File Numbers: 33-3149 and 811-4581
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Securities and Exchange Commission
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Post-Effective Amendment No.:11 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No.:13 X
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(Check appropriate box or boxes)
THE CORNERCAP GROUP OF FUNDS
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(Exact Name of Registration as Specified in Charter)
100 Northcreek, Suite 250, 3715 Northside Parkway, NW, Atlanta, GA 30327
- -------------------------------------------------------------------------
(Address of Principal Executive Offices)
(404)240-0666
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(Registrant's Telephone Number, including Area Code)
Thomas E. Quinn
100 Northcreek, Suite 250, 3715 Northside Parkway, NW, Atlanta, GA 30327
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(Name and Address of Agent of Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the registration statement.
It is proposed that this filing will become effective (check appropriate
line).
____ immediately upon filing pursuant to paragraph (b)
X on July 29, 1996 pursuant to paragraph (b)
----
____ 60 days after filing pursuant to paragraph (a)
____ on _____ pursuant to paragraph (a) of Rule 485.
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of rule 485
Registrant registered an indefinite number of securities pursuant to Rule
24f-2 under the Securities Act of 1933. The Registrant will file the
Rule 24f-2 Notice for its fiscal year ended March 31, 1997 on or about
May 30, 1997.
Please send copies of communications to:
Rey Pascual, Esq.
Kilpatrick & Cody
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530<PAGE>
The CornerCap Group of Funds
TABLE OF CONTENTS TO FORM
N-1A
1. Part A - Prospectus for the CornerCap Growth Fund
2. Part B- Statement of Additional Information
3. Part C - Other Information
4. Signature Page
5. Exhibits
<PAGE>
PART A
CORNERCAP GROWTH FUND
of
The CornerCapGroup of Funds
A "Series" Investment Company
Shareholder Services Questions Investment Objectives Questions
Voice: (800) 628-4077 Voice: (800) 728-0670
Fax: (804) 285-8018 Fax: (404) 240-0144
The investment objective of the CornerCap Growth
Fund (the "Fund"), a series of the CornerCap Group
of Funds, is to obtain long term capital
appreciation. Income from dividends or interest on
portfolio securities is a secondary objective.
There is no assurance that the Fund will achieve
its objective.
This Prospectus sets forth concisely the
information about the Fund that you should know
before investing in the Fund. You should read it
and keep it for future reference. A Statement of
Additional Information ("SAI") dated July 29, 1996
as may be amended from time to time, containing
additional information about the Fund has been
filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference in this
Prospectus in its entirety. You may obtain a copy
of the SAI without charge by calling (800) 728-0670
or writing the Fund at the following address:
Cornerstone Capital Corp., 100 Northcreek, Suite
250, Atlanta GA, 30327.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is July 29, 1996
<PAGE>
PROSPECTUS SUMMARY
The Fund...............The Fund is a diversified open-end management investment
company (see page 7). The shares of the Fund are offered
without sales or redemption charges (see page 3).
Investment Objective...The Fund's investment objective is to obtain long-term
capital appreciation. The Fund will attempt to achieve
its objective by investing in equity securities of
domestic and foreign issuers. There can be no assurance
that the Fund will achieve its investment objective
(see page 7).
Investment Policies....The Fund will invest in common stocks, preferred stocks,
and convertible securities selected by Cornerstone
Capital Corp. (the "Advisor") from among 1500 issues
ranked according to fundamental factors, such as relative
price/earnings ratio, earnings growth rate, and cash flow
(see page 8).
Investment Advisor.....Cornerstone Capital acts as the investment advisor to the
Fund. In that capacity, it selects the portfolio
holdings. (see page 9).
Custodian.............The Trust Department of Wachovia Bank of N.C. (the
"Custodian") holds the Fund's assets.
Administration........Funds Services, Inc. is the Transfer Agent (see page 10),
Commonwealth Fund Accounting, Inc. calculates the daily
net asset value (see page 11), and Cornerstone Capital
Corp. provides certain administrative, record keeping
and shareholder servicing services (see page 10).
Dividends &
Distributions.....The Fund currently intends to make at least one
distribution of any net income or capital gains during each
calendar year (see page 15).
Minimum Purchase.....The minimum initial investment is $2,000 and the minimum
subsequent investment in the Fund is $250 (see page 12).
Redemption...........Shares of the Fund may be redeemed at the next determined
net asset value, without charge (see page 12).
2
<PAGE>
Summary of Fund Expenses
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a shareholder
will bear directly or indirectly in connection with an investment
in the Fund.
Shareholder Transaction Expenses
- --------------------------------
Maximum sales charge on purchases . . . . . . . . . . . None
Maximum sales charge imposed on reinvested dividends . None
Deferred sales charge . . . . . . . . . . . . . . . . . None
Redemption Fee . . . . . . . . . . . . . . . . . . . . None
Exchange fee . . . . . . . . . . . . . . . . . . . . . None
Estimated Annual Fund Operating Expenses
(as a percentage of average daily net
assets) <F1>
- -----------------------------------------
Management Fee <F1> . . . . . . . . . . . . . . . 0.40%
12b-1 Fee <F2> . . . . . . . . . . . . . . . . . . . 0.0%
Other Expenses <F3> . . . . . . . . . . . . . . . . . 1.35%
Total Fund Operating Expenses <F3> . . . . . . . . . 1.75%
[FN]
<F1> The Fund's investment advisory agreement with the Advisor
provides for compensation to the Advisor at the annual rate
of 1.0% of average daily net assets. The Advisor has
voluntarily agreed to waive all or such portion of its fee as
may be necessary to cause total Fund operating expenses not
to exceed 2.0% of average net assets. For the year ended
March 31, 1996, the Advisor waived .60% of its 1% management
fee.
<F2> The Fund has adopted a Distribution Plan pursuant to which
it may reimburse the Distributor and Advisor for certain
distribution related expenses of the Fund up to an annual
amount of 0.25% of average daily net assets. No
reimbursements have been made under this plan since its
inception.
<F3> "Other expenses" include fees paid to the Fund's
independent accountant, independent trustees, legal counsel,
transfer agent, administrator, custodian and accounting
services agent. "Other expenses" also include s costs
associated with registration fees, reports to shareholders,
and other miscellaneous expenses. The Advisor has
voluntarily agreed to waive its advisory fee and to reimburse
the Fund for certain of its operating expenses to the extent
and for as long as may be necessary to cause total Fund
operating expenses not to exceed 2.0% of average net assets.
In absence of such waiver and reimbursement, total Fund
operating expenses for the year ended March 31, 1996 were
2.35%.
3
<PAGE>
<TABLE>
<CAPTION>
Hypothetical Example of Fund Expenses 1 Year 3 Years 5 Years 10 Years
------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $18 $55 $95 $206
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period.
</TABLE>
The purpose of this example is to assist investors in
understanding the various costs and expenses which stockholders of
the Fund bear directly and indirectly. The 5% return is
hypothetical and this example should not be considered a
representation of the Fund's past or future performance. The actual
expenses may be greater or less than those shown.
4
<PAGE>
Financial Highlights
For a share outstanding throughout each period indicated.
The following selected per share data and ratios for each of the five
years in the period ended March 31, 1996 have been examined by Tait,
Weller and Baker, independent Certified Public Accountants, whose report
thereon appears in the Fund's 1996 Annual Report to Shareholders, and is
incorporated by reference into this Prospectus. The selected per share
data and ratios for periods prior to April 1, 1990 were examined by other
auditors whose report dated April 19, 1990 expressed an unqualified
opinion of such per share data and ratios. Total return amounts are not
covered by auditors' reports.
<TABLE>
<CAPTION>
Period Ending March 31, 1996
----------------------------
1996 1995 1994 1993 1992<F2> 1991<F2> 1990<F2> 1989<F1> 1988<F1> 1987<F1><F3>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period $8.61 $7.69 $7.58 $7.60 $6.45 $6.96 $7.37 $6.57 $9.92 $9.20
Income From Investment
Operations .04 0.05 0.02 0.23 (0.08) (0.27) 0.09 (0.06) 0.06 0.02
Net investment income
(loss)
Net Gains or Losses on 1.22 0.89 0.11 (0.25) 1.23 (0.10) (0.50) 0.92 (2.94) 0.70
Securities
(both realized and
unrealized)
Total From Investment 1.26 0.94 0.13 (0.02) 1.15 (0.37) (0.41) 0.86 (2.88) 0.72
Operations
Less Distributions
- ------------------
Dividends (from net investment (0.06) (0.02) (0.02) 0.00 0.00 (0.14) 0.00 (0.06) (0.01) 0.00
income)
Distribution (from capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.46) 0.00
-----------
gains)
-----
Total Distributions (0.06) (0.02) (0.02) 0.00 0.00 (0.14) 0.00 (0.06) (0.47) 0.00
Net Asset Value, End of period $9.81 $8.61 $7.69 $7.58 $7.60 $6.45 $6.96 $7.37 $6.57 $9.92
- -----------------------------
Total Return 14.64% 12.25% 1.71 (0.26)% 15.33% (5.54)% (5.56)% 13.09% (29.13) 11.12%
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period $8,371 $7,299 $4,229 $3,042 $1,088 $1,107 $1,814 $3,011 $3,737 $6,081
(x1,000)
Ratio of Expenses to Average Net
Assets: 2.35% 2.69% 3.00% 6.49% 6.26% 8.77% 3.49% 4.44% 4.54% 3.51%
Before Expense Reimbursement
After Expense Reimbursement 1.75% 1.87% 2.00% 2.00% 2.14% 7.77% 2.49% 3.44% 3.54% 2.51%
Ratio of Net Income to Average
Net Assets: (0.11)% (0.70) (0.67)% (4.10)% (4.41)% (4.80)% (0.09)% (1.93)% (0.10)% (0.86)%
Before Expense Reimbursement
After Expense Reimbursement .49% 0.12% 0.13% 0.36% (0.29)% (3.80)% 0.91% (0.93)% 0.90% 0.14%
Portfolio Turnover Rate 40.83% 55.12% 35.58% 83.40% 91.62% 125.24% 127.45% 145.70% 151.80% 118.90%
6<PAGE>
NOTES:
<FN>
<F1> The per share and capital change information represents
performance of Wealth Monitors, Inc., the Fund's Investment Advisor
from March 1986 to August 1990.
