

3. PROXY CONTESTS .........................................................   16
    Voting for Director Nominees in Contested Elections ...................   16
    Reimbursing Proxy Solicitation Expenses ...............................   16
    Confidential Voting ...................................................   16

4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES ........................   17
    Advance Notice Requirements for Shareholder
      Proposals/Nominations ...............................................   17
    Amend Bylaws without Shareholder Consent ..............................   17
    Poison Pills ..........................................................   17
    Shareholder Ability to Act by Written Consent .........................   17
    Shareholder Ability to Call Special Meetings ..........................   17
    Supermajority Vote Requirements .......................................   17

5. MERGERS AND CORPORATE RESTRUCTURINGS ...................................   18
        Overall Approach ..................................................   18
Appraisal Rights ..........................................................   18

================================================================================
(C) 2006 Institutional Shareholder Services Inc. All Rights Reserved.          2

<PAGE>

================================================================================

    Asset Purchases .......................................................   18
    Asset Sales ...........................................................   19
    Bundled Proposals .....................................................   19
    Conversion of Securities ..............................................   19
    Corporate Reorganization/Debt Restructuring/Prepackaged
      Bankruptcy Plans/Reverse
    Leveraged Buyouts/Wrap Plans ..........................................   19
    Formation of Holding Company ..........................................   19
    Going Private Transactions (LBOs, Minority Squeezeouts,
      and Going Dark) .....................................................   20
    Joint Ventures ........................................................   20
    Liquidations ..........................................................   20
    Mergers and Acquisitions/ Issuance of Shares to
      Facilitate Merger or Acquisition ....................................   20
    Private Placements/Warrants/Convertible Debentures ....................   20
    Spinoffs ..............................................................   21
    Value Maximization Proposals ..........................................   21

6. STATE OF INCORPORATION .................................................   22
    Control Share Acquisition Provisions ..................................   22
    Control Share Cash-out Provisions .....................................   22
    Disgorgement Provisions ...............................................   22
    Fair Price Provisions .................................................   22
    Freeze-out Provisions .................................................   22
    Greenmail .............................................................   22
    Reincorporation Proposals .............................................   23
    Stakeholder Provisions ................................................   23
    State Antitakeover Statutes ...........................................   23

7. CAPITAL STRUCTURE ......................................................   24
    Adjustments to Par Value of Common Stock ..............................   24
    Common Stock Authorization ............................................   24
    Dual-Class Stock ......................................................   24
    Issue Stock for Use with Rights Plan ..................................   24
    Preemptive Rights .....................................................   24
    Preferred Stock .......................................................   24
    Recapitalization ......................................................   25
    Reverse Stock Splits ..................................................   25
    Share Repurchase Programs .............................................   25
    Stock Distributions: Splits and Dividends .............................   25
    Tracking Stock ........................................................   25

8. EXECUTIVE AND DIRECTOR COMPENSATION ....................................   26
    Equity Compensation Plans .............................................   26
    Cost of Equity Plans ..................................................   26
    Repricing Provisions ..................................................   26
    Pay-for Performance Disconnect ........................................   26
    Three-Year Burn Rate/Burn Rate Commitment .............................   28
    Poor Pay Practices ....................................................   29
    Specific Treatment of Certain Award Types in Equity Plan Evaluations: .   30
    Dividend Equivalent Rights ............................................   30
    Liberal Share Recycling Provisions ....................................   30
    Other Compensation Proposals and Policies .............................   30
    401(k) Employee Benefit Plans .........................................   30
    Director Compensation .................................................   30
    Director Retirement Plans .............................................   31
    Employee Stock Ownership Plans (ESOPs) ................................   31
    Employee Stock Purchase Plans-- Qualified Plans .......................   31

================================================================================
(C) 2006 Institutional Shareholder Services Inc. All Rights Reserved.          3

<PAGE>

================================================================================


    Employee Stock Purchase Plans-- Non-Qualified Plans ...................   31
    Incentive Bonus Plans and Tax Deductibility Proposals
      (OBRA-Related Compensation Proposals) ...............................   32
    Options Backdating ....................................................   32
    Option Exchange Programs/Repricing Options ............................   32
    Stock Plans in Lieu of Cash ...........................................   33
    Transfer Programs of Stock Options ....................................   33
    Shareholder Proposals on Compensation .................................   33
    Advisory Vote on Executive Compensation (Say-on-Pay) ..................   33
    Compensation Consultants- Disclosure of Board or
      Company's Utilization ...............................................   33
    Disclosure/Setting Levels or Types of Compensation
      for Executives and Directors ........................................   34
    Option Repricing ......................................................   34
    Pay for Superior Performance ..........................................   34
    Pension Plan Income Accounting ........................................   34
    Performance-Based Awards ..............................................   35
    Severance Agreements for Executives/Golden Parachutes .................   35
    Supplemental Executive Retirement Plans (SERPs) .......................   35

9. CORPORATE RESPONSIBILITY ...............................................   36
    Consumer Issues and Public Safety .....................................   36
    Animal Rights .........................................................   36
    Drug Pricing ..........................................................   36
    Drug Reimportation ....................................................   36
    Genetically Modified Foods ............................................   36
    Handguns ..............................................................   37
    HIV/AIDS ..............................................................   37
    Predatory Lending .....................................................   37
    Tobacco ...............................................................   38
    Toxic Chemicals .......................................................   38
    Environment and Energy ................................................   38
    Arctic National Wildlife Refuge .......................................   38
    CERES Principles ......................................................   39
    Climate Change ........................................................   39
    Concentrated Area Feeding Operations (CAFOs) ..........................   39
    Environmental-Economic Risk Report ....................................   39
    Environmental Reports .................................................   39
    Global Warming ........................................................   40
    Kyoto Protocol Compliance .............................................   40
    Land Use ..............................................................   40
    Nuclear Safety ........................................................   40
    Operations in Protected Areas .........................................   40
    Recycling .............................................................   40
    Renewable Energy ......................................................   41
    Sustainability Report .................................................   41
    General Corporate Issues ..............................................   41
    Charitable/Political Contributions ....................................   41
    Disclosure of Lobbying Expenditures/Initiatives .......................   42
    Link Executive Compensation to Social Performance .....................   42
    Outsourcing/Offshoring ................................................   42
    Labor Standards and Human Rights ......................................   42
    China Principles ......................................................   42
    Country-specific Human Rights Reports .................................   42
    International Codes of Conduct/Vendor Standards .......................   42
    MacBride Principles ...................................................   43
    Military Business .....................................................   43

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    Foreign Military Sales/Offsets ........................................   43
    Landmines and Cluster Bombs ...........................................   43
    Nuclear Weapons .......................................................   44
    Operations in Nations Sponsoring Terrorism (e.g., Iran) ...............   44
    Spaced-Based Weaponization ............................................   44
    Workplace Diversity ...................................................   44
    Board Diversity .......................................................   44
    Equal Employment Opportunity (EEO) ....................................   44
    Glass Ceiling .........................................................   45
    Sexual Orientation ....................................................   45

10. MUTUAL FUND PROXIES ...................................................   46
    Election of Directors .................................................   46
    Converting Closed-end Fund to Open-end Fund ...........................   46
    Proxy Contests ........................................................   46
    Investment Advisory Agreements ........................................   46
    Approving New Classes or Series of Shares .............................   46
    Preferred Stock Proposals .............................................   46
    1940 Act Policies .....................................................   46
    Changing a Fundamental Restriction to a Nonfundamental Restriction ....   47
    Change Fundamental Investment Objective to Nonfundamental .............   47
    Name Change Proposals .................................................   47
    Change in Fund's Subclassification ....................................   47
    Disposition of Assets/Termination/Liquidation .........................   47
    Changes to the Charter Document .......................................   47
    Changing the Domicile of a Fund .......................................   48
    Authorizing the Board to Hire and Terminate Subadvisors
      Without Shareholder Approval ........................................   48
    Distribution Agreements ...............................................   48
    Master-Feeder Structure ...............................................   48
    Mergers ...............................................................   48
Shareholder Proposals for Mutual Funds ....................................   48
    Establish Director Ownership Requirement ..............................   48
    Reimburse Shareholder for Expenses Incurred ...........................   48
    Terminate the Investment Advisor ......................................   48



















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1. OPERATIONAL ITEMS
ADJOURN MEETING

Generally vote AGAINST proposals to provide management with the authority to
adjourn an annual or special meeting absent compelling reasons to support the
proposal.

Vote FOR proposals that relate specifically to soliciting votes for a merger or
transaction if supporting that merger or transaction. Vote AGAINST proposals if
the wording is too vague or if the proposal includes "other business."

Amend Quorum Requirements

Vote AGAINST proposals to reduce quorum requirements for shareholder meetings
below a majority of the shares outstanding unless there are compelling reasons
to support the proposal.

Amend Minor Bylaws

Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or
corrections).

Auditor Indemnification and Limitation of Liability

Consider the issue of auditor indemnification and limitation of liability on a
CASE-BY-CASE basis. Factors to be assessed include, but are not limited to:
     o    The terms of the auditor agreement- the degree to which these
          agreements impact shareholders' rights;
     o    Motivation and rationale for establishing the agreements;
     o    Quality of disclosure; and
     o    Historical practices in the audit area.

WTHHOLD against members of an audit committee in situations where there is
persuasive evidence that the audit committee entered into an inappropriate
indemnification agreement with its auditor that limits the ability of the
company, or its shareholders, to pursue legitimate legal recourse against the
audit firm.


Auditor Ratification

Vote FOR proposals to ratify auditors, unless any of the following apply:
     o    An auditor has a financial interest in or association with the
          company, and is therefore not independent,
     o    There is reason to believe that the independent auditor has rendered
          an opinion which is neither accurate nor indicative of the company's
          financial position, or
     o    Fees for non-audit services ("Other" fees) are excessive.

Non-audit
          fees are excessive if:

Non-audit ("other") fees >audit fees + audit-related fees + tax
compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended
tax returns, refund claims and tax payment planning. All other services in the
tax category, such as tax advice, planning or consulting should be added to
"Other" fees. If the breakout of tax fees cannot be determined, add all tax fees
to "Other" fees.



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Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit
their auditors from engaging in non-audit services.

Vote CASE-BY-CASE on shareholder proposals asking for audit firm rotation,
taking into account:
     o    The tenure of the audit firm;
     o    The length of rotation specified in the proposal;
     o    Any significant audit-related issues at the company;
     o    The number of Audit Committee meetings held each year;
     o    The number of financial experts serving on the committee; and
     o    Whether the company has a periodic renewal process where the auditor
          is evaluated for both audit quality and competitive price.

CHANGE COMPANY NAME

Vote FOR proposals to change the corporate name.

CHANGE DATE, TIME, OR LOCATION OF ANNUAL MEETING

Vote FOR management proposals to change the date, time, and/or location of the
annual meeting unless the proposed change is unreasonable.

Vote AGAINST shareholder proposals to change the date, time, and/or location of
the annual meeting unless the current scheduling or location is unreasonable.

TRANSACT OTHER BUSINESS

Vote AGAINST proposals to approve other business when it appears as voting item.








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2. BOARD OF DIRECTORS:
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS

Vote CASE-BY-CASE on director nominees, examining, but not limited to, the
following factors:
     o    Composition of the board and key board committees;
     o    Attendance at board and committee meetings;
     o    Corporate governance provisions and takeover activity;
     o    Disclosures under Section 404 of Sarbanes-Oxley Act;
     o    Long-term company performance relative to a market and peer index;
     o    Extent of the director's investment in the company;
     o    Existence of related party transactions;
     o    Whether the chairman is also serving as CEO;
     o    Whether a retired CEO sits on the board;
     o    Number of outside boards at which a director serves;
     o    Majority vote standard for director elections without a provision to
          allow for plurality voting when there are more nominees than seats.

WITHHOLD from individual directors who:
     o    Attend less than 75 percent of the board and committee meetings
          without a valid excuse (such as illness, service to the nation, work
          on behalf of the company);
     o    Sit on more than six public company boards;
     o    Are CEOs of public companies who sit on the boards of more than two
          public companies besides their own-- withhold only at their outside
          boards.

