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<SEC-DOCUMENT>0000909012-09-000498.txt : 20090306
<SEC-HEADER>0000909012-09-000498.hdr.sgml : 20090306
<ACCEPTANCE-DATETIME>20090306112137
ACCESSION NUMBER:		0000909012-09-000498
CONFORMED SUBMISSION TYPE:	N-CSR
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20081231
FILED AS OF DATE:		20090306
DATE AS OF CHANGE:		20090306
EFFECTIVENESS DATE:		20090306

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:		09661179

	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>t305112.txt
<DESCRIPTION>CLM
<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)

                 305 Madison Avenue, New York, New York        10165
- -------------------------------------------------------------------------------
     (Address of principal executive offices)                 (Zip code)

                                  Gary A. Bentz
                 305 Madison Avenue, New York, New York 10165
- -------------------------------------------------------------------------------
                     (Name and address of agent for service)

Registrant's telephone number, including area code: (513) 326-3597

Date of fiscal year end: December 31, 2008

Date of reporting period: December 31, 2008

         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, 2008 follows.

                             CORNERSTONE STRATEGIC
                                VALUE FUND, INC.

                                 ANNUAL REPORT
                               DECEMBER 31, 2008


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                       14

Results of Special Meeting of Stockholders                                    15

Tax Information                                                               16

Additional Information Regarding the Fund's Directors
  and Corporate Officers                                                      17

Description of Dividend Reinvestment Plan                                     20

Proxy Voting and Portfolio Holdings Information                               22

Privacy Policy Notice                                                         22

Summary of General Information                                                23

Shareholder Information                                                       23



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

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2008 (UNAUDITED)
- --------------------------------------------------------------------------------


SECTOR ALLOCATION

                                                                      Percent of
Sector                                                                Net Assets
- --------------------------------------------------------------------------------
Healthcare                                                              14.2
- --------------------------------------------------------------------------------
Information Technology                                                  13.8
- --------------------------------------------------------------------------------
Consumer Staples                                                        12.7
- --------------------------------------------------------------------------------
Energy                                                                  12.2
- --------------------------------------------------------------------------------
Financials                                                              11.6
- --------------------------------------------------------------------------------
Industrials                                                              9.6
- --------------------------------------------------------------------------------
Closed-End Funds                                                         7.4
- --------------------------------------------------------------------------------
Consumer Discretionary                                                   7.3
- --------------------------------------------------------------------------------
Utilities                                                                4.1
- --------------------------------------------------------------------------------
Telecommunication Services                                               3.5
- --------------------------------------------------------------------------------
Materials                                                                2.5
- --------------------------------------------------------------------------------
Other                                                                    1.1
- --------------------------------------------------------------------------------



TOP TEN HOLDINGS, BY ISSUER

                                                                    Percent of
Holding                                       Sector                Net Assets
- --------------------------------------------------------------------------------
1. Exxon Mobil Corporation                    Energy                    5.2
- --------------------------------------------------------------------------------
2. Procter & Gamble Company (The)        Consumer Staples               2.7
- --------------------------------------------------------------------------------
3. Wal-Mart Stores, Inc.                 Consumer Staples               2.6
- --------------------------------------------------------------------------------
4. JPMorgan Chase & Co.                     Financials                  2.5
- --------------------------------------------------------------------------------
5. Liberty All-Star Equity Fund           Closed-End Funds              2.5
- --------------------------------------------------------------------------------
6. AT&T Inc.                          Telecommunication Services        2.3
- --------------------------------------------------------------------------------
7. Johnson & Johnson                        Healthcare                  2.3
- --------------------------------------------------------------------------------
8. Walt Disney Company (The)           Consumer Discretionary           2.3
- --------------------------------------------------------------------------------
9. Microsoft Corporation               Information Technology           2.1
- --------------------------------------------------------------------------------
10. Wells Fargo & Company                    Financials                 2.1
- --------------------------------------------------------------------------------

================================================================================
                                                                               1
<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2008
- --------------------------------------------------------------------------------

                                                       No. of
Description                                            Shares            Value
- --------------------------------------------------------------------------------
EQUITY SECURITIES - 99.11%
  CLOSED-END FUNDS - 7.37%

Adams Express Company (a)                               49,500      $    397,485
Advent/Claymore Enhanced
  Growth & Income Fund                                  61,070           495,278
Liberty All-Star Equity Fund                           417,530         1,461,355
Liberty All-Star Growth
  Fund, Inc.                                           266,201           692,122
Zweig Fund, Inc.                                       401,750         1,157,040
Other Closed-End Funds (b)                                               182,799
                                                                    ------------
                                                                       4,386,079
                                                                    ------------
CONSUMER DISCRETIONARY - 7.31%

McDonald's Corporation                                   9,900           615,681
Walt Disney Company (The)                               59,200         1,343,248
Other Consumer
  Discretionary ^(b)                                                   2,389,613
                                                                    ------------
                                                                       4,348,542
                                                                    ------------
CONSUMER STAPLES - 12.67%

Coca-Cola Company (The)                                 20,000           905,400
Colgate-Palmolive Company                                8,900           610,006
Kroger Co. (The)                                        13,800           364,458
PepsiCo, Inc.                                            7,100           388,867
Procter & Gamble
  Company (The)                                         26,297         1,625,680
Wal-Mart Stores, Inc.                                   27,100         1,519,226
Other Consumer Staples (b)                                             2,124,823
                                                                    ------------
                                                                       7,538,460
                                                                    ------------
ENERGY - 12.17%

Chevron Corporation                                     17,032         1,259,857
ConocoPhillips                                          10,474           542,553
Exxon Mobil Corporation                                 39,000         3,113,370
Occidental Petroleum
  Corporation                                           10,500           629,895
Other Energy ^(b)                                                      1,697,886
                                                                    ------------
                                                                       7,243,561
                                                                    ------------
FINANCIALS - 11.58%

JPMorgan Chase & Co.                                    47,632         1,501,837
PNC Financial Services
  Group, Inc.                                            7,600           372,400
T. Rowe Price Group Inc.                                11,000           389,840




                                                       No. of
Description                                            Shares            Value
- --------------------------------------------------------------------------------
FINANCIALS (CONTINUED)

Travelers Companies,
  Inc. (The)                                            12,476      $    563,915
Wells Fargo & Company                                   42,900         1,264,692
Other Financials (b)                                                   2,796,397
                                                                    ------------
                                                                       6,889,081
                                                                    ------------
HEALTHCARE - 14.25%

Abbott Laboratories                                     11,200           597,744
Amgen Inc. *                                             9,900           571,725
Becton, Dickinson and
  Company                                                7,900           540,281
Bristol-Myers Squibb
  Company                                               30,500           709,125
Gilead Sciences, Inc. *                                  7,000           357,980
Johnson & Johnson                                       22,900         1,370,107
Medtronic, Inc.                                         14,500           455,590
Merck & Co. Inc.                                        17,500           532,000
Pfizer Inc.                                             23,560           417,248
UnitedHealth Group
  Incorporated                                          19,500           518,700
Wyeth                                                   11,200           420,112
Other Healthcare (b)                                                   1,992,612
                                                                    ------------
                                                                       8,483,224
                                                                    ------------
INDUSTRIALS - 9.62%

Burlington Northern Santa
Fe Corporation                                           5,400           408,834
General Electric Company                                56,900           921,780
United Technologies
Corporation                                              7,500           402,000
Other Industrials ^(b)                                                 3,990,771
                                                                    ------------
                                                                       5,723,385
                                                                    ------------
INFORMATION TECHNOLOGY - 13.84%

Apple, Inc. *                                            8,500           725,475
Cisco Systems, Inc. *                                   47,900           780,770
EMC Corporation *                                       47,148           493,640
Google Inc. *                                            3,000           922,950
Hewlett-Packard Company                                 16,900           613,301
Intel Corporation                                       60,500           886,930
International Business
  Machines Corporation                                  10,600           892,096
Microsoft Corporation                                   65,200         1,267,488

================================================================================
See accompanying notes to financial statements.
2
<PAGE>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
SUMMARY SCHEDULE OF INVESTMENTS - DECEMBER 31, 2008 (CONTINUED)
- --------------------------------------------------------------------------------

                                                       No. of
Description                                            Shares            Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
Oracle Corporation *                                    26,272      $    465,803
QUALCOMM Inc.                                           10,000           358,300
Other Information
Technology (b)                                                           831,401
                                                                    ------------
                                                                       8,238,154
                                                                    ------------
MATERIALS - 2.49%
Monsanto Company                                         5,660           398,181
Other Materials (b)                                                    1,082,820
                                                                    ------------
                                                                       1,481,001
                                                                    ------------
REAL ESTATE INVESTMENT TRUST - 0.18%
Total Real Estate
  Investment Trust (b)                                   2,000           106,260
                                                                    ------------

TELECOMMUNICATION SERVICES - 3.48%
AT&T Inc.                                               48,539         1,383,362
Verizon Communications Inc.                             20,300           688,170
                                                                    ------------
                                                                       2,071,532
                                                                    ------------
UTILITIES - 4.15%
Dominion Resources, Inc.                                11,200           401,408
Other Utilities (b)                                                    2,068,768
                                                                    ------------
                                                                       2,470,176
                                                                    ------------
TOTAL EQUITY SECURITIES
  (cost - $65,972,643)                                                58,979,455
                                                                    ------------

SHORT-TERM INVESTMENTS - 2.54%
  MONEY MARKET SECURITY - 0.82%
JPMorgan U.S. Government
  Money Market Fund                                    488,865           488,865
                                                                    ------------


                                                     Principal
                                                      Amount
Description                                           (000s)           Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.72%
J.P. Morgan Securities Inc. +++
  (Agreement dated 12/31/2008 to
  be repurchased at $1,022,750, 0.04%,
  1/2/2009, collateralized by
  $1,057,368 in United States
  Treasury Notes)                                 $      1,023      $  1,022,748
                                                                    ------------
TOTAL SHORT-TERM INVESTMENTS
  (cost - $1,511,613)                                                  1,511,613
                                                                    ------------
TOTAL INVESTMENTS - 101.65%
  (cost - $67,484,256)                                                60,491,068
                                                                    ------------

LIABILITIES IN EXCESS OF
OTHER ASSETS - (1.65)%                                                  (981,505)
                                                                    ------------

NET ASSETS - 100.00%                                                $ 59,509,563
                                                                    ============
<FN>
- ------------
     ^    Security or a portion thereof is out on loan.
     *    Non-income producing security.
     ADR  American Depositary Receipt
     +    Stated interest rate, before rebate earned by borrower of securities
          on loan.
     ++   Represents investment purchased with collateral received for
          securities on loan.
     (a)  Affiliated investment. The Fund holds 0.67% (based on net assets) of
          Adams Express Company. A director of the Fund also serves as a
          director to such company. During the year ended December 31, 2008
          there were no purchases or sales of this security.
     (b)  Represents issuers 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,
          2008.


================================================================================
                                 See accompanying notes to financial statements.
                                                                               3
</FN>
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2008
- --------------------------------------------------------------------------------

ASSETS

Investments, at value, including collateral
  for securities on loan of $1,022,748:
  Unaffiliated issuers (cost - $66,878,434)(1)                     $ 60,093,583
  Affiliated issuer (cost - $605,822)                                   397,485
                                                                   ------------
  Total investments (cost - $67,484,256)                             60,491,068
Receivables:
  Dividends                                                             189,433
  Interest                                                                  933
Prepaid expenses                                                          1,452
                                                                   ------------
Total Assets                                                         60,682,886
                                                                   ------------

LIABILITIES

Payables:
  Due to custodian                                                        1,860
  Upon return of securities loaned                                    1,022,748
  Investment management fees (net of fee waivers)                        42,782
  Directors' fees                                                        30,771
  Other accrued expenses                                                 75,162
                                                                   ------------
  Total Liabilities                                                   1,173,323
                                                                   ============
NET ASSETS (applicable to 6,835,701 shares of
  common stock outstanding)                                        $ 59,509,563
                                                                   ============

NET ASSET VALUE PER SHARE ($59,509,563 / 6,835,701)                $       8.71
                                                                   ============

NET ASSETS CONSISTS OF

Capital stock, $0.001 par value; 6,835,701 shares issued and
  outstanding (100,000,000 shares authorized)                      $      6,836
Paid-in capital                                                      72,139,403
Accumulated net realized loss on investments                         (5,643,488)
Net unrealized depreciation in value of investments                  (6,993,188)
                                                                   ------------
Net assets applicable to shares outstanding                        $ 59,509,563
                                                                   ============

- --------
     (1)  Includes securities out on loan to brokers with a market value of
          $1,021,565.
================================================================================
See accompanying notes to financial statements.
4
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2008
- --------------------------------------------------------------------------------

INVESTMENT INCOME

Income:
  Dividends (including $24,255 earned from affiliated issuer)      $  2,218,294
  Interest                                                               15,915
  Securities lending                                                     24,863
                                                                   ------------
  Total Investment Income                                             2,259,072
                                                                   ------------

Expenses:
  Investment management fees                                            906,969
  Legal and audit fees                                                  109,068
  Directors' fees                                                       108,619
  Administration fees                                                    91,215
  Printing                                                               70,941
  Accounting fees                                                        35,185
  Custodian fees                                                         23,484
  Transfer agent fees                                                    19,427
  Reverse split fees                                                     18,750
  Stock exchange listing fees                                             9,112
  Insurance                                                               6,940
  Miscellaneous                                                           4,200
                                                                   ------------
  Total Expenses                                                      1,403,910
  Less: Management fee waivers                                          (87,091)
  Less: Fees paid indirectly                                            (42,490)
                                                                   ------------
    Net Expenses                                                      1,274,329
                                                                   ------------
  Net Investment Income                                                 984,743
                                                                   ------------

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized loss from investments                                   (3,741,734)
Capital gain distributions from regulated
  investment companies and real estate
  investment trust                                                        8,983
Net change in unrealized appreciation in
  value of investments                                              (33,698,235)
                                                                   ------------
Net realized and unrealized loss on investments                     (37,430,986)
                                                                   ------------

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS               $(36,446,243)
                                                                   ============


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

<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
- --------------------------------------------------------------------------------
CORNERSTONE STRATEGIC VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------


                                                                          For the Years Ended
                                                                               December 31,
                                                                      ---------------------------

                                                                          2008              2007
                                                                      -------------    -------------
DECREASE IN NET ASSETS

Operations:
  Net investment income                                               $     984,743    $   1,120,928
  Net realized gain/(loss) from investments                              (3,741,734)       8,478,941
  Capital gain distributions from regulated investment companies
    and real estate investment trust                                          8,983           50,393
  Net change in unrealized appreciation in value of investments         (33,698,235)      (2,452,733)
                                                                      -------------    -------------
    Net increase/(decrease) in net assets resulting from operations     (36,446,243)       7,197,529
                                                                      -------------    -------------

Dividends and distributions to shareholders:
  Net investment income                                                    (984,743)      (1,120,928)
  Net realized capital gains                                                   --         (8,509,935)
  Return-of-capital                                                     (27,088,110)     (19,451,697)
                                                                      -------------    -------------
  Total dividends and distributions to shareholders                     (28,072,853)     (29,082,560)
                                                                      -------------    -------------

Capital stock transactions:*
  Cash in lieu of 81 fractional shares from the
    reverse stock split                                                        (544)            --
  Proceeds from 196,609 and 228,404 shares newly issued
    and/or from treasury in reinvestment of dividends
    and distributions, respectively                                       3,761,155        5,808,750
                                                                      -------------    -------------
  Total capital share transactions                                        3,760,611        5,808,750
                                                                      -------------    -------------

    Total decrease in net assets                                        (60,758,485)     (16,076,281)
                                                                      -------------    -------------
NET ASSETS

Beginning of year                                                       120,268,048      136,344,329
                                                                      -------------    -------------

End of year                                                           $  59,509,563    $ 120,268,048
                                                                      =============    =============

- ------------
     *    Shares are adjusted for the one-for-four reverse stock split that was
          effective December 23, 2008.

