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CORNERCAP GROWTH FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
A Series of
CornerCap Group of Funds
A "Series" Investment Company
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1997
The Peachtree, Suite 1700 Advisor: (800) 728-0670
1355 Peachtree Street NE Administrator: (888) 81 FUNDS
Atlanta, GA 30309 Telecopier: (404) 892-9353
<PAGE>
CornerCap Growth Fund
Manager's Report to the Shareholders
for the semi-annual period ended September 30, 1997
Dear Shareholder:
Attached are the portfolio valuation and financial reports for
the semi-annual period ended September 30, 1997. As of this
date, the shares of the CornerCap Growth Fund were valued at
$15.37. The Fund has continued to perform very well, with
double-digit returns in three of the last four quarters. For the
quarter and year-to-date, the Fund was up 14.4% and 31.3%,
respectively. For the last 12 months, the Fund returned 44.4%.
These returns exceed all of the major stock market indices over
these periods.
When Cornerstone Capital took over the Fund on September 30,
1992, exactly five years ago, it was one of the worst performing
funds in the market. Since that time, the Fund has returned
17.9% per year. It was ranked 4th and 14th in the nation for
Capital Appreciation by Morningstar in 1994 and 1996,
respectively. We are very proud of the turnaround in performance
and the improved administration of the Fund.
The Fund has also held up well during the market correction that
has occurred since September 30. As of November 18, 1997, the
Fund was valued at $15.35, very close to our quarter end
valuation. Also, as noted on the Wall Street Journal reprint on
the back of this report, our Fund was ranked 9th in the nation
for Capital Appreciation for the 12 month period ending October
31, 1997.
Please remember that our best source of new clients has been
referrals from existing shareholders. While our Fund is
available on Schwab and other discount brokerage networks, it is
not available through the retail brokerage firms. This helps us
to hold down your costs. Adding new shareholders also helps us
to reduce your costs even further. If we can help a friend or
another member of your family with their investments, we hope
that you will give us a call and let us talk with them or send a
prospectus and a letter of introduction. Help us to help you by
calling (800)728-0670 and leaving the referral with anyone at
Cornerstone.
Thank you for continuing to be one of our much-appreciated
shareholders.
Cornerstone Capital Corp.
November 19, 1997
<PAGE>
Reprinted from THE WALL STREET JOURNAL.
MONDAY, NOVEMBER 3, 1997
1997 Dow Jones & Company, Inc. All Rights Reserved
MUTUAL FUND QUOTATIONS
Mutual Fund Scorecard/Capital Appreciation
INVESTMENT OBJECTIVE: Long-term appreciation through high
portfolio turnover and, at times, large cash positions; many can
leverage or buy options. Bull/Bear ratings are figured over the
latest two rising and two falling market cycles.
<TABLE>
<CAPTION>
ASSETS PAST PERFORMANCE
SEPT. 30 BULL BEAR TOTAL RETURN <F1> IN PERIOD ENDING OCT. 30
(in millions) MARKET MARKET FUND NAME 4 WEEKS 52 WEEKS 5 YEARS*
- ------------- ------ ------- --------- -----------------------------------------
TOP 15 PERFORMERS
- -----------------
<S> <S> <S> <S> <C> <C> <C>
155.8 ** ** Hartfd: Cap - 7.74% 72.18% **%
Appr; A <F4>
23.1 Low Low American - 6.80 62.71 2.50
Heritage Fund <F2>
28.8 ** ** Hodges Fund <F3> - 3.13 43.96 19.46
18.2 ** ** Delaware - 4.52 43.41 **
Val;Inst <F2> <F4> <F5>
269.5 ** Med Delaware: - 4.51 43.01 18.37
Sm Cap Val;A <F4>
58.6 ** Med Berger Sm Cap - 4.69 41.89 23.13
Val; Inst <F2> <F4> <F5>
212.9 ** ** Olstein: Finl - 3.46 41.81 **
Alert Fd <F2>
556.5 ** ** Gabelli Value - 2.45 39.00 22.14
Fund
16.3 ** Med Cornercap: - 3.42 38.32 17.25
Growth <F2>
374.7 High Low Sm Barney - 8.91 37.59 19.44
Aggr Gro;A <F4>
22.9 ** ** DLB Gp:Quan- - 8.16 37.08 **
titative Eq <F5>
76.9 ** ** Virtus:Style - 5.25 36.50 **
Mgr <F2>
767.6 ** ** Rydex:Nova -10.21 36.41 **
Fund <F2>
