CORNERCAP GROWTH FUND
ANNUAL REPORT TO SHAREHOLDERS
A Series of
CornerCap Group of Funds
A "Series" Investment Company
FOR THE FISCAL YEAR ENDED
MARCH 31, 1997<PAGE>
The Peachtree, Suite 1700 Advisor: (800) 728-0670
1355 Peachtree Street NE Administrator: (888) 81 FUNDS
Atlanta, GA 30309 Telecopier: (404) 892-9353
CornerCap Growth Fund
Manager's Report to the Shareholders
for the year ended March 31, 1997
Dear Shareholder:
As of our March 31, 1997, fiscal year end, the Fund's net
asset value was $11.67 per share. For the year, this reflects a
total return of 19.8%. In a few months (September 30) we will
have managed the CornerCap Growth Fund for five years. This is
an important date for us, since many prospective fund investors
closely scrutinize five year performance results before making an
investment. Long term investors will remember the poor pre-
9/30/92 performance delivered by the previous advisors to the
Fund. We look forward to those results continuing to drop
further off the historic charts.
As depicted on the price chart on the back of this page, the
Fund has gone from $6.87 at 9/30/92 to $12.72 per share as of
5/28/97, and this does not consider the dividends paid over that
period. This most recent price reflects a 9% growth in our
Fund's shares since our last quarterly report on March 31, 1997.
This recent return, plus the 28.9% return in 1996 (ranking our
Fund 14th in the nation for capital appreciation), has enabled
the Fund to deliver results that we believe are attractive for
our shareholders. More importantly, this has not been a good
market for smaller capitalization, value-oriented equity
securities, which is the focus of our Fund's investment approach.
The objective of the Fund is to be approximately fully
invested in a diversified portfolio of small to intermediate size
common stocks. We talk to most shareholders before they make a
contribution to the Fund, and we try to insure that their
objectives are consistent with those of the Fund. Attached is
the Annual Report prepared by the Fund's auditors, Tait, Weller &
Baker. As part of the financial statements, you will find a list
of the portfolio holdings as of March 31, 1997, grouped by
industry classification.
As we have been promising our shareholders, we have added
another member to our CornerCap Group of Funds. We are now
managing the CornerCap Balanced Fund, which has a Net Asset Value
of $8.25 per share as of May 28, 1997. The investment objectives
for this fund are more conservative than for the CornerCap Growth
Fund. While the Balanced Fund will have a significant growth
component, targeting approximately 60% in equities over time, it
will also have a target allocation for fixed income securities --
corporate and government bonds. The Balanced Fund should be less
volatile than the Growth Fund, and it will generate a higher
portion of its total return from yield.
There are no load charges for contributing or withdrawing
moneys from any CornerCap Fund. Also, we are not paying 12b1
fees on the Funds. Since there is no way to adequately
compensate a broker for selling our Funds, they are typically not
offered through the retail brokerage firms. Our Funds may be
purchased through a Charles Schwab brokerage account, or more
typically, direct from the Transfer Agent, Fortune Fund<PAGE>
Administration (888/81FUNDS).
With all of our investment products, we work hard to create
a strategy and structure that will create (1) the highest
possible return for a given target risk, (2) the lowest possible
downside volatility relative to that risk, and (3) at the lowest
possible cost. In that regard, using our family of CornerCap
mutual funds and several Federated Investor funds, we have
developed an excellent 401K product for our clients. We use
Fortune Benefits, an affiliate company of Fortune Fund
Administration, to do the administration for the plans. We
charge no investment management fee to the 401K plan. This is a
one-stop-shopping product that is designed to deliver good
performance and to minimize the hassles and costs often
experienced by trustees and participants.