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

<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

- --------------------------------------------------------------------------------
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,
                                                         ---------------------------------------------------------------
                                                             2008        2007          2006        2005           2004
                                                             ----        ----          ----        ----           ----
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of year                       $  18.12     $   21.28     $   22.60    $   25.92     $   27.60
                                                         --------     ---------     ---------    ---------     ---------
Net investment income #                                      0.15          0.16          0.20         0.12          0.20
Net realized and unrealized gain/(loss) on investments      (5.55)         0.96          2.64         0.72          2.20
                                                         --------     ---------     ---------    ---------     ---------
Net increase/(decrease) in net assets
  resulting from operations                                 (5.40)         1.12          2.84         0.84          2.40
                                                         --------     ---------     ---------    ---------     ---------
Dividends and distributions to shareholders:
  Net investment income                                     (0.15)        (0.16)        (0.16)       (0.16)        (0.20)
  Net realized capital gains                                 --           (1.32)         --          (4.00)         --
  Return-of-capital                                         (4.01)        (3.00)        (4.00)        --           (3.96)
                                                         --------     ---------     ---------    ---------     ---------
  Total dividends and distributions to shareholders         (4.16)        (4.48)        (4.16)       (4.16)        (4.16)
                                                         --------     ---------     ---------    ---------     ---------

Capital stock transactions:
  Anti-dilutive effect due to shares issued in
    reinvestment of dividends and distributions              0.15          0.20          --           --            0.08
                                                         --------     ---------     ---------    ---------     ---------

Net asset value, end of year                             $   8.71     $   18.12     $   21.28    $   22.60     $   25.92
                                                         ========     =========     =========    =========     =========
Market value, end of year                                $   7.62     $   20.20     $   33.80    $   28.20     $   34.04
                                                         ========     =========     =========    =========     =========
Total investment return (a)                                (49.92)       (29.04)%       45.36%       (1.32)%        8.38%
                                                         ========     =========     =========    =========     =========

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted)                    $ 59,510     $ 120,268     $ 136,344    $ 139,706     $ 154,690
Ratio of expenses to average net assets,
  net of fee waivers, if any (b)                             1.40%         1.23%         1.22%        1.20%         1.28%
Ratio of expenses to average net assets,
  excluding fee waivers, if any (c)                          1.54%         1.35%         1.32%        1.36%         1.50%
Ratio of expenses to average net assets,
  net of fee waivers, if any (c)                             1.44%         1.25%         1.25%        1.26%         1.36%
Ratio of net investment income to
  average net assets                                         1.08%         0.86%         0.85%        0.58%         0.73%
Portfolio turnover rate                                     13.24%        10.38%        10.59%       21.60%        39.05%

- ----------
     *    Per share amounts prior to December 23, 2008 have been restated to
          reflect a one-for-four reverse stock split.
     #    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.

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

<PAGE>

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

NOTE A. ORGANIZATION

Cornerstone Strategic Value Fund, Inc. (the "Fund") was incorporated in Maryland
on May 1, 1987 and commenced investment operations on June 30, 1987. Its
investment objective is to seek long-term capital appreciation through
investment primarily in equity securities of U.S. and non-U.S. companies. The
Fund is registered under the Investment Company Act of 1940, as amended, as a
closed-end, diversified management investment company.

NOTE B. SIGNIFICANT ACCOUNTING POLICIES

MANAGEMENT ESTIMATES: The preparation of financial statements in 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. Readily marketable portfolio securities listed on the NYSE
are valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the NYSE on the business day as of which such
value is being determined. If there has been no sale on such day, the securities
are valued at the mean of the closing bid and asked prices on such day. If no
bid or asked prices are quoted on such day or if market prices may be unreliable
because of events occurring after the close of trading, then the security is
valued by such method as the Board of Directors shall determine in good faith to
reflect its fair market value. Readily marketable securities not listed on the
NYSE but listed on other domestic or foreign securities exchanges are valued in
a like manner. Portfolio securities traded on more than one securities exchange
are valued at the last sale price on the business day as of which such value is
being determined as reflected on the consolidated tape at the close of the
exchange representing the principal market for such securities. Securities
trading on the Nasdaq Stock Market, Inc. ("NASDAQ") are valued at the closing
price.

Readily marketable securities traded in the over-the counter market, including
listed securities whose primary market is believed by Cornerstone Advisors, Inc.
(the "Investment Adviser" or "Cornerstone") to be over-the-counter, are valued
at the mean of the current bid and asked prices as reported by the NASDAQ or, in
the case of securities not reported by the NASDAQ or a comparable source, as the
Board of Directors deem appropriate to reflect their fair market value. Where
securities are traded on more than one exchange and also over-the-counter, the
securities will generally be valued using the quotations the Board of Directors
believes reflect most closely the value of such securities.

At December 31, 2008, the Fund held no securities valued in good faith by the
Board of Directors. The net asset value per share of the Fund is calculated
weekly and on the last business day of the month with the exception of those
days on which the NYSE Alternext US LLC is closed.

On March 19, 2008, Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 161, "Disclosures about Derivative
instruments and Hedging Activities" ("FAS 161"). FAS 161 requires qualitative
disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative
instruments, and disclosures about credit-risk-related contingent features in
derivative agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal years.
At this time, management is evaluating the implications of FAS 161 and its
impact on the financial statements is not expected to be material.

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

================================================================================
8
<PAGE>

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

(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 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 July 2006, the Financial Accounting Standards Board ("FASB") released FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an
interpretation of FASB Statement No. 109. FIN 48 provides guidance for how
uncertain tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the accounting and disclosure of
tax positions taken or expected to be taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are "more likely than
not" of being sustained by the applicable tax authority. Tax positions not
deemed to meet the more likely than not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is effective during
the first required financial reporting period for fiscal years beginning after
December 15, 2006. Management adopted FIN 48 on June 29, 2007 and reviewed any
uncertain tax positions for open tax years 2005 through 2008. The Fund has
initiated discussions with the Internal Revenue Service's New York Regional
Office regarding a technical tax issue relating to whether the Fund's historic
dividend reinvestment plan may have resulted in a violation of certain
Subchapter M requirements of the Internal Revenue Code for certain prior tax
years. The outcome of this matter is currently uncertain including, whether
ultimately it might negatively affect the tax status of the Fund. The Fund will
continue to monitor this matter closely and is pursuing a potential resolution
with the Internal Revenue Service by seeking to obtain a closing letter that, if
successful, will avoid a material negative tax impact to the Fund. There was no
material impact to the financial statements or, other than as described herein,
the disclosures thereto as a result of the adoption of this pronouncement.

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 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

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

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

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.

NOTE C. FAIR VALUE

The Fund adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective
January 1, 2008. In accordance with FAS 157, fair value is defined as the price
that the Fund would receive upon selling an investment in a timely transaction
to an independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk, for example,
the risk inherent in a particular valuation technique used to measure fair value
including such a pricing model and/or the risk inherent in the inputs to the
valuation technique. Inputs may be observable or unobservable. Observable inputs
are inputs that reflect the assumptions market participants would use in pricing
the asset or liability developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs that reflect
the reporting entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances. The three-tier hierarchy of inputs
is summarized in the three broad Levels listed below.

     o    Level 1 - quoted prices in active markets for identical investments

     o    Level 2 - other significant observable inputs (including quoted prices
          for similar investments, interest rates, prepayment speeds, credit
          risk, etc.)

     o    Level 3 - significant unobservable inputs (including the Fund's own
          assumptions in deter- mining the fair value of investments)

The inputs or methodology used in valuing securities are not necessarily an
indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of December 31, 2008 in valuing
the Fund's investments carried at value:

                                                 INVESTMENTS IN  OTHER FINANCIAL
VALUATION INPUTS                                  SECURITIES      INSTRUMENTS*
- --------------------------------------------------------------------------------
Level 1 - Quoted
  Prices                                          $58,979,455           --
Level 2 - Other
  Significant
  Observable Inputs                                 1,511,613           --
Level 3 - Significant
  Unobservable Inputs                                    --             --
                                                  -----------      -----------
Total                                             $60,491,068           --
                                                  ===========      ===========

- --------
     * Other financial instruments include futures, forwards and swap contracts.

The Fund did not have any assets or liabilities that were measured at fair value
on a recurring basis using significant unobservable inputs (Level 3) at December
31, 2008.

================================================================================
10
<PAGE>

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

NOTE D. 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, 2008, 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 and extraordinary expenses) exceeded
an annual rate of 0.10% and 0.11% of average annual weekly net assets, through
February 29, 2008, and thereafter, respectively. For the year ended December 31,
2008, Cornerstone earned $906,969 for investment management services, of which
it waived $87,091. 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 $42,490 arising from credits earned on portfolio
transactions executed with a broker, pursuant to a directed brokerage
arrangement.

The Fund paid or accrued approximately $87,608 for the year ended December 31,
2008 for legal services to Blank Rome LLP ("Blank"), counsel to the Fund. Thomas
R. Westle, partner of Blank, served as Secretary of the Fund until February 15,
2008.

NOTE E. AFFILIATED INVESTMENTS

Transactions in affiliates for the yeended December 31, 2008 were as follows:

                                                           ADAMS
                                                          EXPRESS
                                                          COMPANY
                                                          --------
Market value at
  beginning of year                                       $698,940
                                                          ========
Shares at beginning
  of year                                                   49,500
Shares purchased
  during the year                                             --
Shares sold during
  the year                                                    --
                                                          --------
Shares at end of year                                       49,500
                                                          ========
Dividend income earned
  during the year                                           24,255
                                                          ========
Cost of purchases
  during the year                                             --
Proceeds from sales
  during the year                                             --
Net realized gain/(loss)
  during the year                                             --
Market value at
  end of year                                             $397,485
                                                          ========

NOTE F. INVESTMENT IN SECURITIES

For the year ended December 31, 2008, purchases and sales of securities, other
than short-term investments, were $12,137,958 and $34,882,842 respectively.


================================================================================
                                                                              11
<PAGE>

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

NOTE G. SHARES OF COMMON STOCK

The Fund has 100,000,000 shares of common stock authorized and 6,835,701 shares
outstanding at December 31, 2008. As of that date, three individuals that
control Cornerstone owned 21,371 shares in the Fund.

Transactions in common stock for the year ended December 31, 2008 were as
follows+:

Shares at beginning of year                                  6,639,173
Shares newly issued in reinvestment
  of dividends and distributions                               196,609
Shares paid in cash in lieu of fractional
  shares from the reverse stock split                              (81)
                                                             ---------
Shares at end of year                                        6,835,701
                                                             =========

- ------
     +  Share amounts reflect the one-for-four reverse stock split that was
        effective December 23, 2008.

NOTE H. SHARE REPURCHASE PROGRAM

As has been done in the past to enhance shareholder value, pursuant to Section
23 of the Investment Company Act of 1940, as amended, the Fund may again in the
future purchase shares of its common stock on the open market from time to time,
at such times, and in such amounts as may be deemed advantageous to the Fund.
Nothing herein shall be considered a commitment to purchase such shares. The
Fund had no repurchases during the year ended December 31, 2008. No limit has
been placed on the number of shares to be repurchased by the Fund other than
those imposed by federal securities laws.

All purchases are made in accordance with federal securities laws, with shares
repurchased held in treasury effective January 1, 2002, for future use by the
Fund.

NOTE I. 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, 2008, was $1,021,565.
During the year ended December 31, 2008, the Fund earned $24,863 in securities
lending income which is included under the caption SECURITIES LENDING in the
Statement of Operations.

NOTE J. 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.


================================================================================
12
<PAGE>

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

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
             ---------------                    -----------------
        2008              2007              2008               2007
        ----              ----              ----               ----
     $ 984,743        $3,365,187        $27,088,110        $19,451,697

                         LONG-TERM CAPITAL GAINS
                         -----------------------
                          2008            2007
                          ----            ----
                          --            $6,265,676

At December 31, 2008 the components of the accumulated deficit on a tax basis,
for the Fund were as follows:

Capital loss carryforward                                $ (5,171,824)
Net unrealized depreciation                                (6,993,188)
Other accumulated losses                                     (471,664)
                                                         ------------
Total distributable earnings                             $(12,636,676)
                                                         ============

Accounting principles generally accepted in the United States of America require
that certain components of net assets relating to permanent differences be
reclassified between financial and tax reporting. These reclassifications have
no effect on net assets or net asset value per share. For the year ended
December 31, 2008, the Fund decreased net realized loss by $1,139,305 and
decreased paid-in capital by $1,139,305. 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, 2008, the Fund incurred
Post-October losses in the amount of $471,664.

At December 31, 2008, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $5,171,824 of which $1,139,305 expires in 2009, $250,210
expires in 2010, $484,687 expires in 2011, and $3,297,622 expires in 2016. These
capital loss carryforwards are subject to an annual limitation of $1,139,305 for
the year ended December 31, 2009. At December 31, 2008, 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
$67,484,256, $5,679,070, $(12,672,258) and $(6,993,188), respectively.

NOTE K. SUBSEQUENT EVENTS

Effective February 13, 2009, Kayadti A. Madison resigned as Treasurer. Effective
that same day Gary A. Bentz was appointed as Assistant Treasurer.

Effective February 28, 2009, Ultimus Fund Solutions, LLC replaced Bear Stearns
Funds Management Inc. as Fund Administrator.

================================================================================
                                                                              13
<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, 2008, and the related statement of operations for the year then
ended, the statements 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 its
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, 2008, by correspondence with the custodian.
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, 2008, 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 24, 2009


================================================================================
14
<PAGE>







RESULTS OF SPECIAL MEETING OF STOCKHOLDERS (UNAUDITED)

On October 15, 2008, a Special Meeting of Stockholders of Cornerstone Strategic
Value Fund, Inc. was held and the following matter was voted upon based on
27,116,390 shares of common stock outstanding on August 18, 2008:

    (1) To approve a one-for-four reverse stock split of the Fund's issued and
        outstanding shares of common stock and the amendment to the Articles of
        Incorporation.

                  FOR                 AGAINST          ABSTAIN
              18,127,847             5,121,816         401,958
















================================================================================
                                                                              15
<PAGE>

2008 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, 2008) 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. The $28,072,853 in dividend and
distributions paid to shareholders in respect of such year, is represented by
$984,743 of ordinary income, and $27,088,110 of return-of-capital.
As indicated in this notice, significant portions of the Fund's distributions
for 2008 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, 2008 the following dividends and distributions per share
were paid by the Fund:

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                     SOURCES OF DIVIDENDS AND DISTRIBUTIONS
                              (PER SHARE AMOUNTS)+

PAYMENT DATES:              1/31/08        2/29/08       3/31/08       4/30/08       5/30/08       6/30/08
                           --------       --------      --------      --------      --------      --------
Ordinary Income(1)         $ 0.0030       $ 0.0030      $ 0.0030      $ 0.0030      $ 0.0030      $ 0.0030
Return-of-Capital(2)         0.0837         0.0837        0.0837        0.0837        0.0837        0.0837
                           --------       --------      --------      --------      --------      --------
Total:                     $ 0.0867       $ 0.0867      $ 0.0867      $ 0.0867      $ 0.0867      $ 0.0867
                           ========       ========      ========      ========      ========      ========
PAYMENT DATES:              7/31/08        8/29/08       9/30/08      10/31/08      11/28/08      12/19/08
                           --------       --------      --------      --------      --------      --------
Ordinary Income(1)         $ 0.0030       $ 0.0030      $ 0.0030      $ 0.0030      $ 0.0030      $ 0.0030
Return-of-Capital(2)         0.0837         0.0837        0.0837        0.0837        0.0837        0.0837
                           --------       --------      --------      --------      --------      --------
Total:                     $ 0.0867       $ 0.0867      $ 0.0867      $ 0.0867      $ 0.0867      $ 0.0867
                           ========       ========      ========      ========      ========      ========
- ----------------------------------------------------------------------------------------------------------
</TABLE>

     +    Per share amounts do not reflect the one-for-four reverse stock split
          that was effective December 23, 2008.
     (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.

The Fund has met the requirements to pass through all (100%) of its 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. They will
generally not be entitled to foreign tax credit or deduction for the withholding
taxes 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.

