1. ORGANIZATION
The CornerCap Group of Funds (the "Funds") was organized on January 6, 1986 as a Massachusetts Business Trust (the "Trust") and is registered under the Investment Company Act of 1940 as a diversified open-end management investment company. CornerCap Balanced Fund and CornerCap Large/Mid-Cap Value Fund currently offer Investor Shares and CornerCap Small-Cap Value Fund currently offers Investor Shares and Institutional Shares.The investment objective of the CornerCap Balanced Fund and CornerCap Small‐Cap Value Fund is to obtain capital appreciation and current income, whereas the CornerCap Large/Mid‐Cap Value Fund's investment objective is to obtain capital appreciation.
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services – Investment Companies". The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with U.S. generally accepted accounting principles ("GAAP").Accounting Estimates – In preparing financial statements in conformity with GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent 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.
Security Valuation – Portfolio securities including common stocks, corporate bonds, municipal bonds, exchange traded funds (ETFs), open‐end funds, closed‐end funds, and U.S. Government and Agency obligations that are listed on national securities exchanges or the NASDAQ National Market System are valued at the last sale price as of 4:00 p.m. Eastern time or, in the absence of recorded sales, at the closing bid price on such exchanges or such system. Based on obtaining active market quotes, common stocks and exchange traded funds are classified as Level 1 of the fair value hierarchy. Corporate bonds, municipal bonds, certificates of deposit and U.S. Government and Agency obligations are classified as Level 2 of the fair value hierarchy, and are priced based upon valuations provided by a recognized independent, third party pricing agent. Third‐party pricing agents value these securities by employing methodologies that utilize actual market transactions, broker‐supplied valuations, or other methodologies designed to identify the market value for such securities. Such methodologies generally consider such factors as security prices, yields, maturities, call features, ratings, and developments relating to specific securities in arriving at valuations. Unlisted securities that are not included on such exchanges or systems are valued at the mean of the quoted bid and asked prices on the over‐the counter market. Shares of a registered investment company, including money market funds, that are not traded on an exchange are valued at that investment company's net asset value per share and are classified as Level 1 within the fair value hierarchy. Securities and other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Adviser under procedures established by and under the general supervision and responsibility of the Funds' Board of Trustees and will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments.
Security Transactions, Investment Income and Other – Security transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on the identified cost basis. Withholding taxes on foreign dividends have been provided in accordance with the Funds' understanding of the applicable country's tax rules and rates. Discounts and premiums on securities purchased are amortized over the lives of the respective securities, using the effective interest method. In the event of a security in default, a portion of interest receivable that was once recognized as interest income is written off and treated as a reduction of interest income.
Notes to Financial Statements | |
| March 31, 2016 |
Federal Income Taxes – For Federal income tax purposes, the Funds currently qualify, and intend to remain qualified, as regulated investment companies ("RICs") under the provisions of Subchapter M of the Internal Revenue Code of 1986 ("Code"), as amended, by complying with the requirements applicable to RICs and by distributing their investment company taxable net income including any excess realized gain which has not been offset by capital loss carryforwards, if any, to their shareholders. Accordingly, no provision for federal income or excise taxes has been made. As of and during the year ended March 31, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds file U.S. federal, state, and local tax returns as required. The Funds' tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years of 2013-2015 and as of and during the year ended March 31, 2016, have incorporated no uncertain tax positions that require a provision for income taxes. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year, the Funds did not incur any interest or penalties.
Distributions to Shareholders – Distributions from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. Income and capital gains distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Distributions to shareholders are recorded on the ex-dividend date.
Income and Expense Allocation – The Trust accounts separately for the assets, liabilities and operations of each Fund. Expenses that are directly attributable to more than one investment portfolio are allocated among the respective investment portfolios in an equitable manner.
CornerCap Small-Cap Value Fund's class specific expenses are charged to the operations of that class of shares. Income and expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on the class' respective net assets to the total net assets of the Fund.
Fair Value Measurements – A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.
Various inputs are used in determining the value of each Fund's investments as of the reporting period end. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:
Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date;
Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and
Level 3 – Significant unobservable prices or inputs (including each Fund's own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.