Thank you for your investment in the CornerCap Growth Fund,
and for your continued support of your investment advisor,
Cornerstone Capital. Please let us know if we can be of further
service to you or someone you know.<PAGE>
"Comparison of Change in Value of a $10,000 investment in the
CornerCap Growth Fund, the Value Line Index, & the S&P 500 Index"
Subtitle
Note: This is the footnote
CGF Value Line
9/92 "10,000" "10,000"
12/92 "10,771" "10,857"
3/93 "11,019" "11,454"
6/93 "11,063" "11,436"
9/93 "11,048" "11,882"
12/93 "11,354" "12,244"
3/94 "11,223" "11,863"
6/94 "11,485" "11,500"
9/94 "11,909" "12,096"
12/94 "12,275" "11,713"
3/95 "12,597" "12,380"
6/95 "12,899" "13,247"
9/95 "13,183" "14,148"
12/95 "13,473" "14,205"
3/96 "14,449" "14,858"
6/96 "15,760" "15,313"
9/96 "15,789" "15,455"
12/96 "17,375" "16,334"
3/97 "17,315" "16,189"
12.98% 11.30%<PAGE>
"Comparison of Change in Value of $10,000 investment in the
CornerCap Growth Fund, the Value Line Index, & the S&P 500
Index"
Subtitle
Note: This is the footnote
CGF Value Line
9/30/86 "10,000" "10,000"
3/31/87 "11,112" "11,286"
3/31/88 "7,875" "9,858"
3/31/89 "8,906" "10,883"
3/31/90 "8,411" "11,036"
3/31/91 "7,963" "11,027"
3/31/92 "9,383" "12,205"
3/31/93 "9,359" "13,556"
3/31/94 "9,519" "14,039"
3/31/95 "10,138" "14,651"
3/31/96 "11,743" "17,567"
3/31/97 "14,092" "19,148"
5year 8.47%
inception 3.03%<PAGE>
Cornerstone Capital Corp.
May 30, 1997
Sep-92 $6.87
Oct-92 $6.87
Nov-92 $7.20
Dec-92 $7.40
Jan-93 $7.64
Feb-93 $7.50
Mar-93 $7.57
Apr-93 $7.59
May-93 $7.67
Jun-93 $7.60
Jul-93 $7.53
Aug-93 $7.63
Sep-93 $7.59
Oct-93 $7.64
Nov-93 $7.59
Dec-93 $7.78
Jan-94 $8.09
Feb-94 $8.01
Mar-94 $7.69
Apr-94
$7.76
May-94 $7.90
Jun-94 $7.87
Jul-94 $8.05
Aug-94 $8.32
Sep-94 $8.16
Oct-94 $8.24
Nov-94 $8.04
Dec-94 $8.39
Jan-95 $8.26
Feb-95 $8.54
Mar-95 $8.61
Apr-95 $8.68
May-95 $8.84
Jun-95 $8.82
Jul-95 $9.03
Aug-95 $9.05
Sep-95 $9.01
Oct-95 $8.51
Nov-95 $8.94
Dec-95 $9.15
Jan-96 $9.15
Feb-96 $9.53
Mar-96 $9.81
Apr-96 $10.38
May-96 $10.64
Jun-96 $10.68
Jul-96 $10.20
Aug-96 $10.50
Sep-96 $10.72
Oct-96 $10.91
Nov-96 $11.36
Dec-96 $11.71
Jan-97 $11.88
Feb-97 $11.97
Mar-97 $11.67
Apr-97 $11.79
May-97 $12.72<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
CornerCap Growth Fund
Atlanta, Georgia
We have audited the accompanying statement of assets and
liabilities of CornerCap Growth Fund, including the portfolio of
investments, as of March 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the
period then ended. These financial statements are the
responsibility of the Trust'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 generally accepted
auditing standards. 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. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. 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 CornerCap Growth Fund as of March 31, 1997,
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 generally
accepted accounting principles.