<F2> The per share and capital change information represents
performance of Dorado/IDS Corporation, the Fund's Investment Advisor
from August 1990 to August 1992. Cornerstone Capital became the
advisor for the Fund in August 1992.
<F3> For the period July 17, 1986 (inception) to March 31, 1987.
The total return, expense, and net investment income ratios for this
period have been annualized.
</TABLE>
7<PAGE>
PERFORMANCE CHARTS
FUND PERFORMANCE UNDER CORNERSTONE CAPITAL CORP.
Comparison of Change in Value of a $10,000 investment
in the CornerCap Growth Fund, the Value Line Index,
& the S&P Index
[chart appears here]
<TABLE>
<CAPTION
CGF Value Line S&P 500
------ ---------- -------
<S> <C> <C> <C>
9/92 10,000 10,000 10,000
12/92 10,771 10,857 10,507
3/93 11,019 11,454 10,961
6/93 11,063 11,436 11,009
9/93 11,048 11,882 11,303
12/93 11,354 12,244 11,566
3/94 11,223 11,882 11,118
6/94 11,485 11,500 11,156
9/94 11,909 12,096 11,711
12/94 12,275 11,713 11,707
3/95 12,597 12,380 12,850
6/95 12,899 13,247 14,058
9/95 13,183 14,148 15,197
12/95 13,473 14,205 16,109
3/96 14,449 14,858 16,678
</TABLE>
FUND PERFORMANCE SINCE INCEPTION WITH PRIOR MANAGEMENT INCLUDED
Comparison of Change in Value of $10,000 investment in the CornerCap
Growth Fund, the Value Line Index, & the S&P 500 Index
[chart appears here]
<TABLE>
<CAPTION>
CGF Value Line S&P 500
------- ------- -------
<S> <C> <C> <C>
9/30/86 10,000 10,000 10,000
3/31/87 11,112 11,286 12,577
3/31/88 7,875 9,858 11,530
3/31/89 8,906 10,883 13,593
3/31/90 8,411 11,036 16,195
3/31/91 7,963 11,027 18,524
3/31/92 9,383 12,205 20,583
3/31/93 9,359 13,556 23,724
3/31/94 9,579 14,039 24,063
3/31/95 10,138 14,651 27,800
3/31/96 11,743 17,567 36,696
</TABLE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
CornerCap Growth Fund invests in small- and mid-capitalization companies
characterized as attractive by a ranking of 1,500 publicly traded stocks.
Our model screens for companies with relatively low price/earnings
ratios, above average cash flows, and above average returns on equity
that are exhibiting renewed earnings momentum. Under Cornerstone
Capital's management (9/30/92 - 3/31/96), the Fund returned, on an annual
basis, 11.03% vs. 11.9% for the Value Line Index and 16.2% for the S&P
500 Index. The annual report contains additional information on the
Fund's performance, and a copy is available free from the Fund's advisor.
Also, investors should realize that past performance is not predictive of
future performance.
8
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The CornerCap Growth Fund (the "Fund") is the only series of
the CornerCap Group of Funds, a diversified, open-end
management investment company registered with the SEC as
required under the Investment Company Act of 1940 (the "1940 Act").
Shares of the Fund may be purchased at their net asset value, without
sales load, as next determined after an account application is received
in proper form.
The Fund's investment objective is to obtain long-term capital
appreciation. Income from dividends or interest on portfolio securities
is a secondary objective. The Fund will attempt to achieve its objective
by investing in equity securities of domestic and foreign issuers.
The equity securities that the Fund may purchase consist of common
stocks, preferred stocks, or convertible securities that will generally
be publicly traded on a national securities exchange or over-the-counter.
In selecting portfolio securities for purchase by the Fund, the Fund's
investment advisor, Cornerstone Capital Corp. (the "Advisor'') ranks
approximately 1,500 common stocks according to fundamental factors. The
three key criteria are relative price/earnings ratio, earnings growth
rate, and cash flows that are in excess of capital expenditures.
Purchases are made from the most attractive securities based on
diversification and risk, and will be made only if they can be made at
prices which, in the judgment of the Advisor, create the possibility of
additional growth in capital. There can be no assurance that the Fund
will achieve its objective.
The Fund will invest at least a minimum of 65% of its assets in equity
securities having the characteristics described above; however, it is
expected that under normal circumstances the Fund will be over 90%
invested in equity securities. The remainder of the portfolio may be
invested in short-term U.S. Government obligations such as U.S. Treasury
Bills or cash equivalent instruments. In addition, the Fund may invest
part of its assets temporarily in debt obligations pending the investment
of the proceeds of sales of shares of the Fund or of portfolio
securities.
INVESTMENT RISKS - As a fund investing in equity securities, the Fund is
subject to market risk--i.e., the possibility that stock prices will
decline over short or even extended periods when stock prices generally
rise and periods when prices generally decline. The market for equity
securities in the United States tends to be cyclical, with periods when
the prices of securities generally rise and periods when they generally
decline. All equity securities are usually influenced to some extent by
price movements in the equities market. Because of the risks associated
with investments in equity securities, the Fund is intended to be a long-
term investment vehicle and is not designed to provide investors with a
means of speculating on short-term stock market movements. As the Fund
will have a large percentage of its assets invested in stocks, it is not
suitable for investors who are unable or unwilling to assume the risk of
loss inherent in equity investments. Investors should consider the Fund
as a vehicle with which to balance their total investment program risks.
FOREIGN SECURITIES - The Fund may, using the criteria set forth
above, invest up to 20% of its assets in securities of foreign
issuers. The Advisor anticipates that such investments will be
made in U.S. dollar denominated securities in the form of (i)
American Depository Receipts (ADRs) issued against the
securities of foreign issuers, or (ii) other securities of
foreign issuers that are traded on U.S. national securities
exchanges or in the U.S. over-the-counter market.
9<PAGE>
There are risks associated with investments in securities of foreign
issuers. Such risks include changes in currency rates, greater difficulty
in commencing lawsuits, differences between U.S. and foreign economies,
and U.S. Government policy with respect to certain investments abroad.
Foreign companies are frequently not subject to the accounting and
financial reporting standards applicable to U.S. companies, and there may
be less information available about foreign issuers. Securities of
foreign issuers are generally less liquid and more volatile than those of
comparable U.S. issuers. There is often less government regulation of
issuers than in the U.S. There is also the possibility of expropriation
or confiscatory taxation, political or social instability or diplomatic
developments that could adversely affect the value of those investments.
=========================================================================
PRINCIPAL INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions which are
fundamental policies that cannot be changed without the Principal
approval of the holders of a majority (as defined in the 1940 Investment
Act) of the Fund's outstanding securities. The Fund's investment
objective is such a policy. Among its other fundamental policies, the
Fund may not (i) invest more than 5% of the value of its total assets in
securities of any one issuer (other than securities of the U.S.
Government, its agencies and instrumentalities); or (ii) invest 25% or
more of the value of its total assets in securities of issuers in any one
industry. Additional information about the Fund's investment restrictions
is contained in the SAI.
It is the position of the staff of the SEC (and an operating although not
a fundamental policy of the Fund) that open-end investment companies,
such as the Fund, should not make certain investments if thereafter more
than 10% of the value of their net assets would be invested in illiquid
assets. The investments included in this 10% limit are (i) those which
are restricted, i.e., those which are subject to restriction as to
disposition under Federal securities laws (which the Fund does not expect
to own), (ii) fixed time deposits subject to withdrawal penalties
(other than overnight deposits), (iii) repurchase agreements having a
maturity of more than seven days, and (iv) investments which
are not readily marketable. This 10% limit does not include
obligations payable at principal amount plus accrued interest
within seven days after purchase.
=========================================================================
MANAGEMENT
The Fund's Board of Trustees decides on matters of general
policy and reviews the activities of the Fund's Advisor and
officers, and reviews the business operations of the Fund.
THE ADVISOR - Cornerstone Capital Corp., 100 NorthCreek, Suite 250, 3715
Northside Parkway, NW, Atlanta, GA 30327, acts as investment advisor to
the Fund, subject to the control of the Fund's Board of Trustees, and
supervises and arranges the purchase and sale of securities held in the
portfolio of the Fund. The Advisor is a Georgia corporation organized in
1989. It was registered with the SEC as an investment advisor in 1989.
The Advisor is controlled by Thomas E. Quinn and Gene A. Hoots, the
Advisor's majority shareholders.