================================================================================
16
<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

ADDITIONAL INFORMATION REGARDING THE FUND'S DIRECTORS
AND CORPORATE OFFICERS (UNAUDITED)
                                                                                                     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
- --------------------------------------------------------------------------------------------------------------------
Ralph W.              Chairman of the     President, Cornerstone Advisors, Inc.;        1998            3
Bradshaw**            Board of            Financial Consultant; President and
(Dec. 1950)           Directors and       Director of Cornerstone Total Return
                      President           Fund, Inc.; President and Trustee of
                                          Cornerstone Progressive Return Fund.

Thomas H.             Director; Audit,    Independent Financial Adviser; Director       1987            3
Lenagh                Nominating and      of Photonics Products Group; Director
(Nov. 1924)           Corporate           of Cornerstone Total Return Fund, Inc.;
                      Governance          Trustee of Cornerstone Progressive
                      Committee           Return Fund; Director of Adams Express
                      Member              Company and Petroleum and Resources
                                          Corporation.

Edwin                 Director; Audit,    Distinguished Fellow, The Heritage            2001            3
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.; Director
                      Member              of Cornerstone Total Return Fund, Inc.;
                                          Trustee of Cornerstone Progressive
                                          Return Fund.

Scott B. Rogers       Director; Audit,    Chairman, Board of Health Partners,           2000            3
(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.; Trustee of
                                          Cornerstone Progressive Return Fund.
</TABLE>

================================================================================
                                                                              17
<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

ADDITIONAL INFORMATION REGARDING THE FUND'S DIRECTORS
AND CORPORATE OFFICERS (UNAUDITED) (CONTINUED)
                                                                                                     NUMBER OF
                                                                                                     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
- --------------------------------------------------------------------------------------------------------------------
Andrew A.            Director;             Attorney and senior member of Strauss         2000           3
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.; Trustee of
                                           Cornerstone Progressive Return Fund.

Glenn W.             Director;             Chairman of the Board, Tower                  2000           3
Wilcox, Sr.          Chairman of           Associates, Inc.; Chairman of the Board
(Dec. 1931)          Audit Committee       and Chief Executive Officer of Wilcox
                     Nominating and        Travel Agency, Inc.; Director of
                     Corporate             Cornerstone Total Return Fund, Inc.;
                     Governance            Trustee of Cornerstone Progressive
                     Committee             Return Fund.
                     Member





</TABLE>

================================================================================
18
<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

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

NAME AND                                                                                              POSITION
ADDRESS*                   POSITION                 PRINCIPAL OCCUPATION                              WITH FUND
(BIRTH DATE)               HELD WITH FUND           OVER LAST 5 YEARS                                 SINCE
- ------------------------------------------------------------------------------------------------------------------
Gary A. Bentz              Chief Compliance         Chairman and Chief Financial Officer of           2004, 2008,
(June 1956)                Officer, Secretary,      Cornerstone Advisors, Inc.; previous Director,    2009
                           and Assistant            Vice President and Treasurer of the Fund and
                           Treasurer                Cornerstone Total Return Fund, Inc.; Financial
                                                    Consultant, C.P.A.; Chief Compliance Officer,
                                                    Secretary, and Assistant Treasurer of
                                                    Cornerstone Total Return Fund, Inc. and
                                                    Cornerstone Progressive Return Fund.

William A. Clark           Vice President           Director and Stockholder of Cornerstone           2004
(Oct. 1945)                                         Advisors, Inc.; Vice President and former
                                                    Director of Cornerstone Total Return Fund,
                                                    Inc.; Vice President and former Trustee of
                                                    Cornerstone Progressive Return Fund;
                                                    Financial Consultant; former Director of
                                                    Investors First Fund, Inc.
</TABLE>

- --------------------------------------------------------------------------------
     *    The mailing address of each Director and/or Officer with respect to
          the Fund's operation is 305 Madison Ave., New York, NY 10165.
     **   Designates a director who is an "interested person" of the Fund as
          defined by the Investment Company Act of 1940, as amended. Mr.
          Bradshaw is an interested person of the Fund by virtue of his current
          position with the Investment Adviser of the Fund.




================================================================================
                                                                              19
<PAGE>

DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED)

Cornerstone Strategic Value Fund, Inc. (the "Fund") operates a Dividend
Reinvestment Plan (the "Plan"), sponsored and administered by American Stock
Transfer & Trust Company (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.

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 their broker, or if a registered shareholder, the
Agent in writing at P.O. Box 922, Wall Street Station, New York, New York
10269-0560. Such written notice must be received by the Agent prior to the
record date of the Distribution or the shareholder will receive such
Distribution in shares through the Plan. 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
NYSE Alternext US 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.

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. 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.

================================================================================
20
<PAGE>




DESCRIPTION OF DIVIDEND REINVESTMENT PLAN (UNAUDITED) (CONCLUDED)

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.

The automatic reinvestment of Distributions will not relieve participants of any
federal, state or local income tax that may be payable (or required to be
withheld) on such Distributions. The Fund reserves the right to amend or
terminate the Plan. There is no direct service charge to participants with
regard to purchases in the Plan.

All correspondence concerning the Plan should be directed to the Agent at P.O.
Box 922, Wall Street Station, New York, New York 10269-0560. Certain
transactions can be performed online at www.amstock.com or by calling the toll
free number 877-864-4833.




================================================================================
                                                                              21
<PAGE>


PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

Information regarding how 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 (513) 326-3597 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 (513) 326-3597. 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.


================================================================================
22
<PAGE>

SUMMARY OF GENERAL INFORMATION (UNAUDITED)

Cornerstone Strategic Value Fund, Inc. is a closed-end, diversified investment
company whose shares trade on the NYSE Alternext US LLC. Its investment
objective is to seek long-term capital appreciation through investment primarily
in equity securities of U.S. and non-U.S. com3panies. The Fund is managed by
Cornerstone Advisors, Inc.

SHAREHOLDER INFORMATION (UNAUDITED)

The Fund is listed on the NYSE Alternext US LLC (symbol "CLM"). The previous
week's net asset value per share, market price, and related premium or discount
are published each Monday in THE WALL STREET JOURNAL under the designation
"CornstnStrat" and BARRON'S under the designation "Cornerstone Str Val". Such
information 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.
- --------------------------------------------------------------------------------



================================================================================
23
<PAGE>

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

DIRECTORS AND CORPORATE OFFICERS
Ralph W. Bradshaw              Chairman of the Board of
                                 Directors and 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,
                                 Secretary, and
                                 Assistant Treasurer
William A. Clark               Vice President

                               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
Ultimus Fund Solutions, LLC    Tait, Weller & Baker LLP
305 Madison Avenue             1818 Market Street
New York, NY 10165             Suite 2400
                               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
305 Madison Avenue
New York, NY 10165

For shareholder inquiries, registered shareholders should call (800) 937-5449.
For general inquiries, please call (513) 326-3597.


   CLM
  LISTED
ALTERNEXT


                     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 (513) 326-3597.

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,
2008 and December 31, 2007.

                                                       2008          2007
                                                     -------       -------
Audit Fees                                           $18,100       $17,200
Audit-related Fees                                        --            --
Tax Fees (1)                                           3,600         3,500
All Other Fees                                            --            --
                                                     -------       -------
Total                                                $21,700       $20,700
                                                     =======       =======

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


(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, 2007 and December 31, 2008).

(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.

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
CORNERSTONE STRATEGIC VALUE FUND, INC.
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2008


                                                            No. of
 Description                                                Shares      Value
- ------------------------------------------------------     ---------------------

EQUITY SECURITIES - 99.11%
    CLOSED-END FUNDS - 7.37%
       Adams Express Company (a)                             49,500   $  397,485
       Advent/Claymore Enhanced Growth & Income Fund         61,070      495,278
       Dreman/Claymore Dividend & Income Fund                69,100      130,599
       General American Investors Company, Inc.               3,000       52,200
       Liberty All-Star Equity Fund                         417,530    1,461,355
       Liberty All-Star Growth Fund, Inc.                   266,201      692,122
       Zweig Fund, Inc.                                     401,750    1,157,040
                                                                      ----------
                                                                       4,386,079
                                                                      ----------
    CONSUMER DISCRETIONARY - 7.31%
       Amazon.com, Inc. *                                     3,000      153,840
       Comcast Corporation, Class A                          11,555      195,048
       DIRECTV Group, Inc. (The) * ^                          4,000       91,640
       Gap, Inc. (The)                                        9,200      123,188
       Home Depot, Inc. (The)                                 2,000       46,040
       Johnson Controls, Inc.                                 3,500       63,560
       Lowe's Companies, Inc.                                 5,900      126,968
       McDonald's Corporation                                 9,900      615,681
       News Corporation, Class A                             10,000       90,900
       NIKE, Inc., Class B ^                                  6,100      311,100
       Omnicom Group Inc.                                     6,200      166,904
       Staples, Inc.                                         10,800      193,536
       Starbucks Corporation *                                2,800       26,488
       Target Corporation                                     6,800      234,804
       Time Warner Inc.                                      23,500      236,410
       TJX Companies, Inc. (The)                              3,000       61,710
       Toyota Motor Corporation ADR                           2,500      163,600
       Viacom Inc., Class B *                                 5,450      103,877
       Walt Disney Company (The)                             59,200    1,343,248
                                                                      ----------
                                                                       4,348,542
                                                                      ----------
    CONSUMER STAPLES - 12.67%
       Altria Group, Inc.                                    13,300      200,298
       Archer-Daniels-Midland Company                         3,960      114,167
       Coca-Cola Company (The)                               20,000      905,400
       Colgate-Palmolive Company                              8,900      610,006
       ConAgra Foods, Inc.                                    7,400      122,100
       CVS Caremark Corporation                              10,430      299,758
       General Mills, Inc.                                    2,500      151,875
       H.J. Heinz Company                                     4,000      150,400
       Kimberly-Clark Corporation                             2,500      131,850
       Kraft Foods Inc, Class A                              10,932      293,524
       Kroger Co. (The)                                      13,800      364,458
       PepsiCo, Inc.                                          7,100      388,867
       Philip Morris International Inc.                       7,300      317,623
       Procter & Gamble Company (The)                        26,297    1,625,680
       Sysco Corporation                                      9,800      224,812
       Walgreen Co.                                           4,800      118,416
       Wal-Mart Stores, Inc.                                 27,100    1,519,226
                                                                      ----------
                                                                       7,538,460
                                                                      ----------
<PAGE>

    ENERGY - 12.17%
       Baker Hughes Incorporated                             10,600      339,942
       Chevron Corporation                                   17,032    1,259,857
       ConocoPhillips                                        10,474      542,553
       ENSCO International Incorporated                       2,500       70,975
       Exxon Mobil Corporation                               39,000    3,113,370
       Halliburton Company                                   13,200      239,976
       Marathon Oil Corp.                                    11,500      314,640
       Noble Corporation ^                                    2,500       55,150
       Occidental Petroleum Corporation                      10,500      629,895
       Schlumberger Limited                                   8,000      338,640
       Transocean Ltd. *                                      2,500      118,125
       XTO Energy, Inc.                                       6,250      220,438
                                                                      ----------
                                                                       7,243,561
                                                                      ----------
    FINANCIALS - 11.58%
       Aflac, Inc.                                            7,000      320,880
       Allstate Corporation (The)                             6,800      222,768
       American Express Company                               6,400      118,720
       Bank of America Corporation                           16,138      227,223
       Bank of New York Mellon Corporation                    5,754      163,011
       Capital One Financial Corporation                      2,500       79,725
       Charles Schwab Corporation (The)                      22,000      355,740
       Goldman Sachs Group, Inc. (The)                        2,800      236,292
       Hudson City Bancorp, Inc.                              9,000      143,640
       JPMorgan Chase & Co.                                  47,632    1,501,837
       Marsh & McLennan Companies, Inc.                      10,000      242,700
       MetLife, Inc.                                          5,700      198,702
       Morgan Stanley                                         7,000      112,280
       PNC Financial Services Group, Inc.                     7,600      372,400
       Prudential Financial, Inc.                             4,200      127,092
       T. Rowe Price Group Inc.                              11,000      389,840
       Travelers Companies, Inc. (The)                       12,476      563,915
       U.S. Bancorp                                           9,901      247,624
       Wells Fargo & Company                                 42,900    1,264,692
                                                                      ----------
                                                                       6,889,081
                                                                      ----------
    HEALTHCARE - 14.25%
       Abbott Laboratories                                   11,200      597,744
       Aetna Inc.                                            11,000      313,500
       Amgen Inc. *                                           9,900      571,725
       Baxter International Inc.                              5,000      267,950
       Becton, Dickinson and Company                          7,900      540,281
       Biogen Idec Inc. *                                     3,000      142,890
       Bristol-Myers Squibb Company                          30,500      709,125
       Cardinal Health, Inc.                                  7,950      274,036
       Covidien Limited                                       2,599       94,188
       Eli Lilly and Company                                  4,700      189,269
       Gilead Sciences, Inc. *                                7,000      357,980
       Johnson & Johnson                                     22,900    1,370,107
<PAGE>

       McKesson Corporation                                   2,800      108,444
       Medtronic, Inc.                                       14,500      455,590
       Merck & Co. Inc.                                      17,500      532,000
       Pfizer Inc.                                           23,560      417,248
       Schering-Plough Corporation                           18,500      315,055
       Stryker Corporation                                    3,500      139,825
       UnitedHealth Group Incorporated                       19,500      518,700
       WellPoint Inc. *                                       3,500      147,455
       Wyeth                                                 11,200      420,112
                                                                      ----------
                                                                       8,483,224
                                                                      ----------
    INDUSTRIALS - 9.62%
       3M Co.                                                 4,400      253,176
       Boeing Company (The)                                   4,200      179,214
       Burlington Northern Santa Fe Corporation               5,400      408,834
       Caterpillar Inc.                                       6,800      303,756
       CSX Corporation                                        6,500      211,055
       Danaher Corporation                                    3,500      198,135
       Deere & Company ^                                      8,000      306,560
       Emerson Electric Co.                                   8,400      307,524
       FedEx Corp.                                            2,000      128,300
       General Dynamics Corporation                           3,200      184,288
       General Electric Company                              56,900      921,780
       Honeywell International Inc.                           5,000      164,150
       Illinois Tool Works Inc.                               4,800      168,240
       Lockheed Martin Corporation                            4,000      336,320
       Norfolk Southern Corporation                           5,500      258,775
       Northrop Grumman Corporation                           2,500      112,600
       Raytheon Company                                       3,000      153,120
       Union Pacific Corporation                              4,000      191,200
       United Parcel Service, Inc., Class B                   4,100      226,156
       United Technologies Corporation                        7,500      402,000
       Waste Management, Inc. ^                               9,300      308,202
                                                                      ----------
                                                                       5,723,385
                                                                      ----------
    INFORMATION TECHNOLOGY - 13.84%
       Adobe Systems Incorporated *                           4,200       89,418
       Apple, Inc. *                                          8,500      725,475
       Applied Materials, Inc.                               17,800      180,314
       Automatic Data Processing, Inc.                        4,400      173,096
       Cisco Systems, Inc. *                                 47,900      780,770
       Corning Incorporated                                  16,500      157,245
       Dell Inc. *                                            4,700       48,128
       eBay Inc. *                                            2,500       34,900
       EMC Corporation *                                     47,148      493,640
       Google Inc. *                                          3,000      922,950
       Hewlett-Packard Company                               16,900      613,301
       Intel Corporation                                     60,500      886,930
       International Business Machines Corporation           10,600      892,096
       Microsoft Corporation                                 65,200    1,267,488
       Nortel Networks Corporation *                            660          172
       Oracle Corporation *                                  26,272      465,803
       QUALCOMM Inc.                                         10,000      358,300
       Texas Instruments Incorporated                         6,400       99,328
       Yahoo! Inc. *                                          4,000       48,800
                                                                      ----------
                                                                       8,238,154
                                                                      ----------
<PAGE>