Notes to Financial Statements | |
| March 31, 2016 |
The following is a summary of the inputs used to value the Funds' investments as of March 31, 2016:
CornerCap Balanced Fund:
| | Valuation Inputs | |
| Investments in Securities at Value* | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | $ | 15,436,491 | $ | - | $ | - | $ | 15,436,491 |
| Exchange Traded Funds | | 1,004,960 | | - | | - | | 1,004,960 |
| Government Bond | | - | | 531,266 | | - | | 531,266 |
| Corporate Bonds | | - | | 6,720,591 | | - | | 6,720,591 |
| Municipal Bonds | | - | | 308,871 | | - | | 308,871 |
| Short-Term Investments | | 1,540,934 | | - | | - | | 1,540,934 |
| Total | $ | 17,982,385 | $ | 7,560,728 | $ | - | $ | 25,543,113 |
CornerCap Small-Cap Value Fund:
| | Valuation Inputs | |
| Investments in Securities at Value* | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | $ | 93,500,938 | $ | - | $ | - | $ | 93,500,938 |
| Total | $ | 93,500,938 | $ | - | $ | - | $ | 93,500,938 |
CornerCap Large/Mid-Cap Value Fund:
| | Valuation Inputs | |
| Investments in Securities at Value* | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | $ | 12,339,597 | $ | - | $ | - | $ | 12,339,597 |
| Short-Term Investments | | 791,137 | | - | | | | 791,137 |
| Total | $ | 13,130,734 | $ | - | $ | - | $ | 13,130,734 |
* See Schedule of Investments for industry classification.
The Funds recognize transfers between levels as of the beginning of the annual period in which the transfer occurred. There were no transfers into or out of Levels 1 and 2 during the year ended March 31, 2016.
For the year ended March 31, 2016, the Funds did not have significant unobservable inputs (Level 3) used in determining fair value of any investments. Therefore, a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value is not applicable. The Funds did not hold any derivative instruments at any time during the year.
3. SHARES OF BENEFICIAL INTEREST
On March 31, 2016, there was an unlimited number of no par-value shares of beneficial interest authorized for each Fund. Subject to certain exceptions, each Fund charges a 1% redemption fee calculated as a percentage of the amount redeemed. This is applicable to all redemptions (sales or exchanges) made within sixty days of initial purchase of shares of the applicable Fund. The redemption fees charged during the year are disclosed on the Statements of Changes in Net Assets.
Notes to Financial Statements | |
| March 31, 2016 |
Transactions in shares of beneficial interest were as follows:
| CornerCap Balanced Fund: | | | | | | | | | | | | | |
| | | | Year Ended March 31, 2016 | | Year Ended March 31, 2015 |
| | | | Shares | | | | Amount | | | Shares | | | | Amount | |
| | Shares Sold | 416,972 | | | $ | 5,601,666 | | | 363,579 | | | $ | 5,540,649 | |
| | Shares Issued in Reinvestment of Dividends | 195,814 | | | | 2,424,124 | | | 183,973 | | | | 2,711,768 | |
| | Total | 612,786 | | | | 8,025,790 | | | 547,552 | | | | 8,252,417 | |
| | Less Shares Redeemed | (432,785 | ) | | | (6,025,774 | ) | | (226,634 | ) | | | (3,457,096 | ) |
| | Net increase | 180,001 | | | $ | 2,000,016 | | | 320,918 | | | $ | 4,795,321 | |
| | | | | | | | | | | | | | | | |
| CornerCap Small-Cap Value Fund | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | Year Ended March 31, 2016 | | Year Ended March 31, 2015 |
| | | | Shares | | | | Amount | | | Shares | | | | Amount | |
| | Shares Sold | | | | | | | | | | | | | |
| | | Investor Shares | 1,221,462 | | | $ | 18,051,246 | | | 1,598,514 | | | $ | 24,616,043 | |
| | | Institutional Shares | 1,501,333 | | | | 20,715,586 | | | - | | | | - | |
| | Shares Issued in Reinvestment of Dividends | | | | | | | | |
| | | Investor Shares | 453,244 | | | | 6,159,575 | | | 523,914 | | | | 7,780,119 | |
| | Total | 3,176,039 | | | | 44,926,407 | | | 2,122,428 | | | | 32,396,162 | |
| | Less Shares Redeemed | | | | | | | | | | | | | |