883.1 ** ** Putnam Cup - 4.27 35.75 **
Apprec;B <F2> <F4>
201.6 Med Med Saloman Bros - 4.60 35.11 19.36
Opportunity <F2>
AVG. FOR CATEGORY - 5.77% 21.51% 16.18%
NUMBER OF FUNDS 238 202 77
BOTTOM 10 PERFORMERS
60.4 ** ** Linder Inv: - 2.81% -22.54% **%
Bulwark;Inv <F2> <F4>
4.6 ** ** Fontaine: - 9.13% -22.48 4.15
Capital Apprec<F2>
111.4 ** High Comstock Cap 0.53 -20.24 -5.04
Value;A <F3> <F4>
265.3 ** ** Rydex: Ursa 6.43 -18.22 **
Fund <F2>
26.3 ** ** Prudent Bear 11.04 - 9.14 **
Fund <F2>
88.0 ** ** Perkins - 7.26 - 8.10 **
Opportunity
Fund
1117.8 Med Low Stein Roe - 6.44 - 5.86 19.50
Capital
Oppty <F2>
1.0 Low Low Steadman -15.29 - 4.00 -12.31
Amer
Indusy <F2> <F5>
81.0 ** ** Vanguard -11.04 - 3.82 **
Hz:Cap Oppty <F2>
137.5 ** ** Dreyfus Aggr - 8.18 - 0.61 **
Gro <F3>
<FN>
<F1> Change in net asset value with reinvested dividends and capital gains Hi = Top third
<F2> No initial load Med = Middle third
<F3> Low initial load of 4.5% or less Low = Bottom third
<F4> Fund has other share classes * Annualized
<F5> Fund may not be open to all investors
</FN>
** Fund track record is too short Source: Lipper Analytical Services, Inc.
</TABLE>
THE PUBLISHER'S SALE OF THIS REPRINT DOES NOT CONSTITUTE OR IMPLY ANY
ENDORSEMENT OR SPONSORSHIP OF ANY PRODUCT, SERVICE, COMPANY OR
ORGANIZATION.
Journal Reprints (609) 520-4328 P.O. Box 300 Princeton, N.J. 08543-
0300. DO NOT EDIT OR ALTER REPRINTS - REPRODUCTIONS NOT PERMITTED<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
_________________________________________________________________________
<TABLE>
Value
Shares (Note 1-A)
------ ----------
<C> <S> <C>
COMMON STOCKS - 97.01%
Building Materials - 5.54%
10,700 Southdown, Inc. $ 584,488
11,750 International Aluminum Corp. 322,391
--------------
906,879
Specialty Chemicals - 3.12%
12,450 Furon Company 511,228
--------------
Computer Software & Service - 2.07%
12,750 BancTec, Inc. * 339,469
--------------
Containers - Metal Glass - 2.34%
11,000 Ball Corp. 382,937
--------------
Diversified Companies - 2.63%
8,600 Sprint Corp. 430,000
--------------
Electric Products - 2.48%
17,300 Ametek 406,550
--------------
Electronic Components - 2.54%
12,400 Watkins Johnson 415,400
--------------
Electronics - Distributor - 2.32%
22,520 Bell Industries 380,025
--------------
Equipment - Medical - 2.75%
14,500 Marquette Medical System 449,500
--------------
Franchise - 4.30%
30,800 NPC International 388,850
14,900 Wendy's International 316,625
--------------
705,475
Furniture/Home Furnishings - 2.67%
9 21,100 Culp, Inc. 437,825
--------------
Home Building - 4.85%
21,900 Ryland Group, Inc. 388,725
10,600 Pulte 405,450
--------------
794,175
Instruments - Controls - 2.13%
11,700 Duriron Co. 349,537
--------------
</TABLE>
__________________________________________________________________________<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (Continued)
September 30, 1997 (Unaudited)
__________________________________________________________________________
<TABLE>
<CAPTIOM>
Value
Shares (Note 1-A)
------ -----------
<C> <S> <C>
Insurance - Diversified - 2.52%
11,300 American Bankers Insurance Group 412,450
--------------
Insurance - Life -1.56%
6,450 Providian Corp. 255,984
--------------
Insurance - Property & Casualty - 5.07%
41,742 Gainsco, Inc. 404,376
9,400 Orion Capital Corp. 425,937
--------------
830,313
Integrated Steel Producer -1.90%
14,200 Inland Steel Industries 310,625
--------------
Machinery - Diversified - 5.12%
25,800 Huffy Corp. 425,700
13,100 Standex International 412,650
--------------
838,350
--------------
Manufacturer - Industrial - 2.30%
9,150 Crane Co. 376,294
--------------
Metal Fabricating & Fasteners - 2.60%
18,600 Handy & Harman 425,475
--------------
Mineral Resources - 2.14%
14,600 Cyprus Amax Minerals 350,400
--------------
Printing and Publishing-2.48%
12,100 Deluxe Corporation 406,106
--------------
Retail - Mail Order - 2.90%
26,200 Blair Corp 474,875
--------------
Restaurants - 2.64%
31,000 Piccadilly Cafeterias 432,063
--------------
Scientific Equipment - 5.22%
18,100 EG&G, Inc. 374,444