    MATERIALS - 2.49%
       Alcoa Inc.                                            20,400      229,704
       Dow Chemical Company (The)                             5,400       81,486
       E. I. du Pont de Nemours and Company                   9,500      240,350
       Freeport-McMoRan Copper & Gold, Inc.                   5,000      122,200
       International Paper Company                            7,000       82,600
       Monsanto Company                                       5,660      398,181
       Praxair, Inc.                                          5,500      326,480
                                                                      ----------
                                                                       1,481,001
                                                                      ----------
    REAL ESTATE INVESTMENT TRUST - 0.18%
       Simon Property Group, Inc.                             2,000      106,260
                                                                      ----------

    TELECOMMUNICATION SERVICES - 3.48%
       AT&T Inc.                                             48,539    1,383,362
       Verizon Communications Inc.                           20,300      688,170
                                                                      ----------
                                                                       2,071,532
                                                                      ----------
    UTILITIES - 4.15%
       American Electric Power Company, Inc.                  8,000      266,240
       Dominion Resources, Inc.                              11,200      401,408
       Duke Energy Corporation                               15,800      237,158
       Edison International                                   6,500      208,780
       Exelon Corporation                                     3,000      166,830
       FirstEnergy Corp.                                      5,000      242,900
       FPL Group, Inc.                                        4,000      201,320
       PG&E Corporation                                       5,000      193,550
       Public Service Enterprise Group Incorporated           7,000      204,190
       Southern Company (The)                                 9,400      347,800
                                                                      ----------
                                                                       2,470,176
                                                                      ----------
TOTAL EQUITY SECURITIES
     (cost - $65,972,643)                                             58,979,455
                                                                      ----------

SHORT-TERM INVESTMENTS - 2.54%
    MONEY MARKET SECURITY - 0.82%
       JPMorgan U.S. Government Money Market Fund           488,865      488,865
                                                                      ----------

                                                          Principal
                                                            Amount
                                                           (000's)
                                                         -----------
    REPURCHASE AGREEMENT - 1.72%
       J.P. Morgan Securities Inc. + ++
       (Agreement dated 12/31/2008 to be
       repurchased at $1,022,750, 0.04%,
      1/2/2009, collateralized by $1,057,368
      in United States Treasury Notes)                    $ 1,023      1,022,748
                                                                    ------------

TOTAL SHORT-TERM INVESTMENTS
     (cost - $1,511,613)                                               1,511,613
                                                                    ------------
TOTAL INVESTMENTS - 101.65%
     (cost - $67,484,256)                                             60,491,068
                                                                    ------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.65)%                         (981,505)
                                                                    ------------
NET ASSETS - 100.00%                                                $ 59,509,563
                                                                    ============

- ------------------------------
(a) Affiliated investment.  The Fund holds 0.67% (based on net assets) of Adams
Express Company.  A director of the Fund also serves as a director to such
company.  During the fiscal year ended December 31, 2008 there were no purchases
or sales of this security.
  * Non-income producing security.
  ^ Security or a portion thereof is out on loan.
ADR American Depositary Receipt
  + Stated interest rate, before rebate earned by borrower of securities on
    loan.
 ++ Represents investment purchased with collateral received for securities on
    loan.
</TABLE>
<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, 2008, the related statement of operations for the year then
ended, the statements 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 its
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, 2008, by correspondence with the custodian.
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, 2008, 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, 2008 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 24, 2009


<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
Vice President and former Director/Trustee of Cornerstone Total Return Fund,
Inc. and Cornerstone Progressive Return Fund.

(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 two other registered closed-end funds (Cornerstone
Total Return Fund, Inc. and Cornerstone Progressive Return Fund). As of December
31, 2008, the total assets of Cornerstone Total Return Fund, Inc. was $22.5
million. As of December 31, 2008, the total assets of Cornerstone Progressive
Return Fund, Inc. was $70.0 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, 2008, 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 $10,001-$50,000 and for William A. Clark it is in the range
of $10,001-$50,000.

(b) None.

<PAGE>

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 6, 2009


     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 6, 2009

By: /S/ GARY A. BENTZ
- ----------------------
Name: Gary A. Bentz
Title: Principal Financial Officer
Date: March 6, 2009
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CERT
<SEQUENCE>2
<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 6, 2009

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


<PAGE>


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

I, Gary A. Bentz, 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 6, 2009
/s/ Gary A. Bentz
- ------------------------
Gary A. Bentz
Assistant Treasurer (Principal Financial Officer)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.906CERT
<SEQUENCE>3
<FILENAME>exh906.txt
<TEXT>

                                                                   EX-99.906CERT


                           SECTION 906 CERTIFICATIONS

Ralph W. Bradshaw, Principal Executive Officer, and Gary A. Bentz,
Principal Financial Officer, of 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,
2008 (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/ GARY A. BENTZ
- ---------------------                            ------------------
Ralph W. Bradshaw                                Gary A. Bentz
Chairman and President                           Assistant Treasurer
(Principal Executive Officer)                    (Principal Financial Officer)
March 6, 2009                                    March 6, 2009








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CODE ETH
<SEQUENCE>4
<FILENAME>codeofethics.txt
<TEXT>

                       CORNERSTONE PROGRESSIVE RETURN FUND

                     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, Cornerstone Progressive
Return Fund, 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 (or Trustees, as the case may be) 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/Trustees 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/Trustees 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/Trustees 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 Progressive Return Fund, 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, 2008; 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, 2008.

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

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------




Name:  _________________

Date:  _________________

                                      -5-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exh99votereg.txt
<DESCRIPTION>VOTING
<TEXT>







                       [GRAPHIC OMITTED][GRAPHIC OMITTED]



                               RISKMETRICS Group

- --------------------------------------------------------------------------------



                   2009 U.S. PROXY VOTING GUIDELINES SUMMARY


                                December 24, 2008



- --------------------------------------------------------------------------------









Copyright (C) 2008 by RiskMetrics Group.

All rights reserved. No part of this publication may be reproduced or
transmitted in any form or by any means, electronic or mechanical, including
photocopy, recording, or any information storage and retrieval system, without
permission in writing from the publisher. Requests for permission to make copies
of any part of this work should be sent to: RiskMetrics Group Marketing
Department, One Chase Manhattan Plaza, 44th Floor, New York, NY 10005.
RiskMetrics Group is a trademark used herein under license.







         Risk Management | RiskMetrics Labs | ISS Governance Services |
                         Financial Research & Analysis

                               www.riskmetrics.com




<PAGE>

- --------------------------------------------------------------------------------
RiskMetrics Group                                            www.riskmetrics.com
- --------------------------------------------------------------------------------

                                RISKMETRICS GROUP

                    2009 U.S. PROXY VOTING GUIDELINES SUMMARY

                 EFFECTIVE FOR MEETINGS ON OR AFTER FEB. 1, 2009
                              UPDATED DEC. 24, 2008

The following is a condensed version of the proxy voting recommendations
contained in the RiskMetrics' (RMG) U.S. Proxy Voting Manual.


Table of Contents


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
   RMG Classification of Directors - 2009.....................................10
   AGE LIMITS.................................................................12
   Board Size.................................................................12
   Classification/Declassification of the Board...............................12
   Cumulative Voting..........................................................12
   Director and Officer Indemnification and Liability Protection..............13
   Establish/amend Nominee Qualifications.....................................13
   Establishment of Board Committees Shareholder Proposals....................13
   Establishment of Board Policy On Shareholder Engagement....................14
   Filling Vacancies/Removal of Directors.....................................14
   Independent Chair (Separate Chair/CEO).....................................14
   Majority of Independent Directors/Establishment of Committees..............15
   Majority Vote Shareholder Proposals........................................15
   Open Access................................................................16
   Performance/Governance Evaluation for Directors............................16
   Stock Ownership Requirements...............................................16
   Term Limits................................................................16
   Vote No Campaigns..........................................................17


3. PROXY CONTESTS.............................................................18
   Voting for Director Nominees in Contested Elections........................18
   Reimbursing Proxy Solicitation Expenses....................................18
   Confidential Voting........................................................18


4. ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES............................19
   Advance Notice Requirements for Shareholder Proposals/Nominations..........19
   Amend Bylaws Without Shareholder Consent...................................19
   Poison Pills...............................................................19
   Shareholder Ability to Act by Written Consent..............................20
   Shareholder Ability to Call Special Meetings...............................20
   Supermajority Vote Requirements............................................20

- --------------------------------------------------------------------------------
2009 RiskMetrics Group U.S. Proxy Voting Guidelines Summary                  -2-
<PAGE>

- --------------------------------------------------------------------------------
RiskMetrics Group                                            www.riskmetrics.com
- --------------------------------------------------------------------------------


5. MERGERS AND CORPORATE RESTRUCTURINGS.......................................21

OVERALL APPROACH..............................................................21
   Appraisal Rights...........................................................21
   Asset Purchases............................................................21
   Asset Sales................................................................22
   Bundled Proposals..........................................................22
   Conversion of Securities...................................................22
   Corporate Reorganization/Debt Restructuring/Prepackaged
      Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans...................22
   Formation of Holding Company...............................................23
   Going Private and Going Dark Transactions
      (Lbos and Minority Squeeze-outs)........................................23
   Joint Ventures.............................................................24
   Liquidations...............................................................24
   Mergers and Acquisitions/Issuance of Shares to Facilitate
      Merger or Acquisition...................................................24
   Private Placements/Warrants/Convertible Debentures.........................24
   Special Purpose Acquisition Corporations (Spacs)...........................25
   Spinoffs...................................................................26
   Value Maximization Shareholder Proposals...................................26


6. STATE OF INCORPORATION.....................................................27
   Control Share Acquisition Provisions.......................................27
   Control Share Cash-Out Provisions..........................................27
   Disgorgement Provisions....................................................27
   Fair Price Provisions......................................................27
   Freeze-out Provisions......................................................28
   Greenmail..................................................................28
   Reincorporation Proposals..................................................28
   Stakeholder Provisions.....................................................28
   State Antitakeover Statutes................................................28


7. CAPITAL STRUCTURE..........................................................29
   ADjustments to Par Value of Common Stock...................................29
   Common Stock Authorization.................................................29
   Dual-class Stock...........................................................29
   Issue Stock for Use With Rights Plan.......................................29
   Preemptive Rights..........................................................29
   Preferred Stock............................................................30
   Recapitalization...........................................................30
   Reverse Stock Splits.......................................................30
   Share Repurchase Programs..................................................31
   Stock Distributions: Splits and Dividends..................................31
   Tracking Stock.............................................................31


8. EXECUTIVE AND DIRECTOR COMPENSATION........................................32

EQUITY COMPENSATION PLANS.....................................................32
   Cost of Equity Plans.......................................................32
   Repricing Provisions.......................................................33
   Pay-for-Performance Disconnect.............................................33
   Three-year Burn Rate/Burn Rate Commitment..................................35
   Liberal Definition of Change-in-Control....................................37
   Poor Pay Practices.........................................................37

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RiskMetrics Group                                            www.riskmetrics.com
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SPECIFIC TREATMENT OF CERTAIN AWARD TYPES IN EQUITY PLAN EVALUATIONS:.........38
   Dividend Equivalent Rights.................................................38
   Liberal Share Recycling Provisions.........................................38
   Operating Partnership (Op) Units in Equity Plan Analysis of
      Real Estate Investment Trusts (Reits)...................................39
   Option Overhang Cost.......................................................39


OTHER COMPENSATION PROPOSALS AND POLICIES.....................................40
   401(k) Employee Benefit Plans..............................................40
   Advisory Vote On Executive Compensation (Say-on-Pay)
      Management Proposals....................................................40
   Director Compensation......................................................41
   Director Retirement Plans..................................................41
   Employee Stock Ownership Plans (ESOPs).....................................41
   Employee Stock Purchase Plans-- Qualified Plans............................41
   Employee Stock Purchase Plans-- Non-qualified Plans........................42
   Incentive Bonus Plans and Tax Deductibility Proposals
      (OBRA-related Compensation Proposals)...................................42
   Options Backdating.........................................................43
   Option Exchange Programs/repricing Options.................................43
   Stock Plans in Lieu of Cash................................................44
   Transfer Stock Option (TSO) Programs.......................................44

SHAREHOLDER PROPOSALS ON COMPENSATION.........................................45
   Advisory Vote On Executive Compensation (Say-on-Pay).......................45
   Bailout Bill/Executive Compensation Resolutions............................45
   Compensation Consultants-Disclosure of Board or Company's Utilization......45
   Disclosure/Setting Levels or Types of Compensation for
      Executives and Directors................................................45
   Golden Coffins/Executive Death Benefits....................................46
   Pay for Superior Performance...............................................46
   Performance-Based Awards...................................................46
   Pension Plan Income Accounting.............................................47
   Pre-arranged Trading Plans (10B5-1 Plans)..................................47
   Recoup Bonuses.............................................................47
   Severance Agreements for Executives/Golden Parachutes......................48
   Share Buyback Holding Periods..............................................48
   Stock Ownership or Holding Period Guidelines...............................48
   Supplemental Executive Retirement Plans (SERPs)............................49
   Termination of Employment Prior to Severance Payment and Eliminating
      Accelerated Vesting of Unvested Equity..................................49
   Tax Gross-Up Proposals.....................................................49


9. CORPORATE SOCIAL RESPONSIBILITY (CSR) ISSUES...............................50

OVERALL APPROACH..............................................................50

ANIMAL WELFARE................................................................50
   Animal Testing.............................................................50
   Animal Welfare Policies....................................................50
   Controlled Atmosphere Killing (CAK)........................................51

CONSUMER ISSUES...............................................................51
   Genetically Modified Ingredients...........................................51
   Consumer Lending...........................................................51
   Pharmaceutical Pricing, Access to Medicines, and Product Reimportation.....52
   Product Safety and Toxic/hazardous Materials...............................52
   Tobacco....................................................................53

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RiskMetrics Group                                            www.riskmetrics.com
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DIVERSITY.....................................................................53
   Board Diversity............................................................53
   Equality of Opportunity....................................................54
   Gender Identity, Sexual Orientation, and Domestic Partner Benefits.........54

CLIMATE CHANGE AND THE ENVIRONMENT............................................54
   CLimate Change.............................................................54
   Concentrated Animal Feeding Operations (CAFOs).............................54
   Energy Efficiency..........................................................55
   Facility and Operational Safety/security...................................55
   Greenhouse Gas (GHG) Emissions.............................................55
   Operations in Protected Areas..............................................55
   Recycling..................................................................56
   Renewable Energy...........................................................56

GENERAL CORPORATE ISSUES......................................................56
   Charitable Contributions...................................................56
   Csr Compensation-related Proposals.........................................56
   Health Pandemics...........................................................57
   Lobbying Expenditures/Initiatives..........................................57
   Political Contributions and Trade Associations Spending....................57

INTERNATIONAL ISSUES, LABOR ISSUES, AND HUMAN RIGHTS..........................58
   Community Social and Environmental Impact Assessments......................58
   Foreign Military Sales/Offsets.............................................58
   Internet Privacy and Censorship............................................58
   Labor and Human Rights Standards...........................................59
   Macbride Principles........................................................59
   Nuclear and Depleted Uranium Weapons.......................................59
   Operations in High Risk Markets............................................60
   Outsourcing/Offshoring.....................................................60

SUSTAINABILITY................................................................60
   Sustainability Reporting...................................................60


10. MUTUAL FUND PROXIES.......................................................61
   Election of Directors......................................................61
   Converting Closed-end Fund to Open-end Fund................................61
   Proxy Contests.............................................................61
   Investment Advisory Agreements.............................................61
   Approving New Classes or Series of Shares..................................62
   Preferred Stock Proposals..................................................62
   1940 Act Policies..........................................................62
   Changing a Fundamental Restriction to a Nonfundamental Restriction.........62
   Change Fundamental Investment Objective to Nonfundamental..................62
   Name Change Proposals......................................................62
   Change in Fund's Subclassification.........................................63
   Disposition of Assets/Termination/liquidation..............................63
   Changes to the Charter Document............................................63
   Changing the Domicile of a Fund............................................63
   Authorizing the Board to Hire and Terminate Subadvisors
      Without Shareholder Approval............................................64
   Distribution Agreements....................................................64
   Master-Feeder Structure....................................................64
   Mergers....................................................................64

SHAREHOLDER PROPOSALS FOR MUTUAL FUNDS........................................64
   Establish Director Ownership Requirement...................................64
   Reimburse Shareholder for Expenses Incurred................................65
   Terminate the Investment Advisor...........................................65

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RiskMetrics Group                                            www.riskmetrics.com
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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 or vote 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;

     o    Poor accounting practices are identified that rise to a serious level
          of concern, such as: fraud; misapplication of GAAP; and material
          weaknesses identified in Section 404 disclosures; or

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     o    Fees for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

     o    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.