| | | Investor Shares | (1,720,670 | ) | | | (24,142,090 | ) | | (321,780 | ) | | | (5,028,974 | ) |
| | Net increase | 1,455,369 | | | $ | 20,784,317 | | | 1,800,648 | | | $ | 27,367,188 | |
| | | | | | | | | | | | | | | | |
| CornerCap Large/Mid-Cap Value Fund | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | Year Ended March 31, 2016 | | Year Ended March 31, 2015 |
| | | | Shares | | | | Amount | | | Shares | | | | Amount | |
| | Shares Sold | 367,122 | | | $ | 4,310,268 | | | 197,580 | | | $ | 2,776,016 | |
| | Shares Issued in Reinvestment of Dividends | 172,503 | | | | 1,818,821 | | | 70,614 | | | | 987,891 | |
| | Total | 539,625 | | | | 6,129,089 | | | 268,194 | | | | 3,763,907 | |
| | Less Shares Redeemed | (164,018 | ) | | | (2,111,161 | ) | | (206,515 | ) | | | (2,868,883 | ) |
| | Net increase | 375,607 | | | $ | 4,017,928 | | | 61,679 | | | $ | 895,024 | |
| | | | | | | | | | | | | | | | |
Notes to Financial Statements | |
| March 31, 2016 |
4. FEDERAL TAX INFORMATION
The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Funds. Distributions from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually.The tax character of distributions paid for the years ended March 31, 2016 and March 31, 2015 were as follows:
| | | CornerCap Balanced Fund |
| Distributions Paid From: | | 2016 | | 2015 |
| Ordinary Income | | $ | 418,583 | | $ | 1,168,009 |
| Long-term capital gains | | | 2,007,864 | | | 1,546,598 |
| Total | | $ | 2,426,447 | | $ | 2,714,607 |
| | | CornerCap Small-Cap Value Fund |
| Distributions Paid From: | | 2016 | | 2015 |
| Ordinary Income | | $ | 1,928,842 | | $ | 3,289,628 |
| Long-term capital gains | | | 4,231,458 | | | 4,503,589 |
| Total | | $ | 6,160,300 | | $ | 7,793,217 |
| | | CornerCap Large/Mid-Cap Value Fund |
| Distributions Paid From: | | 2016 | | 2015 |
| Ordinary Income | | $ | 369,619 | | $ | 389,070 |
| Long-term capital gains | | | 1,449,202 | | | 601,045 |
| Total | | $ | 1,818,821 | | $ | 990,115 |
For the year ended March 31, 2016, each Fund recorded the following reclassifications to the accounts listed below. The reclassifications were primarily as a result of dividend reclassifications and real estate investment trust reclassifications.
| | Increase/(Decrease) Undistributed Net Investment Income (Loss) | | Increase/(Decrease) Accumulated Net Realized Gain | |
| CornerCap Balanced Fund | | $ | (18 | ) | | $ | 18 | | |
| CornerCap Small-Cap Value Fund | | | (44,942 | ) | | | 44,942 | | |
| CornerCap Large/Mid-Cap Value Fund | | | (25,089 | ) | | | 25,089 | | |
Notes to Financial Statements | |
| March 31, 2016 |
As of March 31, 2016, the components of distributable earnings on a tax basis were as follows:
| | | | CornerCap Balanced Fund | | | | CornerCap Small-Cap Value Fund | | | | CornerCap Large/Mid-Cap Value Fund | |
| Undistributed ordinary income | | $ | 340,528 | | | $ | 74,437 | | | $ | 18,330 | |
| Capital and other losses | | | (545,687 | ) | | | (988,430 | ) | | | (462,087 | ) |
| Net unrealized appreciation (depreciation) on investments | | | (152,663 | ) | | | 3,399,325 | | | | (72,163 | ) |
| Total | | $ | (357,822 | ) | | $ | 2,485,332 | | | $ | (515,920 | ) |
The difference between components of distributable earnings on a tax bsis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash sales and real estate investment trust investments.
As of March 31, 2016, the Funds had no capital loss carryforwards to reduce the Funds' taxable income arising from future net realized gains on investments.
For tax purposes, the current year post-October loss deferral was $545,687, $988,430 and $462,087 (realized during the period November 1, 2015 through March 31, 2016) for CornerCap Balanced Fund, CornerCap Small-Cap Value Fund and CornerCap Large/Mid-Cap Value Fund, respectively. These losses will be recognized for tax purposes on the first business day of each Fund's next fiscal year, April 1, 2016.
