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Previous: CORNERCAP GROUP OF FUNDS /VA/, N-30D, 1999-12-03 |
Next: VALUEQUEST TA LLC, SC 13G, 1999-12-03 |
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, 1999
The Peachtree, Suite 1700 Advisor:
(800) 728-0670
1355 Peachtree Street, NE Administrator:
(888) 81-FUNDS
Atlanta, Georgia 30309 Telecopier:
(404) 870-0770
<PAGE>
CORNERCAP GROUP OF FUNDS
MANAGER'S REPORT TO THE SHAREHOLDERS
FOR THE SEMIANNUAL PERIOD ENDED SEPTEMBER 30, 1999
Dear Shareholder:
Attached are the portfolio valuation and financial reports for the semiannual
period ended September 30, 1999. As of this date, the shares of the CornerCap
Growth Fund were valued at $11.20, and the shares of the CornerCap Balanced Fund
were valued at $11.99. In this letter, we would like to cover two areas: first,
the year-to-date performance of our mutual funds and, second, a few recent
activities of our fund company about which we would like to keep you informed.
During the inflationary 1970s, investors closely scrutinized their real estate
returns. In the 1990s, investor focus is on stock returns. Like real estate,
which includes houses, hotels, shopping centers, office buildings, raw land,
etc., stocks come in as many flavors. They can be large stocks, small stocks,
something in between, or some blending of these sizes .... growth stocks or
value stocks .... US stocks or non-US stocks .... Internet retail stocks or
Internet infrastructure stocks ... etc.
The ideal mutual fund would be the one that could consistently predict the next
flavor of the month moving correctly from one flavor to the next over time. That
fund does not exist. At CornerCap, rather than continually trying to chase that
latest investment fad, we believe investors will be more successful if they
select an investment approach that is consistent with their long-term objectives
and has performed well over time.
The "flavor" that we use for the CornerCap Growth Fund is to be fully invested
in small- to mid-capitalization stocks that are primarily value-oriented. This
approach is somewhat volatile, but it has realized higher returns over the
years. Our more conservative CornerCap Balanced Fund is also value-oriented, but
we limit the equity commitment to approximately 60% of the portfolio (40% in
bonds), and the equities are primarily in the large- to mid-capitalization area.
Using the Wilshire 5000 Index, which breaks down 5,000 stocks into a variety of
style characteristics, we thought you might be interested in how our mutual fund
returns compare.
<TABLE>
<CAPTION>
YTD 9/30/99 6/30/99 3/31/99
<S> <C> <C> <C> <C>
FUNDS
CornerCap Growth Fund 7.8% -5.1% 23.4% -8.0%
CornerCap Balanced Fund 0.0% -5.7% 9.6% -3.2%
WILSHIRE INDICES
Wilshire 5000 4.5% -6.6% 7.8% 3.8%
Styles:
Value:
Large 1.4% -10.1% 11.7% 0.9%
Mid -1.0% -10.2% 16.9% -5.6%
Small -15.3% -10.8% 1.2% -6.2%
Growth:
Large 7.0% -3.3% 2.8% 7.6%
Mid 14.0% -2.0% 15.9% 0.4%
Small 10.6% -3.0% 13.6% 0.4%
</TABLE>
<PAGE>
What do the above numbers tell us? With regard to both of our funds, value
investing continues to be out of favor, much as it was in 1998. With regard to
our Growth Fund, small-capitalization value stocks were even more seriously
punished by the market in 1999, down 15.3%. Our fund was up 7.8% over this
period, so we were in the wrong pond, but at least we caught the most fish. With
regard to our Balanced Fund, our zero year-to-date return is in line with the
average of the large- and mid-capitalization value stocks, especially when you
consider that bonds have actually realized negative returns this year.
During 1999, we have been busy on other matters with regard to our mutual funds
to improve services to our shareholders. As we have reported in the past, we are
continuing with our action plan to ensure that there are no problems with the
valuation and administration of our funds when January 2000 arrives, i.e., the
"Y2K" issue. We believe all of our hardware and software should operate normally
on January 2000, and we have established manual procedures for administering our
funds if problems should still occur.
At the start of this year, we changed custodians to United Missouri Bank (UMB),
and it is doing an excellent job. We have also negotiated a lower commission
schedule with the majority of the brokers whom we use to execute trades for our
funds. We use a portion of these commission dollars, approximately 20%, to
purchase investment research data and services that we believe will be value
adding to our funds. Of course, since we self distribute our funds, we charge no
fees for contributions or withdrawals.
Thank you for being one of our valued shareholders and for the referrals that
many of you have made to our mutual fund family.