WITHHOLD from the entire board of directors, (except from new nominees, who
should be considered on a CASE-BY-CASE basis) if:
     o    The company's proxy indicates that not all directors attended 75% of
          the aggregate of their board and committee meetings, but fails to
          provide the required disclosure of the names of the directors
          involved. If this information cannot be obtained, withhold from all
          incumbent directors;
     o    The company's poison pill has a dead-hand or modified dead-hand
          feature. Withhold every year until this feature is removed;
     o    The board adopts or renews a poison pill without shareholder approval
          since the beginning of 2005, does not commit to putting it to
          shareholder vote within 12 months of adoption, or reneges on a
          commitment to put the pill to a vote, and has not yet received a
          withhold recommendation for this issue;
     o    The board failed to act on a shareholder proposal that received
          approval by a majority of the shares outstanding the previous year;
     o    The board failed to act on a shareholder proposal that received
          approval of the majority of shares cast for the previous two
          consecutive years;
     o    The board failed to act on takeover offers where the majority of the
          shareholders tendered their shares;
     o    At the previous board election, any director received more than 50
          percent withhold votes of the shares cast and the company has failed
          to address the issue(s) that caused the high withhold rate;
     o    The company is a Russell 3000 company that underperformed its industry
          group (GICS group) under the criteria discussed in the section
          "Performance Test for Directors".

WITHHOLD from Inside Directors and Affiliated Outside Directors (per the
Classification of Directors below) when:
     o    The inside or affiliated outside director serves on any of the three
          key committees: audit, compensation, or nominating;

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     o    The company lacks an audit, compensation, or nominating committee so
          that the full board functions as that committee;
     o    The company lacks a formal nominating committee, even if board attests
          that the independent directors fulfill the functions of such a
          committee;
     o    The full board is less than majority independent.

WITHHOLD from the members of the Audit Committee if:
     o    The non - audit fees paid to the auditor are excessive (see discussion
          under Auditor Ratification);
     o    A material weakness identified in the Section 404 Sarbanes-Oxley Act
          disclosures rises to a level of serious concern; there are chronic
          internal control issues and an absence of established effective
          control mechanisms;
     o    There is persuasive evidence that the audit committee entered into an
          inappropriate indemnification agreement with its auditor that limits
          the ability of the company, or its shareholders, to pursue legitimate
          legal recourse against the audit firm.

WITHHOLD from the members of the Compensation Committee if:
     o    There is a negative correlation between the chief executive's pay and
          company performance (see discussion under Equity Compensation Plans);
     o    The company reprices underwater options for stock, cash or other
          consideration without prior shareholder approval, even if allowed in
          their equity plan;
     o    The company fails to submit one-time transfers of stock options to a
          shareholder vote;
     o    The company fails to fulfill the terms of a burn rate commitment they
          made to shareholders;
     o    The company has backdated options (see "Options Backdating" policy);
     o    The company has poor compensation practices (see "Poor Pay Practices"
          policy). Poor pay practices may warrant withholding votes from the CEO
          and potentially the entire board as well.

WITHHOLD from directors, individually or the entire board, for egregious actions
or failure to replace management as appropriate.





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2007 CLASSIFICATION OF DIRECTORS
- --------------------------------------------------------------------------------
INSIDE DIRECTOR (I)
     o    Employee of the company or one of its affiliates(1);
     o    Non-employee officer of the company if among the five most highly paid
          individuals (excluding interim CEO);
     o    Listed as a Section 16 officer(2);
     o    Current interim CEO;
     o    Beneficial owner of more than 50 percent of the company's voting power
          (this may be aggregated if voting power is distributed among more than
          one member of a defined group).

 AFFILIATED OUTSIDE DIRECTOR (AO)
     o    Board attestation that an outside director is not independent;
     o    Former CEO of the company;
     o    Former CEO of an acquired company within the past five years;
     o    Former interim CEO if the service was longer than 18 months. If the
          service was between twelve and eighteen months an assessment of the
          interim CEO's employment agreement will be made;(3)
     o    Former executive(2) of the company, an affiliate or an acquired firm
          within the past five years;
     o    Executive(2) of a former parent or predecessor firm at the time the
          company was sold or split off from the parent/predecessor within the
          past five years;
     o    Executive, former executive, general or limited partner of a joint
          venture or partnership with the company;
     o    Relative(4) of a current Section 16 officer of company or its
          affiliates;
     o    Relative(4) of a current employee of company or its affiliates where
          additional factors raise concern (which may include, but are not
          limited to, the following: a director related to numerous employees;
          the company or its affiliates employ relatives of numerous board
          members; or a non-Section 16 officer in a key strategic role);
     o    Relative(4) of former Section 16 officer, of company or its affiliate
          within the last five years;
     o    Currently provides (or a relative(4) provides) professional
          services(5) to the company, to an affiliate of the company or an
          individual officer of the company or one of its affiliates in excess
          of $10,000 per year;
     o    Employed by (or a relative(4) is employed by) a significant customer
          or supplier(6);
     o    Has (or a relative(4) has) any transactional relationship with the
          company or its affiliates excluding investments in the company through
          a private placement; (6)
     o    Any material financial tie or other related party transactional
          relationship to the company;
     o    Party to a voting agreement to vote in line with management on
          proposals being brought to shareholder vote;
     o    Has (or a relative4 has) an interlocking relationship as defined by
          the SEC involving members of the board of directors or its
          Compensation and Stock Option Committee; (7)
     o    Founder (8) of the company but not currently an employee;
     o    Is (or a relative4 is) a trustee, director or employee of a charitable
          or non-profit organization that receives grants or endowments(6) from
          the company or its affiliates(1).

INDEPENDENT OUTSIDE DIRECTOR (IO)
     o    No material(9) connection to the company other than a board seat.

- --------------------------------------------------------------------------------
 FOOTNOTES:

(1) "Affiliate" includes a subsidiary, sibling company, or parent company. ISS
uses 50 percent control ownership by the parent company as the standard for
applying its affiliate designation.

(2) "Executives" (officers subject to Section 16 of the Securities and Exchange
Act of 1934) include the chief executive, operating, financial, legal,
technology, and accounting officers of a company (including the president,
treasurer, secretary, controller, or any vice president in charge of a principal
business unit, division or policy function).
- --------------------------------------------------------------------------------

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- --------------------------------------------------------------------------------
(3) ISS will look at the terms of the interim CEO's employment contract to
determine if it contains severance pay, long-term health and pension benefits or
other such standard provisions typically contained in contracts of permanent,
non-temporary CEOs. ISS will also consider if a formal search process was
underway for a full-time CEO at the time.

(4) "Relative" follows the SEC's new definition of "immediate family members"
which covers spouses, parents, children, step-parents, step-children, siblings,
in-laws, and any person (other than a tenant or employee) sharing the household
of any director, nominee for director, executive officer, or significant
shareholder of the company.

(5) Professional services can be characterized as advisory in nature and
generally include the following: investment banking / financial advisory
services; commercial banking (beyond deposit services); investment services;
insurance services; accounting/audit services; consulting services; marketing
services; and legal services. The case of participation in a banking syndicate
by a non-lead bank should be considered a transaction (and hence subject to the
associated materiality test) rather than a professional relationship.

(6) If the company makes or receives annual payments exceeding the greater of
$200,000 or five percent of the recipient's gross revenues. (The recipient is
the party receiving the financial proceeds from the transaction).

(7) Interlocks include: (a) executive officers serving as directors on each
other's compensation or similar committees (or, in the absence of such a
committee, on the board) or (b) executive officers sitting on each other's
boards and at least one serves on the other's compensation or similar committees
(or, in the absence of such a committee, on the board).

(8) The operating involvement of the Founder with the company will be
considered. Little to no operating involvement may cause ISS to deem the Founder
as an independent outsider.

(9) For purposes of ISS' director independence classification, "material" will
be defined as a standard of relationship (financial, personal or otherwise) that
a reasonable person might conclude could potentially influence one's objectivity
in the boardroom in a manner that would have a meaningful impact on an
individual's ability to satisfy requisite fiduciary standards on behalf of
shareholders.
- --------------------------------------------------------------------------------


AGE LIMITS
Vote AGAINST shareholder or management proposals to limit the tenure of outside
directors through mandatory retirement ages.

BOARD SIZE
Vote FOR proposals seeking to fix the board size or designate a range for the
board size.

Vote AGAINST proposals that give management the ability to alter the size of the
board outside of a specified range without shareholder approval.

CLASSIFICATION/DECLASSIFICATION OF THE BOARD
Vote AGAINST proposals to classify the board.

Vote FOR proposals to repeal classified boards and to elect all directors
annually.

CUMULATIVE VOTING
Generally vote AGAINST proposals to eliminate cumulative voting.

Generally vote FOR proposals to restore or provide for cumulative voting unless
the company meets all of the following criteria:

     o    Majority vote standard in director elections, including a carve-out
          for plurality voting in contested situations;
     o    Annually elected board;
     o    Two-thirds of the board composed of independent directors;
     o    Nominating committee composed solely of independent directors;

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     o    Confidential voting; however, there may be a provision for suspending
          confidential voting during proxy contests;
     o    Ability of shareholders to call special meetings or act by written
          consent with 90 days' notice;
     o    Absence of superior voting rights for one or more classes of stock;
     o    Board does not have the right to change the size of the board beyond a
          stated range that has been approved by shareholders;
     o    The company has not under-performed its both industry peers and index
          on both a one-year and three-year total shareholder returns basis*,
          unless there has been a change in the CEO position within the last
          three years; and
     o    No director received a WITHHOLD vote level of 35% or more of the votes
          cast in the previous election.

* Starting in 2007, the industry peer group used for this evaluation will change
from the 4-digit GICS group to the average of the 12 companies in the same
6-digit GICS group that are closest in revenue to the company. To fail, the
company must under-perform its index and industry group on all 4 measures (1 and
3 year on industry peers and index).

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION
Vote CASE-BY-CASE on proposals on director and officer indemnification and
liability protection using Delaware law as the standard.

Vote AGAINST proposals to eliminate entirely directors' and officers' liability
for monetary damages for violating the duty of care.

Vote AGAINST indemnification proposals that would expand coverage beyond just
legal expenses to liability for acts, such as negligence, that are more serious
violations of fiduciary obligation than mere carelessness.

Vote AGAINST proposals that would expand the scope of indemnification to provide
for mandatory indemnification of company officials in connection with acts that
previously the company was permitted to provide indemnification for at the
discretion of the company's board (i.e. "permissive indemnification") but that
previously the company was not required to indemnify.

Vote FOR only those proposals providing such expanded coverage in cases when a
director's or officer's legal defense was unsuccessful if both of the following
apply:
     o    If the director was found to have acted in good faith and in a manner
          that he reasonably believed was in the best interests of the company;
          and
     o    If only the director's legal expenses would be covered.

ESTABLISH/AMEND NOMINEE QUALIFICATIONS
Vote CASE-BY-CASE on proposals that establish or amend director qualifications.
Votes should be based on how reasonable the criteria are and to what degree they
may preclude dissident nominees from joining the board.

Vote AGAINST shareholder proposals requiring two candidates per board seat.

FILLING VACANCIES/REMOVAL OF DIRECTORS
Vote AGAINST proposals that provide that directors may be removed only for
cause.

Vote FOR proposals to restore shareholders' ability to remove directors with or
without cause.




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Vote AGAINST proposals that provide that only continuing directors may elect
replacements to fill board vacancies.

Vote FOR proposals that permit shareholders to elect directors to fill board
vacancies.

INDEPENDENT CHAIR (SEPARATE CHAIR/CEO)
Generally vote FOR shareholder proposals requiring the position of chair be
filled by an independent director unless there are compelling reasons to
recommend against the proposal, such as a counterbalancing governance structure.
This should include all of the following:
     o    Designated lead director, elected by and from the independent board
          members with clearly delineated and comprehensive duties. (The role
          may alternatively reside with a presiding director, vice chairman, or
          rotating lead director; however the director must serve a minimum of
          one year in order to qualify as a lead director.) At a minimum these
          should include:
          -    Presides at all meetings of the board at which the chairman is
               not present, including executive sessions of the independent
               directors,
          -    Serves as liaison between the chairman and the independent
               directors,
          -    Approves information sent to the board,
          -    Approves meeting agendas for the board,
          -    Approves meetings schedules to assure that there is sufficient
               time for discussion of all agenda items,
          -    Has the authority to call meetings of the independent directors,
          -    If requested by major shareholders, ensures that he is available
               for consultation and direct communication;
     o    Two-thirds independent board;
     o    All-independent key committees;
     o    Established governance guidelines;
     o    The company should not have underperformed both its industry peers and
          index on both a one-year and three-year total shareholder returns
          basis*, unless there has been a change in the Chairman/CEO position
          within that time;
     o    The company does not have any problematic governance issues.

* Starting in 2007, the industry peer group used for this evaluation will change
from the 4-digit GICS group to the average of the 12 companies in the same
6-digit GICS group that are closest in revenue to the company. To fail, the
company must under-perform its index and industry group on all 4 measures (1 and
3 year on industry peers and index).


MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES
Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS' definition of independent outsider. (See Classification of Directors.)

Vote FOR shareholder proposals asking that board audit, compensation, and/or
nominating committees be composed exclusively of independent directors if they
currently do not meet that standard.