In circumstances where "Other" fees include fees related to significant one-time
capital structure events: initial public offerings, bankruptcy emergence, and
spin-offs; and the company makes public disclosure of the amount and nature of
those fees which are an exception to the standard "non-audit fee" category, then
such fees may be excluded from the non-audit fees considered in determining the
ratio of non-audit to audit/audit-related fees/tax compliance and preparation
for purposes of determining whether non-audit fees are excessive.

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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RiskMetrics Group                                            www.riskmetrics.com
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2. BOARD OF DIRECTORS:

VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS Vote on director nominees
should be determined on a CASE-BY-CASE basis.

Vote AGAINST or WITHHOLD(1) 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, or funeral obligations. If the company
          provides meaningful public or private disclosure explaining the
          director's absences, evaluate the information on a CASE-BY-CASE basis
          taking into account the following factors:

          -    Degree to which absences were due to an unavoidable conflict;

          -    Pattern of absenteeism; and

          -    Other extraordinary circumstances underlying the director's
               absence;

     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.

Vote AGAINST or WITHHOLD from all nominees of the 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, vote
          against/withhold from all incumbent directors;

     o    The company's poison pill has a dead-hand or modified dead-hand
          feature. Vote against/withhold every year until this feature is
          removed;

     o    The board adopts or renews a poison pill without shareholder approval,
          does not commit to putting it to shareholder vote within 12 months of
          adoption (or in the case of an newly public company, does not commit
          to put the pill to a shareholder vote within 12 months following the
          IPO), or reneges on a commitment to put the pill to a vote, and has
          not yet received a withhold/against 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 (a
          management proposal with other than a FOR recommendation by management
          will not be considered as sufficient action taken);

     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 (a management proposal with other than a FOR
          recommendation by management will not be considered as sufficient
          action taken);

     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/against votes of the shares cast and the company has
          failed to address the underlying issue(s) that caused the high
          withhold/against vote;


- ---------------------

(1) In general, companies with a plurality vote standard use "Withhold" as the
valid contrary vote option in director elections; companies with a majority vote
standard use "Against". However, it will vary by company and the proxy must be
checked to determine the valid contrary vote option for the particular company.

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RiskMetrics Group                                            www.riskmetrics.com
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     o    The board is classified, and a continuing director responsible for a
          problematic governance issue at the board/committee level that would
          warrant a withhold/against vote recommendation is not up for election-
          any or all appropriate nominees (except new) may be held accountable;

     o    The board lacks accountability and oversight, coupled with sustained
          poor performance relative to peers. Sustained poor performance is
          measured by one- and three-year total shareholder returns in the
          bottom half of a company's four-digit GICS industry group (Russell
          3000 companies only).

Vote AGAINST or 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;

     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.

Vote AGAINST or WITHHOLD from the members of the Audit Committee if:

     o    The non-audit fees paid to the auditor are excessive;

     o    The company receives an adverse opinion on the company's financial
          statements from its auditor; or

     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.

Vote CASE-by-CASE on members of the Audit Committee and/or the full board if
poor accounting practices, which rise to a level of serious concern, such as:
fraud; misapplication of GAAP; and material weaknesses identified in Section 404
disclosures, are identified.

Examine the severity, breadth, chronological sequence and duration, as well as
the company's efforts at remediation or corrective actions in determining
whether negative vote recommendations are warranted against the members of the
Audit Committee who are responsible for the poor accounting practices, or the
entire board.

Vote AGAINST or 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);

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.

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

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2009 RiskMetrics Group U.S. Proxy Voting Guidelines Summary                  -9-
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RiskMetrics Group                                            www.riskmetrics.com
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                                      *****


RMG CLASSIFICATION OF DIRECTORS - 2009
- --------------------------------------------------------------------------------
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(3,4);

     o    Former CEO of an acquired company within the past five years4;

     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;5

     o    Former executive(2) of the company, an affiliate or an acquired firm
          within the past five years;

     o    Executive2 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(2), former executive, general or limited partner of a joint
          venture or partnership with the company;

     o    Relative(6) of a current Section 16 officer of company or its
          affiliates;

     o    Relative(6) 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(6) of former Section 16 officer, of company or its affiliate
          within the last five years;

     o    Currently provides (or a relative(6) provides) professional
          services(7) 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(6) is employed by) a significant customer
          or supplier(8);

     o    Has (or a relative(6) has) any transactional relationship with the
          company or its affiliates excluding investments in the company through
          a private placement; (8)

     o    Any material financial tie or other related party transactional
          relationship to the company;

     o    Party to a voting agreement (9) to vote in line with management on
          proposals being brought to shareholder vote;

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     o    Has (or a relative6 has) an interlocking relationship as defined by
          the SEC involving members of the board of directors or its
          Compensation and Stock Option Committee; (10)

     o    Founder (11) of the company but not currently an employee;

     o    Is (or a relative6 is) a trustee, director or employee of a charitable
          or non-profit organization that receives grants or endowments(8) from
          the company or its affiliates(1).

 INDEPENDENT OUTSIDE DIRECTOR (IO)

     o    No material(12) connection to the company other than a board seat.


- --------------------------------------------------------------------------------

FOOTNOTES:

(1) "Affiliate" includes a subsidiary, sibling company, or parent company. RMG
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). A non-employee director serving as
an officer due to statutory requirements (e.g. corporate secretary) will be
classified as an Affiliated Outsider. If the company provides additional
disclosure that the director is not receiving additional compensation for
serving in that capacity, then the director will be classified as an Independent
Outsider.

(3) Includes any former CEO of the company prior to the company's initial public
offering (IPO).

(4) When there is a former CEO of a special purpose acquisition company (SPAC)
serving on the board of an acquired company, RMG will generally classify such
directors as independent unless determined otherwise taking into account the
following factors: the applicable listing standards determination of such
director's independence; any operating ties to the firm; and if there are any
other conflicting relationships or related party transactions.

(5) RMG 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. RMG will also consider if a formal search process was
underway for a full-time CEO at the time.

(6) "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.

(7) 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.

(8) If the company makes or receives annual payments exceeding the greater of
$200,000 or 5 percent of the recipient's gross revenues. (The recipient is the
party receiving the financial proceeds from the transaction).

- --------------------------------------------------------------------------------

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(9) Dissident directors who are parties to a voting agreement pursuant to a
settlement arrangement will generally be classified as independent unless
determined otherwise, taking into account the following factors: the terms of
the agreement; the duration of the standstill provision in the agreement; the
limitations and requirements of actions that are agreed upon; if the dissident
director nominee(s) is subject to the standstill; and if there any conflicting
relationships or related party transactions.

(10) 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).

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

(12) For purposes of RMG's 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:

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RiskMetrics Group                                            www.riskmetrics.com
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     o    The company has proxy access or a similar structure(2) to allow
          shareholders to nominate directors to the company's ballot; and

     o    The company has adopted a majority vote standard, with a carve-out for
          plurality voting in situations where there are more nominees than
          seats, and a director resignation policy to address failed elections.

Vote FOR proposals for cumulative voting at controlled companies (insider voting
power > 50%).

                                      *****


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.

                                      *****


ESTABLISHMENT OF BOARD COMMITTEES SHAREHOLDER PROPOSALS
Generally vote AGAINST shareholder proposals to establish a new standing board
committee, as such proposals seek a specific oversight mechanism/structure that
potentially limits a company's flexibility to determine an appropriate oversight
mechanism for itself. However, the following factors will be considered:


- --------------
(2) Similar structure" would be a structure that allows shareholders to nominate
candidates who the company will include on the management ballot IN ADDITION TO
management's nominees, and their bios are included in management's proxy.


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     o    Existing oversight mechanisms (including current committee structure)
          regarding the issue for which board oversight is sought;

     o    Level of disclosure regarding the issue for which board oversight is
          sought;

     o    Company performance related to the issue for which board oversight is
          sought;

     o    Board committee structure compared to that of other companies in its
          industry sector; and/or

     o    The scope and structure of the proposal.

                                      *****


ESTABLISHMENT OF BOARD POLICY ON SHAREHOLDER ENGAGEMENT
Generally vote FOR shareholders proposals requesting that the board establish an
internal mechanism/process, which may include a committee, in order to improve
communications between directors and shareholders, unless the company has the
following features, as appropriate:

     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 director, according
          to RMG's definition. This individual must be made available for
          periodic consultation and direct communication with major
          shareholders.

                                      *****


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.

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 that the chairman's position
be filled by an independent director, unless the company satisfies ALL of the
following criteria:

The company maintains the following counterbalancing governance structure:

     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.) The duties should
          include, but are not limited to, the following:

          -    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;

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          -    approves information sent to the board;

          -    approves meeting agendas for the board;

          -    approves meeting 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    A company in the Russell 3000 universe must not have exhibited
          sustained poor total shareholder return (TSR) performance, defined as
          one- and three-year TSR in the bottom half of the company's four-digit
          GICS industry group (using Russell 3000 companies only), unless there
          has been a change in the Chairman/CEO position within that time. For
          companies not in the Russell 3000 universe, the company must not have
          underperformed both its peers and index on the basis of both one-year
          and three-year total shareholder returns, unless there has been a
          change in the Chairman/CEO position within that time;

     o    The company does not have any problematic governance or management
          issues, examples of which include, but are not limited to:

          -    Egregious compensation practices;

          -    Multiple related-party transactions or other issues putting
               director independence at risk;

          -    Corporate and/or management scandals;

          -    Excessive problematic corporate governance provisions; or

          -    Flagrant actions by management or the board with potential or
               realized negative impacts on shareholders.

                                      *****


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
RMG's 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.

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.

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                                      *****


OPEN ACCESS
Vote shareholder proposals asking for open or proxy access on a CASE-BY-CASE
basis, taking into account:

o        The ownership threshold proposed in the resolution;

o The proponent's rationale for the proposal at the targeted company in terms of
board and director conduct.

                                      *****


PERFORMANCE/GOVERNANCE EVALUATION FOR DIRECTORS
     o    Vote WITHHOLD/AGAINST on all director nominees if the board lacks
          accountability and oversight, coupled with sustained poor performance
          relative to peers. Sustained poor performance is measured by one- and
          three-year total shareholder returns in the bottom half of a company's
          four-digit GICS industry group (Russell 3000 companies only).

Evaluate board accountability and oversight at companies that demonstrate
sustained poor performance. Problematic provisions include but are not limited
to:

     o    a classified board structure;

     o    a supermajority vote requirement;

     o    majority vote standard for director elections with no carve out for
          contested elections;

     o    the inability for shareholders to call special meetings;

     o    the inability for shareholders to act by written consent;

     o    a dual-class structure; and/or

     o    a non-shareholder approved poison pill.

If a company exhibits sustained poor performance coupled with a lack of board
accountability and oversight, also take into consideration the company's
five-year total shareholder return and five-year operational metrics in the
evaluation.

                                      *****


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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                                      *****


VOTE NO CAMPAIGNS
In cases where companies are targeted in connection with public "vote no"
campaigns, evaluate director nominees under the existing governance policies for
voting on director nominees in uncontested elections. In issuing vote
recommendations, consider arguments submitted by shareholders and other
publicly-available information.

                                      *****



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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 ositions.

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]


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.

Generally vote FOR shareholder proposals calling for the reimbursement of
reasonable costs incurred in connection with nominating one or more candidates
in a contested election where the following apply:

     o    The election of fewer than 50% of the directors to be elected is
          contested in the election;

     o    One or more of the dissident's candidates is elected;

     o    Shareholders are not permitted to cumulate their votes for directors;
          and

     o    The election occurred, and the expenses were incurred, after the
          adoption of this bylaw.

                                      *****


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 basis on advance notice proposals, giving support to those
proposals which allow shareholders to submit proposals/nominations as close to
the meeting date as reasonably possible and within the broadest window possible,
recognizing the need to allow sufficient notice for company, regulatory and
shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/
nominations must not be more than 60 days prior to the meeting, with a submittal
window of at least 30 days prior to the deadline. The submittal window is the
period under which a shareholder must file his proposal/nominations prior to the
deadline.

In general, support additional efforts by companies to ensure full disclosure in
regard to a proponent's economic and voting position in the company so long as
the informational requirements are reasonable and aimed at providing
shareholders with the necessary information to review such proposal.

                                      *****


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 12 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 12 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;

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     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, 10 percent of the shares may call a special meeting or seek
          a written consent to vote on rescinding the pill.

In addition, the rationale for adopting the pill should be thoroughly explained
by the company. In examining the request for the pill, take into consideration
the company's existing governance structure, including: board independence,
existing takeover defenses, and any problematic governance concerns.

For management proposals to adopt a poison pill for the stated purpose of
preserving a company's net operating losses ("NOL pills"), the following factors
should be considered:

     o    the trigger (NOL pills generally have a trigger slightly below 5%);

     o    the value of the NOLs;

     o    the term;

     o    shareholder protection mechanisms (sunset provision, causing
          expiration of the pill upon exhaustion or expiration of NOLs); and

     o    other factors that may be applicable.

In addition, vote WITHHOLD/AGAINST the entire board of directors, (except new
nominees, who should be considered on a CASE-by-CASE basis) if the board adopts
or renews a poison pill without shareholder approval, does not commit to putting
it to a shareholder vote within 12 months of adoption (or in the case of a newly
public company, does not commit to put the pill to a shareholder vote within 12
months following the IPO), or reneges on a commitment to put the pill to a vote,
and has not yet received a withhold recommendation for this issue.

                                      *****


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 "RMG
          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;

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     o    Non-completion risk.

                                      *****


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.

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]


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.

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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.

                                      *****


GOING PRIVATE AND GOING DARK TRANSACTIONS (LBOS AND MINORITY SQUEEZE-OUTS) 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    Balanced interests of continuing vs. cashed-out shareholders, taking
          into account the following:

          -    Are all shareholders able to participate in the transaction?

          -    Will there be a liquid market for remaining shareholders
               following the transaction?

          -    Does the company have strong corporate governance?

          -    Will insiders reap the gains of control following the proposed
               transaction?

          -    Does the state of incorporation have laws requiring continued
               reporting that may benefit shareholders?

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                                      *****


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:

1. Dilution to existing shareholders' position.

          -    The amount and timing of shareholder ownership dilution should be
               weighed against the needs and proposed shareholder benefits of
               the capital infusion.

2.       Terms of the offer - discount/premium in purchase price to investor,
         including any fairness opinion; conversion features; termination
         penalties; exit strategy.

          -    The terms of the offer should be weighed against the alternatives
               of the company and in light of company's financial issues.

          -    When evaluating the magnitude of a private placement discount or
               premium, RiskMetrics will consider whether it is affected by
               liquidity, due diligence, control and monitoring issues, capital
               scarcity, information asymmetry and anticipation of future
               performance.

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3. Financial issues include but are not limited to examining the following:

          -    company's financial situation;

          -    degree of need for capital;

          -    use of proceeds;

          -    effect of the financing on the company's cost of capital;

          -    current and proposed cash burn rate; and

          -    going concern viability and the state of the capital and credit
               markets.

4.       Management's efforts to pursue alternatives and whether the company
         engaged in a process to evaluate alternatives. A fair, unconstrained
         process helps to ensure the best price for shareholders. Financing
         alternatives can include joint ventures, partnership, merger or sale of
         part or all of the company.

5.       Control issues:

          -    change in management;

          -    change in control,

          -    guaranteed board and committee seats;

          -    standstill provisions;

          -    voting agreements;

          -    veto power over certain corporate actions.