21,000 VWR Scientific Products 480,375
--------------
854,819
--------------
Securities Brokerage - 2.96%
6,450 Salomon, Inc. 484,959
--------------
</TABLE>
__________________________________________________________________________
<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (Continued)
September 30, 1997 (Unaudited)
__________________________________________________________________________
<TABLE>
<CAPTION>
Value
Shares (Note 1-A)
------ ----------
<C> <S> <C> <C>
Shipping - 2.81%
36,850 OMI Corp. 460,625
--------------
Textiles - Apparel - 5.44%
14,950 Kellwood Co. 529,791
60,100 Tultex Corporation 360,600
--------------
890,391
Textiles - Manufacture/Recycles - 2.51%
17,750 Wellman, Inc. 411,578
--------------
Tobacco - 4.90%
12,850 UST Inc. 392,728
11,300 Universal Corp. 409,625
--------------
802,353
--------------
Transport - Equipment - 2.18%
9,040 VarLen Corp. 357,080
--------------
Total Common Stocks (Cost $11,531,594) 15,883,740
Principal
Amount SHORT-TERM INVESTMENTS - 2.07%
$417,008 Wachovia Bank Short-Term Authorized Demand Notes
(Cost $417,008) 417,008
--------------
Total Investments (Cost $11,948,602)(a) 99.78% 16,300,748
Other Assets in Excess of Liabilities - Net .22 35,247
------ --------------
Net Assets 100.00 % $ 16,335,995
======= ==============
(a) Aggregate cost for federal income tax purposes is $11,948,602. At
September 30, 1997, unrealized appreciation(depreciation) of
securities for federal income tax purposes is as follows:
Unrealized appreciation $ 4,559,662
Unrealized depreciation (207,516)
Net unrealized appreciation $ 4,352,146
==============
</TABLE>
_________________________________________________________________________
See accompanying notes to financial statements <PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997 (Unaudited)
_________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at market value, (Identified cost $11,948,602 1-A) $ 16,300,748
Cash 55,475
Dividends receivable 11,319
Insurance reserve 2,106
Interest receivable 3,072
--------------
Total assets 16,372,720
--------------
LIABILITIES
Accrued expenses 36,725
NET ASSETS
(Applicable to 1,063,083.124 shares outstanding,
$.01 par value, unlimited shares authorized) $ 16,335,995
==============
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($16,335,995 divided by 1,063,083.124 shares) $ 15.37
=======
NET ASSETS
At September 30, 1997, net assets consisted of:
Paid-in capital $ 10,203,546
Accumulated net investment income 28,721
Accumulated net realized gains on investments 1,751,582
Unrealized appreciation of investments 4,352,146
--------------
$ 16,335,995
==============
</TABLE>
_________________________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF OPERATIONS
Six months ended September 30, 1997 (Unaudited)
_________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income
Interest $ 13,090
Dividends 115,132
-------------
Total investment income 128,222
-------------
Expenses
Fund accounting fees 14,522
Advisory fee (Note 2) 73,176
Professional fees 6,789
Custodian fees 1,505
Transfer agent fees 14,030
Administration fees 23,412
Shareholder servicing costs 6,139
Registration fees 00
Insurance 1,604
Trustees fees 3,000
Miscellaneous 17,940
-------------
Total expenses 162,177
Less expenses waived and reimbursed (Note 2) (40,176)
-------------
Net expenses 121,941
-------------
Net investment income 6,281
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions 989,539
Increase in unrealized appreciation of investments 3,020,049
-------------
Net realized and unrealized gain on investments 4,009,588
-------------
Net increase in net assets resulting from operations $ 4,015,869
==============
</TABLE>
_________________________________________________________________________
See accompanying notes to financial statements
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Six months ended September 30, 1997 (Unaudited)
_________________________________________________________________________
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1997 March 31, 1997