MAJORITY VOTE SHAREHOLDER PROPOSALS
Generally vote FOR precatory and binding resolutions requesting that the board
change the company's bylaws to stipulate that directors need to be elected with
an affirmative majority of votes cast, provided it does not conflict with the
state law where the company is incorporated. Binding resolutions need to allow
for a carve-out for a plurality vote standard when there are more nominees than
board seats.

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Companies are strongly encouraged to also adopt a post-election policy (also
know as a director resignation policy) that will provide guidelines so that the
company will promptly address the situation of a holdover director.

OFFICE OF THE BOARD
Generally vote FOR shareholders proposals requesting that the board establish an
Office of the Board of Directors in order to facilitate direct communications
between shareholders and non-management directors, unless the company has all of
the following:
     o    Established a communication structure that goes beyond the exchange
          requirements to facilitate the exchange of information between
          shareholders and members of the board;
     o    Effectively disclosed information with respect to this structure to
          its shareholders;
     o    Company has not ignored majority-supported shareholder proposals or a
          majority withhold vote on a director nominee; and
     o    The company has an independent chairman or a lead/presiding director,
          according to ISS' definition. This individual must be made available
          for periodic consultation and direct communication with major
          shareholders.

OPEN ACCESS
Generally vote FOR reasonably crafted shareholder proposals providing
shareholders with the ability to nominate director candidates to be included on
management's proxy card, provided the proposal substantially mirrors the SEC's
proposed two-trigger formulation (see the proposed "Security Holder Director
Nominations" rule (http://www.sec.gov/rules/proposed/34-48626.htm) or ISS'
comment letter to the SEC dated 6/13/2003, available on ISS website under
Governance Center- ISS Position Papers).

PERFORMANCE TEST FOR DIRECTORS

WITHHOLD from directors of Russell 3000 companies that underperformed relative
to their industry peers. The criterion used to evaluate such underperformance is
a combination of four performance measures:

One measurement will be a market-based performance metric and three measurements
will be tied to the company's operational performance. The market performance
metric in the methodology is five-year Total Shareholder Return (TSR) on a
relative basis within each four-digit GICS group. The three operational
performance metrics are sales growth, EBITDA growth, and pre-tax operating
Return on Invested Capital (ROIC) on a relative basis within each four-digit
GICS group. All four metrics will be time-weighted as follows: 40 percent on the
trailing 12 month period and 60 percent on the 48 month period prior to the
trailing 12 months. This methodology emphasizes the company's historical
performance over a five-year period yet also accounts for near-term changes in a
company's performance.

The table below summarizes the new framework:

- --------------------------------------------------------------------------------
Metrics                   Basis of Evaluation      Weighting       2nd Weighting
- --------------------------------------------------------------------------------
Operational                                                        50%
Performance
- --------------------------------------------------------------------------------
5-year Average            Management               33.3%
pre-tax                   efficiency in
operating ROIC            deploying assets
- --------------------------------------------------------------------------------
5-year Sales              Top-Line                 33.3%
Growth
- --------------------------------------------------------------------------------
5-year EBITDA             Core-earnings            33.3%
Growth
- --------------------------------------------------------------------------------
Sub Total                                          100%
- --------------------------------------------------------------------------------

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- --------------------------------------------------------------------------------
Stock                                                  50%
Performance
- --------------------------------------------------------------------------------
5-year TSR               Market
- --------------------------------------------------------------------------------
Total                                                  100%
- --------------------------------------------------------------------------------

Adopt a two-phased approach. In 2007 (Year 1), the worst performers (bottom five
percent) within each of the 24 GICS groups will automatically receive cautionary
language, except for companies that have already received cautionary language or
withhold votes in 2006 under the current policy. The latter may be subject to
withhold votes in 2007. For 2008 (Year 2), WITHHOLD votes from director nominees
if a company continues to be in the bottom five percent within its GICS group
for that respective year and/or shows no improvement in its most recent trailing
12 months operating and market performance relative to its peers in its GICS
group. This policy would be applied on a rolling basis going forward.


STOCK OWNERSHIP REQUIREMENTS
Generally vote AGAINST shareholder proposals that mandate a minimum amount of
stock that directors must own in order to qualify as a director or to remain on
the board. While stock ownership on the part of directors is desired, the
company should determine the appropriate ownership requirement.

Vote CASE-BY-CASE on shareholder proposals asking that the company adopt a
holding or retention period for its executives (for holding stock after the
vesting or exercise of equity awards), taking into account any stock ownership
requirements or holding period/retention ratio already in place and the actual
ownership level of executives.

TERM LIMITS
Vote AGAINST shareholder or management proposals to limit the tenure of outside
directors through term limits. However, scrutinize boards where the average
tenure of all directors exceeds 15 years for independence from management and
for sufficient turnover to ensure that new perspectives are being added to the
board.







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3. PROXY CONTESTS
Voting for Director Nominees in Contested Elections Vote CASE-BY-CASE on the
election of directors in contested elections, considering the following factors:
     o    Long-term financial performance of the target company relative to its
          industry;
     o    Management's track record;
     o    Background to the proxy contest;
     o    Qualifications of director nominees (both slates);
     o    Strategic plan of dissident slate and quality of critique against
          management;
     o    Likelihood that the proposed goals and objectives can be achieved
          (both slates);
     o    Stock ownership positions.

REIMBURSING PROXY SOLICITATION EXPENSES
Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When
voting in conjunction with support of a dissident slate, vote FOR the
reimbursement of all appropriate proxy solicitation expenses associated with the
election.

CONFIDENTIAL VOTING
Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators, and use independent inspectors of
election, as long as the proposal includes a provision for proxy contests as
follows: In the case of a contested election, management should be permitted to
request that the dissident group honor its confidential voting policy. If the
dissidents agree, the policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived.

Vote FOR management proposals to adopt confidential voting.





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4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES
Advance Notice Requirements for Shareholder Proposals/Nominations Vote
CASE-BY-CASE on advance notice proposals, supporting those proposals which allow
shareholders to submit proposals as close to the meeting date as reasonably
possible and within the broadest window possible.

AMEND BYLAWS WITHOUT SHAREHOLDER CONSENT
Vote AGAINST proposals giving the board exclusive authority to amend the bylaws.
Vote FOR proposals giving the board the ability to amend the bylaws in addition
to shareholders.

POISON PILLS
Vote FOR shareholder proposals requesting that the company submit its poison
pill to a shareholder vote or redeem it UNLESS the company has: (1) A
shareholder approved poison pill in place; or (2) The company has adopted a
policy concerning the adoption of a pill in the future specifying that the board
will only adopt a shareholder rights plan if either:
     o    Shareholders have approved the adoption of the plan; or
     o    The board, in its exercise of its fiduciary responsibilities,
          determines that it is in the best interest of shareholders under the
          circumstances to adopt a pill without the delay in adoption that would
          result from seeking stockholder approval (i.e. the "fiduciary out"
          provision). A poison pill adopted under this fiduciary out will be put
          to a shareholder ratification vote within twelve months of adoption or
          expire. If the pill is not approved by a majority of the votes cast on
          this issue, the plan will immediately terminate.

Vote FOR shareholder proposals calling for poison pills to be put to a vote
within a time period of less than one year after adoption. If the company has no
non-shareholder approved poison pill in place and has adopted a policy with the
provisions outlined above, vote AGAINST the proposal. If these conditions are
not met, vote FOR the proposal, but with the caveat that a vote within twelve
months would be considered sufficient.

Vote CASE-by-CASE on management proposals on poison pill ratification, focusing
on the features of the shareholder rights plan. Rights plans should contain the
following attributes:
     o    No lower than a 20% trigger, flip-in or flip-over;
     o    A term of no more than three years;
     o    No dead-hand, slow-hand, no-hand or similar feature that limits the
          ability of a future board to redeem the pill;
     o    Shareholder redemption feature (qualifying offer clause); if the board
          refuses to redeem the pill 90 days after a qualifying offer is
          announced, ten percent of the shares may call a special meeting or
          seek a written consent to vote on rescinding the pill.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT
Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent. Vote FOR proposals to allow or make easier
shareholder action by written consent.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings. Vote FOR proposals that remove restrictions on the right of
shareholders to act independently of management.

SUPERMAJORITY VOTE REQUIREMENTS
Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR
proposals to lower supermajority vote requirements.



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5. MERGERS AND CORPORATE RESTRUCTURINGS
OVERALL APPROACH

For mergers and acquisitions, review and evaluate the merits and drawbacks of
the proposed transaction, balancing various and sometimes countervailing factors
including:

     o    VALUATION - Is the value to be received by the target shareholders (or
          paid by the acquirer) reasonable? While the fairness opinion may
          provide an initial starting point for assessing valuation
          reasonableness, emphasis is placed on the offer premium, market
          reaction and strategic rationale.

     o    MARKET REACTION - How has the market responded to the proposed deal? A
          negative market reaction should cause closer scrutiny of a deal.

     o    STRATEGIC RATIONALE - Does the deal make sense strategically? From
          where is the value derived? Cost and revenue synergies should not be
          overly aggressive or optimistic, but reasonably achievable. Management
          should also have a favorable track record of successful integration of
          historical acquisitions.

     o    NEGOTIATIONS AND PROCESS - Were the terms of the transaction
          negotiated at arm's-length? Was the process fair and equitable? A fair
          process helps to ensure the best price for shareholders. Significant
          negotiation "wins" can also signify the deal makers' competency. The
          comprehensiveness of the sales process (e.g., full auction, partial
          auction, no auction) can also affect shareholder value.

     o    CONFLICTS OF INTEREST - Are insiders benefiting from the transaction
          disproportionately and inappropriately as compared to non-insider
          shareholders? As the result of potential conflicts, the directors and
          officers of the company may be more likely to vote to approve a merger
          than if they did not hold these interests. Consider whether these
          interests may have influenced these directors and officers to support
          or recommend the merger. The CIC figure presented in the "ISS
          Transaction Summary" section of this report is an aggregate figure
          that can in certain cases be a misleading indicator of the true value
          transfer from shareholders to insiders. Where such figure appears to
          be excessive, analyze the underlying assumptions to determine whether
          a potential conflict exists.

     o    GOVERNANCE - Will the combined company have a better or worse
          governance profile than the current governance profiles of the
          respective parties to the transaction? If the governance profile is to
          change for the worse, the burden is on the company to prove that other
          issues (such as valuation) outweigh any deterioration in governance.

APPRAISAL RIGHTS
Vote FOR proposals to restore, or provide shareholders with, rights of
appraisal.

ASSET PURCHASES
Vote CASE-BY-CASE on asset purchase proposals, considering the following
factors:
     o    Purchase price;
     o    Fairness opinion;
     o    Financial and strategic benefits;
     o    How the deal was negotiated;
     o    Conflicts of interest;
     o    Other alternatives for the business;
     o    Non-completion risk.


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ASSET SALES
Vote CASE-BY-CASE on asset sales, considering the following factors:
     o    Impact on the balance sheet/working capital;
     o    Potential elimination of diseconomies;
     o    Anticipated financial and operating benefits;
     o    Anticipated use of funds;
     o    Value received for the asset;
     o    Fairness opinion;
     o    How the deal was negotiated;
     o    Conflicts of interest.

BUNDLED PROPOSALS
Vote CASE-BY-CASE on bundled or "conditional" proxy proposals. In the case of
items that are conditioned upon each other, examine the benefits and costs of
the packaged items. In instances when the joint effect of the conditioned items
is not in shareholders' best interests, vote AGAINST the proposals. If the
combined effect is positive, support such proposals.

CONVERSION OF SECURITIES
Vote CASE-BY-CASE on proposals regarding conversion of securities. When
evaluating these proposals the investor should review the dilution to existing
shareholders, the conversion price relative to market value, financial issues,
control issues, termination penalties, and conflicts of interest.

Vote FOR the conversion if it is expected that the company will be subject to
onerous penalties or will be forced to file for bankruptcy if the transaction is
not approved.

CORPORATE REORGANIZATION/DEBT RESTRUCTURING/PREPACKAGED BANKRUPTCY PLANS/REVERSE
LEVERAGED BUYOUTS/WRAP PLANS
Vote CASE-BY-CASE on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan, taking into consideration the
following:
     o    Dilution to existing shareholders' position;
     o    Terms of the offer;
     o    Financial issues;
     o    Management's efforts to pursue other alternatives;
     o    Control issues;
     o    Conflicts of interest.

Vote FOR the debt restructuring if it is expected that the company will file for
bankruptcy if the transaction is not approved.

FORMATION OF HOLDING COMPANY
Vote CASE-BY-CASE on proposals regarding the formation of a holding company,
taking into consideration the following:
     o    The reasons for the change;
     o    Any financial or tax benefits;
     o    Regulatory benefits;
     o    Increases in capital structure;
     o    Changes to the articles of incorporation or bylaws of the company.