Minority versus majority ownership and corresponding minority discount or
majority control premium

6.       Conflicts of interest

          -    Conflicts of interest should be viewed from the perspective of
               the company and the investor.

          -    Were the terms of the transaction negotiated at arm's-length? Are
               managerial incentives aligned with shareholder interests?

7.       Market reaction

          -    The market's response to the proposed deal. A negative market
               reaction is a cause for concern. Market reaction may be addressed
               by analyzing the one day impact on the unaffected stock price.

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

                                      *****


SPECIAL PURPOSE ACQUISITION CORPORATIONS (SPACS)
Vote on a CASE-BY-CASE basis on SPAC mergers and acquisitions taking into
account the following:

     o    Valuation - Is the value being paid by the SPAC reasonable? SPACs
          generally lack an independent fairness opinion and the financials on
          the target may be limited. Compare the conversion price with the
          intrinsic value of the target company provided in the fairness
          opinion. Also, evaluate the proportionate value of the combined entity
          attributable to the SPAC IPO shareholders versus the pre-merger value
          of SPAC. Additionally, a private company discount may be applied to
          the target, if it is a private entity.

     o    Market reaction - How has the market responded to the proposed deal? A
          negative market reaction may be a cause for concern. Market reaction
          may be addressed by analyzing the one-day impact on the unaffected
          stock price.

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     o    Deal timing - A main driver for most transactions is that the SPAC
          charter typically requires the deal to be complete within 18 to 24
          months, or the SPAC is to be liquidated. Evaluate the valuation,
          market reaction, and potential conflicts of interest for deals that
          are announced close to the liquidation date.

     o    Negotiations and process - What was the process undertaken to identify
          potential target companies within specified industry or location
          specified in charter? Consider the background of the sponsors.

     o    Conflicts of interest - How are sponsors benefiting from the
          transaction compared to IPO shareholders? Potential conflicts could
          arise if a fairness opinion is issued by the insiders to qualify the
          deal rather than a third party or if management is encouraged to pay a
          higher price for the target because of an 80% rule (the charter
          requires that the fair market value of the target is at least equal to
          80% of net assets of the SPAC). Also, there may be sense of urgency by
          the management team of the SPAC to close the deal since its charter
          typically requires a transaction to be completed within the 18-24
          month timeframe.

     o    Voting agreements - Are the sponsors entering into enter into any
          voting agreements/ tender offers with shareholders who are likely to
          vote AGAINST the proposed merger or exercise conversion rights?

     o    Governance - What is the impact of having the SPAC CEO or founder on
          key committees following the proposed merger?


                                     *****


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 SHAREHOLDER 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.

                                      *****

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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.

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
Management or shareholder proposals to change a company's state of incorporation
should be evaluated on a CASE-BY-CASE basis, giving consideration to both
financial and corporate governance concerns including the following:

     o    Reasons for reincorporation;

     o    Comparison of company's governance practices and provisions prior to
          and following the reincorporation; and

     o    Comparison of corporation laws of original state and destination state

Vote FOR reincorporation 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,
freeze-out 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. Take into account company-specific factors which
include, at a minimum, the following:

     o    Specific reasons/ rationale for the proposed increase;

     o    The dilutive impact of the request as determined through an allowable
          cap generated by RiskMetrics' quantitative model;

     o    The board's governance structure and practices; and

     o    Risks to shareholders of not approving the request.

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.


                                      *****


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.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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PREFERRED STOCK
Vote CASE-BY-CASE on proposals to increase the number of shares of preferred
stock authorized for issuance. Take into account company-specific factors which
include, at a minimum, the following:

     o    Specific reasons/ rationale for the proposed increase;

     o    The dilutive impact of the request as determined through an allowable
          cap generated by RiskMetrics' quantitative model;

     o    The board's governance structure and practices; and

     o    Risks to shareholders of not approving the request.

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).

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.

                                      *****


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.

                                      *****

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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 RMG.

                                      *****


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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RiskMetrics Group                                            www.riskmetrics.com
- --------------------------------------------------------------------------------


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/stock
          appreciate rights (SARs) without prior shareholder approval;

     o    The CEO is a participant in the proposed equity-based compensation
          plan and there is a disconnect between CEO pay and the company's
          performance where over 50 percent of the year-over-year increase is
          attributed to equity awards;

     o    The company's three year burn rate exceeds the greater of 2% and the
          mean plus one standard deviation of its industry group;

     o    The plan provides for the acceleration of vesting of equity awards
          even though an actual change in control may not occur (e.g., upon
          shareholder approval of a transaction or the announcement of a tender
          offer); or

     o    The plan is a vehicle for poor pay practices.

Each of these factors is 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.

For the Dec. 1, 2008, March 1, June 1 and Sept. 1, 2009 quarterly data
downloads, RMG will use 400-day volatility for the shareholder value
calculation. RMG intends to revert to the 200-day volatility for the Dec. 1,
2009 and subsequent quarterly data downloads. Also, for those specified time
periods, RMG will use the 90-day average stock price at the quarterly data
download, and intends to revert to the 200-day average stock price for the Dec
1, 2009 and subsequent quarterly data downloads.

                                      *****

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REPRICING PROVISIONS
Vote AGAINST plans that expressly permit the repricing or exchange of underwater
stock options without prior shareholder approval, even if the cost of the plan
is reasonable. Also, vote AGAINST OR WITHHOLD from members of the Compensation
Committee who approved and/or implemented a repricing or an option exchange
program, by 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 and/or WITHHOLD votes from the Compensation
Committee members if:

     o    There is a pay for performance disconnect between the CEO's pay and
          company's stock performance;

     o    The main source of the pay increase (over half) is equity-based; and

     o    The CEO is a participant of the equity proposal.

A pay for performance disconnect is defined as an increase in CEO's total
compensation and the company's one-year and three-year total shareholder returns
are in the bottom half of its industry group (i.e., four-digit GICS - Global
Industry Classification Group). CEO total compensation is defined as the sum of
base salary, bonus, non-equity incentives, grant date full value of stock awards
and options, target value of performance shares/units, change in pension value
and nonqualified deferred compensation earnings, and all other compensation.

The pay for performance policy first identifies companies that are in the bottom
half of each four-digit GICS coupled with an increase in total direct
compensation for the CEO. Examine the Compensation Discussion & Analysis
("CD&A") to understand the source of increase. Is the increase attributed to
performance-based compensation such as performance-based stock awards with
pre-established performance measures or time-based restricted stock? The CD&A
should provide enlightening and meaningful disclosure with respect to the
committee decisions on executive pay and the underlying rationale for increases
in pay despite poor stock performance. Newly appointed CEOs that have not been
with the company for the past two complete fiscal years are exempted from the
policy. Please note that this is a case-by-case analysis that requires detailed
examination of the company's CD&A.

To potentially mitigate the withhold vote recommendations, consider whether a
company evidenced a commitment to pay for performance principles by (1) stating
that the compensation committee has reviewed all components of CEO compensation,
(2) providing a tally sheet under various termination scenarios, (3) disclosing
performance measures and goals for all performance-based compensation, (4)
committing to grant at least 50 percent of equity awards where the grant or
vesting is tied to pre-established performance conditions, and (6) committing
that the compensation committee has the sole authority to hire or fire
compensation consultants. To provide complete transparency to shareholders, the
commitment must be publicly disclosed.

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:

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     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 RMG's
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
          to be made. The performance-based equity awards do not refer to
          non-qualified stock options(3) or performance-accelerated grants.(4)
          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.


- ------------------
(3) 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.

(4) 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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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 compensationconsultants. 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 2 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.

The annual burn rate is calculated as follows:

Annual Burn rate = (# of options granted + # of full value shares awarded *
Multiplier) / Weighted Average common shares outstanding)

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 AGAINST or WITHHOLD
from the compensation committee.

For the Dec. 1, 2008, March 1, June 1 and Sept. 1, 2009 quarterly data
downloads, RMG will use 400-day volatility for the shareholder value transfer
and burn rate polices. RMG intends to revert to the 200-day volatility for the
Dec. 1, 2009 and subsequent quarterly data downloads.

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<PAGE>

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<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

BURN RATE TABLE FOR 2009

                                                       RUSSELL 3000                            NON-RUSSELL 3000
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
                                                               STANDARD        MEAN                      MEAN         MEAN
  GICS         DESCRIPTION                             MEAN    DEVIATION      +STDEV            MEAN   DEVIATION     +STDEV
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    1010       Energy                                  1.75%      1.35%         3.09%          2.41%     2.75%         5.15%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    1510       Materials                               1.22%      0.91%         2.14%          2.17%     1.63%         3.80%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2010       Capital Goods                           1.69%      1.83%         3.52%          2.71%     2.44%         5.15%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2020       Commercial Services & Supplies          2.21%      1.79%         4.01%          2.50%     2.19%         4.69%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2030       Transportation                          1.82%      1.36%         3.18%          1.86%     1.59%         3.45%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2510       Automobiles & Components                1.86%      1.19%         3.05%          1.86%     1.19%         3.05%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2520       Consumer Durables & Apparel              2.06      1.38%         3.44%          2.33%     2.46%         4.79%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2530       Consumer Services                       2.11%      1.21%         3.32%          2.75%     2.39%         5.14%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2540       Media                                   1.87%      1.38%         3.25%          3.16%     2.98%         6.13%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    2550       Retailing                               1.84%      1.27%         3.12%          2.79%     1.83%         4.62%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
 3010, 3020,   Consumer Staples                        1.77%      1.35%         3.12%          2.39%     2.06%         4.45%
    3030
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    3510       Health Care Equipment & Services        2.72%      1.67%         4.39%          3.63%     3.01%         6.64%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    3520       Pharmaceuticals & Biotechnology         3.40%      2.36%         5.76%          4.98%     4.49%         9.46%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4010       Banks                                   1.20%      0.97%         2.18%          1.40%     1.50%         2.89%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4020       Diversified Financials                  2.94%      2.62%         5.56%          5.12%     5.93%         11.05%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4030       Insurance                               1.23%      0.98%         2.22%          2.49%     2.22%         4.71%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4040       Real Estate                             1.07%      0.99%         2.05%          1.33%     1.52%         2.85%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4510       Software & Services                     4.05%      2.72%         6.76%          5.57%     4.56%         10.12%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    4520       Technology Hardware & Equipment         3.24%      2.29%         5.52%          3.54%     2.76%         6.30%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
               Semiconductors & Semiconductor
    4530       Equipment                               3.69%      2.02%         5.72%          4.95%     2.84%         7.79%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    5010       Telecommunication Services              2.16%      1.57%         3.74%          2.92%     3.00%         5.92%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
    5510       Utilities                               0.81%      0.83%         1.64%          0.87%     1.00%         1.86%
- -------------- --------------------------------------- ------- ------------ ---------------    ------- ----------- ---------------
</TABLE>


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

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

- ------------------------------------------------------- -------------------------------------------------------------------
STOCK PRICE VOLATILITY                                    MULTIPLIER
- ------------------------------------------------------- -------------------------------------------------------------------
54.6% and higher                                        1 full-value award will count as 1.5 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
36.1% or higher and less than 54.6%                     1 full-value award will count as 2.0 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
24.9% or higher and less than 36.1%                     1 full-value award will count as 2.5 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
16.5% or higher and less than 24.9%                     1 full-value award will count as 3.0 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
7.9% or higher and less than 16.5%                      1 full-value award will count as 3.5 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
Less than 7.9%                                          1 full-value award will count as 4.0 option shares
- ------------------------------------------------------- -------------------------------------------------------------------
</TABLE>

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2009 RiskMetrics Group U.S. Proxy Voting Guidelines Summary                 -36-
<PAGE>

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RiskMetrics Group                                            www.riskmetrics.com
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                                      *****


LIBERAL DEFINITION OF CHANGE-IN-CONTROL
Generally vote AGAINST equity plans if the plan provides for the acceleration of
vesting of equity awards even though an actual change in control may not occur.
Examples of such a definition could include, but are not limited to,
announcement or commencement of a tender offer, provisions for acceleration upon
a "potential" takeover, shareholder approval of a merger or other transactions,
or similar language.

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]


POOR PAY PRACTICES
Vote AGAINST or WITHHOLD from compensation committee members, CEO, and
potentially the entire board, if the company has poor compensation practices.
Vote AGAINST equity plans if the plan is a vehicle for poor compensation
practices.

The following practices, while not exhaustive, are examples of poor compensation
practices that may warrant withhold vote recommendations:

     o    Egregious employment contracts:

          -    Contracts containing multi-year guarantees for salary increases,
               bonuses and equity compensation;

     o    Excessive perks/tax reimbursements:

          -    Overly generous perquisites, which may include, but are not
               limited to the following: personal use of corporate aircraft,
               personal security systems maintenance and/or installation, car
               allowances;

          -    Reimbursement of income taxes on executive perquisites or other
               payments;

          -    Perquisites for former executives, such as car allowances,
               personal use of corporate aircraft or other inappropriate
               arrangements;

     o    Abnormally large bonus payouts without justifiable performance linkage
          or proper disclosure:

          -    Performance metrics that are changed, 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:

          -    Inclusion of additional years of service not worked that result
               in significant payouts;

          -    Inclusion of performance-based equity awards in the pension
               calculation;

     o    New CEO with overly generous new hire package:

          -    Excessive "make whole" provisions;

          -    Any of the poor pay practices listed in this policy;

     o    Excessive severance and/or change in control provisions:

          -    Inclusion of excessive change in control or severance payments,
               especially those with a multiple in excess of 3X cash pay;

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          -    Payments upon an executive's termination in connection with
               performance failure;

          -    Change in control payouts without loss of job or substantial
               diminution of job duties (single-triggered);

          -    New or materially amended employment or severance agreements that
               provide for modified single triggers, under which an executive
               may voluntarily leave for any reason and still receive the
               change-in-control severance package;

          -    Liberal change in control definition in individual contracts or
               equity plans which could result in payments to executives without
               an actual change in control occurring;

          -    New or materially amended employment or severance agreements that
               provide for an excise tax gross-up. Modified gross-ups would be
               treated in the same manner as full gross-ups;

          -    Perquisites for former executives such as car allowances,
               personal use of corporate aircraft or other inappropriate
               arrangements;

     o    Dividends or dividend equivalents paid on unvested performance shares
          or units;

     o    Poor disclosure practices:

          -    Unclear explanation of how the CEO is involved in the pay setting
               process;

          -    Retrospective performance targets and methodology not discussed;

          -    Methodology for benchmarking practices and/or peer group not
               disclosed and explained;

     o    Internal Pay Disparity:

          -    Excessive differential between CEO total pay and that of next
               highest paid named executive officer (NEO);

     o    Options backdating (covered in a separate policy);

     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.

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                                      *****


OPERATING PARTNERSHIP (OP) UNITS IN EQUITY PLAN ANALYSIS OF REAL ESTATE
INVESTMENT TRUSTS (REITS) For Real Estate Investment Trusts (REITS), include the
common shares issuable upon conversion of outstanding Operating Partnership (OP)
units in the share count for the purposes of determining: (1) market
capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares
outstanding in the burn rate analysis.