(Unaudited)
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $6,281 $21,184
Net realized gain on investments 989,539 1,620,467
Increase in unrealized appreciation of investments 3,020,049 233,821
--------- ---------
Net increase in net assets resulting from operations 4,015,869 1,875,472
Distributions to shareholders from
Net investment income 0 (13,865)
Realized gains 0 (75,349)
--------- ---------
Total distribution 0 (89,214)
Capital share transactions (a)
Increase,(Decrease) in net assets resulting from
capital share transactions (536,171) 2,698,790
--------- ---------
Total increase in net assets 3,479,698 4,485,048
NET ASSETS
Beginning of year 12,856,297 8,371,249
---------- ---------
End of year
(including accumulated net investment income of
$28,721) $ 16,335,995 $12,856,297
============ ===========
(a) Summary of capital share activity follows:
Period Ending September 30, 1997 Period Ending March 31, 1997
-------------------------------- ----------------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold 62,373.317 885,044 375,974 $4,117,045
Shares redeemed (100,315.19) (1,421,215) 7,481 87,223
Shares reinvested 00 00 (135,896) (1,505,478)
------------ --------- -------- ----------
Net increase (37,941.873) $(536,171) 247,559 $2,698.790
=========== ========= ======== ==========
</TABLE>
_________________________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(For a share outstanding throughout the six month period)
_________________________________________________________________________
Six Months Ended Years ended March 31,
September 30,
-------------- ---------------------------------------------------------
1997 1997 1996 1995 1994 1993
---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value,
beginning of period $11.68 $9.81 $8.61 $7.69 $7.58 $7.60
-------------------------------------------------------------------------------
Income from
investment operations -
Net investment income (loss) .01 .02 .04 .05 .02 .23
Net realized and unrealized
gain (loss) on investments 3.68 1.93 1.22 .89 .11 (.25)
-------------------------------------------------------------------------------
Total from
investment operations 3.69 1.95 1.26 .94 .13 (.02)
-------------------------------------------------------------------------------
Less distributions from
Net investment income .00 .01 .06 .02 .02 -
Realized gains .00 .07 - - - -
-------------------------------------------------------------------------------
Total distributions .00 .08 .06 .02 .02 -
-------------------------------------------------------------------------------
Net asset value,
End of period $15.37 $11.68 $9.81 $8.61 $7.69 $7.58
==============================================================================
Total Return 31.59% 19.94% 14.64% 12.25% 1.71% (.26)%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of year ($000) $16,336 $12,856 $8,371 $7,299 $4,229 $3,042
Ratios to average net assets
Expenses .8% 1.71% 1.75% 1.87% 2.00% 2.00%
Net investment income (loss) .04% .19% .49% .70% .13% .40%
Portfolio turnover rate 18.4% 37.13% 40.83% 55.12% 35.58% 83.40%
Average Commission Rate
per share .1150 .1129
</TABLE>
_________________________________________________________________________
See accompanying notes to financial statements<PAGE>
CORNERCAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 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.
(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.<PAGE>
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 September 30, 1997. For the six months ended September 30,
1997, the Advisor waived the Advisory fee of $40,176.
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 period ending September 30, 1997, no
such reimbursements were made.
(3) PURCHASES AND SALES OF SECURITIES
For the six months ended September 30, 1997, the cost of purchases and
the proceeds from sales of securities, excluding short-term
securities, were $1,631,654 and $2,638,936, 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.
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