     Absent compelling financial reasons to recommend the transaction, vote
     AGAINST the formation of a holding company if the transaction would include
     either of the following:
     o    Increases in common or preferred stock in excess of the allowable
          maximum (see discussion under "Capital Structure");
     o    Adverse changes in shareholder rights.

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GOING PRIVATE TRANSACTIONS (LBOS, MINORITY SQUEEZEOUTS,  AND GOING DARK)
Vote CASE-BY-CASE on going private transactions, taking into account the
following:
        o Offer price/premium;
        o Fairness opinion;
        o How the deal was negotiated;
        o Conflicts of interest;
        o Other alternatives/offers considered; and
        o Non-completion risk.

Vote CASE-BY-CASE on "going dark" transactions, determining whether the
transaction enhances shareholder value by taking into consideration:
     o    Whether the company has attained benefits from being publicly-traded
          (examination of trading volume, liquidity, and market research of the
          stock);
     o    Cash-out value;
     o    Whether the interests of continuing and cashed-out shareholders are
          balanced; and
     o    The market reaction to public announcement of transaction.

JOINT VENTURES
Vote CASE-BY-CASE on proposals to form joint ventures, taking into account the
following:
     o    Percentage of assets/business contributed;
     o    Percentage ownership;
     o    Financial and strategic benefits;
     o    Governance structure;
     o    Conflicts of interest;
     o    Other alternatives;
     o    Noncompletion risk.

LIQUIDATIONS
Vote CASE-BY-CASE on liquidations, taking into account the following:
     o    Management's efforts to pursue other alternatives;
     o    Appraisal value of assets; and
     o    The compensation plan for executives managing the liquidation.

Vote FOR the liquidation if the company will file for bankruptcy if the proposal
is not approved.

MERGERS AND ACQUISITIONS/ ISSUANCE OF SHARES TO FACILITATE MERGER OR ACQUISITION
Vote CASE-BY-CASE on mergers and acquisitions, determining whether the
transaction enhances shareholder value by giving consideration to items listed
under "Mergers and Corporate Restructurings: Overall Approach."

PRIVATE PLACEMENTS/WARRANTS/CONVERTIBLE DEBENTURES
Vote CASE-BY-CASE on proposals regarding private placements, taking into
consideration:
     o    Dilution to existing shareholders' position;
     o    Terms of the offer;
     o    Financial issues;
     o    Management's efforts to pursue other alternatives;
     o    Control issues;
     o    Conflicts of interest.

Vote FOR the private placement if it is expected that the company will file for
bankruptcy if the transaction is not approved.



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SPINOFFS
Vote CASE-BY-CASE on spin-offs, considering:
     o    Tax and regulatory advantages;
     o    Planned use of the sale proceeds;
     o    Valuation of spinoff;
     o    Fairness opinion;
     o    Benefits to the parent company;
     o    Conflicts of interest;
     o    Managerial incentives;
     o    Corporate governance changes;
     o    Changes in the capital structure.

VALUE MAXIMIZATION PROPOSALS
Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value
by hiring a financial advisor to explore strategic alternatives, selling the
company or liquidating the company and distributing the proceeds to
shareholders. These proposals should be evaluated based on the following
factors:
     o    Prolonged poor performance with no turnaround in sight;
     o    Signs of entrenched board and management;
     o    Strategic plan in place for improving value;
     o    Likelihood of receiving reasonable value in a sale or dissolution; and
     o    Whether company is actively exploring its strategic options, including
          retaining a financial advisor.




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6. STATE OF INCORPORATION
CONTROL SHARE ACQUISITION PROVISIONS
Control share acquisition statutes function by denying shares their voting
rights when they contribute to ownership in excess of certain thresholds. Voting
rights for those shares exceeding ownership limits may only be restored by
approval of either a majority or supermajority of disinterested shares. Thus,
control share acquisition statutes effectively require a hostile bidder to put
its offer to a shareholder vote or risk voting disenfranchisement if the bidder
continues buying up a large block of shares.

Vote FOR proposals to opt out of control share acquisition statutes unless doing
so would enable the completion of a takeover that would be detrimental to
shareholders.

Vote AGAINST proposals to amend the charter to include control share acquisition
provisions.

Vote FOR proposals to restore voting rights to the control shares.

CONTROL SHARE CASH-OUT PROVISIONS
Control share cash-out statutes give dissident shareholders the right to
"cash-out" of their position in a company at the expense of the shareholder who
has taken a control position. In other words, when an investor crosses a preset
threshold level, remaining shareholders are given the right to sell their shares
to the acquirer, who must buy them at the highest acquiring price.

Vote FOR proposals to opt out of control share cash-out statutes.

DISGORGEMENT PROVISIONS
Disgorgement provisions require an acquirer or potential acquirer of more than a
certain percentage of a company's stock to disgorge, or pay back, to the company
any profits realized from the sale of that company's stock purchased 24 months
before achieving control status. All sales of company stock by the acquirer
occurring within a certain period of time (between 18 months and 24 months)
prior to the investor's gaining control status are subject to these
recapture-of-profits provisions.
Vote FOR proposals to opt out of state disgorgement provisions.

FAIR PRICE PROVISIONS
Vote CASE-BY-CASE on proposals to adopt fair price provisions (provisions that
stipulate that an acquirer must pay the same price to acquire all shares as it
paid to acquire the control shares), evaluating factors such as the vote
required to approve the proposed acquisition, the vote required to repeal the
fair price provision, and the mechanism for determining the fair price.

Generally, vote AGAINST fair price provisions with shareholder vote requirements
greater than a majority of disinterested shares.

FREEZE-OUT PROVISIONS
Vote FOR proposals to opt out of state freeze-out provisions. Freeze-out
provisions force an investor who surpasses a certain ownership threshold in a
company to wait a specified period of time before gaining control of the
company.

GREENMAIL
Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the market
value of its shares, the practice discriminates against all other shareholders.

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Vote FOR proposals to adopt anti-greenmail charter or bylaw amendments or
otherwise restrict a company's ability to make greenmail payments.

Vote CASE-BY-CASE on anti-greenmail proposals when they are bundled with other
charter or bylaw amendments.

REINCORPORATION PROPOSALS
Vote CASE-BY-CASE on proposals to change a company's state of incorporation,
taking into consideration both financial and corporate governance concerns,
including:
       o   The reasons for reincorporating;
       o   A comparison of the governance provisions;
       o   Comparative economic benefits; and
       o   A comparison of the jurisdictional laws.

Vote FOR re-incorporation when the economic factors outweigh any neutral or
negative governance changes.

STAKEHOLDER PROVISIONS
Vote AGAINST proposals that ask the board to consider non-shareholder
constituencies or other non-financial effects when evaluating a merger or
business combination.

STATE ANTITAKEOVER STATUTES
Vote CASE-BY-CASE on proposals to opt in or out of state takeover statutes
(including control share acquisition statutes, control share cash-out statutes,
freezeout provisions, fair price provisions, stakeholder laws, poison pill
endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).






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7. CAPITAL STRUCTURE

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK
Vote FOR management proposals to reduce the par value of common stock.

COMMON STOCK AUTHORIZATION
Vote CASE-BY-CASE on proposals to increase the number of shares of common stock
authorized for issuance using a model developed by ISS.

Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.

In addition, for capital requests less than or equal to 300 percent of the
current authorized shares that marginally fail the calculated allowable cap
(i.e., exceed the allowable cap by no more than 5 percent), on a CASE-BY-CASE
basis, vote FOR the increase based on the company's performance and whether the
company's ongoing use of shares has shown prudence. Factors should include, at a
minimum, the following:
     o    Rationale;
     o    Good performance with respect to peers and index on a five-year total
          shareholder return basis;
     o    Absence of non-shareholder approved poison pill;
     o    Reasonable equity compensation burn rate;
     o    No non-shareholder approved pay plans; and
     o    Absence of egregious equity compensation practices.

DUAL-CLASS STOCK
Vote AGAINST proposals to create a new class of common stock with superior
voting rights.

Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.

Vote FOR proposals to create a new class of nonvoting or sub-voting common stock
if:
     o    It is intended for financing purposes with minimal or no dilution to
          current shareholders;
     o    It is not designed to preserve the voting power of an insider or
          significant shareholder.

ISSUE STOCK FOR USE WITH RIGHTS PLAN
Vote AGAINST proposals that increase authorized common stock for the explicit
purpose of implementing a non-shareholder approved shareholder rights plan
(poison pill).

PREEMPTIVE RIGHTS
Vote CASE-BY-CASE on shareholder proposals that seek preemptive rights, taking
into consideration: the size of a company, the characteristics of its
shareholder base, and the liquidity of the stock.

PREFERRED STOCK
Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock).

Vote FOR proposals to create "declawed" blank check preferred stock (stock that
cannot be used as a takeover defense).


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Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable.

Vote AGAINST proposals to increase the number of blank check preferred stock
authorized for issuance when no shares have been issued or reserved for a
specific purpose.

Vote CASE-BY-CASE on proposals to increase the number of blank check preferred
shares after analyzing the number of preferred shares available for issue given
a company's industry and performance in terms of shareholder returns.

RECAPITALIZATION
Vote CASE-BY-CASE on recapitalizations (reclassifications of securities), taking
into account the following:
     o    More simplified capital structure;
     o    Enhanced liquidity;
     o    Fairness of conversion terms;
     o    Impact on voting power and dividends;
     o    Reasons for the reclassification;
     o    Conflicts of interest; and
     o    Other alternatives considered.

REVERSE STOCK SPLITS
Vote FOR management proposals to implement a reverse stock split when the number
of authorized shares will be proportionately reduced.

Vote FOR management proposals to implement a reverse stock split to avoid
delisting.

Vote CASE-BY-CASE on proposals to implement a reverse stock split that do not
proportionately reduce the number of shares authorized for issue based on the
allowable increased calculated using the Capital Structure model.

SHARE REPURCHASE PROGRAMS
Vote FOR management proposals to institute open-market share repurchase plans in
which all shareholders may participate on equal terms.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
Vote FOR management proposals to increase the common share authorization for a
stock split or share dividend, provided that the increase in authorized shares
would not result in an excessive number of shares available for issuance as
determined using a model developed by ISS.

TRACKING STOCK
Vote CASE-BY-CASE on the creation of tracking stock, weighing the strategic
value of the transaction against such factors as:
     o    Adverse governance changes;
     o    Excessive increases in authorized capital stock;
     o    Unfair method of distribution;
     o    Diminution of voting rights;
     o    Adverse conversion features;
     o    Negative impact on stock option plans; and
     o    Alternatives such as spin-off.


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8. EXECUTIVE AND DIRECTOR COMPENSATION
EQUITY COMPENSATION PLANS

Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the equity
plan if any of the following factors apply:
     o    The total cost of the company's equity plans is unreasonable;
     o    The plan expressly permits the repricing of stock options without
          prior shareholder approval;
     o    There is a disconnect between CEO pay and the company's performance;
     o    The company's three year burn rate exceeds the greater of 2% and the
          mean plus 1 standard deviation of its industry group; or
     o    The plan is a vehicle for poor pay practices.

Each of these factors is further described below:

COST OF EQUITY PLANS
Generally, vote AGAINST equity plans if the cost is unreasonable. For
non-employee director plans, vote FOR the plan if certain factors are met (see
Director Compensation section).

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT),
which is measured using a binomial option pricing model that assesses the amount
of shareholders' equity flowing out of the company to employees and directors.
SVT is expressed as both a dollar amount and as a percentage of market value,
and includes the new shares proposed, shares available under existing plans, and
shares granted but unexercised. All award types are valued. For omnibus plans,
unless limitations are placed on the most expensive types of awards (for
example, full value awards), the assumption is made that all awards to be
granted will be the most expensive types. See discussion of specific types of
awards.

The Shareholder Value Transfer is reasonable if it falls below the
company-specific allowable cap. The allowable cap is determined as follows: The
top quartile performers in each industry group (using the Global Industry
Classification Standard GICS) are identified. Benchmark SVT levels for each
industry are established based on these top performers' historic SVT. Regression
analyses are run on each industry group to identify the variables most strongly
correlated to SVT. The benchmark industry SVT level is then adjusted upwards or
downwards for the specific company by plugging the company-specific performance
measures, size and cash compensation into the industry cap equations to arrive
at the company's allowable cap.

REPRICING PROVISIONS
Vote AGAINST plans that expressly permit the repricing of underwater stock
options without prior shareholder approval, even if the cost of the plan is
reasonable. Also, WITHHOLD from members of the Compensation Committee who
approved and/or implemented an option exchange program by repricing and buying
out underwater options for stock, cash or other consideration or canceling
underwater options and regranting options with a lower exercise price without
prior shareholder approval, even if such repricings are allowed in their equity
plan.