Mr. Quinn is the portfolio manager for the Fund. He has worked in
investment management and financial analysis for 22 years, the last seven
10
<PAGE>
years as a principal of Cornerstone Capital Corp. His primary
responsibilities are portfolio management, investment strategy and
research. Previously, Mr. Quinn was Chief Investment Officer for RJR
Investment Management, Inc. where he managed over $600 million in
primarily equity assets. He is a Chartered Financial Analyst and a
Certified Public Accountant. His graduate degrees include an MBA from
the University of North Carolina at Greensboro and an MS in Operations
Research from Ohio University.
Mr. Hoots has worked in investment management and financial analysis for
over 26 years, the last seven years as a principal of Cornerstone Capital
Corp. His primary responsibilities are portfolio management, client
service and investment policy. Previously, Mr. Hoots was Vice President
of Reich & Tang and President of RJR Investment Management, Inc. He has
an MBA from the University of North Carolina at Chapel Hill and a BS in
Engineering from N.C. State University.
The Fund has retained the Advisor under an Investment Advisory Agreement
(the "Agreement'') dated September 9, 1992, which remains in effect from
year to year if approved annually by the Board of Trustees. The Fund pays
the Advisor a fee, computed daily and payable monthly, at an annual rate
of 1% of the Fund's average daily net assets. This rate of fee is higher
than the investment advisory fees paid by most management investment
companies.
The Agreement contains provisions relating to the selection of
broker-dealers ("brokers'') for the Fund's portfolio
transactions. One of such provisions states that the Advisor,
subject to all other provisions of the Agreement on the subject, may
consider sales of shares of the Fund and/or of any other investment
companies for which the Advisor acts as investment advisor as a factor in
the selection of brokers to execute brokerage and principal transactions,
subject to the requirements of "best execution,'' as defined in the
Agreement. See the SAI for additional information as to brokerage.
The Fund is subject to the expense limitation set by applicable
regulations of the various state securities commissions relating to
expenses. Currently, the most restrictive applicable expense limitation
is 2.5% of the first $30 million of a fund's average net assets, 2.0% of
the next $70 million of average net assets, and 1.5% of average net
assets in excess of $100 million. The Agreement provides that the Advisor
will reduce its fee in any fiscal year to the extent that the expenses of
the Fund exceed applicable state limitations, up to the full amount of
the fee. In addition, the Advisor has voluntarily agreed to reimburse the
Fund for certain of its operating expenses to the extent and for so long
as may be necessary to cause the total operating expenses not to exceed
2.0% of average net assets. In the absence of this limitation, total
Fund operating expenses were 2.35% for fiscal year ended March 31,1996.
ADMINISTRATOR - Cornerstone Capital Corp. serves as the Fund's
Administrator pursuant to an Administration Agreement. The Administrator
provides certain record-keeping and shareholder servicing functions
required of registered investment companies, and will assist the Fund in
preparing and filing certain financial and other reports, and performs
certain daily functions required for ongoing operations.
The Administration Agreement provides that the Administrator will be paid
at the annual rate of .20% of the Funds average daily assets, up to a
maximum of $4,000 a month. The Administrator will be reimbursed for
certain out-of-pocket expenses, and they may sub-contract with other
responsible companies for some of its duties. The address of the
Administrator is 100 NorthCreek, Suite 250, 3715 Northside Parkway,
Atlanta, GA 30327.
11
<PAGE>
See the SAI for more information regarding the Fund's Trustees and
Officers.
========================================================================
NET ASSET VALUE
The Fund's net asset value per share is determined as of 4:15 PM on each
day that the New York Stock Exchange is open for trading. The net asset
value per share is the value of the Fund's assets, less its liabilities,
divided by the number of shares of the Fund outstanding. The value of the
Fund's portfolio securities is, in general, the market value of such
securities. See the SAI for further information.
======================================================================
DISTRIBUTION PLAN
A shareholders' meeting was held September 9, 1992, at which time the
shareholders of the Fund adopted a Distribution Plan (the "Distribution
Plan"), dated September 14, 1992, pursuant to Section 12b-1 of the 1940
Act. The Distribution Plan is in effect for one year, and year to year
thereafter if approved by the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Fund and who have no
direct or financial interest in the operation of the Distribution Plan.
In approving the Distribution Plan, the Trustees determined, in the
exercise of their business judgment and in light of their fiduciary
duties, that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders.
Pursuant to the Distribution Plan, the Advisor or Attkisson, Carter &
Akers, Inc., One Buckhead Plaza, Suite 1475, 3060 Peachtree Road, N.W.,
Atlanta, GA, 30305 (the "Distributor"), the Fund's distributor and
principal underwriter, are authorized to purchase advertising, sales
literature, and other promotional material and to pay affiliated sales
people of the Distributor. The annual expenditure limit under the Fund s
Distribution Plan is .25% of 1%. No such reimbursement may be made for
expenditures or fees for fiscal years prior to the current fiscal year
or in contemplation of future fees or expenditures. Any reimbursement
paid pursuant to the Distribution Plan is in addition to the investment
advisory fee.
The Fund did not pay any amount under the Distribution Plan for the
fiscal year ended March 31,1996. However, it is possible that the Fund
may pay out some amounts under the Distribution Plan during the current
fiscal year. See Distribution Plan in the SAI.
The Fund has also entered into a separate Distribution Agreement with the
Distributor pursuant to which the Distributor acts as agent upon the
receipt of purchase orders from investors.
Shares of the Fund may be purchased at the Net Asset Value next
determined after receipt of an account application in proper form; see
"Net Asset Value".
12<PAGE>
HOW TO PURCHASE SHARES
The minimum initial investment is $2,000 and the minimum subsequent
investment in the Fund is $250. The Fund reserves the right to reject any
account application.
INVESTING BY MAIL - To purchase shares of the Fund, investors should mail
a completed account application with a check payable to CornerCap Growth
Fund, Fund Services, Inc., P.O. Box 26305, Richmond, VA 23260. No
certificates will be issued unless specifically requested. If the
purchase being made is a subsequent investment, the shareholder should
send a stub from a confirmation previously sent by the Transfer Agent in
lieu of the account application. If no such stub is available, a brief
letter giving the registration of the account and the account number
should accompany the check. In addition, the shareholder's account number
should be written on the check. Checks do not need to be certified but
are accepted subject to face value in U.S. dollars and must be drawn on a
U.S. bank.
INVESTING BY WIRE - You may purchase shares by requesting your bank to
transmit "Federal Funds" by wire directly to the Transfer Agent. To
invest by wire please call the Transfer Agent at 1-800-628-4077 for
instructions, then notify the Distributor by calling 1-800-848-9555.
Your bank may charge you a small fee for this service. The Account
Application which accompanies this Prospectus should be completed and
promptly forwarded to the Transfer Agent. This application is required
to complete the Fund's records in order to allow you access to your
shares. Once your account is opened by mail or by wire, additional
investments may be made at any time through the wire procedure described
above. Be sure to include your name and account number in the wire
instructions you provide your bank.
========================================================================
HOW TO REDEEM SHARES
The Fund will redeem for cash all of its full and fractional shares at
the net asset value per share next determined after receipt of a
redemption request in proper form, as described below.
A shareholder wishing to redeem shares may do so at any time by writing
or calling CornerCap Growth Fund, Fund Services, Inc., P.O. Box 26305,
Richmond, VA 23260 (800/628-4077). The instructions should specify the
number of shares to be redeemed and be signed by all registered owners
exactly as the account is registered. It will not be accepted unless it
contains all required documents in proper form, as described below.
In addition to written instructions, if any shares being
redeemed or repurchased are represented by stock certificates,
the certificates must be surrendered. The certificates must
either be endorsed or accompanied by a stock power signed by
the registered owners, exactly as the certificates are registered.
Additional documents may be required from corporations or other
organizations, fiduciaries or anyone other than the shareholder of
record.
The Fund does not issue share certificates unless specifically requested.
Maintaining shares in uncertificated form minimizes the risk of loss or
theft of a share certificate. A lost, stolen or destroyed certificate can
only be replaced upon obtaining a sufficient indemnity bond. The cost of
such a bond, which is borne by the shareholder, can be 2% or more of the
value of the missing certificate. To resolve questions concerning
documents, contact the Transfer Agent at 1-800-628-4077.
13<PAGE>
Payment for shares tendered will be made within seven days after receipt
by the transfer agent of instructions, certificates, if any, and other
documents, all in proper form. However, payment may be delayed under
unusual circumstances, as specified in the 1940 Act or as determined by
the SEC. Payment may also be delayed for any shares purchased by check
for a reasonable time (not to exceed 15 days) necessary to determine that
the purchase check will be honored. Payment will be sent only to
shareholders at the address of record. A signature guarantee is required
if the shareholder requests that the check be mailed anywhere other than
to the shareholder's address of record.
If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
wholly or partly in cash, the Fund may pay the redemption price in whole
or in part by a distribution in kind of securities from the portfolio of
the Fund, in lieu of cash, in conformity with applicable rules of the
SEC. The Fund, however, has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or one percent of the net
asset value of the Fund during any 90 day period for any one shareholder.
Should redemptions by any shareholder exceed such limitation, the Fund
will have the option of redeeming the excess in cash or in kind. If
shares are redeemed in kind, the redeeming shareholder would incur
brokerage costs in converting the assets into cash.