/s/ Tait, Weller & Baker
Philadelphia, Pennsylvania
May 23, 1997<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
March 31, 1997
___________________________________________________________________
<TABLE>
<CAPTION>
Value
Shares (Note 1-A)
------ ----------
COMMON STOCKS - 97.86%
----------------------
<C> <S> <C>
Building Materials - 5.16%
10,700 Southdown, Inc. $ 366,475
11,750 International Aluminum Corp. 296,688
-----------
663,163
-----------
Specialty Chemicals - 2.06%
12,450 Furon Company 264,562
-----------
Computer Software & Service - 2.53%
12,750 BancTec, Inc. * 325,125
-----------
Containers - Metal Glass - 2.27%
11,000 Ball Corp. 291,500
-----------
Diversified Companies - 2.26%
6,400 Sprint Corp. 291,200
-----------
Electric Products - 5.19%
13,000 Ametek 274,625
10,300 Dynamics Corp. of America 392,688
-----------
667,313
-----------
Electronic Components - 2.21%
12,400 Watkins Johnson 283,650
-----------
Electronics - Distributor - 2.04%
14,600 Bell Industries 262,800
-----------
Equipment - Medical - 2.27%
14,500 Marquette Medical System 291,813
-----------
Franchise - 4.94%
30,800 NPC International 327,250
14,900 Wendy's International 307,312
-----------
634,562
-----------
Furniture/Home Furnishings - 2.83%
21,100 Culp, Inc. 363,975
-----------
Home Building - 4.41%
21,900 Ryland Group, Inc. 257,325
10,600 Pulte 310,050
-----------
567,375
-----------
Instruments - Controls - 2.00%
11,700 Duricon Co. 257,400
-----------
</TABLE>
__________________________________________________________________________<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (Continued)
March 31, 1997
____________________________________________________________________
<TABLE>
<CAPTION>
Value
Shares (Note 1-A)
------ ----------
<C> <S> <C>
Insurance - Diversified - 2.14%
5,650 American Bankers Insurance Group 275,438
-----------
Insurance - Life - 2.68%
6,450 Providian Corp. 345,075
-----------
Insurance - Property & Casualty - 4.48%
31,742 Gainsco, Inc. 285,678
4,700 Orion Capital Corp. 290,225
-----------
575,903
-----------
Integrated Steel Producer - 2.15%
14,200 Inland Steel Industries 276,900
-----------
Machinery - Diversified - 4.11%
20,800 Huffy Corp. 286,000
9,300 Standex International 242,962
-----------
528,962
-----------
Manufacturer - Industrial - 2.23%
9,150 Crane Co. 287,081
-----------
Merchandise - Discount Store - 1.93%
16,500 Shopko Stores 247,500
-----------
Metal Fabricating & Fasteners - 2.17%
18,600 Handy & Harman 279,000
-----------
Mineral Resources - 2.05%
11,100 Cyprus Amax Minerals 263,625
-----------
Oil Refining - 1.72%
21,000 Tesoro Petroleum 220,500
-----------
Retail - Mail Order - 1.89%
15,300 Blair Corp. 242,887
-----------
Restaurants - 2.17%
31,000 Piccadilly Cafeterias 279,000
-----------
Scientific Equipment - 3.88%
13,200 EG&G, Inc. 275,550
-----------
15,000 VWR Scientific Products 223,125
-----------
498,675
-----------
Securities Brokerage - 2.04%
5,250 Salomon, Inc. 261,844
-----------
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (Continued)
March 31, 1997
__________________________________________________________________
<TABLE>
<CAPTION>
Value
Shares (Note 1-A)
------ ----------
<C> <S> <C>
Shipping - 2.79%
36,850 OMI Corp. 359,288
-----------
Steel - Specialty - 2.31%
17,100 Oregon Steel 297,113
-----------
Telecommunications - Foreign - 2.48%
4,450 Telefonica de Espana Sponsored ADR 319,287
Textiles - Apparel - 5.82%
14,950 Kellwood Co. 373,750
48,300 Tultex Corporation 374,325
-----------
748,075
-----------
Textiles - Manufacture/Recycles - 1.66%
12,200 Wellman, Inc. 213,500
-----------
Tobacco - 4.31%
10,550 UST Inc. 294,081
9,000 Universal Corp. 259,875
-----------
553,956
-----------
Transport - Equipment - 2.68%
17,640 VarLen Corp. 343,980
-----------
Total Common Stocks (Cost $11,249,930) 12,582,027
Principal
Amount SHORT-TERM INVESTMENTS - 2.07%
<C> <S> <C> <C>
$265,893 Wachovia Bank Short-Term Authorized Demand Notes
(Cost $265,893) 265,893
-----------
Total Investments (Cost $11,515,823)(a) 99.93 % 12,847,920
Other Assets in Excess of Liabilities - Net .07 8,377
------- ----------
Net Assets 100.00 % $ 12,856,297
======== ==========
* Non-Income Producing Security
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(a) Aggregate cost for federal income tax purposes is $11,515,823. At
March 31, 1997, unrealized appreciation (depreciation) of securities
for federal income tax purposes is as follows:
Unrealized appreciation $ 2,030,948
Unrealized depreciation 698,851
----------
Net unrealized appreciation $ 1,332,097
===========
_________________________________________________________________________
See accompanying notes to financial statements
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
_________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at market value, (Identified cost $7,265,699) (Note 1-A) $ 12,847,920
Cash 1,059<PAGE>
Dividends receivable 10,371
Other assets 27,231
-----------
Total assets 12,886,581
-----------
LIABILITIES
Payable for capital stock redeemed 19,219
Accrued expenses 11,065
-----------
Total liabilities 30,284