Vote AGAINST plans if the company has a history of repricing options without
shareholder approval, and the applicable listing standards would not preclude
them from doing so.

PAY-FOR PERFORMANCE DISCONNECT
Generally vote AGAINST plans in which:
     o    there is a disconnect between the CEO's pay and company performance
          (an increase in pay and a decrease in performance);
     o    the main source of the pay increase (over half) is equity-based, and


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     o    the CEO is a participant of the equity proposal.

Performance decreases are based on negative one- and three-year total
shareholder returns. CEO pay increases are based on the CEO's total direct
compensation (salary, cash bonus, present value of stock options, face value of
restricted stock, value of non-equity incentive payouts, change in pension value
and nonqualified deferred compensation earnings, and all other compensation)
increasing over the previous year.

WITHHOLD votes from the Compensation Committee members when the company has a
pay for performance disconnect.

On a CASE-BY-CASE basis, vote for equity plans and FOR compensation committee
members with a pay-for-performance disconnect if compensation committee members
can present strong and compelling evidence of improved committee performance.
This evidence must go beyond the usual compensation committee report disclosure.
This additional evidence necessary includes all of the following:

     o    The compensation committee has reviewed all components of the CEO's
          compensation, including the following:
          -    Base salary, bonus, long-term incentives;
          -    Accumulative realized and unrealized stock option and restricted
               stock gains;
          -    Dollar value of perquisites and other personal benefits to the
               CEO and the total cost to the company;
          -    Earnings and accumulated payment obligations under the company's
               nonqualified deferred compensation program;
          -    Actual projected payment obligations under the company's
               supplemental executive retirement plan (SERPs).

     o    A tally sheet with all the above components should be disclosed for
          the following termination scenarios:
          -    Payment if termination occurs within 12 months: $_____;
          -    Payment if "not for cause" termination occurs within 12 months:
               $_____;
          -    Payment if "change of control" termination occurs within 12
               months: $_____.

     o    The compensation committee is committed to providing additional
          information on the named executives' annual cash bonus program and/or
          long-term incentive cash plan for the current fiscal year. The
          compensation committee will provide full disclosure of the qualitative
          and quantitative performance criteria and hurdle rates used to
          determine the payouts of the cash program. From this disclosure,
          shareholders will know the minimum level of performance required for
          any cash bonus to be delivered, as well as the maximum cash bonus
          payable for superior performance.

The repetition of the compensation committee report does not meet ISS'
requirement of compelling and strong evidence of improved disclosure. The level
of transparency and disclosure is at the highest level where shareholders can
understand the mechanics of the annual cash bonus and/or long-term incentive
cash plan based on the additional disclosure.

     o    The compensation committee is committed to granting a substantial
          portion of performance-based equity awards to the named executive
          officers. A substantial portion of performance-based awards would be
          at least 50 percent of the shares awarded to each of the named
          executive officers. Performance-based equity awards are earned or paid
          out based on the achievement of company performance targets. The
          company will disclose the details of the performance criteria (e.g.,
          return on equity) and the hurdle rates (e.g., 15 percent) associated
          with the performance targets. From this disclosure, shareholders will
          know the minimum level of performance required for any equity grants

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to be made. The performance-based equity awards do not refer to non-qualified
stock options(1) or performance-accelerated grants.(2) Instead,
performance-based equity awards are performance-contingent grants where the
individual will not receive the equity grant by not meeting the target
performance and vice versa.

The level of transparency and disclosure is at the highest level where
shareholders can understand the mechanics of the performance-based equity awards
based on the additional disclosure.

     o    The compensation committee has the sole authority to hire and fire
          outside compensation consultants. The role of the outside compensation
          consultant is to assist the compensation committee to analyze
          executive pay packages or contracts and understand the company's
          financial measures.

THREE-YEAR BURN RATE/BURN RATE COMMITMENT

Generally vote AGAINST plans if the company's most recent three-year burn rate
exceeds one standard deviation in excess of the industry mean (per the following
Burn Rate Table) and is over two percent of common shares outstanding. The
three-year burn rate policy does not apply to non-employee director plans unless
outside directors receive a significant portion of shares each year.

However, vote FOR equity plans if the company fails this burn rate test but the
company commits in a public filing to a three-year average burn rate equal to
its GICS group burn rate mean plus one standard deviation (or 2%, whichever is
greater), assuming all other conditions for voting FOR the plan have been met.

If a company fails to fulfill its burn rate commitment, vote to WITHHOLD from
the compensation committee.






- --------------
(1) Non-qualified stock options are not performance-based awards unless the
grant or the vesting of the stock options is tied to the achievement of a
pre-determined and disclosed performance measure. A rising stock market will
generally increase share prices of all companies, despite of the company's
underlying performance.
(2) Performance-accelerated grants are awards that vest earlier based on the
achievement of a specified measure. However, these grants will ultimately vest
over time even without the attainment of the goal(s).

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<TABLE>
<CAPTION>


                                                            2007 BURN RATE TABLE

                                                  Russell 3000                          Non-Russell 3000
- ------------------------------------------------------------------------        --------------------------------
                                                    Standard     Mean +                      Standard     Mean +
GICS        Description                      Mean   Deviation    STDEV          Mean         Deviation    STDEV
<C>         <S>                            <C>        <C>       <C>          <C>          <C>            <C>
1010        Energy                           1.37%    0.92%      2.29%          1.76%        2.01%        3.77%
1510        Materials                        1.23%    0.62%      1.85%          2.21%        2.15%        4.36%
2010        Capital Goods                    1.60%    0.98%      2.57%          2.34%        1.98%        4.32%
2020        Commercial Services & Supplies   2.39%    1.42%      3.81%          2.25%        1.93%        4.18%
2030        Transportation                   1.30%    1.01%      2.31%          1.92%        1.95%        3.86%
2510        Automobiles &                    1.93%    0.98%      2.90%          2.37%        2.32%        4.69%
            Components
2520        Consumer Durables & Apparel      1.97%    1.12%      3.09%          2.02%        1.68%        3.70%
2530        Hotels Restaurants &             2.22%    1.19%      3.41%          2.29%        1.88%        4.17%
            Leisure
2540        Media                            1.78%    0.92%      2.70%          3.26%        2.36%        5.62%
2550        Retailing                        1.95%    1.10%      3.05%          2.92%        2.21%        5.14%
3010, 3020,
3030        Food & Staples                   1.66%    1.25%      2.91%          1.90%        2.00%        3.90%
            Retailing
3510        Health Care Equipment & Services 2.87%    1.32%      4.19%          3.51%        2.31%        5.81%
3520        Pharmaceuticals & Biotechnology  3.12%    1.38%      4.50%          3.96%        2.89%        6.85%
4010        Banks                            1.31%    0.89%      2.20%          1.15%        1.10%        2.25%
4020        Diversified                      2.13%    1.64%      3.76%          4.84%        5.03%        9.87%
            Financials
4030        Insurance                        1.34%    0.88%      2.22%          1.60%        1.96%        3.56%
4040        Real Estate                      1.21%    1.02%      2.23%          1.21%        1.02%        2.23%
4510        Software & Services              3.77%    2.05%      5.82%          5.33%        3.13%        8.46%
4520        Technology Hardware & Equipment  3.05%    1.65%      4.70%          3.58%        2.34%        5.92%
4530        Semiconductors & Semiconductor   3.76%    1.64%      5.40%          4.48%        2.46%        6.94%
            Equip.
5010        Telecommunication                1.71%    0.99%      2.70%          2.98%        2.94%        5.92%
            Services
5510        Utilities                        0.84%    0.51%      1.35%          0.84%        0.51%        1.35%
</TABLE>


For companies that grant both full value awards and stock options to their
employees, ISS shall apply a premium on full value awards for the past three
fiscal years. The guideline for applying the premium is as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
CHARACTERISTICS                      ANNUAL STOCK PRICE  PREMIUM
                                     VOLATILITY
- ----------------------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>
High annual volatility               53% and higher      1 full-value award will count as 1.5 option shares
Moderate annual volatility           25% - 52%           1 full-value award will count as 2.0 option shares
Low annual volatility                Less than 25%       1 full-value award will count as 4.0 option shares
- ----------------------------------------------------------------------------------------------------------
</TABLE>


POOR PAY PRACTICES
Vote AGAINST equity plans if the plan is a vehicle for poor compensation
practices.

WITHHOLD from compensation committee members, CEO, and potentially the entire
board, if the company has poor compensation practices. The following practices,
while not exhaustive, are examples of poor compensation practices that may
warrant withholding votes:

     o    Egregious employment contracts (e.g., those containing multi-year
          guarantees for bonuses and grants);
     o    Excessive perks that dominate compensation (e.g., tax gross-ups for
          personal use of corporate aircraft);

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     o    Huge bonus payouts without justifiable performance linkage or proper
          disclosure;
     o    Performance metrics that are changed (e.g., canceled or replaced
          during the performance period without adequate explanation of the
          action and the link to performance);
     o    Egregious pension/SERP (supplemental executive retirement plan)
          payouts (e.g., the inclusion of additional years of service not worked
          or inclusion of performance-based equity awards in the pension
          calculation);
     o    New CEO awarded an overly generous new hire package (e.g., including
          excessive "make whole" provisions or any of the poor pay practices
          listed in this policy);
     o    Excessive severance provisions (e.g., including excessive change in
          control payments);
     o    Change in control payouts without loss of job or substantial
          diminution of job duties;
     o    Internal pay disparity;
     o    Options backdating (covered in a separate policy); and
     o    Other excessive compensation payouts or poor pay practices at the
          company.

SPECIFIC TREATMENT OF CERTAIN AWARD TYPES IN EQUITY PLAN
EVALUATIONS:

DIVIDEND EQUIVALENT RIGHTS
Options that have Dividend Equivalent Rights (DERs) associated with them will
have a higher calculated award value than those without DERs under the binomial
model, based on the value of these dividend streams. The higher value will be
applied to new shares, shares available under existing plans, and shares awarded
but not exercised per the plan specifications. DERS transfer more shareholder
equity to employees and non-employee directors and this cost should be captured.

LIBERAL SHARE RECYCLING PROVISIONS
Under net share counting provisions, shares tendered by an option holder to pay
for the exercise of an option, shares withheld for taxes or shares repurchased
by the company on the open market can be recycled back into the equity plan for
awarding again. All awards with such provisions should be valued as full-value
awards. Stock-settled stock appreciation rights (SSARs) will also be considered
as full-value awards if a company counts only the net shares issued to employees
towards their plan reserve.

OTHER COMPENSATION PROPOSALS AND POLICIES

401(K) EMPLOYEE BENEFIT PLANS
Vote FOR proposals to implement a 401(k) savings plan for employees.

DIRECTOR COMPENSATION
Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the
cost of the plans against the company's allowable cap.

On occasion, director stock plans that set aside a relatively small number of
shares when combined with employee or executive stock compensation plans exceed
the allowable cap. Vote for the plan if ALL of the following qualitative factors
in the board's compensation are met and disclosed in the proxy statement:
     o    Director stock ownership guidelines with a minimum of three times the
          annual cash retainer.
     o    Vesting schedule or mandatory holding/deferral period:
          -    A minimum vesting of three years for stock options or restricted
               stock; or
          -    Deferred stock payable at the end of a three-year deferral
               period.
     o    Mix between cash and equity:
          -    A balanced mix of cash and equity, for example 40% cash/60%
               equity or 50% cash/50% equity; or

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          -    If the mix is heavier on the equity component, the vesting
               schedule or deferral period should be more stringent, with the
               lesser of five years or the term of directorship.
     o    No retirement/benefits and perquisites provided to non-employee
          directors; and
     o    Detailed disclosure provided on cash and equity compensation delivered
          to each non-employee director for the most recent fiscal year in a
          table. The column headers for the table may include the following:
          name of each non-employee director, annual retainer, board meeting
          fees, committee retainer, committee-meeting fees, and equity grants.

DIRECTOR RETIREMENT PLANS
Vote AGAINST retirement plans for non-employee directors.

Vote FOR shareholder proposals to eliminate retirement plans for non-employee
directors.


EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)
Vote FOR proposals to implement an ESOP or increase authorized shares for
existing ESOPs, unless the number of shares allocated to the ESOP is excessive
(more than five percent of outstanding shares).

EMPLOYEE STOCK PURCHASE PLANS-- QUALIFIED PLANS
Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee
stock purchase plans where all of the following apply:
     o    Purchase price is at least 85 percent of fair market value;
     o    Offering period is 27 months or less; and
     o    The number of shares allocated to the plan is ten percent or less of
          the outstanding shares.

Vote AGAINST qualified employee stock purchase plans where any of the following
apply:
     o    Purchase price is less than 85 percent of fair market value; or
     o    Offering period is greater than 27 months; or
     o    The number of shares allocated to the plan is more than ten percent of
          the outstanding shares.