                                      *****


OPTION OVERHANG COST
Companies with sustained positive stock performance and high overhang cost
attributable to in-the-money options outstanding in excess of six years may
warrant a carve-out of these options from the overhang as long as the dilution
attributable to the new share request is reasonable and the company exhibits
sound compensation practices. Consider, on a CASE-BY-CASE basis, a carve-out of
a portion of cost attributable to overhang, considering the following criteria:

     o    PERFORMANCE: Companies with sustained positive stock performance will
          merit greater scrutiny. Five-year total shareholder return (TSR),
          year-over-year performance, and peer performance could play a
          significant role in this determination.

     o    OVERHANG DISCLOSURE: Assess whether optionees have held in-the-money
          options for a prolonged period (thus reflecting their confidence in
          the prospects of the company). Note that this assessment would require
          additional disclosure regarding a company's overhang. Specifically,
          the following disclosure would be required:

          -    The number of in-the-money options outstanding in excess of six
               or more years with a corresponding weighted average exercise
               price and weighted average contractual remaining term;

          -    The number of all options outstanding less than six years and
               underwater options outstanding in excess of six years with a
               corresponding weighted average exercise price and weighted
               average contractual remaining term;

          -    The general vesting provisions of option grants; and

          -    The distribution of outstanding option grants with respect to the
               named executive officers;

     o    DILUTION: Calculate the expected duration of the new share request in
          addition to all shares currently available for grant under the equity
          compensation program, based on the company's three-year average burn
          rate (or a burn-rate commitment that the company makes for future
          years). The expected duration will be calculated by multiplying the
          company's unadjusted (options and full-value awards accounted on a
          one-for-one basis) three-year average burn rate by the most recent
          fiscal year's weighted average shares outstanding (as used in the
          company's calculation of basic EPS) and divide the sum of the new
          share request and all available shares under the company's equity
          compensation program by the product. For example, an expected duration
          in excess of five years could be considered problematic; and

     o    COMPENSATION PRACTICES: An evaluation of overall practices could
          include: (1) stock option repricing provisions, (2) high concentration
          ratios (of grants to top executives), or (3) additional practices
          outlined in the Poor Pay Practices policy.

                                      *****

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OTHER COMPENSATION PROPOSALS AND POLICIES


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

                                      *****


ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY) MANAGEMENT PROPOSALS
Vote CASE-BY-CASE on management proposals for an advisory vote on executive
compensation. Vote AGAINST these resolutions in cases where boards have failed
to demonstrate good stewardship of investors' interests regarding executive
compensation practices. The following principles and factors should be
considered:

1. The following FIVE GLOBAL PRINCIPLES apply to all markets:

     o    Maintain appropriate pay-for-performance alignment with emphasis on
          long-term shareholder value: This principle encompasses overall
          executive pay practices, which must be designed to attract, retain,
          and appropriately motivate the key employees who drive shareholder
          value creation over the long term. It will take into consideration,
          among other factors: the linkage between pay and performance; the mix
          between fixed and variable pay; performance goals; and equity-based
          plan costs;

     o    Avoid arrangements that risk "pay for failure": This principle
          addresses the use and appropriateness of long or indefinite contracts,
          excessive severance packages, and guaranteed compensation;

     o    Maintain an independent and effective compensation committee: This
          principle promotes oversight of executive pay programs by directors
          with appropriate skills, knowledge, experience, and a sound process
          for compensation decision-making (e.g., including access to
          independent expertise and advice when needed);

     o    Provide shareholders with clear, comprehensive compensation
          disclosures: This principle underscores the importance of informative
          and timely disclosures that enable shareholders to evaluate executive
          pay practices fully and fairly;

     o    Avoid inappropriate pay to non-executive directors: This principle
          recognizes the interests of shareholders in ensuring that compensation
          to outside directors does not compromise their independence and
          ability to make appropriate judgments in overseeing managers' pay and
          performance. At the market level, it may incorporate a variety of
          generally accepted best practices.

2. For U.S. companies, vote CASE-BY-CASE considering the following factors in
the context of each company's specific circumstances and the board's disclosed
rationale for its practices:

     RELATIVE CONSIDERATIONS:

     o    Assessment of performance metrics relative to business strategy, as
          discussed and explained in the CD & A;

     o    Evaluation of peer groups used to set target pay or award
          opportunities;

     o    Alignment of company performance and executive pay trends over time
          (e.g., performance down: pay down);

     o    Assessment of disparity between total pay of the CEO and other Named
          Executive Officers (NEOs).

     DESIGN CONSIDERATIONS:

     o    Balance of fixed versus performance-driven pay;

     o    Assessment of excessive practices with respect to perks, severance
          packages, supplemental executive pension plans, and burn rates.

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     COMMUNICATION CONSIDERATIONS:

     o    Evaluation of information and board rationale provided in CD&A about
          how compensation is determined (e.g., why certain elements and pay
          targets are used, and specific incentive plan goals, especially
          retrospective goals);

     o    Assessment of board's responsiveness to investor input and engagement
          on compensation issues (e.g., in responding to majority-supported
          shareholder proposals on executive pay topics).

                                      *****


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 will
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

          -    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:

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     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.

                                      *****


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) of the
Internal Revenue Code.

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.

Votes to amend existing plans to increase shares reserved and to qualify for
favorable tax treatment under the provisions of Section 162(m) are considered on
a CASE-BY-CASE basis using a proprietary, quantitative model developed by RMG.

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.

Vote AGAINST proposals if the compensation committee does not fully consist of
independent outsiders, as defined in RMG's classification of director
independence.

                                      *****

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OPTIONS BACKDATING
In cases where a company has practiced options backdating, vote AGAINST or
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. Vote AGAINST or 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 total cost of equity plans and
its 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 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.

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                                      *****


STOCK PLANS IN LIEU OF CASH
Vote CASE-by-CASE on plans that 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 that 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, RMG will not make any adjustments to carve out the
in-lieu-of cash compensation.

                                      *****


TRANSFER STOCK OPTION (TSO) PROGRAMS
One-time Transfers: Vote AGAINST or WITHHOLD from compensation committee members
if they fail to submit one-time transfers 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 to a third-party institution and whether the events leading up
to a 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.

Ongoing TSO program: Vote AGAINST equity plan proposals if the details of
ongoing TSO programs are not provided to shareholders. Since TSOs will be one of
the award types under a stock plan, the ongoing TSO program, structure and
mechanics must be disclosed to shareholders. The specific criteria to be
considered in evaluating these proposals include, but not limited, to the
following:

     o    Eligibility;

     o    Vesting;

     o    Bid-price;

     o    Term of options;

     o    Cost of the program and impact of the TSOs on company's total option
          expense

     o    Option repricing policy.

Amendments to existing plans that allow for introduction of transferability of
stock options should make clear that only options granted post-amendment shall
be transferable.

                                      *****

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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.

                                      *****


BAILOUT BILL/EXECUTIVE COMPENSATION RESOLUTIONS
Vote on a CASE-BY-CASE on shareholder proposals that call for the imposition of
compensation limits at companies that are participating in the Capital Purchase
Program established under the Troubled Asset Relief Program (TARP). Limits under
the proposal include an emphasis on performance-vested equity awards, cap on
bonus compensation, equity retention requirements, limits on retirement and
severance benefits.

While there are components of the program RMG would not support on a stand-alone
basis, we consider the proposal to be a symbolic call on companies receiving
this relief to adhere to higher compensation standards, a number of which were
proposed in earlier drafts of the legislation. As such, the following factors
will be taken into account:

     o    The absence of evidence that the Compensation Committee has taken
          substantial steps to review practices to reflect the dramatically
          different circumstances of the current environment, including the
          optics of maintaining former practices while taking tax-payer moneys.

     o    Problematic pay practices, current and past, particularly those which
          shareholders believe may have promoted a risk-taking environment that
          was ultimately in the detriment of shareholders' long-term interests.

                                      *****


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

                                      *****


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.

                                      *****

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GOLDEN COFFINS/EXECUTIVE DEATH BENEFITS
Generally vote FOR proposals calling companies to adopt a policy of obtaining
shareholder approval for any future agreements and corporate policies that could
oblige the company to make payments or awards following the death of a senior
executive in the form of unearned salary or bonuses, accelerated vesting or the
continuation in force of unvested equity grants, perquisites and other payments
or awards made in lieu of compensation. This would not apply to any benefit
programs or equity plan proposals that the broad-based employee population is
eligible.

                                      *****


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 proposal has
the following principles:

     o    Sets compensation targets for the Plan's annual and long-term
          incentive pay component s at or below the peer group median;

     o    Delivers a majority of the Plan's target long-term compensation
          through performance-vested, not simply time-vested, equity awards;

     o    Provides the strategic rationale and relative weightings of the
          financial and non-financial performance metrics or criteria used in
          the annual and performance-vested long-term incentive components of
          the plan;

     o    Establishes performance targets for each plan financial metric
          relative to the performance of the company's peer companies;

     o    Limits payment under the annual and performance-vested long-term
          incentive components of the plan to when the company's performance on
          its selected financial performance metrics exceeds peer group median
          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?

                                      *****


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:

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     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.

                                      *****


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.

                                      *****


PRE-ARRANGED TRADING PLANS (10B5-1 PLANS)
Generally vote FOR shareholder proposals calling for certain principles
regarding the use of prearranged trading plans (10b5-1 plans) for executives.
These principles include:

     o    Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed
          within two business days in a Form 8-K;

     o    Amendment or early termination of a 10b5-1 Plan is allowed only under
          extraordinary circumstances, as determined by the board;

     o    Ninety days must elapse between adoption or amendment of a 10b5-1 Plan
          and initial trading under the plan;

     o    Reports on Form 4 must identify transactions made pursuant to a 10b5-1
          Plan;

     o    An executive may not trade in company stock outside the 10b5-1 Plan.

     o    Trades under a 10b5-1 Plan must be handled by a broker who does not
          handle other securities transactions for the executive.

                                      *****


RECOUP BONUSES
Vote on a CASE-BY-CASE on proposals to recoup unearned incentive bonuses or
other incentive payments made to senior executives if it is later determined
that the figures upon which incentive compensation is earned later turn out to
have been in error. This is line with the clawback provision in the Trouble
Asset Relief Program. Many companies have adopted policies that permit
recoupment in cases where fraud, misconduct, or negligence significantly
contributed to a restatement of financial results that led to the awarding of
unearned incentive compensation. RMG will take into consideration:

     o    If the company has adopted a formal recoupment bonus policy;

     o    If the company has chronic restatement history or material financial
          problems; or


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     o    If the company's policy substantially addresses the concerns raised by
          the proponent.


                                      *****


SEVERANCE AGREEMENTS FOR EXECUTIVES/GOLDEN PARACHUTES
Vote FOR shareholder proposals requiring that golden parachutes or executive
severance agreements 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.

                                      *****


SHARE BUYBACK HOLDING PERIODS
Generally vote AGAINST shareholder proposals prohibiting executives from selling
shares of company stock during periods in which the company has announced that
it may or will be repurchasing shares of its stock. Vote FOR the proposal when
there is a pattern of abuse by executives exercising options or selling shares
during periods of share buybacks.

                                      *****


STOCK OWNERSHIP OR HOLDING PERIOD GUIDELINES
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 RMG favors stock ownership on the part of directors, the
company should determine the appropriate ownership requirement.

Vote on a CASE-BY-CASE on shareholder proposals asking companies to adopt
policies requiring Named Executive Officers to retain 75% of the shares acquired
through compensation plans while employed and/or for two years following the
termination of their employment, and to report to shareholders regarding this
policy. The following factors will be taken into account:

     o    Whether the company has any holding period, retention ratio, or
          officer ownership requirements in place. These should consist of:

          -    Rigorous stock ownership guidelines, or

          -    A holding period requirement coupled with a significant long-term
               ownership requirement, or

          -    A meaningful retention ratio,

     o    Actual officer stock ownership and the degree to which it meets or
          exceeds the proponent's suggested holding period/retention ratio or
          the company's own stock ownership or retention requirements.

     o    Problematic pay practices, current and past, which may promote a
          short-term versus a long-term focus.

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A rigorous stock ownership guideline should be at least 10x base salary for the
CEO, with the multiple declining for other executives. A meaningful retention
ratio should constitute at least 50 percent of the stock received from equity
awards (on a net proceeds basis) held on a long-term basis, such as the
executive's tenure with the company or even a few years past the executive's
termination with the company.

                                      *****


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.

                                      *****


TERMINATION OF EMPLOYMENT PRIOR TO SEVERANCE PAYMENT AND ELIMINATING ACCELERATED
VESTING OF UNVESTED EQUITY Vote on a CASE-by-CASE on shareholder proposals
seeking a policy requiring termination of employment prior to severance payment,
and eliminating accelerated vesting of unvested equity. Change-in-control
payouts without loss of job or substantial diminution of job duties
(single-triggered) are consider a poor pay practice under RMG policy, and may
even result in withheld votes from compensation committee members. The second
component of this proposal -- related to the elimination of accelerated vesting
- - requires more careful consideration. The following factors will be taken into
regarding this policy.

     o    The company's current treatment of equity in change-of-control
          situations (i.e. is it double triggered, does it allow for the
          assumption of equity by acquiring company, the treatment of
          performance shares.

     o    Current employment agreements, including potential poor pay practices
          such as gross-ups embedded in those agreements.

                                      *****


TAX GROSS-UP PROPOSALS
Generally vote FOR proposals calling for companies to adopt a policy of not
providing tax gross-up payments to executives, except in situations where
gross-ups are provided pursuant to a plan, policy, or arrangement applicable to
management employees of the company, such as a relocation or expatriate tax
equalization policy.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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9. Corporate Social Responsibility (CSR) Issues


OVERALL APPROACH

When evaluating social and environmental shareholder proposals, RMG considers
the following factors:

     o    Whether adoption of the proposal is likely to enhance or protect
          shareholder value;

     o    Whether the information requested concerns business issues that relate
          to a meaningful percentage of the company's business as measured by
          sales, assets, and earnings;

     o    The degree to which the company's stated position on the issues raised
          in the proposal could affect its reputation or sales, or leave it
          vulnerable to a boycott or selective purchasing;

     o    Whether the issues presented are more appropriately/effectively dealt
          with through governmental or company-specific action;

     o    Whether the company has already responded in some appropriate manner
          to the request embodied in the proposal;

     o    Whether the company's analysis and voting recommendation to
          shareholders are persuasive;

     o    What other companies have done in response to the issue addressed in
          the proposal;

     o    Whether the proposal itself is well framed and the cost of preparing
          the report is reasonable;

     o    Whether implementation of the proposal's request would achieve the
          proposal's objectives;

     o    Whether the subject of the proposal is best left to the discretion of
          the board;

     o    Whether the requested information is available to shareholders either
          from the company or from a publicly available source; and

     o    Whether providing this information would reveal proprietary or
          confidential information that would place the company at a competitive
          disadvantage.

                                      *****



ANIMAL WELFARE


ANIMAL TESTING
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 commonly accepted and used at industry peers; or

     o    There are recent, significant fines or litigation related to the
          company's treatment of animals.

                                      *****


ANIMAL WELFARE POLICIES
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 industry peers; and

     o    There are no recent, significant fines or litigation related to the
          company's treatment of animals.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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CONTROLLED ATMOSPHERE KILLING (CAK)
Generally vote AGAINST proposals requesting the implementation of CAK methods at
company and/or supplier operations unless such methods are required by
legislation or generally accepted as the industry standard.

Vote CASE-BY-CASE on proposals requesting a report on the feasibility of
implementing CAK methods at company and/or supplier operations considering the
availability of existing research conducted by the company or industry groups on
this topic and any fines or litigation related to current animal processing
procedures at the company.

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]



CONSUMER ISSUES


GENETICALLY MODIFIED INGREDIENTS
Generally vote AGAINST proposals asking suppliers, genetic research companies,
restaurants and food retail companies to voluntarily label genetically
engineered (GE) ingredients in their products and/or eliminate GE ingredients.
The cost of labeling and/or phasing out the use of GE ingredients may not be
commensurate with the benefits to shareholders and is an issue better left to
regulators.

Vote CASE-BY-CASE on proposals asking for a report on the feasibility of
labeling products containing GE ingredients taking into account:

     o    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,
          related voluntary initiatives, and how this disclosure compares with
          industry peer disclosure; and

     o    Company's current disclosure on the feasibility of GE product
          labeling, including information on the related costs.

Generally vote AGAINST proposals seeking a report on the social, health, and
environmental effects of genetically modified organisms (GMOs). Studies of this
sort are better undertaken by regulators and the scientific community.

Generally 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 regulators) that may outweigh the economic benefits derived from
biotechnology.

                                      *****


CONSUMER LENDING
Vote CASE-BY CASE on requests for reports on the company's lending guidelines
and procedures 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
          the lending products in question;

     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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RiskMetrics Group                                            www.riskmetrics.com
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PHARMACEUTICAL PRICING, ACCESS TO MEDICINES, AND PRODUCT REIMPORTATION
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 report on
their product pricing policies or their access to medicine policies,
considering:

     o    The nature of the company's business and the potential for
          reputational and market risk exposure;

     o    The existing disclosure of relevant policies;

     o    Deviation from established industry norms;

     o    The company's existing, relevant initiatives to provide research
          and/or products to disadvantaged consumers;

     o    Whether the proposal focuses on specific products or geographic
          regions; and

     o    The potential cost and scope of the requested report.