CornerCap Investment Counsel
November 19, 1999
<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1-A)
------ -----------
COMMON STOCKS - 95.24%
----------------------
<C> <S> <C>
AEORSPACE/DEFENSE - 2.24%
10,700 Moog Inc. Class A $ 308,962
-------------
APPAREL - 2.48%
15,550 Kellwood Co. 342,100
--------------
AUTOMOTIVES - 2.88%
57,500 TBC Corp. * 398,009
--------------
BANK - 2.78%
18,800 Pacific Century Financial Corp 384,225
--------------
BEVERAGES - 3.59%
8,300 Canadaigua Brands, Inc. Class A * 495,925
--------------
BUILDING MATERIALS - 2.52%
6,500 Southdown, Inc. 347,750
--------------
CONSTRUCTION - 2.51%
8,600 Fluor Corp. 346,150
--------------
DIVERSIFIED - 2.56%
13,100 Standex International Corp. 353,700
--------------
DRUG INDUSTRY- 2.31%
18,600 ICN Pharmaceuticals, Inc. 319,688
--------------
EDUCATIONAL SERVICES - 2.74%
19,400 ITT Educational Services, Inc. 378,300
--------------
ELECTRICAL EQUIPMENT - 4.96%
17,300 Ametek, Inc. 342,756
6,900 Plantronics, Inc 343,275
--------------
686,031
--------------
FOOD PROCESSING - 2.55%
19,900 Ralcorp Holdings * 351,981
--------------
FURNITURE - 3.00%
28,600 Haverty Furniture 414,700
--------------
HOLDINGS COMPANY - 2.23%
13,725 Crane Company 307,955
--------------
HOME BUILDERS - 4.20%
56,000 Oakwood Homes Corp. 252,000
15,100 Pulte Corp 328,425
--------------
580,425
--------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1-A)
------ ----------
COMMON STOCKS - 95.24%
----------------------
INDUSTRIAL SERVICES - 4.59%
<C> <S> <C>
11,300 ABM Industries 286,737
73,000 Health Management Systems * 346,750
------------
633,487
------------
MACHINERY - 4.17%
19,100 Flowserve Corporation 317,537
10,600 Kulicke & Soffa Industries * 257,713
------------
575,250
------------
MARITIME - 0.80%
43,050 New OMI Corp. * 110,316
------------
METALS - 2.34%
11,750 International Aluminum, Inc. 323,860
------------
OIL AND GAS - 4.61%
18,700 Ensco International, Inc. 337,769
67,600 Parker Drilling Co. * 299,975
------------
637,744
------------
PACKAGING AND CONTAINERS - 1.95%
6,100 Ball Corp. 268,781
------------
PUBLISHING - 2.98%
12,100 Deluxe Corp. 411,400
------------
RECREATION - 8.06%
7,600 Anchor Gaming * 452,200
29,800 Huffy Corp. 294,275
10,600 Polaris Industries 367,025
------------
1,113,500
------------
RESTAURANT - 3.71%
37,400 Piccadilly Cafeterias, Inc. 245,438
23,700 NPC International * 266,625
------------
512,063
------------
RETAIL - 2.24%
17,600 Blair Corporation 310,200
------------
SECURITIES BROKERAGE - 2.58%
13,500 A.G. Edwards, Inc. 356,062
------------
STEEL - INTEGRATED - 3.46%
20,700 Ryerson Tull 478,687
------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1-A)
------ ----------
<C> <S> <S> <C>
COMMON STOCKS - 95.24%
----------------------
TEXTILES - 2.85%
54,300 Culp, Inc. 393,675
------------
TOBACCO - 4.95%
12,850 United States Tobacco, Inc. 387,909
11,300 Universal Corporation 295,212
------------
683,121
THRIFT - 2.43%
14,500 Washington Federal, Inc. 336,219
------------
TOTAL COMMON STOCKS (COST $13,350,705) 13,160,267
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1-A)
- -------- ----------
SHORT-TERM INVESTMENTS - 4.47%
------------------------------
<C> <S> <C> <C>
$630,998 Wachovia Bank Short-Term Authorized Demand Notes
(Cost $630,999) 630,999
------------
TOTAL INVESTMENTS (COST $13,981,704) <F1> 99.71% 13,791,266
LIABILITIES IN EXCESS OF OTHER ASSETS - NET .29% (203,203)
------ ------------
NET ASSETS 100.00% $ 13,588,063
====== ============
* NON INCOME PRODUCING SECURITY
<FN>
<F1> AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSE IS $13,981,704.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
At September 30, 1999, unrealized appreciation (depreciation)
of securities for federal income tax purposes is as follows:
Gross unrealized appreciation $ 1,620,117
Gross unrealized depreciation (1,810,555)
------------
Net unrealized depreciation $ (190,438)
============
- -------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
SIX-MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments at market value,
(Identified cost $13,981,704) (NOTE 1-A) $ 13,160,267
Cash 630,999
Receivable for investment securities sold 0
Interest receivable 2,661
Dividends receivable 12,487
Insurance and Reserves 11,109
-------------
TOTAL ASSETS 13,817,523
-------------
LIABILITIES
Payable for investment securities purchased 212,890
Payable for fund shares redeemed 0
Advisory fee payable 11,180
Service fees payable 5,590
24F-2 Fee (200)
-------------
TOTAL LIABILITIES 229,460
-------------
NET ASSETS
(Applicable to 1,213,453 shares outstanding, unlimited shares authorized) $ 13,588,063
=============
NET ASSET VALUE OFFERING AND REPURCHASE
PRICE PER SHARE
($13,588,063 divided by 1,213,453 shares) $11.20
======
NET ASSETS
At September 30, 1999, net assets consisted of:
Paid-in capital $ 11,969,487
Undistributed net investment income 65,483
Accumulated net realized gain on investments 1,743,531
Net unrealized depreciation (190,438)
-------------
$ 13,588,063
=============
- -------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF OPERATIONS
SIX-MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends $ 114,288