EMPLOYEE STOCK PURCHASE PLANS-- NON-QUALIFIED PLANS
Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR
nonqualified employee stock purchase plans with all the following features:
     o    Broad-based participation (i.e., all employees of the company with the
          exclusion of individuals with 5 percent or more of beneficial
          ownership of the company);
     o    Limits on employee contribution, which may be a fixed dollar amount or
          expressed as a percent of base salary;
     o    Company matching contribution up to 25 percent of employee's
          contribution, which is effectively a discount of 20 percent from
          market value;
     o    No discount on the stock price on the date of purchase since there is
          a company matching contribution.

Vote AGAINST nonqualified employee stock purchase plans when any of the plan
features do not meet the above criteria. If the company matching contribution
exceeds 25 percent of employee's contribution, evaluate the cost of the plan
against its allowable cap.


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INCENTIVE BONUS PLANS AND TAX DEDUCTIBILITY PROPOSALS (OBRA-RELATED
COMPENSATION PROPOSALS)
Vote FOR proposals that simply amend shareholder-approved compensation plans to
include administrative features or place a cap on the annual grants any one
participant may receive to comply with the provisions of Section 162(m).

Vote FOR proposals to add performance goals to existing compensation plans to
comply with the provisions of Section 162(m) unless they are clearly
inappropriate.

Vote CASE-BY-CASE on amendments to existing plans to increase shares reserved
and to qualify for favorable tax treatment under the provisions of Section
162(m) as long as the plan does not exceed the allowable cap and the plan does
not violate any of the supplemental policies.

Generally vote FOR cash or cash and stock bonus plans that are submitted to
shareholders for the purpose of exempting compensation from taxes under the
provisions of Section 162(m) if no increase in shares is requested.

OPTIONS BACKDATING
In cases where a company has practiced options backdating, WITHHOLD on a
CASE-BY-CASE basis from the members of the compensation committee, depending on
the severity of the practices and the subsequent corrective actions on the part
of the board. WITHHOLD from the compensation committee members who oversaw the
questionable options grant practices or from current compensation committee
members who fail to respond to the issue proactively, depending on several
factors, including, but not limited to:
     o    Reason and motive for the options backdating issue, such as
          inadvertent vs. deliberate grant date changes;
     o    Length of time of options backdating;
     o    Size of restatement due to options backdating;
     o    Corrective actions taken by the board or compensation committee, such
          as canceling or repricing backdated options, or recoupment of option
          gains on backdated grants;
     o    Adoption of a grant policy that prohibits backdating, and creation of
          a fixed grant schedule or window period for equity grants going
          forward.


OPTION EXCHANGE PROGRAMS/REPRICING OPTIONS
Vote CASE-by-CASE on management proposals seeking approval to exchange/reprice
options taking into consideration:
     o    Historic trading patterns--the stock price should not be so volatile
          that the options are likely to be back "in-the-money" over the near
          term;
     o    Rationale for the re-pricing--was the stock price decline beyond
          management's control?
     o    Is this a value-for-value exchange?
     o    Are surrendered stock options added back to the plan reserve?
     o    Option vesting--does the new option vest immediately or is there a
          black-out period?
     o    Term of the option--the term should remain the same as that of the
          replaced option;
     o    Exercise price--should be set at fair market or a premium to market;
     o    Participants--executive officers and directors should be excluded.

If the surrendered options are added back to the equity plans for re-issuance,
then also take into consideration the company's three-year average burn rate. In
addition to the above considerations, evaluate the intent, rationale, and timing
of the repricing proposal. The proposal should clearly articulate why the board
is choosing to conduct an exchange program at this point in time. Repricing
underwater options after a recent precipitous


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drop in the company's stock price demonstrates poor timing. Repricing after a
recent decline in stock price triggers additional scrutiny and a potential
AGAINST vote on the proposal. At a minimum, the decline should not have happened
within the past year. Also, consider the terms of the surrendered options, such
as the grant date, exercise price and vesting schedule. Grant dates of
surrendered options should be far enough back (two to three years) so as not to
suggest that repricings are being done to take advantage of short-term downward
price movements. Similarly, the exercise price of surrendered options should be
above the 52-week high for the stock price.

Vote FOR shareholder proposals to put option repricings to a shareholder vote.

STOCK PLANS IN LIEU OF CASH
Vote CASE-by-CASE on plans which provide participants with the option of taking
all or a portion of their cash compensation in the form of stock.

Vote FOR non-employee director only equity plans which provide a
dollar-for-dollar cash for stock exchange.

Vote CASE-by-CASE on plans which do not provide a dollar-for-dollar cash for
stock exchange. In cases where the exchange is not dollar-for-dollar, the
request for new or additional shares for such equity program will be considered
using the binomial option pricing model. In an effort to capture the total cost
of total compensation, ISS will not make any adjustments to carve out the
in-lieu-of cash compensation.

TRANSFER PROGRAMS OF STOCK OPTIONS
One-time Transfers: WITHHOLD votes from compensation committee members if they
fail to submit one-time transfers for to shareholders for approval.

Vote CASE-BY-CASE on one-time transfers. Vote FOR if:
     o    Executive officers and non-employee directors are excluded from
          participating;
     o    Stock options are purchased by third-party financial institutions at a
          discount to their fair value using option pricing models such as
          Black-Scholes or a Binomial Option Valuation or other appropriate
          financial models;
     o    There is a two-year minimum holding period for sale proceeds (cash or
          stock) for all participants.

Additionally, management should provide a clear explanation of why options are
being transferred and whether the events leading up to the decline in stock
price were beyond management's control. A review of the company's historic stock
price volatility should indicate if the options are likely to be back
"in-the-money" over the near term.

SHAREHOLDER PROPOSALS ON COMPENSATION

ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)
Generally, vote FOR shareholder proposals that call for non-binding shareholder
ratification of the compensation of the named Executive Officers and the
accompanying narrative disclosure of material factors provided to understand the
Summary Compensation Table.


COMPENSATION CONSULTANTS- DISCLOSURE OF BOARD OR COMPANY'S UTILIZATION
Generally vote FOR shareholder proposals seeking disclosure regarding the
Company, Board, or Board committee's use of compensation consultants, such as
company name, business relationship(s) and fees paid.



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DISCLOSURE/SETTING LEVELS OR TYPES OF COMPENSATION FOR EXECUTIVES AND DIRECTORS
Generally, vote FOR shareholder proposals seeking additional disclosure of
executive and director pay information, provided the information requested is
relevant to shareholders' needs, would not put the company at a competitive
disadvantage relative to its industry, and is not unduly burdensome to the
company.

Vote AGAINST shareholder proposals seeking to set absolute levels on
compensation or otherwise dictate the amount or form of compensation.

Vote AGAINST shareholder proposals requiring director fees be paid in stock
only.

Vote CASE-BY-CASE on all other shareholder proposals regarding executive and
director pay, taking into account company performance, pay level versus peers,
pay level versus industry, and long term corporate outlook.


OPTION REPRICING
Vote FOR shareholder proposals to put option repricings to a shareholder vote.

PAY FOR SUPERIOR PERFORMANCE
Generally vote FOR shareholder proposals based on a case-by-case analysis that
requests the board establish a pay-for-superior performance standard in the
company's executive compensation plan for senior executives. The proposals call
for:
     o    the annual incentive component of the plan should utilize financial
          performance criteria that can be benchmarked against peer group
          performance, and provide that no annual bonus be awarded based on
          financial performance criteria unless the company exceeds the median
          or mean performance of a disclosed group of peer companies on the
          selected financial criteria;
     o    the long-term equity compensation component of the plan should utilize
          financial and/or stock price performance criteria that can be
          benchmarked against peer group performance, and any options,
          restricted shares, or other equity compensation used should be
          structured so that compensation is received only when company
          performance exceeds the median or mean performance of the peer group
          companies on the selected financial and stock price performance
          criteria; and
     o    the plan disclosure should allow shareholders to monitor the
          correlation between pay and performance.

Consider the following factors in evaluating this proposal:
     o    What aspects of the company's annual and long -term equity incentive
          programs are performance driven?
     o    If the annual and long-term equity incentive programs are performance
          driven, are the performance criteria and hurdle rates disclosed to
          shareholders or are they benchmarked against a disclosed peer group?
     o    Can shareholders assess the correlation between pay and performance
          based on the current disclosure?
     o    What type of industry and stage of business cycle does the company
          belong to?


PENSION PLAN INCOME ACCOUNTING
Generally vote FOR shareholder proposals to exclude pension plan income in the
calculation of earnings used in determining executive bonuses/compensation.




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PERFORMANCE-BASED AWARDS
Vote CASE-BY-CASE on shareholder proposal requesting that a significant amount
of future long-term incentive compensation awarded to senior executives shall be
performance-based and requesting that the board adopt and disclose challenging
performance metrics to shareholders, based on the following analytical steps:

     o    First, vote FOR shareholder proposals advocating the use of
          performance-based equity awards, such as performance contingent
          options or restricted stock, indexed options or premium-priced
          options, unless the proposal is overly restrictive or if the company
          has demonstrated that it is using a "substantial" portion of
          performance-based awards for its top executives. Standard stock
          options and performance-accelerated awards do not meet the criteria to
          be considered as performance-based awards. Further, premium-priced
          options should have a premium of at least 25 percent and higher to be
          considered performance-based awards.

     o    Second, assess the rigor of the company's performance-based equity
          program. If the bar set for the performance-based program is too low
          based on the company's historical or peer group comparison, generally
          vote FOR the proposal. Furthermore, if target performance results in
          an above target payout, vote FOR the shareholder proposal due to
          program's poor design. If the company does not disclose the
          performance metric of the performance-based equity program, vote FOR
          the shareholder proposal regardless of the outcome of the first step
          to the test.

In general, vote FOR the shareholder proposal if the company does not meet both
of the above two steps.

SEVERANCE AGREEMENTS FOR EXECUTIVES/GOLDEN PARACHUTES
Vote FOR shareholder proposals to require golden parachutes or executive
severance agreements to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts.

Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden parachutes.
An acceptable parachute should include, but is not limited to, the following:
     o    The triggering mechanism should be beyond the control of management;
     o    The amount should not exceed three times base amount (defined as the
          average annual taxable W-2 compensation during the five years prior to
          the year in which the change of control occurs;
     o    Change-in-control payments should be double-triggered, i.e., (1) after
          a change in control has taken place, and (2) termination of the
          executive as a result of the change in control. Change in control is
          defined as a change in the company ownership structure.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (SERPS)
Generally vote FOR shareholder proposals requesting to put extraordinary
benefits contained in SERP agreements to a shareholder vote unless the company's
executive pension plans do not contain excessive benefits beyond what is offered
under employee-wide plans.

Generally vote FOR shareholder proposals requesting to limit the executive
benefits provided under the company's supplemental executive retirement plan
(SERP) by limiting covered compensation to a senior executive's annual salary
and excluding of all incentive or bonus pay from the plan's definition of
covered compensation used to establish such benefits.


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9. CORPORATE RESPONSIBILITY
CONSUMER ISSUES AND PUBLIC SAFETY

ANIMAL RIGHTS
Generally vote AGAINST proposals to phase out the use of animals in product
testing unless:
     o    The company is conducting animal testing programs that are unnecessary
          or not required by regulation;
     o    The company is conducting animal testing when suitable alternatives
          are accepted and used at peer firms;
     o    The company has been the subject of recent, significant controversy
          related to its testing programs.

Generally vote FOR proposals seeking a report on the company's animal welfare
standards unless:
     o    The company has already published a set of animal welfare standards
          and monitors compliance;
     o    The company's standards are comparable to or better than those of peer
          firms; and
     o    There are no serious controversies surrounding the company's treatment
          of animals.

DRUG PRICING
Generally vote AGAINST proposals requesting that companies implement specific
price restraints on pharmaceutical products unless the company fails to adhere
to legislative guidelines or industry norms in its product pricing.

Vote CASE-BY-CASE on proposals requesting that the company evaluate their
product pricing considering:
     o    The existing level of disclosure on pricing policies;
     o    Deviation from established industry pricing norms;
     o    The company's existing initiatives to provide its products to needy
          consumers;
     o    Whether the proposal focuses on specific products or geographic
          regions.

DRUG REIMPORTATION
Generally vote FOR proposals requesting that companies report on the financial
and legal impact of their policies regarding prescription drug reimportation
unless such information is already publicly disclosed.

Generally vote AGAINST proposals requesting that companies adopt specific
policies to encourage or constrain prescription drug reimportation.

GENETICALLY MODIFIED FOODS
Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.