The Board of Trustees may, in order to reduce the expenses of the Fund,
redeem all of the shares of any shareholder (other than a qualified
retirement plan) whose account has declined to a net asset value of less
than $2,000, as a result of a transfer or redemption, at the net asset
value determined as of the close of business on the business day
preceding the sending of notice of such redemption.
The Fund would give shareholders whose shares were being
redeemed 60 days prior written notice in which to purchase
sufficient shares to avoid such redemption.
=======================================================================
TELEPHONE PURCHASES AND REDEMPTIONS FOR SECURITIES FIRMS
The following purchase and redemption telphone procedures have been
established by the Fund for investors who purchase Fund shares through
member firms of the National Association of Securities Dealers, Inc. (the
NASD ) who have accounts with the Fund for the benefit of their clients.
Telephone purchases and redemptions will be effected by the Fund only
through such NASD members, who in turn will be responsible for crediting
the investor's account at the NASD member with the amount of any purchase
or redemption pursuant to its account agreement with the investors
instruction to purchase or redeem Fund shares.
NASD member firms may charge a reasonable handling fee for providing this
service. Such fees are established by each NASD member acting
independently from the Fund and neither the Fund nor the Distributor
receives any part of such fees. Such handling fees may be avoided by
investing directly with the Fund through the Distributor, but investors
doing so will not be able to avail themselves of the Fund s telephone
privileges.
Member firms of the NASD may telephone the Distributor at (800) 628-4077
and place purchase and redemption orders on behalf of investors who carry
their Fund investments through the member s account with the Fund.
14<PAGE>
PURCHASE BY TELEPHONE. Shares shall be purchased at the next determined
net asset value. Payment for shares purchased must be received from the
NASD member firm by the Fund by wire no later than the third business day
following the purchase order. If payment for any purchase order is not
received on or before the third business day, the order is subject to
cancellation by the Fund and the NASD member firm s account with the Fund
will immediately be charged for any loss.
REDEMPTION BY TELEPHONE. The redemption price is the net asset value
next determined after the receipt of the redemption request by the Fund.
Shares purchased by telephone may not be redeemed until after the Fund
has received good payment.
By electing telephone purchase and redemption privileges, NASD member
firms, on behalf of themselves and their clients, agree that neither the
Fund, the Distributor nor the Transfer Agent shall be liable for
following instructions communicated by telephone and reasonably believed
to be genuine. The Fund and its agents provide written confirmation of
transactions initiated by telephone as a procedure designed to confirm
that telephone instructions are genuine. In addition, all telephone
transactions are recorded. As a result of these and other policies, the
NASD member firm may bear the risk of any loss in the event of such a
transaction. If the Fund fails to employ this and other established
procederes, it may be liable. The Fund reserves the right to modify or
terminate these telephone privileges at any time.
=======================================================================
DIVIDENDS AND TAX STATUS
The Fund currently intends to make at least one distribution of any net
income or capital gains during each calendar year. The distribution will
be made following the Fund's fiscal year and end, March 31, and any
additional distributions will be declared by December 31 of each year
with respect to any additional undistributed capital gains earned during
the one year period ended October 31 of such calendar year and with
respect to any undistributed income for such calendar year. The amount
and frequency of distributions by the Fund are not guaranteed and are
subject to the discretion of the Fund's Board of Trustees.
The Fund has qualified and elected to be treated as a "regulated
investment company'' under Subchapter M of the Code during its previous
fiscal periods and intends to continue to do so in the future. By
distributing all of its net investment income and net capital gains to
its shareholders for a fiscal year in accordance with the timing
requirements of the Code and by meeting other requirements of the Code
relating to the sources of income and diversification of its assets, the
Fund will not be subject to Federal income or excise taxes.
All dividends from net investment income together with those derived from
the excess of net short-term capital gain over net long-term capital loss
(collectively, "income dividends''), will be taxable as ordinary income
to shareholders whether or not paid in additional shares. Any
distributions derived from the excess of net long-term capital gain over
net short-term capital loss ("capital gains distributions'') are taxable
as long-term capital gains to shareholders regardless of the length of
time a shareholder has owned his shares. Any loss realized upon the
redemption of shares within six months after the date of their purchase
will be treated as a long-term capital loss to the extent of amounts
treated as distributions of net long-term capital gain during such six-
month period. The Fund had a net capital loss carryforward of $783,074as
of March 31,1996. A net capital loss carryforward is treated as net
15<PAGE>
short-term capital loss for purposes of calculating taxable net capital
gain. A net capital loss carryforward may be carried over for a period
of up to eight taxable years succeeding the loss year. Of the Fund's net
capital loss carryforward, $316,444will expire in 1997 and $466,630 will
expire in 1998.
Income dividends and capital gains distributions are taxed in the manner
described above, regardless of whether they are received in cash or
reinvested in additional shares. For the convenience of investors, all
income dividends and capital gains distributions are reinvested in full
and fractional shares of the Fund based on the net asset value per share
at the close of business on the record date, unless the shareholder has
given prior written notice to the transfer agent that the payment should
be made in cash. Shareholders will receive information annually on Form
1099 with respect to the amount and nature of income and gains to assist
them in reporting the prior calendar year's distributions on their
Federal income tax return.
Distributions which are declared in October, November, or December but
which are not paid to shareholders until the following January will be
treated for tax purposes as if received on December 31 of the year in
which they were declared.
Under the Code, the Fund may be required to impose backup withholding at
a rate of 31% on income dividends and capital gains distributions, and
payment of redemption proceeds to individuals and other non-exempt
shareholders, if such shareholders have not provided a correct taxpayer
identification number and made the certifications required by the
Internal Revenue Service on the account application. A shareholder may
also be subject to backup withholding if the Internal Revenue Service or
a broker notifies the Fund that the shareholder is subject to backup
withholding.
The Fund may liquidate the account of any shareholder who fails to
furnish its certificate of taxpayer identification number within 30 days
after date the account was opened.
Shareholders should consult their tax advisors with respect to applicable
foreign, state and local taxes.
========================================================================
PERFORMANCE INFORMATION
From time to time, the Fund may publish its total return in
advertisements and communications to investors. Total return information
will include the Fund's average annual compounded rate of return over the
most recent four calendarion quarters and over the period from the Fund's
inception of operations. The Fund may also advertise aggregate and
average total return information over different periods of time. The
Fund's total return will be based upon the value of the shares acquired
through a hypothetical $1,000 investment at the beginning of the
specified period and the net asset value of such shares at the end of the
period, assuming reinvestment of all distributions at net asset value.
Total return figures will reflect all recurring charges against the
Fund's income.
Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for
any period should not be considered as a representation of what an
investor's total return may be in any future period. For further
information, including the formula and an example of the total return
calculation, see the SAI.
16<PAGE>
In reports or other communications to shareholders and in advertising
material, the Fund may compare performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services,
Inc. and similar independent services that monitor the performance of
mutual funds, or unmanaged indices of securities of the type in which the
Fund invests.
=========================================================================
GENERAL INFORMATION
The Fund was organized on January 6, 1986, as a Massachusetts business
trust. Prior to August 13, 1990 the Fund was known as Wealth Monitors
Fund. Between August 13, on 1990 and September 25, 1992, the Fund was
known as the Sunshine Growth Trust. From September 25, 1992until July
28, 1995, the Fund was known as the Cornerstone Growth Fund. The Fund is
currently the only series of the CornerCap Group of Funds. The
Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which
he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his office. In addition, the Declaration of Trust
contains an express disclaimer of Shareholder liability for acts or
obligations of the Fund.
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of
Trustees and on other matters submitted to meetings of shareholders. It
is not contemplated that regular annual meetings of shareholders will be
held. The Board of Trustees may, at its own discretion, create additional
series of shares.
The Declaration of Trust provides that the Fund's shareholders
have the right, upon the declaration in writing or vote of more
than two-thirds of its outstanding shares, to remove a Trustee.
The Trustees will call a meeting of shareholders to vote on the
removal of a trustee upon the written request of the record
holders of ten percent of its shares. In addition, ten shareholders
holding the lesser of $25,000 worth or one percent of Fund shares may
advise the Trustees in writing that they wish to communicate with other
shareholders for the purpose of requesting a meeting to remove a Trustee.
The Trustees will then, if requested by the applicants, mail at the
applicants' expense the applicants' communications to all other
shareholders. Except for a change in the name of the Fund, no amendment
may be made to the Declaration of Trust without the affirmative vote of
the holders of more than 50% of its outstanding shares. The holders of
shares have no pre-emptive or conversion rights. Shares when issued are
fully paid and non-assessable, except as set forth above. The Fund may be
terminated upon the sale of its assets to another issuer, if such sale is
approved by the vote of the holders of more than 50% of the outstanding
shares of each series, or upon liquidation and distribution of its
assets, if so approved. If not so terminated, the Fund will continue
indefinitely.
With respect to the purchase and sale of Fund shares, certain
broker/dealers other than the Distributor may charge a fee to Fund
investors for executing transactions on the investor's behalf. Such
transactions may be executed on the investor's behalf directly through
the Fund's Transfer Agent without payment of such a fee. See the section
entitled "How to Purchase Shares" in the Prospectus.