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

Generally vote AGAINST proposals requesting that companies adopt specific
policies to encourage or constrain prescription drug reimportation. Such matters
are more appropriately the province of legislative activity and may place the
company at a competitive disadvantage relative to its peers.

                                      *****


PRODUCT SAFETY AND TOXIC/HAZARDOUS MATERIALS
Generally vote FOR proposals requesting the company to report on its policies,
initiatives/procedures, and oversight mechanisms related to toxic/hazardous
materials or product safety in its supply chain, unless:

     o    The company already discloses similar information through existing
          reports such as a Supplier Code of Conduct and/or a sustainability
          report;

     o    The company has formally committed to the implementation of a
          toxic/hazardous materials and/or product safety and supply chain
          reporting and monitoring program based on industry norms or similar
          standards within a specified time frame; and

     o    The company has not been recently involved in relevant significant
          controversies, significant fines, or litigation.

Vote CASE-BY-CASE on resolutions requesting that companies develop a feasibility
assessment to phase-out of certain toxic/hazardous materials, or evaluate and
disclose the potential financial and legal risks associated with utilizing
certain materials, considering:

     o    The company's current level of disclosure regarding its product safety
          policies, initiatives and oversight mechanisms.

     o    Current regulations in the markets in which the company operates; and

     o    Recent significant controversies, litigation, or fines stemming from
          toxic/hazardous materials at the company.

Generally vote AGAINST resolutions requiring that a company reformulate its
products.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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TOBACCO
Vote CASE-BY-CASE on resolutions regarding the advertisement of tobacco
products, considering:

     o    Recent related fines, controversies, or significant litigation;

     o    Whether the company complies with relevant laws and regulations on the
          marketing of tobacco;

     o    Whether the company's advertising restrictions deviate from those of
          industry peers;

     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.

Vote CASE-BY-CASE on proposals regarding second-hand smoke, considering;

     o    Whether the company complies with all laws 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.

Generally vote AGAINST resolutions to cease production of tobacco-related
products, to avoid selling products to tobacco companies, to spin-off
tobacco-related businesses, or prohibit investment in tobacco equities. Such
business decisions are better left to company management or portfolio managers.

Generally vote AGAINST proposals regarding tobacco product warnings. Such
decisions are better left to public health authorities.

                                      *****



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.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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EQUALITY OF OPPORTUNITY
Generally vote FOR proposals requesting a company disclose its diversity
policies or initiatives, or proposals requesting disclosure of a company's
comprehensive workforce diversity data, including requests for EEO-1 data,
unless:

     o    The company publicly discloses its comprehensive equal opportunity
          policies and initiatives;

     o    The company already publicly discloses comprehensive workforce
          diversity data; and

     o    The company has no recent significant EEO-related violations or
          litigation.

Generally vote AGAINST proposals seeking information on the diversity efforts of
suppliers and service providers. Such requests may pose a significant cost and
administration burden on the company.

                                      *****


GENDER IDENTITY, SEXUAL ORIENTATION, AND DOMESTIC PARTNER BENEFITS
Generally vote FOR proposals seeking to amend a company's EEO statement or
diversity policies to prohibit discrimination based on sexual orientation and/or
gender identity, unless the change would result in excessive costs for the
company.

Generally vote AGAINST proposals to extend company benefits to, or eliminate
benefits from domestic partners. Decisions regarding benefits should be left to
the discretion of the company.

                                      *****



CLIMATE CHANGE AND THE ENVIRONMENT


CLIMATE CHANGE
Generally vote FOR resolutions requesting that a company disclose information on
the impact of climate change on the company's operations and investments
considering:

     o    The company already provides current, publicly-available information
          on the impacts that climate change may have on the company as well as
          associated company policies and procedures to address related risks
          and/or opportunities;

     o    The company's level of disclosure is at least comparable to that of
          industry peers; and

     o    There are no significant, controversies, fines, penalties, or
          litigation associated with the company's environmental performance.

                                      *****


CONCENTRATED ANIMAL FEEDING OPERATIONS (CAFOS)
Generally vote FOR resolutions requesting companies report to shareholders on
the risks and liabilities associated with CAFOs unless:

     o    The company has publicly disclosed its environmental management
          policies for its corporate and contract farming operations, including
          compliance monitoring; and

     o    The company publicly discloses company and supplier farm environmental
          performance data; or

     o    The company does not have company-owned CAFOs and does not directly
          source from contract farm CAFOs.

                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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ENERGY EFFICIENCY
Generally vote FOR on proposals requesting a company report on its comprehensive
energy efficiency policies, unless:

     o    The company complies with applicable energy efficiency regulations and
          laws, and discloses its participation in energy efficiency policies
          and programs, including disclosure of benchmark data, targets, and
          performance measures; or

     o    The proponent requests adoption of specific energy efficiency goals
          within specific timelines.

                                      *****


FACILITY AND OPERATIONAL SAFETY/SECURITY
Vote CASE-BY-CASE on resolutions requesting that companies report on safety
and/or security risks associated with their operations and/or facilities,
considering:

     o    The company's compliance with applicable regulations and guidelines;

     o    The company's current level of disclosure regarding its security and
          safety policies, procedures, and compliance monitoring; and,

     o    The existence of recent, significant violations, fines, or controversy
          regarding the safety and security of the company's operations and/or
          facilities.

                                      *****


GREENHOUSE GAS (GHG) EMISSIONS
Generally vote FOR proposals requesting a report on greenhouse gas emissions
from company operations and/or products, unless:



     o    The company already provides current, publicly-available information
          on the impacts that greenhouse gas emissions may have on the company
          as well as associated company policies and procedures to address
          related risks and/or opportunities;

     o    The company's level of disclosure is at least comparable to that of
          industry peers; and

     o    There are no significant, controversies, fines, penalties, or
          litigation associated with the company's greenhouse gas emissions.

Generally vote AGAINST proposals that call for reduction in greenhouse gas
emissions by specific amounts or within a specific time frame, unless:

     o    The company lags behind industry standards; and,

     o    The company has been the subject of recent, significant violations,
          fines, litigation, or controversy related to greenhouse gas emissions.

                                      *****


OPERATIONS IN PROTECTED AREAS
Generally vote FOR requests for reports on potential environmental damage as a
result of company operations in protected regions unless:

     o    Operations in the specified regions are not permitted by current laws
          or regulations;

     o    The company does not currently have operations or plans to develop
          operations in these protected regions; or,

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RiskMetrics Group                                            www.riskmetrics.com
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o        The company's disclosure of its operations and environmental policies
         in these regions is 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;

     o    The extent that peer companies are recycling;

     o    The timetable prescribed by the proposal and the costs and methods of
          implementation;

     o    Whether the company has a poor environmental track record, such as
          violations of applicable regulations.

                                      *****


RENEWABLE ENERGY
Generally vote FOR requests for reports on the feasibility of developing
renewable energy resources 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 resources. Such decisions are best left to management's evaluation of the
feasibility and financial impact that such programs may have on the company.

                                      *****



GENERAL CORPORATE ISSUES


CHARITABLE CONTRIBUTIONS
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,
and if, contributions are in the best interests of the company.

                                      *****


CSR COMPENSATION-RELATED PROPOSALS
Vote CASE-BY-CASE on proposals to report on ways of linking executive
compensation to non-financial criteria, such as corporate downsizings, customer
or employee satisfaction, community involvement, human rights, environmental
performance, or predatory lending. Such resolutions should be evaluated in the
context of:

     o    The relevance of the non-financial criteria in question to the
          company;

     o    The degree to which non-financial criteria are already included in the
          company's executive compensation structure and publicly disclosed;

     o    The degree to which non-financial criteria are used by industry peers
          in setting executive compensation;

     o    Significant company violations or controversies associated with social
          and/or environmental performance or compensation practices;

     o    The company's current level of disclosure regarding environmental and
          social performance;

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RiskMetrics Group                                            www.riskmetrics.com
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     o    Independence of the compensation committee;

Generally vote AGAINST proposals to link executive compensation to non-financial
criteria, such as corporate downsizings, customer or employee satisfaction,
community involvement, human rights, environmental performance, and predatory
lending.

Generally vote AGAINST proposals calling for an analysis of the pay disparity
between corporate executives and other employees. Such comparisons may be
arbitrary in nature and/or provide information of limited value to shareholders.

                                      *****


HEALTH PANDEMICS
Vote CASE-BY-CASE on requests for reports outlining the impact of health
pandemics (such as HIV/AIDS, Malaria, Tuberculosis, and Avian Flu) on the
company's operations and how the company is responding to the situation, taking
into account:

     o    The scope of the company's operations in the affected/relevant
          area(s);

     o    The company's existing healthcare policies, including benefits and
          healthcare access; and

     o    Company donations to relevant healthcare providers.

Vote AGAINST proposals asking companies to establish, implement, and report on a
standard of response to health pandemics (such as HIV/AIDS, Malaria,
Tuberculosis, and Avian Flu), unless the company has significant operations in
the affected markets and has failed to adopt policies and/or procedures to
address these issues comparable to those of industry peers.

                                      *****


LOBBYING EXPENDITURES/INITIATIVES
Vote CASE-BY-CASE on proposals requesting information on a company's lobbying
initiatives, considering:

     o    Significant controversies, fines, or litigation surrounding a
          company's public policy activities,

     o    The company's current level of disclosure on lobbying strategy, and

     o    The impact that the policy issue may have on the company's business
          operations.

                                      *****


POLITICAL CONTRIBUTIONS AND TRADE ASSOCIATIONS SPENDING
Generally vote AGAINST proposals asking the company to affirm political
nonpartisanship in the workplace so long as:

     o    There are no recent, significant controversies, fines or litigation
          regarding the company's political contributions or trade association
          spending; and

     o    The company has procedures in place to ensure that employee
          contributions to company-sponsored political action committees (PACs)
          are strictly voluntary and prohibits coercion.

Vote AGAINST proposals to publish in newspapers and public media the company's
political contributions. 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 and trade association spending considering:

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RiskMetrics Group                                            www.riskmetrics.com
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     o    Recent significant controversy or litigation related to the company's
          political contributions or governmental affairs; and

     o    The public availability of a company policy on political contributions
          and trade association spending including information on the types of
          organizations supported, the business rationale for supporting these
          organizations, and the oversight and compliance procedures related to
          such expenditures of corporate assets.

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

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.

                                      *****



INTERNATIONAL ISSUES, LABOR ISSUES, AND HUMAN RIGHTS


COMMUNITY SOCIAL AND ENVIRONMENTAL IMPACT ASSESSMENTS
Vote CASE-BY-CASE on requests for reports outlining policies and/or the
potential (community) social and/or environmental impact of company operations
considering:

     o    Current disclosure of applicable policies and risk assessment
          report(s) and risk management procedures;

     o    The impact of regulatory non-compliance, litigation, remediation, or
          reputational loss that may be associated with failure to manage the
          company's operations in question, including the management of relevant
          community and stakeholder relations;

     o    The nature, purpose, and scope of the company's operations in the
          specific region(s);

     o    The degree to which company policies and procedures are consistent
          with industry norms; and

     o    Scope of the resolution.

                                      *****


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.

                                      *****


INTERNET PRIVACY AND CENSORSHIP
Vote CASE-BY-CASE on resolutions requesting the disclosure and implementation of
Internet privacy and censorship policies and procedures considering:

     o    The level of disclosure of company policies and procedures relating to
          privacy, freedom of speech, Internet censorship, and government
          monitoring of the Internet;

     o    Engagement in dialogue with governments and/or relevant groups with
          respect to the Internet and the free flow of information;

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RiskMetrics Group                                            www.riskmetrics.com
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     o    The scope of business involvement and of investment in markets that
          maintain government censorship or monitoring of the Internet;

     o    The market-specific laws or regulations applicable to Internet
          censorship or monitoring that may be imposed on the company; and,

     o    The level of controversy or litigation related to the company's
          international human rights policies and procedures.

                                      *****


LABOR AND HUMAN RIGHTS STANDARDS
Generally vote FOR proposals requesting a report on company or company supplier
labor and/or human rights standards and policies unless such information is
already publicly disclosed.

Vote CASE-BY-CASE on proposals to implement company or company supplier labor
and/or human rights standards and policies, considering:

     o    The degree to which existing relevant policies and practices are
          disclosed;

     o    Whether or not existing relevant policies are consistent with
          internationally recognized standards;

     o    Whether company facilities and those of its suppliers are monitored
          and how;

     o    Company participation in fair labor organizations or other
          internationally recognized human rights initiatives;

     o    Scope and nature of business conducted in markets known to have higher
          risk of workplace labor/human rights abuse;

     o    Recent, significant company controversies, fines, or litigation
          regarding human rights at the company or its suppliers;

     o    The scope of the request; and

     o    Deviation from industry sector peer company standards and practices.

                                      *****


MACBRIDE PRINCIPLES
Generally vote AGAINST proposals to endorse or increase activity on the MacBride
Principles, unless:

     o    The company has formally been found to be out of compliance with
          relevant Northern Ireland fair employment laws and regulations;

     o    Failure to implement the MacBride Principles would put the company in
          an inconsistent position and/or at a competitive disadvantage compared
          with industry peers;

     o    Failure to implement the MacBride Principles would subject the company
          to excessively negative financial impacts due to laws that some
          municipalities have passed regarding their contracting operations and
          companies that have not implemented the MacBride Principles; or

     o    The company has had recent, significant controversies, fines or
          litigation regarding religious-based employment discrimination in
          Northern Ireland.

                                      *****


NUCLEAR AND DEPLETED URANIUM WEAPONS
Generally vote AGAINST proposals asking a company to cease production or report
on the risks associated with the use of depleted uranium munitions or nuclear
weapons components and delivery systems, including disengaging from current and
proposed contracts. Such contracts are monitored by government agencies, serve
multiple military and non-military uses, and withdrawal from these contracts
could have a negative impact on the company's business.

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RiskMetrics Group                                            www.riskmetrics.com
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                                      *****


OPERATIONS IN HIGH RISK MARKETS
Vote CASE-BY-CASE on requests for a report on a company's potential financial
and reputational risks associated with operations in "high-risk" markets, such
as a terrorism-sponsoring state or politically/socially unstable region, taking
into account:

     o    The nature, purpose, and scope of the operations and business involved
          that could be affected by social or political disruption;

     o    Current disclosure of applicable risk assessment(s) and risk
          management procedures;

     o    Compliance with U.S. sanctions and laws;

     o    Consideration of other international policies, standards, and laws;
          and

     o    Whether the company has been recently involved in recent, significant
          controversies, fines or litigation related to its operations in
          "high-risk" markets.



                                      *****


OUTSOURCING/OFFSHORING
Vote CASE-BY-CASE on proposals calling for companies to report on the risks
associated with outsourcing/plant closures, considering:

     o    Controversies surrounding operations in the relevant market(s);

     o    The value of the requested report to shareholders;

     o    The company's current level of disclosure of relevant information on
          outsourcing and plant closure procedures; and

     o    The company's existing human rights standards relative to industry
          peers.

                                      *****



SUSTAINABILITY


SUSTAINABILITY REPORTING
Generally vote FOR proposals requesting the company to report on its policies,
initiatives, and oversight mechanisms 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

                                      *****


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RiskMetrics Group                                            www.riskmetrics.com
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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).


                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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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.

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:

     o    Political/economic changes in the target market;

     o    Consolidation in the target market; and

     o    Current asset composition.

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RiskMetrics Group                                            www.riskmetrics.com
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                                      *****


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:

     o    The degree of change implied by the proposal;

     o    The efficiencies that could result;

     o    The state of incorporation;

     o    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;

     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:

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RiskMetrics Group                                            www.riskmetrics.com
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     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.


                                      *****

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RiskMetrics Group                                            www.riskmetrics.com
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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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