-----------
NET ASSETS
(Applicable to 1,101,025 shares outstanding,
$.01 par value, unlimited shares authorized) $ 12,856,297
===========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($12,856,297 divided by 1,101,025 shares) $ 11.68
=======
NET ASSETS
At March 31, 1997, net assets consisted of:
Paid-in capital $ 10,739,717
Accumulated net investment income 22,440
Accumulated net realized gains on investments 762,043
Unrealized appreciation of investments 1,332,097
--------------
$ 12,856,297
==============
</TABLE>
_____________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF OPERATIONS
Year ended March 31, 1997
_____________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income
Interest $ 22,681
Dividends 187,360
----------
Total investment income 210,041
Expenses
Fund accounting fees 21,226
Advisory fee (Note 2) 110,145
Professional fees 15,775
Custodian fees 2,461
Transfer agent fees 32,248
Administration fees 24,079
Shareholder servicing costs 6,377
Registration fees 2,592
Insurance 10,282
Trustees fees 7,939
Miscellaneous 3,878
----------
Total expenses 237,002
Less expenses waived and reimbursed (Note 2) (48,145)
-----------
Net expenses 188,857
----------
Net investment income 21,184
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions 1,620,467
Increase in unrealized appreciation of investments 233,821
----------
Net realized and unrealized gain on investments 1,854,288
----------
Net increase in net assets resulting from operations $ 1,875,472
==========
</TABLE>
_______________________________________________________________
See accompanying notes to financial statements
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended March 31, 1997 and 1996
______________________________________________________________
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $ 21,184 $ 40,178
Net realized gain on investments 1,620,467 201,707
Increase in unrealized appreciation of investments 233,821 862,129
------------ -----------
Net increase in net assets resulting from operations 1,875,472 1,104,014
Distributions to shareholders from
Net investment income ($.01 and $.06, respectively) (13,865) (51,322)
Realized gains ($.07 and $0, respectively) (75,349) -
------------ -----------
Total distributions (89,214) (51,322)
------------ -----------
Capital share transactions (a)
Increase in net assets resulting from
capital share transactions 2,698,790 19,909
------------ -----------
Total increase in net assets 4,485,048 1,072,601
NET ASSETS
Beginning of year 8,371,249 7,298,648
------------ -----------
End of year
(including accumulated net investment income of
$22,440 and $15,121, respectively) $ 12,856,297 $ 8,371,249
============ ===========
</TABLE>
<TABLE>
<CAPTION>
(a) Summary of capital share activity follows:
1997 1996
---- ----
Shares Value Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold 375,974 $ 4,117,045 211,232 $ 1,880,260
Shares reinvested 7,481 87,223 5,691 50,656
Shares redeemed (135,896) (1,505,478) (210,768) (1,911,007)
-------- ---------- --------- -----------
Net increase 247,559 $ 2,698,790 6,155 $ 19,909
======== =========== ========= ===========
</TABLE>
____________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
_____________________________________________________________
<TABLE>
<CAPTION>
Years ended March 31,
---------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value,
beginning of year $9.81 $8.61 $7.69 $7.58 $7.60
-----------------------------------------------
Income from
investment operations -
Net investment income (loss) .02 .04 .05 .02 .23
Net realized and unrealized
gain (loss) on investments 1.93 1.22 .89 .11 (.25)
-----------------------------------------------
Total from
investment operations 1.95 1.26 .94 .13 (.02)
-----------------------------------------------
Less distributions from
Net investment income .01 .06 .02 .02 -
Realized gains .07 - - - -
-----------------------------------------------
Total distributions .08 .06 .02 .02 -
-----------------------------------------------
Net asset value,
End of year $11.68 $9.81 $8.61 $7.69 $7.58
===============================================
Total Return 19.94% 14.64 % 12.25 % 1.71 % (.26)%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of year ($000) $12,856 $8,371 $7,299 $4,229 $3,042
Ratios to average net assets
Expenses 1.71% 1.75% 1.87% 2.00% 2.00%
Net investment income (loss) .19% .49% .70% .13% .40%
Portfolio turnover rate 37.13% 40.83% 55.12% 35.58% 83.40%
Average Commission Rate
per share .1129
</TABLE>
__________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
_________________________________________________________________________
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CornerCap Growth Fund (the "FUND") was organized on January 6,
1986 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940 as a diversified open-end
management investment company. Investment operations
commenced on July 17, 1986. The following is a summary of
significant accounting policies followed by the Fund in the
preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles.