17<PAGE>
The Advisor will sell portfolio securities whenever it is appropriate,
regardless of how long the securities have been held by the Fund. The
Advisor will change the Fund's investments whenever it believes doing so
furthers the Fund's investment objective. Portfolio turnover involves
some expense to the Fund, including brokerage commissions and other
transaction costs and reinvestment in other securities. Portfolio
turnover may also result in the recognition of capital gains which may be
distributed to shareholders. Tax considerations may limit the Fund's
portfolio turnover. The Fund's annual rate on portfolio turnover is
anticipated to be between 30% and 70%. For the year ended March 31, 1996,
the portfolio turnover rate was 40.83%. Tait, Weller & Baker serves as
the certified public accountants of the Fund. Funds Services, Inc. serves
as the Fund's Transfer Agent. Commonwealth Fund Accounting provides the
daily pricing for the Fund. The Trust Department of Wachovia Bank of
N.C. is the custodian of the Fund's assets. Kilpatrick & Cody serves as
legal counsel for the Fund. Shareholder inquiries related to the
administration of shareholder accounts should be directed to the Transfer
Agent, and inquiries related to the investment objectives of the Fund
should be directed to the Advisor.
18
<PAGE>
CORNERCAP GROWTH FUND
NEW ACCOUNT APPLICATION FORM
Please complete items 1, 2 and 3.
1. NAME
Individual__________________________________________________________
First Middle Last
Joint Owner_________________________________________________________
First Middle Last
Gift to Minors____________________as custodian for________________
Name of Custodian Name of Minor
under the (State)____________________Uniform Gifts to Minors Act
(show minor's Soc. Sec. # Below)
Other_______________________________________________________________
Name of Corporation, Partnership or other Organization.
(If Trust, include names of Trustee and date of trust
instrument. NOTE: These accounts require additional
forms. Please call Transfer Agent at 1-800-628-4077.)
ADDRESS
__________________________________________________(_____)_______________
Street Area Code Daytime
Telephone
_________________________________________________________________________
City State Zip
SOCIAL SECURITY or TAX IDENTIFICATION NUMBER__________________
2. INITIAL INVESTMENT (Minimum $2,000) $_______________(Please make
check payable to CornerCap Growth Fund and mail your investment to
the address shown below.).
3. SIGNATURE(S)
The undersigned warrant(s) that I (we) have full authority to make
this application, am (are) of legal age, and have received and read
a current Prospectus and agree to be bound by its terms. I (we)
understand that all shares will be held in uncertificated form.
Share certificates may be requested, but Telephone Privileges will
not then be available (see other side).
This application is not effective until it is received and accepted
by the Fund. Under the penalties of perjury I (we) certify that the
Social Security or Tax Identification Number shown on this form is<PAGE>
correct, and that I am (we are) not subject to backup withholding as
a result of a failure to report all interest or dividends, or the
Internal Revenue Service has notified me that I am (we are) no
longer subject to backup withholding.
SIGN HERE:
___________________________________ DATE:______________19_____
Signature of Individual (or Custodian)
____________________________________ DATE:______________19_____
Signature of Joint Registrant, if any
TRANSFER AGENT: For Account Information, wire instructions,
or redemptions, call the Fund Services,
Inc., Toll Free at 1-800-628-4077, or write to:
P.O. Box 26305, Richmond, VA 23260.
DISTRIBUTOR: Attisson, Carter & Akers, Inc., 3060 Peachtree Rd.,
SW, Suite 1475
Atlanta, GA 30305 404-364-2070
<PAGE>
CORNERCAP GROWTH FUND
OPTIONAL FEATURES
You may select any or all of these additional services
4. DISTRIBUTION OPTION:
Income dividends and capital gains are automatically
reinvested, unless you elect otherwise:
____ Yes, please reinvest my distributions in additional shares
(at no charge)
____ No, please make distributions as follows:
____ All distributions in cash.
____ Dividends in cash. Capital gains reinvested in
shares.
5. TELEPHONE PRIVILEGES:
To use the telephone to authorize the transactions below,
please check the appropriate box(es):
_____ I (we) hereby authorize Fund Services, Inc. to honor
telephone instructions for my (our) account. Neither the Fund
nor Fund Services, Inc. will be liable for properly acting upon
telephone instructions believed to be genuine. I (we)
understand that redemptions authorized by telephone are paid by
check and are mailed to me (us).
6. AUTOMATIC INVESTMENT PLAN:
To make automatic monthly investments from you bank account,
check the box below (Minimum monthly investment amount is
$250.00).
______ This Plan allows me(us) to make automatic monthly
investments from my(our) bank account. Fund Services, Inc.
will transfer money from my(our) bank account into the Fund.
There is no charge, and I may cancel at any time.
Invest $_______________________into my(our) account on the 15th
day of each month by transfer from my(our) bank account.
(Please include a voided check.)
7. AUTOMATIC WITHDRAWAL PLAN:
Automatic withdrawals are available for CornerCap Growth Fund
accounts of $10,000 or more. The minimum withdrawal per month<PAGE>
is $100 and will be withdrawn on the 25th of each month.
Please call the Transfer Agent at 1-800-628-4077 for further
instructions.
_____ Please send me additional information on IRA (Individual
Retirement Account.)
PLEASE SEND YOUR COMPLETED APPLICATION AND CHECK, MADE PAYABLE TO
CORNERCAP GROWTH FUND TO: FUND SERVICES, INC., P.O. BOX 26305,
RICHMOND, VA 23260
____________________________________________________________________
Registered Rep. Name Rep. Number Branch Wire Code
_________________________________________________(___)______________
Branch Address Area Code Telephone Number
CORRESPONDENT FIRM IDENTIFICATION
____________________________________________________________________
Firm Name and Address
___________________________________________________________________
Authorized Signature<PAGE>
PART B
Statement of Additional Information
Dated July 29, 1996
The CornerCap Growth Fund (the "Fund") is currently the only series of
the CornerCap Group of Funds, a diversified open-end management
investment company registered with the Securities and Exchange Commission
(the "SEC") as required by the Investment Company Act of 1940 (the "1940
Act").
This Statement of Additional Information is not a prospectus, and it
should be read in conjunction with the Prospectus of the Fund dated July
29, 1996, as may be amended from time to time (the Prospectus"); copies
of the Prospectus may be obtained from the Fund, c/o Cornerstone Capital
Corp., 100 NorthCreek, Suite 250, Atlanta, GA, 30327. Cornerstone
Capital Corp. (the "Advisor") is the Fund's investment advisor.
TABLE OF CONTENTS
Page
Investment Objectives and Policies . . . . . . . . . 2
Portfolio Turnover . . . . . . . . . . . . . . . . . 2
Investment Restrictions . . . . . . . . . . . . . . . 2
Management . . . . . . . . . . . . . . . . . . . . . 4
The Advisor . . . . . . . . . . . . . . . . . . . . . 5
Accounting & Administrative Services . . . . . . . . 6
Portfolio Transactions and Brokerage . . . . . . . . 6
Distribution Plan . . . . . . . . . . . . . . . . . . 7
Net Asset Value . . . . . . . . . . . . . . . . . . . 9
Tax Status . . . . . . . . . . . . . . . . . . . . . 9
General . . . . . . . . . . . . . . . . . . . . . . 10
Principal Shareholders . . . . . . . . . . . . . . 12
Performance Information . . . . . . . . . . . . . . 12
Financial Statements . . . . . . . . . . . . . . . 13
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is long-term capital appreciation.
Income from dividends or interest on portfolio securities is a secondary
objective in the management of the Fund's portfolio. The portfolio and
investment strategies of the Fund are described in the Fund's Prospectus.
1<PAGE>
Prior to August 13, 1990, the Fund was known as Wealth Monitors Fund.
From August 13, 1990 to September 25, 1992 the Fund was known as the
Sunshine Growth Trust. From September 25, 1992 to June 30, 1995 the Fund
was known as the Cornerstone Growth Fund.
PORTFOLIO TURNOVER
An annual portfolio turnover rate is, in general, the percentage computed
by taking the lesser of purchases or sales of portfolio securities
(excluding certain short-term securities) for a year and dividing that
amount by the monthly average of the market value of such securities
during the year. The Fund's portfolio turnover rate for the fiscal year
ended March 31, 1996 was 40.83%. The Fund's portfolio turnover rate in
the future is expected to be in the range of 30% to 70%. Higher turnover
would involve correspondingly greater commissions and transaction costs.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions (in addition to those
indicated in its Prospectus) as fundamental policies, which may not be
changed without the favorable vote of the holders of a "majority," as
defined in the 1940 Act, of the Fund's outstanding voting securities.
Under the 1940 Act, the vote of the holders of a "majority" of a Fund's
outstanding voting securities means the vote of the holders of the lesser
of (i) 67% of the shares of the Fund represented at a meeting at which
the holders of more than 50% of its outstanding shares are represented or
(ii) more than 50% of the outstanding shares. The Fund may not:
1. Purchase securities on margin (but the Fund may obtain such short-
term credits as may be necessary for the clearance of transactions);
2. Issue senior securities, borrow money or pledge its assets except
that the Fund may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 33% (taken at the lower of cost or
current value) of its total assets (not including the amount
borrowed) and pledge its assets to secure such borrowings; the Fund
will not purchase any additional portfolio securities while such
borrowings are outstanding;
3. Purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common
stock issues of an issuer as a single class, all preferred stock
issues as a single class, and all debt issues as a single class) or
more than 33.33% of the outstanding voting securities of an issuer;
2
<PAGE>
4. Purchase any security if as a result the Fund would then have more
than 5% of its total assets (taken at current value) invested in
securities of companies (including predecessors) less than three
years old;
5. Invest in securities of any issuer if, to the knowledge of the Fund,
any officer or Trustee of the Fund or officer or director of the
Advisor owns more than 1/2 of 1% of the outstanding securities of
such issuer, and such Trustees, officers and Trustees who own more
than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer;
6. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;
7. Make investments for the purpose of exercising control or management;
8. Participate on a joint, or joint and several basis in any trading
account in securities;
9. Invest in securities of other registered investment companies;
10. Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the common stocks of
companies which invest in or sponsor such programs;
11. Make loans, except through repurchase agreements;
12. Purchase warrants if as a result the Fund would then have more
than 5% of its total net assets (taken at the lower of cost or
current value) invested in warrants, or if more than 2% of the value
of the Fund's total net assets would be invested in warrants which
are not listed on the New York or American Stock Exchanges, except
for warrants included in units or attached to other securities;
13. Buy or sell commodities or commodity contracts, or real estate
or interests in real estate, although it may purchase and sell
securities which are secured by real estate and securities of
companies which invest or deal in real estate. It may buy or sell
futures contracts or options thereon for hedging purposes as
described in the Fund's prospectus.