Vote CASE-BY-CASE on proposals asking for a report on the feasibility of
labeling products containing GE ingredients taking into account:
     o    The relevance of the proposal in terms of the company's business and
          the proportion of it affected by the resolution;
     o    The quality of the company's disclosure on GE product labeling and
          related voluntary initiatives and how this disclosure compares with
          peer company disclosure;
     o    Company's current disclosure on the feasibility of GE product
          labeling, including information on the related costs;
     o    Any voluntary labeling initiatives undertaken or considered by the
          company.

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Vote CASE-BY-CASE on proposals asking for the preparation of a report on the
financial, legal, and environmental impact of continued use of GE
ingredients/seeds. Evaluate the following:
     o    The relevance of the proposal in terms of the company's business and
          the proportion of it affected by the resolution;
     o    The quality of the company's disclosure on risks related to GE product
          use and how this disclosure compares with peer company disclosure;
     o    The percentage of revenue derived from international operations,
          particularly in Europe, where GE products are more regulated and
          consumer backlash is more pronounced.

Vote AGAINST proposals seeking a report on the health and environmental effects
of genetically modified organisms (GMOs). Health studies of this sort are better
undertaken by regulators and the scientific community.

Vote AGAINST proposals to completely phase out GE ingredients from the company's
products or proposals asking for reports outlining the steps necessary to
eliminate GE ingredients from the company's products. Such resolutions
presuppose that there are proven health risks to GE ingredients (an issue better
left to federal regulators) that outweigh the economic benefits derived from
biotechnology.


Handguns
Generally vote AGAINST requests for reports on a company's policies aimed at
curtailing gun violence in the United States unless the report is confined to
product safety information. Criminal misuse of firearms is beyond company
control and instead falls within the purview of law enforcement agencies.

HIV/AIDS
Vote CASE-BY-CASE on requests for reports outlining the impact of the health
pandemic (HIV/AIDS, malaria and tuberculosis) on the company's Sub-Saharan
operations and how the company is responding to it, taking into account:
     o    The nature and size of the company's operations in Sub-Saharan Africa
          and the number of local employees;
     o    The company's existing healthcare policies, including benefits and
          healthcare access for local workers;
     o    Company donations to healthcare providers operating in the region.

Vote AGAINST proposals asking companies to establish, implement, and report on a
standard of response to the HIV/AIDS, TB, and malaria health pandemic in Africa
and other developing countries, unless the company has significant operations in
these markets and has failed to adopt policies and/or procedures to address
these issues comparable to those of industry peers.

Predatory Lending
Vote CASE-BY CASE on requests for reports on the company's procedures for
preventing predatory lending, including the establishment of a board committee
for oversight, taking into account:
     o    Whether the company has adequately disclosed mechanisms in place to
          prevent abusive lending practices;
     o    Whether the company has adequately disclosed the financial risks of
          its subprime business;
     o    Whether the company has been subject to violations of lending laws or
          serious lending controversies;
     o    Peer companies' policies to prevent abusive lending practices.



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TOBACCO
Most tobacco-related proposals should be evaluated on a CASE-BY-CASE basis,
taking into account the following factors:

Second-hand smoke:
     o    Whether the company complies with all local ordinances and
          regulations;
     o    The degree that voluntary restrictions beyond those mandated by law
          might hurt the company's competitiveness;
     o    The risk of any health-related liabilities.

Advertising to youth:
     o    Whether the company complies with federal, state, and local laws on
          the marketing of tobacco or if it has been fined for violations;
     o    Whether the company has gone as far as peers in restricting
          advertising;
     o    Whether the company entered into the Master Settlement Agreement,
          which restricts marketing of tobacco to youth;
     o    Whether restrictions on marketing to youth extend to foreign
          countries.

Cease production of tobacco-related products or avoid selling products to
tobacco companies:
     o    The percentage of the company's business affected;
     o    The economic loss of eliminating the business versus any potential
          tobacco-related liabilities.

Spin-off tobacco-related businesses:
     o    The percentage of the company's business affected;
     o    The feasibility of a spin-off;
     o    Potential future liabilities related to the company's tobacco
          business.

STRONGER PRODUCT WARNINGS:
Vote AGAINST proposals seeking stronger product warnings. Such decisions are
better left to public health authorities.

INVESTMENT IN TOBACCO STOCKS:
Vote AGAINST proposals prohibiting investment in tobacco equities. Such
decisions are better left to portfolio managers.

TOXIC CHEMICALS
Generally vote FOR resolutions requesting that a company discloses its policies
related to toxic chemicals.
Vote CASE-BY-CASE on resolutions requesting that companies evaluate and disclose
the potential financial and legal risks associated with utilizing certain
chemicals, considering:
     o    Current regulations in the markets in which the company operates;
     o    Recent significant controversy, litigation, or fines stemming from
          toxic chemicals or ingredients at
     o    the company; and
     o    The current level of disclosure on this topic.

Generally vote AGAINST resolutions requiring that a company reformulate its
products within a certain timeframe unless such actions are required by law in
specific markets.

ENVIRONMENT AND ENERGY

ARCTIC NATIONAL WILDLIFE REFUGE
Generally vote AGAINST request for reports outlining potential environmental
damage from drilling in the Arctic National Wildlife Refuge (ANWR) unless:

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     o    New legislation is adopted allowing development and drilling in the
          ANWR region;
     o    The company intends to pursue operations in the ANWR; and
     o    The company does not currently disclose an environmental risk report
          for their operations in the ANWR.

CERES PRINCIPLES
Vote CASE-BY-CASE on proposals to adopt the CERES Principles, taking into
account:
     o    The company's current environmental disclosure beyond legal
          requirements, including environmental health and safety (EHS) audits
          and reports that may duplicate CERES;
     o    The company's environmental performance record, including violations
          of federal and state regulations, level of toxic emissions, and
          accidental spills;
     o    Environmentally conscious practices of peer companies, including
          endorsement of CERES;
     o    Costs of membership and implementation.

CLIMATE CHANGE
In general, vote FOR resolutions requesting that a company disclose information
on the impact of climate change on the company's operations unless:

     o    The company already provides current, publicly-available information
          on the perceived impact that climate change may have on the company as
          well as associated policies and procedures to address such risks
          and/or opportunities;
     o    The company's level of disclosure is comparable to or better than
          information provided by industry peers; and
     o    There are no significant fines, penalties, or litigation associated
          with the company's environmental performance.


CONCENTRATED AREA FEEDING OPERATIONS (CAFOS)
Vote FOR resolutions requesting that companies report to shareholders on the
risks and liabilities associated with CAFOs unless:
     o    The company has publicly disclosed guidelines for its corporate and
          contract farming operations, including compliance monitoring; or
     o    The company does not directly source from CAFOs.

ENVIRONMENTAL-ECONOMIC RISK REPORT
Vote CASE-BY-CASE on proposals requesting an economic risk assessment of
environmental performance considering:
     o    The feasibility of financially quantifying environmental risk factors;
     o    The company's compliance with applicable legislation and/or
          regulations regarding environmental performance;
     o    The costs associated with implementing improved standards;
     o    The potential costs associated with remediation resulting from poor
          environmental performance; and
     o    The current level of disclosure on environmental policies and
          initiatives.

ENVIRONMENTAL REPORTS
Generally vote FOR requests for reports disclosing the company's environmental
policies unless it already has well-documented environmental management systems
that are available to the public.


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GLOBAL WARMING
Generally vote FOR proposals requesting a report on greenhouse gas emissions
from company operations and/or products unless this information is already
publicly disclosed or such factors are not integral to the company's line of
business.

Generally vote AGAINST proposals that call for reduction in greenhouse gas
emissions by specified amounts or within a restrictive time frame unless the
company lags industry standards and has been the subject of recent, significant
fines or litigation resulting from greenhouse gas emissions.

KYOTO PROTOCOL COMPLIANCE
Generally vote FOR resolutions requesting that companies outline their
preparations to comply with standards established by Kyoto Protocol signatory
markets unless:
     o    The company does not maintain operations in Kyoto signatory markets;
     o    The company already evaluates and substantially discloses such
          information; or,
     o    Greenhouse gas emissions do not significantly impact the company's
          core businesses.

LAND USE
Generally vote AGAINST resolutions that request the disclosure of detailed
information on a company's policies related to land use or development unless
the company has been the subject of recent, significant fines or litigation
stemming from its land use.

NUCLEAR SAFETY
Generally vote AGAINST resolutions requesting that companies report on risks
associated with their nuclear reactor designs and/or the production and interim
storage of irradiated fuel rods unless:
     o    The company does not have publicly disclosed guidelines describing its
          policies and procedures for addressing risks associated with its
          operations;
     o    The company is non-compliant with Nuclear Regulatory Commission (NRC)
          requirements; or
     o    The company stands out amongst its peers or competitors as having
          significant problems with safety or environmental performance related
          to its nuclear operations.

OPERATIONS IN PROTECTED AREAS
Generally vote FOR requests for reports outlining potential environmental damage
from operations in protected regions, including wildlife refuges unless:
     o    The company does not currently have operations or plans to develop
          operations in these protected regions; or,
     o    The company provides disclosure on its operations and environmental
          policies in these regions comparable to industry peers.

RECYCLING
Vote CASE-BY-CASE on proposals to adopt a comprehensive recycling strategy,
taking into account:
     o    The nature of the company's business and the percentage affected;
     o    The extent that peer companies are recycling;
     o    The timetable prescribed by the proposal;
     o    The costs and methods of implementation;
     o    Whether the company has a poor environmental track record, such as
          violations of federal and state regulations.


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RENEWABLE ENERGY
In general, vote FOR requests for reports on the feasibility of developing
renewable energy sources unless the report is duplicative of existing disclosure
or irrelevant to the company's line of business.

Generally vote AGAINST proposals requesting that the company invest in renewable
energy sources. Such decisions are best left to management's evaluation of the
feasibility and financial impact that such programs may have on the company.

SUSTAINABILITY REPORT
Generally vote FOR proposals requesting the company to report on policies and
initiatives related to social, economic, and environmental sustainability,
unless:
     o    The company already discloses similar information through existing
          reports or policies such as an Environment, Health, and Safety (EHS)
          report; a comprehensive Code of Corporate Conduct; and/or a Diversity
          Report; or
     o    The company has formally committed to the implementation of a
          reporting program based on Global Reporting Initiative (GRI)
          guidelines or a similar standard within a specified time frame.

GENERAL CORPORATE ISSUES

CHARITABLE/POLITICAL CONTRIBUTIONS
Generally vote AGAINST proposals asking the company to affirm political
nonpartisanship in the workplace so long as:
     o    The company is in compliance with laws governing corporate political
          activities; and
     o    The company has procedures in place to ensure that employee
          contributions to company-sponsored political action committees (PACs)
          are strictly voluntary and not coercive.

Vote AGAINST proposals to publish in newspapers and public media the company's
political contributions as such publications could present significant cost to
the company without providing commensurate value to shareholders.

Vote CASE-BY-CASE on proposals to improve the disclosure of a company's
political contributions considering:
     o    Recent significant controversy or litigation related to the company's
          political contributions or governmental affairs; and
     o    The public availability of a policy on political contributions.

Vote AGAINST proposals barring the company from making political contributions.
Businesses are affected by legislation at the federal, state, and local level
and barring contributions can put the company at a competitive disadvantage.

Vote AGAINST proposals restricting the company from making charitable
contributions. Charitable contributions are generally useful for assisting
worthwhile causes and for creating goodwill in the community. In the absence of
bad faith, self-dealing, or gross negligence, management should determine which
contributions are in the best interests of the company.

Vote AGAINST proposals asking for a list of company executives, directors,
consultants, legal counsels, lobbyists, or investment bankers that have prior
government service and whether such service had a bearing on the business of the
company. Such a list would be burdensome to prepare without providing any
meaningful information to shareholders.





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DISCLOSURE OF LOBBYING EXPENDITURES/INITIATIVES
Vote CASE-BY-CASE on proposals requesting information on a company's lobbying
initiatives, considering any significant controversy or litigation surrounding a
company's public policy activities, the current level of disclosure on lobbying
strategy, and the impact that the policy issue may have on the company's
business operations.

LINK EXECUTIVE COMPENSATION TO SOCIAL PERFORMANCE
Vote CASE-BY-CASE on proposals to review ways of linking executive compensation
to social factors, such as corporate downsizings, customer or employee
satisfaction, community involvement, human rights, environmental performance,
predatory lending, and executive/employee pay disparities. Such resolutions
should be evaluated in the context of:
     o    The relevance of the issue to be linked to pay;
     o    The degree that social performance is already included in the
          company's pay structure and disclosed;
     o    The degree that social performance is used by peer companies in
          setting pay;
     o    Violations or complaints filed against the company relating to the
          particular social performance measure;
     o    Artificial limits sought by the proposal, such as freezing or capping
          executive pay
     o    Independence of the compensation committee;
     o    Current company pay levels.