A. SECURITY VALUATION - Portfolio securities that are listed
on national securities exchanges or the NASDAQ National
Market System are valued at the last sale price as of 4:15
p.m. Eastern time, or in the absence of recorded sales, at
the average of readily available closing bid and asked
prices on such exchanges or such System. Unlisted
securities that are not included in such System are valued
at the mean of the quoted bid and asked prices in the
over-the-counter-market. Securities and other assets for
which market quotations are not readily available are
valued at fair value as determined in good faith by the
Advisor under procedures established by and under the
general supervision and responsibility of the Fund's Board
of Trustees. Short-term investments are valued at
amortized cost, if their original maturity was 60 days or
less, or by amortizing the values as of the 61st day prior
to maturity, if their original term to maturity exceeded
60 days.
B. SECURITY TRANSACTIONS, INVESTMENT INCOME AND OTHER -
Security transactions are recorded on the next business
date after trade date. Realized gains and losses on sales
of investments are calculated on the identified cost
basis. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis.
C. DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net
investment income and realized gains, if any, are recorded
on the ex-dividend date. Income distributions and capital
gain distributions are determined in accordance with
income tax regulations which may differ from generally
accepted accounting principles.
D. ACCOUNTING ESTIMATES - In preparing financial statements
in conformity with generally accepted accounting
principles, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities
at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
<PAGE>
(2) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The Fund has an investment advisory agreement with the
Advisor, pursuant to which the Advisor receives a fee,
computed daily and payable monthly, at an annual rate of
1.0% of the average daily net assets.
The Advisor provides continuous supervision of the
investment portfolio and pays the cost of compensation of
the officers of the Fund, occupancy and certain clerical and
administration costs involved in the day to day operations
of the Fund. The Fund bears all other costs and expenses.
Under the investment advisory agreement, if the aggregate
expenses of the Fund (including the fees to the Advisor but
excluding taxes, interest, brokerage fees and commissions,
distribution fee and extraordinary expenses) exceed the
limitations imposed by state securities administrators, the
Advisor will reduce its fee by the amount of such excess.
In addition, the Advisor has undertaken to pay fund expenses
in excess of 2.0% of average net assets for the Fund's
fiscal year ending March 31, 1997. For the year ended March
31, 1997, the Advisor waived the Advisory fee of $48,145.
DISTRIBUTION AGREEMENT AND PLAN
The Fund has adopted a Distribution Plan pursuant to which
the Fund reimburses the Advisor for marketing expenses
incurred in distributing shares of the Fund, primarily the
cost of printing sales material. This expense is limited to
1/4 of 1% of the Fund's average net assets. For the year
ending March 31, 1997, no such reimbursements were made.
(3) PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 1997, the cost of purchases and
the proceeds from sales of securities, excluding short-term
securities, were $6,428,637 and $3,907,930, respectively.
(4) FEDERAL INCOME TAXES
It is the Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to
its share-holders. In addition, the Fund intends to pay
distributions as required to avoid imposition of excise tax.
Therefore, no federal income tax provision is required.