FOREIGN SECURITIES Investments in securities of foreign issuers offer
potential benefits not available from investments solely in securities of
domestic issuers by offering the opportunity to invest in foreign issuers
that appear to offer growth potential, or in foreign countries with
economic policies or business cycles different from those of the United
States, or to reduce fluctuations in portfolio value by taking advantage
of foreign stock markets that do not move in a manner parallel to U.S.
markets.
3<PAGE>
Investments in securities of foreign issuers present special risks and
considerations not typically associated with investments in domestic
securities. Such risks include lack of information about foreign
issuers, and lack of uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic issuers. In the
past, U.S. Government policies have influenced certain investments abroad
by U.S. investors, through taxation or other restrictions, and it is
possible that such restriction could be reimposed. The Fund may invest
in securities of foreign issuers in an amount up to 20% of its assets.
MANAGEMENT
The Board of Trustees is responsible for the overall management of the
Fund, including general supervision and review of its investment
activities. The officers, who administer the Fund's daily operations,
are appointed by the Board of Trustees. The current Trustees and
principal officers of the Fund, their addresses, and their principal
occupations for the past five years are set forth below. "Interested"
trustees, as defined by the 1940 Act, are designated below by an
asterisk.
<TABLE>
<CAPTION>
Position with Principal occupations
Name and Address Trust during past
five years
- -------------------------------------------------------------------------
<S> <C> <C>
Thomas E. Quinn* Trustee, President President, Cornerstone Capital Corp.
100 Northcreek, Suite 250 and Treasurer
3715 Northside Pkwy., NW
Atlanta, GA 30327
Gene A. Hoots* Vice President Chief
Executive Officer, Cornerstone
119B Reynolda Village Capital Corp.
Winston-Salem, NC 27106
Richard T. Bean Secretary Portfolio Manager, Cornerstone Capital
100 Northcreek, Suite 250 Corp.
3715 Northside Pkwy., NW Assistant
Controller, Godwins Inc.
Atlanta, GA 30327
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Position with Principal occupations
Name and Address Trust during past five years
- ---------------------------------------------------------------------------------
<S> <C> <C>
Richard Boger Trustee President, Export Insurance
495 Arden at Argonne, NW Services, Inc.; Chairman
Atlanta, GA 30305
G. Harry Durity Trustee Corporate Vice President, Worldwide
58 Close Road Business Systems, Automatic Data
Greenwich, CT 06831 Processing, Inc.;
Sr. Vice President, Corp. Develop.,
Laurin M. McSwain Trustee Attorney, Bloodworth & Nix
3000 Andrews Drive, NW
#5
Atlanta, GA 30305
</TABLE>
The Fund incurred Trustees' fees and expenses for fiscal years ended
March 31, 1995 and 1996 of $4,500 and 6800, respectively. Beginning on
November 16, 1994, the Fund began paying trustees who are not affiliated
with the Advisor $500 per regular meeting and committee meeting attended,
plus reimbursement of out of pocket expenses for attending Board
meetings.
THE ADVISOR
Cornerstone Capital Corp. is the Fund's investment advisor. The Fund
pays the Advisor for the services performed a fee at the annual rate of
1% of the Fund's average net assets. This rate is higher than that paid
to most management investment companies. However, the Investment Advisory
Agreement dated September 9, 1992 between the Fund and the Advisor (the
"Agreement") provides that in the event the expenses of the Fund
(including the fees of the Advisor and amortization of organization
expenses but excluding interest, taxes, brokerage commissions and
extraordinary expenses) for any fiscal year exceed the limit set by
applicable regulations of a state securities commission, the Advisor will
reduce its fee to the Fund by the amount of such excess up to the full
amount of the advisor's annual fee. Any such reductions are accrued and
paid in the same manner as the Advisor's fee and are subject to
readjustment during the year.
As a result of this limitation, the initial former Advisor (Wealth
Monitors, Inc.) waived its fee for each of the four fiscal years ended
March 31, 1990, and the next former Advisor (Dorado/IDS) waived its fee
for the fiscal year ended March 31, 1992. The Advisor has voluntarily
agreed to waive all or such portion of its fee as may be necessary to
cause the total fund operating expenses not to exceed 2.0% of average net
assets. For1996, the Advisor waived the majority of its fee to reduce
the expense ration to 1. 8%. The Advisor has also voluntarily agreed to
reimburse the fund for certain of its operating expenses to the extent
and for so long as may be necessary to keep total Fund operating expenses
at no greater than 2.0% of average net assets.
5<PAGE>
The Agreement also provides that the Advisor shall not be liable to the
Fund for any error of judgment by the Advisor or for any loss sustained
by the Fund except in the case of a breach of fiduciary duty with respect
to the receipt of compensation for services (in which case any award of
damages will be limited as provided in the 1940 Act) or of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
ACCOUNTING AND ADMINISTRATIVE SERVICES
Cornerstone Capital Corp. provides certain record keeping and shareholder
services functions to the Fund. Commonwealth Fund Accounting, as the
Fund's pricing and accounting services agent, calculates the daily net
asset value of the Fund and maintains the accounting records.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Agreement states that in connection with its duties to arrange for
the purchase and the sale of securities held in the portfolio of the Fund
by placing purchase and sale orders for the Fund, the Advisor shall
select such broker-dealers ("brokers") as shall, in the Advisor's
judgment, implement the policy of the Fund to achieve "best execution"--
i.e., prompt and efficient execution at the most favorable securities
price. In making such selection, the Advisor is authorized in the
Agreement to consider the reliability, integrity and financial condition
of the broker.
The Advisor is also authorized by the Agreement to consider whether the
broker provides brokerage and/or research services to the Fund and/or
other accounts of the Advisor. The Agreement states that the commissions
paid to brokers may be higher than another broker would have charged if a
good faith determination is made by the Advisor that the commission is
reasonable in relation to the services provided, viewed in terms of
either that particular transaction or the Advisor's overall
responsibilities as to the accounts as to which it exercises investment
discretion and that the Advisor shall use its judgment in determining
that the amount of commissions paid are reasonable in relation to the
value of brokerage and research services provided and need not place or
attempt to place a specific dollar value on such services or on the
portion of commission rates reflecting such services. The Agreement
provides that to demonstrate that such determinations were in good faith,
and to show the overall reasonableness of commissions paid, the Advisor
shall be prepared to show that commissions paid (i) were for purposes
contemplated by the Agreement; (ii) were for products or services which
provide lawful and appropriate assistance to the Advisor's decision-
making process; and (iii) were within a reasonable range as compared to
the rates charged by brokers to other institutional investors as such
rates may become known from available information. The Fund recognizes
in the Agreement that, on any particular transaction, a higher than usual
commission may be paid due to the difficulty of the transaction in
question.
6
<PAGE>
The research services discussed above may be in written form or through
direct contact with individuals and may include information as to
particular companies and securities as well as services assisting the
Fund in the valuation of the Fund's investments. The research which the
Advisor receives for the Fund's brokerage commissions whether or not
useful to the Fund, may be useful to the Advisor in managing the accounts
of the Advisor's other advisory clients. Similarly, the research
received for the commissions of such accounts may be useful to the Fund.
In the over-the-counter market, securities are frequently traded on a
"net" basis with dealers acting as principal for their own accounts
without a stated commission, although the price of the security usually
includes a profit to the dealer. Money market instruments usually trade
on a "net" basis as well. On occasion, certain money market instruments
may be purchased by the Fund directly from an issuer in which case no
commissions or discounts are paid. In underwritten offerings, securities
are purchased at a fixed price which includes an amount of compensation
to the underwriter, generally referred to as the underwriter's
concession or discount.
During the three fiscal years ended March 31, 1996, 1995, and 1994, the
Fund paid total brokerage commissions of $46,000, $63,821, and $28,301, ,
respectively.
DISTRIBUTION PLAN
The Fund's Distribution Plan (the "Plan") is its written plan adopted
pursuant to Rule 12b-1 (the "Rule") under the 1940 Act.