OUTSOURCING/OFFSHORING
Vote CASE-BY-CASE on proposals calling for companies to report on the risks
associated with outsourcing, considering:
     o    Risks associated with certain international markets;
     o    The utility of such a report to shareholders;
     o    The existence of a publicly available code of corporate conduct that
          applies to international operations.

LABOR STANDARDS AND HUMAN RIGHTS

CHINA PRINCIPLES
Vote AGAINST proposals to implement the China Principles unless:
     o    There are serious controversies surrounding the company's China
          operations; and
     o    The company does not have a code of conduct with standards similar to
          those promulgated by the
     o    International Labor Organization (ILO).

COUNTRY-SPECIFIC HUMAN RIGHTS REPORTS
Vote CASE-BY-CASE on requests for reports detailing the company's operations in
a particular country and steps to protect human rights, based on:
     o    The nature and amount of company business in that country;
     o    The company's workplace code of conduct;
     o    Proprietary and confidential information involved;
     o    Company compliance with U.S. regulations on investing in the country;
     o    Level of peer company involvement in the country.

INTERNATIONAL CODES OF CONDUCT/VENDOR STANDARDS
Vote CASE-BY-CASE on proposals to implement certain human rights standards at
company facilities or those of its suppliers and to commit to outside,
independent monitoring. In evaluating these proposals, the following should be
considered:
     o    The company's current workplace code of conduct or adherence to other
          global standards and the degree they meet the standards promulgated by
          the proponent;

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     o    Agreements with foreign suppliers to meet certain workplace standards;
     o    Whether company and vendor facilities are monitored and how;
     o    Company participation in fair labor organizations;
     o    Type of business;
     o    Proportion of business conducted overseas;
     o    Countries of operation with known human rights abuses;
     o    Whether the company has been recently involved in significant labor
          and human rights controversies or violations;
     o    Peer company standards and practices;
     o    Union presence in company's international factories.

Generally vote FOR reports outlining vendor standards compliance unless any of
the following apply:
     o    The company does not operate in countries with significant human
          rights violations;
     o    The company has no recent human rights controversies or violations; or
     o    The company already publicly discloses information on its vendor
          standards compliance.

MACBRIDE PRINCIPLES
Vote CASE-BY-CASE on proposals to endorse or increase activity on the MacBride
Principles, taking into account:
     o    Company compliance with or violations of the Fair Employment Act of
          1989;
     o    Company antidiscrimination policies that already exceed the legal
          requirements;
     o    The cost and feasibility of adopting all nine principles;
     o    The cost of duplicating efforts to follow two sets of standards (Fair
          Employment and the MacBride Principles);
     o    The potential for charges of reverse discrimination;
     o    The potential that any company sales or contracts in the rest of the
          United Kingdom could be negatively impacted;
     o    The level of the company's investment in Northern Ireland;
     o    The number of company employees in Northern Ireland;
     o    The degree that industry peers have adopted the MacBride Principles;
     o    Applicable state and municipal laws that limit contracts with
          companies that have not adopted the
     o    MacBride Principles.

MILITARY BUSINESS

FOREIGN MILITARY SALES/OFFSETS
Vote AGAINST reports on foreign military sales or offsets. Such disclosures may
involve sensitive and confidential information. Moreover, companies must comply
with government controls and reporting on foreign military sales.

LANDMINES AND CLUSTER BOMBS
Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in antipersonnel landmine production, taking into account:
     o    Whether the company has in the past manufactured landmine components;
     o    Whether the company's peers have renounced future production.

Vote CASE-BY-CASE on proposals asking a company to renounce future involvement
in cluster bomb production, taking into account:
     o    What weapons classifications the proponent views as cluster bombs;
     o    Whether the company currently or in the past has manufactured cluster
          bombs or their components;
     o    The percentage of revenue derived from cluster bomb manufacture; o
          Whether the company's peers have renounced future production.

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NUCLEAR WEAPONS
Vote AGAINST proposals asking a company to cease production of nuclear weapons
components and delivery systems, including disengaging from current and proposed
contracts. Components and delivery systems serve multiple military and
non-military uses, and withdrawal from these contracts could have a negative
impact on the company's business.

OPERATIONS IN NATIONS SPONSORING TERRORISM (e.g., IRAN)
Vote CASE-BY-CASE on requests for a board committee review and report outlining
the company's financial and reputational risks from its operations in a
terrorism-sponsoring state, taking into account current disclosure on:
     o    The nature and purpose of the operations and the amount of business
          involved (direct and indirect revenues and expenses) that could be
          affected by political disruption;
     o    Compliance with U.S. sanctions and laws.

SPACED-BASED WEAPONIZATION
Generally vote FOR reports on a company's involvement in spaced-based
weaponization unless:
       o  The information is already publicly available; or
       o  The disclosures sought could compromise proprietary information.

WORKPLACE DIVERSITY

BOARD DIVERSITY
Generally vote FOR reports on the company's efforts to diversify the board,
unless:
     o    The board composition is reasonably inclusive in relation to companies
          of similar size and business; or
     o    The board already reports on its nominating procedures and diversity
          initiatives.

Generally vote AGAINST proposals that would call for the adoption of specific
committee charter language regarding diversity initiatives unless the company
fails to publicly disclose existing equal opportunity or non-discrimination
policies.

Vote CASE-BY-CASE on proposals asking the company to increase the representation
of women and minorities on the board, taking into account:
     o    The degree of board diversity;
     o    Comparison with peer companies;
     o    Established process for improving board diversity;
     o    Existence of independent nominating committee;
     o    Use of outside search firm;
     o    History of EEO violations.

EQUAL EMPLOYMENT OPPORTUNITY (EEO)
Generally vote FOR reports outlining the company's affirmative action
initiatives unless all of the following apply:
     o    The company has well-documented equal opportunity programs;
     o    The company already publicly reports on its company-wide affirmative
          initiatives and provides data on
     o    its workforce diversity; and
     o    The company has no recent EEO-related violations or litigation.

Vote AGAINST proposals seeking information on the diversity efforts of suppliers
and service providers, which can pose a significant cost and administration
burden on the company.





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GLASS CEILING
Generally vote FOR reports outlining the company's progress towards the Glass
Ceiling Commission's business recommendations, unless:
     o    The composition of senior management and the board is fairly
          inclusive;
     o    The company has well-documented programs addressing diversity
          initiatives and leadership development;
     o    The company already issues public reports on its company-wide
          affirmative initiatives and provides data on its workforce diversity;
          and
     o    The company has had no recent, significant EEO-related violations or
          litigation.

SEXUAL ORIENTATION
Vote FOR proposals seeking to amend a company's EEO statement in order to
prohibit discrimination based on sexual orientation, unless the change would
result in excessive costs for the company.

Vote AGAINST proposals to extend company benefits to or eliminate benefits from
domestic partners. Benefits decisions should be left to the discretion of the
company.





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10. MUTUAL FUND PROXIES

ELECTION OF DIRECTORS
Vote CASE-BY-CASE on the election of directors and trustees, following the same
guidelines for uncontested directors for public company shareholder meetings.
However, mutual fund boards do not usually have compensation committees, so do
not withhold for the lack of this committee.

CONVERTING CLOSED-END FUND TO OPEN-END FUND
Vote CASE-BY-CASE on conversion proposals, considering the following factors:
     o    Past performance as a closed-end fund;
     o    Market in which the fund invests;
     o    Measures taken by the board to address the discount; and
     o    Past shareholder activism, board activity, and votes on related
          proposals.

PROXY CONTESTS
Vote CASE-BY-CASE on proxy contests, considering the following factors:
     o    Past performance relative to its peers;
     o    Market in which fund invests;
     o    Measures taken by the board to address the issues;
     o    Past shareholder activism, board activity, and votes on related
          proposals;
     o    Strategy of the incumbents versus the dissidents;
     o    Independence of directors;
     o    Experience and skills of director candidates;
     o    Governance profile of the company;
     o    Evidence of management entrenchment.

INVESTMENT ADVISORY AGREEMENTS
Vote CASE-BY-CASE on investment advisory agreements, considering the following
factors:
     o    Proposed and current fee schedules;
     o    Fund category/investment objective;
     o    Performance benchmarks;
     o    Share price performance as compared with peers;
     o    Resulting fees relative to peers;
     o    Assignments (where the advisor undergoes a change of control).

APPROVING NEW CLASSES OR SERIES OF SHARES
Vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS
Vote CASE-BY-CASE on the authorization for or increase in preferred shares,
considering the following factors:
     o    Stated specific financing purpose;
     o    Possible dilution for common shares;
     o    Whether the shares can be used for antitakeover purposes.

1940 ACT POLICIES
Vote CASE-BY-CASE on policies under the Investment Advisor Act of 1940,
considering the following factors:
     o    Potential competitiveness;
     o    Regulatory developments;
     o    Current and potential returns; and
     o    Current and potential risk.


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Generally vote FOR these amendments as long as the proposed changes do not
fundamentally alter the investment focus of the fund and do comply with the
current SEC interpretation.

CHANGING A FUNDAMENTAL RESTRICTION TO A NONFUNDAMENTAL RESTRICTION
Vote CASE-BY-CASE on proposals to change a fundamental restriction to a
non-fundamental restriction, considering the following factors:
     o    The fund's target investments;
     o    The reasons given by the fund for the change; and
     o    The projected impact of the change on the portfolio.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL
Vote AGAINST proposals to change a fund's fundamental investment objective to
non-fundamental.

NAME CHANGE PROPOSALS
Vote CASE-BY-CASE on name change proposals, considering the following factors:
         Political/economic changes in the target market;
         Consolidation in the target market; and
         Current asset composition.

CHANGE IN FUND'S SUBCLASSIFICATION
Vote CASE-BY-CASE on changes in a fund's sub-classification, considering the
following factors:
     o    Potential competitiveness;
     o    Current and potential returns;
     o    Risk of concentration;
     o    Consolidation in target industry.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION
Vote CASE-BY-CASE on proposals to dispose of assets, to terminate or liquidate,
considering the following factors:
     o    Strategies employed to salvage the company;
     o    The fund's past performance;
     o    The terms of the liquidation.

CHANGES TO THE CHARTER DOCUMENT
Vote CASE-BY-CASE on changes to the charter document, considering the following
factors:
         The degree of change implied by the proposal;
         The efficiencies that could result;
         The state of incorporation;
         Regulatory standards and implications.

Vote AGAINST any of the following changes:
     o    Removal of shareholder approval requirement to reorganize or terminate
          the trust or any of its series;
     o    Removal of shareholder approval requirement for amendments to the new
          declaration of trust;
     o    Removal of shareholder approval requirement to amend the fund's
          management contract, allowing the contract to be modified by the
          investment manager and the trust management, as permitted by the 1940
          Act;
     o    Allow the trustees to impose other fees in addition to sales charges
          on investment in a fund, such as deferred sales charges and redemption
          fees that may be imposed upon redemption of a fund's shares;
     o    Removal of shareholder approval requirement to engage in and terminate
          subadvisory arrangements;

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     o    Removal of shareholder approval requirement to change the domicile of
          the fund.

CHANGING THE DOMICILE OF A FUND
Vote CASE-BY-CASE on re-incorporations, considering the following factors:
     o    Regulations of both states;
     o    Required fundamental policies of both states;
     o    The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisors Without Shareholder
Approval Vote AGAINST proposals authorizing the board to hire/terminate
subadvisors without shareholder approval.

DISTRIBUTION AGREEMENTS
Vote CASE-BY-CASE on distribution agreement proposals, considering the following
factors:
     o    Fees charged to comparably sized funds with similar objectives;
     o    The proposed distributor's reputation and past performance;
     o    The competitiveness of the fund in the industry;
     o    The terms of the agreement.

MASTER-FEEDER STRUCTURE
Vote FOR the establishment of a master-feeder structure.

MERGERS
Vote CASE-BY-CASE on merger proposals, considering the following factors:
     o    Resulting fee structure;
     o    Performance of both funds;
     o    Continuity of management personnel;
     o    Changes in corporate governance and their impact on shareholder
          rights.

SHAREHOLDER PROPOSALS FOR MUTUAL FUNDS

ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT
Generally vote AGAINST shareholder proposals that mandate a specific minimum
amount of stock that directors must own in order to qualify as a director or to
remain on the board.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED
Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation
expenses. When supporting the dissidents, vote FOR the reimbursement of the
proxy solicitation expenses.

TERMINATE THE INVESTMENT ADVISOR
Vote CASE-BY-CASE on proposals to terminate the investment advisor, considering
the following factors:
     o    Performance of the fund's Net Asset Value (NAV);
     o    The fund's history of shareholder relations;
     o    The performance of other funds under the advisor's management.



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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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