Interest income 11,121
-------------
TOTAL INCOME 125,409
-------------
EXPENSES
Management fee (NOTE 2) 68,950
Service fees (NOTE 2) 34,475
-------------
TOTAL EXPENSES 103,425
-------------
NET INVESTMENT INCOME 21,984
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized gain from security transactions 1,669,166
Unrealized appreciation of investments 351,766
-------------
NET GAIN ON INVESTMENTS 2,020,932
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,042,917
=============
- -------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX-MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SIX-MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 21,985 $ 33,790
Net realized gain (loss) on investments 1,669,166 (6,658)
Increase (decrease) in unrealized appreciation
of investments 351,766 (4,653,062)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,042,917 (4,625,930)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ($0.00 per share) - -
Realized gains ($0.00 and $1.48 per share, respectively) - (1,763,462)
------------- -------------
TOTAL DISTRIBUTIONS - (1,763,462)
-------------- --------------
CAPITAL SHARE TRANSACTIONS <F1>
Increase (Decrease) in net assets resulting from
capital share transactions (545,770) 537,716
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,497,147 (5,851,676)
NET ASSETS
Beginning of period 12,090,646 17,941,819
------------- -------------
END OF PERIOD
(including undistributed net investment income of
$ 65,483 and $33,790, respectively) $ 13,588,063 $ 12,090,143
============= =============
<FN>
<F1> SUMMARY OF CAPITAL SHARE ACTIVITY FOLLOWS:
SIX-MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold 59,130 $ 666,315 159,957 $ 1,965,699
Shares issued on
reinvested of distributions 0 0 176,112 1,736,461
---------- ------------- ---------- -------------
59,130 $666,315 336,069 3,702,160
Shares redeemed (110,885) (1,212,085) (279,339) (3,164,444)
---------- ------------- ---------- -------------
NET INCREASE (51,755) $ (545,770) 56,730 $ 537,716
=========== ============== ========== =============
</FN>
- -------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE SIXTH MONTH PERIOD)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SIX-MONTHS ENDED SEPTEMBER 30, YEARS ENDED MARCH 31,
---------------------------- ---------------------------------------------
1999 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 9.56 $ 14.85 $ 11.68 $ 9.81 $ 8.61
------- -------- ------ --------
INCOME FROM INVESTMENT OPERATIONS -
Net investment income 0.018 .04 .21 .02 .04
Net realized and unrealized gain (loss) on investments 1.653 (3.85) 5.05 1.93 1.22
-------- ------- -------- ------ --------
TOTAL FROM INVESTMENT OPERATIONS 1.671 (3.81) 5.26 1.95 1.26
-------- ------- -------- ------ --------
LESS DISTRIBUTIONS FROM
Net investment income -- -- (.22) (.01) (.06)
Realized gains -- (1.48) (1.87) (.07) --
------- -------- ------ --------
TOTAL DISTRIBUTIONS -- (1.48) (2.09) (.08) (.06)
------- -------- ------ --------
NET ASSET VALUE, END OF YEAR $ 11.20 $ 9.56 $ 14.85 $ 11.68 $ 9.81
------- ======= ======== ======= ========
TOTAL RETURN 17.15% (25.98)% 47.69% 19.94% 14.64%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD ($000) $ 13,588 $ 12,090 $ 17,942 $ 12,856 $ 8,371
RATIOS TO AVERAGE NET ASSETS
Expenses 0.75% 1.50% 1.56% 1.71% 1.75%
Net investment income 0.16 .23% .17% .19% .49%
PORTFOLIO TURNOVER RATE 47.70% 39.16% 48.82% 37.13% 40.83%
- -------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CORNERCAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
(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 Standard
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>
CORNERCAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
SEPTEMBER 30, 1999
- -------------------------------------------------------------------------------
(2) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS The Fund has an
investment advisory agreement with CornerCap Investment Counsel, Inc. (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.
In addition, the Fund has a service agreement with the Advisor, pursuant
to which the Advisor receives a fee, computed daily and payable monthly,
at an annual rate of .50% of average net assets.
The Advisor will provide day to day operational services to the Fund
including, but not limited to, providing or arranging to provide
accounting, administrative, legal (except litigation), dividend
disbursing, transfer agent, registrar, custodial, shareholder reporting,
sub accounting and recordkeeping services. All fees and expenses
associated with these and other functions including, but not limited to,
expenses of legal compliance, shareholder communication and meetings of
the shareholders and the Board of Trustees will be paid by the Advisor.
(3) PURCHASES AND SALES OF SECURITIES
For the six-month period ended September 30, 1999, the cost of purchases
and the proceeds from sales of securities, excluding short-term
securities, were $2,889,717 and $3,475,518 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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