The Plan authorizes the Advisor or Distributor to make permitted payments
to any qualified recipient under a related agreement on either or both of
the following bases: (a) as reimbursement for direct expenses incurred
in the course of distributing Fund shares or providing administration
assistance to the Fund or its shareholders, including, but not limited to
advertising, printing and mailing promotional material, telephone calls
and lines, computer terminals, and personnel; and/or (b) at a rate
specified in the related agreement with the qualified recipient in
question based on the average value of the qualified holdings of such
qualified recipient ("Permitted Payments"). The Advisor or Distributor
may make permitted payments in any amount to any qualified recipient,
provided that (i) the total amount of all permitted payments made during
a fiscal year of the Fund to all qualified recipients (whether made under
(a) and/or (b) above) do not exceed in that fiscal year 1/4 of 1% of the
Fund's average annual net assets; and (ii) a majority of the Fund's
qualified Trustees may at anytime decrease or limit the aggregate amount
of all permitted payments or decrease or limit the amount payable to any
Qualified recipient. The Fund will reimburse the Advisor or Distributor
for such permitted payments within such limit, but the Advisor or
Distributor shall bear any permitted payments beyond such limits. A
related agreement will terminate automatically if it is assigned, as that
term is defined in the 1940 Act.
7
<PAGE>
The Plan also authorizes the Advisor or Distributor to purchase
advertising to promote the sale of shares of the Fund, to pay for sales
literature and other promotional material, and to make payments to the
Distributor's sales personnel. Any such advertising and sales material
may include references to other open-end investment companies or other
investments and any sales personnel so paid are not required to devote
their time solely to the sale of Fund shares. Any such expenses
("Permitted Expenses") made during a fiscal year of the Fund shall be
reimbursed or paid by the Fund, except that the combined amount of
reimbursement or payment of Permitted Expenses together with the
Permitted Payments made pursuant to the Plan by the Fund shall not, in
the aggregate, in that fiscal year of the Fund, exceed 1/4 of 1% of the
average net assets of the Fund in such year; and the Advisor or
Distributor shall bear any such expenses beyond such limits. No such
reimbursement may be made for Permitted Expenses or Permitted Payments
for the fiscal year prior to the fiscal year in question or in
contemplation of future Permitted Expenses or Permitted Payments.
The Plan requires that while it is in effect the Advisor shall report in
writing at least quarterly to the Board of Trustees, and the Board shall
review the following: (i) The amounts of all Permitted Payments, the
identity of the recipients of each such payment; the basis on which each
such recipient was chosen as a Qualified Recipient and the basis on which
the amount of the Permitted Payment to such Qualified Recipient was made;
(ii) the amounts of Permitted Expenses and the purpose of each such
Expense; and (iii) all costs of the other payments specified in the Plan
(making estimates of such costs where necessary or desirable), in each
case during the preceding calendar or fiscal quarter. While the Plan is
in effect, the selection and nomination of Trustees who are not
interested persons of the Fund is committed to the discretion of the
Fund's then existing disinterested Trustees.
During the fiscal years ended March 31,1991 through March 31, 1996, the
Fund neither paid nor accrued any liability pursuant to the Plan.
NET ASSET VALUE
As indicated in the Prospectus, the net asset value per share of the
Fund's shares will be determined as of 4:15 p.m. on each day that the New
York Stock Exchange ("NYSE") is open for trading. The NYSE annually
announces the days on which it will not be open for trading; the most
recent announcement indicates that it will not be open on the following
days: New Year's Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, it should be noted that the NYSE may close on days not included
in that announcement.
8<PAGE>
In determining the net asset value of the Fund's shares, common stocks
and other securities that are listed on a national securities exchange or
the NASDAQ National Market System are valued at the last sale price as of
4:15 p.m., New York time, on each day that the NYSE is open for trading,
or, in the absence of recorded sales, at the last closing price on such
exchange or on such System. Unlisted securities that are not included in
such National Market System are valued at the closing price in the over-
the-counter market. Securities and other assets for which market
quotations are not readily available are valued by appraisal at their
fair value as determined in good faith by the Advisor under procedures
established by and under the general supervision and responsibility of
the Board of Trustees. Debt securities which mature in less than 60 days
are valued at amortized cost (unless the Board of Trustees determines
that this method does not represent the fair market value of such
assets), if their original maturity was 60 days or less.
TAX STATUS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends and Tax
Status."
When an income dividend or capital gains distribution is paid by the
Fund, net asset value per share is reduced automatically by the amount of
the dividend or distribution. If net asset value per share is reduced
below a shareholder's cost basis as a result, such a distribution might
still be taxable to the shareholder as ordinary income or capital gain
(as the case may be) although in effect it represents a return of
invested capital. For this reason, investors should consider carefully
the desirability of purchasing shares immediately prior to a distribution
date.
The Fund does not intend to invest in foreign issuers which meet the
definition in the Code of passive foreign investment companies ("PFICs").
However, foreign corporations are not required to certify their status as
PFICs to potential U.S. investors, and the Fund may unintentionally
acquire stock in a PFIC. The Fund's income and gain, if any, from the
holding of PFIC stock may be subject to a non-deductible tax at the Fund
level.
A portion of the Fund's income dividends may be eligible for the
dividends-received deduction allowed to corporations under the Code, if
certain requirements are met. Investment income received by the Fund
from sources within foreign countries may be subject to foreign income
taxes withheld at the source.
9
<PAGE>
The treatment of income dividends and capital gains distributions to
shareholders of the Fund under the various foreign, state, and local
income tax laws may not parallel that under the Federal law.
Shareholders should consult their tax adviser with respect to applicable
foreign, state, and local taxes.
GENERAL
The Fund is currently the only series of The CornerCap Group of Funds.
The Fund's Declaration of Trust permits its Trustees to issue an
unlimited number of full and fractional shares of beneficial interest and
to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interest in the
Fund. Each share represents an interest in a Fund proportionately equal
to the interest of each other share. Upon the Fund's liquidation, all
shareholders would share pro rata in the net assets of the Fund in
question available for distribution to shareholders. If they deem it
advisable and in the best interest of shareholders, the Board of Trustees
may create additional classes of shares which differ from each other only
as to dividends. The Board of Trustees has created one class of shares,
but the Board may create additional classes in the future, which
have separate assets and liabilities; each of such classes has or will
have a designation including the word "Series". Rule 18f-2 under the
1940 Act provides that matters submitted to shareholders be approved by a
majority of the outstanding securities of each series, unless it is clear
that the interest of each series in the matter are identical or the
matter does not affect a series. However, the rule exempts the selection
of accountants and the election of Trustees from the separate voting
requirements. Income, direct liabilities and direct operating expenses
of each series will be allocated directly to each series, and general
liabilities and expenses of the Fund will be allocated among the series
in proportion to the total net assets of each series by the Board of
Trustees.
Under Massachusetts law, a shareholder of a Massachusetts business trust
may be held liable as a partner under certain circumstances. The Fund's
Declaration of Trust, however, contains an express disclaimer of
shareholder liability for its acts or obligations and requires that
notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Fund or its Trustees. The
Declaration of Trust provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally
liable for its obligations. The Declaration of Trust also provides that
the Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. In addition, the operation of the Fund as an
investment company would not likely give rise to liabilities in excess of
its assets. Thus the risk of a shareholder incurring financial loss on
account of shareholder liability is highly unlikely and is limited to the
relatively remote circumstances in which the Fund would be unable to meet
its obligations.
The Fund entered into a Distribution Agreement effective as of March 31,
1995, with Attkisson, Carter & Akers, Inc., a securities broker/dealer
registered pursuant to the Securities Exchange Act of 1934, and located
in Atlanta, Georgia. No fee is paid pursuant to this agreement other
than reimbursement under the Fund's Rule 12b-1 Distribution Plan.
With respect to the purchase and sale of Fund shares, certain
broker/dealers other than the Distributor may charge a fee to Fund
investors for executing transactions on the investor's behalf. Such
10<PAGE>
transactions may be executed on the investor's behalf directly through
the Fund's Transfer Agent without payment of such a fee. See the
section entitled "How to Purchase Shares" in the Prospectus.
Funds Services, Inc. serves as the Transfer Agent. Funds Services, Inc.,
in its function as Transfer Agent, disburses dividends, processes new
accounts, purchases, redemptions, transfers, and issues certificates.
Commonwealth Fund Accounting acts as the Fund's accounting services
agent. Wachovia Bank. acts as the Fund's custodian to hold its assets in
safekeeping and collect income.
The Fund's independent public accountants, Tait, Weller & Baker, perform
an annual audit of the Fund's accounts, assist in the preparation of
certain reports to the SEC, and prepare the Fund's tax returns.
11
<PAGE>
PRINCIPAL SHAREHOLDERS
As of June 30, 1996, no shareholder owned beneficially more than 5% of
the outstanding shares of the Fund.
PERFORMANCE INFORMATION
The average annual compound rates of return (unaudited) as of March 31,
1996 for the Fund for the periods listed below are as follows:
<TABLE>
<CAPTION>
Fund
----
<S> <C>
1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.71%
3.5 years (Since Inception of Management by Cornerstone Capital) . . . . . . . . 11.03%
5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01%
9.71 years (Since Fund Inception) . . . . . . . . . . . . . . . . . . . . . . . 1.67%
</TABLE>
Example:
<TABLE>
<CAPTION>
Based on the average annual compound rates of (Unaudited
return listed above over these periods, you could One 3.5 Five 9.71
have expected the following values on a $10,000 Year Years Years Years
investment assuming no redemption at the end of ---- ----- ----- -----
each time period. (March 31, 1996)
<S> <C> <C> <C> <C>
$11,471 $14,423 $15,393 $11,745
</TABLE>
The following is a brief description of how performance is calculated.
Quotations of average annual total return for the Fund will be expressed
in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1 year, 5 years, and
since inception (9.71 years). These are the annual total rates of return
that would equate the initial amount invested to the ending redeemable
value. These rates of return are calculated with the following formula:
P(1+T)n = ERV
(where T= average annual total return; ERV = ending redeemable value of a
hypothetical $10,000 investment made at the beginning of the period; P =
a hypothetical initial payment of $10,000; and n = number of years). All
total return figures reflect the deduction of a proportional share of
Fund expenses on an annual basis, and assume that all dividends and
distributions are reinvested when paid.
12
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Fund for the year ended March 31, 1996
and the report of the Fund's independent accountants are included in the
Fund's Annual Report to shareholders. A copy of the Annual Report
accompanies this SAI. The following financial statements appearing in
such Annual Report are incorporated by reference into this SAI.
Report of Independent Accountants . . . 1
Schedule of Investments . . . . . . . . 2
Statement of Assets and Liabilities . . 6
Statement of Operations . . . . . . . . 7
Changes in Net Assets . . . . . . . . . 8
Financial Highlights . . . . . . . . . . 9
Notes to Financial Statements . . . . . 10
13
<PAGE>
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. Incorporated by reference in the Fund's
Annual Report to Shareholders for the fiscal year ended
March 31, 1996.
(b) Exhibits:
(1) (a) Declaration of Trust - Previously filed.*
(b) Supplemental Declaration of Trust - Previously filed.*
(c) Supplemental Declaration of Trust (dated September 23,
1992 - Incorporated by Reference from PEA No. 8,
filed July 29, 1993)
(2) By-Laws - Previously filed.*
(3) Not Applicable.
(4) Certificate Specimen (Incorporated by Reference from PEA No. 7,
filed September 23, 1992).
(5) Investment Advisory Agreement (dated September 9, 1992) -
Incorporated by Reference from PEA No. 8, filed July 29,
1993.
(6) Distribution Agreement (dated March 31, 1995) - Incorporated by
Reference from PEA No. 10, filed July 31,1995
(7) Not Applicable.
(8) (a) Custody Agreement (dated October 30, 1992) - Incorporated
by Reference from PEA No. 8, filed July 29, 1993.
(b) Accounting Services Agreement (dated October 1, 1992) -
Incorporated by Reference from PEA No. 8, Filed July 29, 1993.
(c) Transfer Agent Agreement (dated October 6, 1992) -
Incorporated by Reference from PEA No. 8, filed
July 29, 1993.
(9) Administrative Agreement (dated June 30, 1995) - Incorporated
by Reference from PEA No. 10, filed July 31,1995
(10) Opinion of Counsel (The Opinion of Counsel with respect to
shares previously sold was attached to the Fund's 24f-2
Notice, which was filed on May 29, 1996).
(11) (a) Consent of Independent Auditors
(b) Power of Attorney (Incorporated by Reference from PEA
No.7, filed September 23, 1992).
(12) Not Applicable.
(13) Not Applicable.
(14) Individual Retirement Account - Incorporated by Reference from
PEA No. 8, filed July 29, 1993.<PAGE>
(15) Distribution Plan - Incorporated by Reference from PEA No. 10,
filed July 31, 1995
(16) Performance Calculation - Incorporated by Reference from PEA
No. 10, filed July 31,1995
* Previously filed and incorporated by reference to the Registrants
Registration Statement on Form N-1a, File No. 33-3149
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
On June 28, 1996, there were 427 record holders of the
Registrant s shares.
ITEM 27. INDEMNIFICATION.
Previously filed on and incorporated by reference from PEA No.
7, filed September 23, 1992.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
Cornerstone Capital Corp. (the "Advisor") is the investment
advisor of the Registrant. For information as to the
business profession, vocation or employment of a
substantial nature of the Advisor, its directors and
officers, reference is made to Part B of this
Registration Statement and to Form ADV filed under the
Investment Advisers Act of 1940 by the Advisor.
ITEM 29. PRINCIPAL UNDEWRITER.
(a) Attkisson, Carter and Akers, Inc.
(b) Name & Principal Position With Position
Business Address Underwriter Registrant
---------------- ----------- -----------
Ronald L. Attkisson President, Chief None
3060 Peachtree Rd., NW Executive Officer, Director
Suite 1475
Atlanta, GA 30305
Belfield H. Carter, Jr. Chairman, None
3060 Peachtree Rd., NW Director
Suite 1475
Atlanta, GA 30305
C. Scott Akers, Jr. Sr. Vice President, None
3060 Peachtree Rd., NW Director
Suite 1475
Atlanta, GA 30305
Kristin W. Montet Chief Financial Officer None
3060 Peachtree Rd., NW
Suite 1475
Atlanta, GA 30305
Mark D. Hill Sr. Vice President None
3060 Peachtree Rd., NW
Suite 1475
Atlanta, GA 30305<PAGE>
(c) (1) Attkisson, Carter & Akers, Inc.
(2) 0
(3) 0
(4) $ 15,000.00
(5) 0
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All shareholder account records including share ledgers,
duplicate confirmation, duplicate account statements, and
application forms are maintained by the Registrant's
Transfer Agent, Fund Services, Inc., 1500 Forest Avenue,
Suite 111, Richmond, Virginia 23229.
Certain accounting records of the Registrant are maintained by
Commonwealth Fund Accounting, Inc. in its capacity as
Accounting Services Agent. These records include:
general ledger, supporting ledgers, pricing computations,
etc. The address of Commonwealth Fund Accounting, Inc.
is 1500 Forest Avenue, Suite 111, Richmond, Virginia,
23229.
Actual portfolio securities and other investment assets
(including cash) are maintained in the custody of the
Registrant's Custodian Bank, Wachovia Bank of North
Carolina, M/C 31013, 301 N. Main Street, Winston-Salem,
North Carolina 27150-3099.
Records relating to the investment of the Cornerstone Growth
Fund, including research information, records relating to
the placement of brokerage transactions, memorandum
regarding investment recommendations for supporting
and/or authorizing the purchase or sale of assets, and
all other records of the Registrant required to be
maintained pursuant to Section 31(a) of the 1940 Act, and
Rule 31a-1 thereunder (such records include copies of the
Declaration of Trust, By-Laws, minute books, original
copies of all agreements, compliance records and reports,
etc.) are maintained at Cornerstone Capital Corp., 100
Northcreek, Suite 250, 3715 Northside Parkway, N.W.,
Atlanta, Georgia, 30327.
Blue Sky records are originated and maintained by Commonwealth
Shareholder Services, Inc., at 1500 Forest Avenue, Suite
223, Richmond, Virginia, 23229. Duplicate copies of Blue
Sky records are also maintained at Cornerstone Capital
Corporation, (address noted above).
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Satisfied.<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Atlanta, and the
State of Georgia on the 18th day of July, 1996.
CornerCap Group of Funds - Registrant
BY:/s/ Thomas E. Quinn
Thomas E. Quinn, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the date indicated below.
/s/ Thomas E. Quinn Trustee 18 July, 1996
Thomas E. Quinn Principal Executive Officer
Principal Accounting Officer
Richard L. Boger** Trustee
Richard L. Boger
G. Harry Durity** Trustee
G. Harry Durity
Laurin M. McSwain** Trustee
Laurin M. McSwain
** Made pursuant to a Power of Attorney previously filed.
/s/ Thomas E. Quinn 18 July, 1996
Thomas E. Quinn
Attorney in Fact<PAGE>
EXHIBIT INDEX
EXHIBIT
(11) Consent of Independent Certified Public Accountants
(27) Financial Data Schedule
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated March 31, 1996 on the
financial statements and per share data and ratios of the Cornerstone
Growth Fund. Such financial statements and per share data and ratios
appear in the 1996 Annual Report to Shareholders which is incorporated by
reference in the Post-Effective Amendment to the Registration Statement
on Form N-1A of Cornerstone Growth Fund. We also consent to the references
to our Firm in the Registration Statement and Prospectus.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 18, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000789280
<NAME> CORNERCAP GROUP OF FUNDS
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7,265,699
<INVESTMENTS-AT-VALUE> 8,363,975
<RECEIVABLES> 6,609
<ASSETS-OTHER> 7,214
<OTHER-ITEMS-ASSETS> 350
<TOTAL-ASSETS> 8,378,148
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,899
<TOTAL-LIABILITIES> 6,899
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,070,926
<SHARES-COMMON-STOCK> 853,467
<SHARES-COMMON-PRIOR> 847,312
<ACCUMULATED-NII-CURRENT> 15,121
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (783,074)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,098,276
<NET-ASSETS> 8,371,249
<DIVIDEND-INCOME> 165,195
<INTEREST-INCOME> 17,080
<OTHER-INCOME> 0
<EXPENSES-NET> 142,097
<NET-INVESTMENT-INCOME> 40,178
<REALIZED-GAINS-CURRENT> 201,707
<APPREC-INCREASE-CURRENT> 862,129
<NET-CHANGE-FROM-OPS> 1,104,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 51,322
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 211,232
<NUMBER-OF-SHARES-REDEEMED> 210,768
<SHARES-REINVESTED> 5,691
<NET-CHANGE-IN-ASSETS> 1,072,601
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 81,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 191,241
<AVERAGE-NET-ASSETS> 8,137,300
<PER-SHARE-NAV-BEGIN> 8.61
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 1.22
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.81
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