The amount of net unrealized appreciation/(depreciation) and the cost of investment securities for tax purposes, including short-term securities at March 31, 2016, were as follows:
| | CornerCap Balanced Fund | CornerCap Small-Cap Value Fund | CornerCap Large/Mid-Cap Value Fund |
| Gross unrealized appreciation (excess of value over tax cost) | $ | 1,196,330 | | $ | 8,639,157 | | $ | 831,075 | |
| Gross unrealized depreciation (excess of tax cost over value) | | (1,348,993 | ) | | (5,239,832 | ) | | (903,238 | ) |
| Net unrealized appreciation (depreciation) | $ | (152,663 | ) | $ | 3,399,325 | | $ | (72,163 | ) |
| Cost of investments for income tax purposes | $ | 25,695,776 | | $ | 90,101,613 | | $ | 13,202,897 | |
5. INVESTMENT ADVISORY AND OTHER RELATED PARTY TRANSACTIONS
A. Each of the Funds has an Investment Advisory Agreement with CornerCap Investment Counsel (the "Adviser"), pursuant to which the Adviser receives an Advisory Fee from each Fund, computed daily and payable monthly, at an annual rate of 0.90% of the average daily net assets. Prior to December 15, 2015, the Advisory Fee was 1.00% of the average daily net assets of each Fund. Under the terms of each Advisory Agreement, the Adviser manages the Funds' investments subject to the approval of the Board of Trustees. The amount of expenses paid to the Adviser are reflected in the Statements of Operations and the amount of current liabilities are reflected in the Statements of Assets and Liabilities.In addition, each Fund and the Adviser have an Operating Services Agreement whereby the Adviser receives an Operating Services Fee,
Notes to Financial Statements | |
| March 31, 2016 |
computed daily and payable monthly, at an annual rate of 0.30%, 0.40%, 0.10% and 0.40% of the average daily net assets of the CornerCap Balanced Fund, CornerCap Small‐Cap Value Fund – Investor Shares, CornerCap Small-Cap Value Fund – Institutional Shares and CornerCap Large/Mid‐Cap Value Fund, respectively. Prior to December 15, 2015, the Operating Services Fee was at an annual rate of 0.50% of the average daily nets assets for CornerCap Small-Cap Value Fund – Investor Shares and CornerCap Large/Mid-Cap Value Fund. The amounts of expenses paid to the Adviser as Operating Services Fees are reflected in the Statements of Operations and the amount of current liabilities are reflected in the Statements of Assets and Liabilities.
The Adviser has contractually agreed to waive fees and reimburse each of the Funds so as to limit each Fund's "Total Annual Fund Operating Expenses" (exclusive of interest, taxes, brokerage fees and commissions, acquired fund fees and expenses, and extraordinary expenses) as reflected in the following table:
| Fund | | Total Annual Fund Operating Expense Limitation |
| CornerCap Balanced Fund | | 1.10% |
| CornerCap Small-Cap Value Fund – Investor Shares | | 1.30% |
| CornerCap Large/Mid-Cap Value Fund | | 1.20% |
The contractual agreements cannot be terminated prior to January 1, 2017, without the Board of Trustees' approval.
B. The Funds and the Adviser have entered into the following agreements whereby the Adviser pays any associated fees from the Operating Services Fees it receives from the Funds to Fund operational service providers pursuant to the following agreements: 1) Atlantic Fund Administration, LLC (d/b/a Atlantic Fund Services) ("Atlantic") provides fund accounting, fund administration services and transfer agency services to each Fund. Pursuant to an Atlantic services agreement, the Adviser pays Atlantic customary fees for its services from the Operating Services Fee it receives from the Funds. Atlantic also provides certain shareholder report production, and EDGAR conversion and filing services; 2) Foreside Fund Services, LLC serves as each Fund's distributor (the "Distributor"). The Distributor is not affiliated with the Adviser or Atlantic or their affiliates. In addition, the Adviser pays all other operating expenses outlined in the Operating Services Agreement.
Certain officers and directors of the Funds are also officers and directors of the Adviser.
6. PURCHASES AND SALES OF SECURITIES
Investment transactions for the year ended March 31, 2016, excluding U.S. Government and Agency securities and short-term investments, were as follows:
| | | Purchases | | Sales |
| CornerCap Balanced Fund | | $ | 17,410,312 | | $ | 17,875,432 |
| CornerCap Small-Cap Value Fund | | | 140,190,843 | | | 125,330,490 |
| CornerCap Large/Mid-Cap Value Fund | | | 12,446,566 | | | 10,846,441 |
7. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under section 2(a)(9) of the Investment Company Act of 1940. As of March 31, 2016, Charles Schwab & Co. held approximately 53.50%, 79.60% and 69.90% of the CornerCap Balanced Fund, CornerCap Small‐Cap Value Fund, and CornerCap Large/Mid‐Cap Value Fund, respectively. The shares are held under omnibus accounts (whereby the transactions of two or more shareholders are combined and carried in the name of the originating broker rather than designated separately).
Notes to Financial Statements | |
| March 31, 2016 |
8. INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that may contain general indemnification clauses which may permit indemnification to the extent permissible under applicable law. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred.
9. SUBSEQUENT EVENTS
Effective April 1, 2016, the expense cap for the Balanced Fund was reduced from 1.10% to 1.00% and the expense cap for the Large/Mid-Cap Value Fund was reduced from 1.20% to 1.00%.
Subsequent events occurring after the date of this report through the date these financial statements were issued have been evaluated for potential impact and, except as set forth above, there are no material subsequent events requiring financial statement disclosure.
Report of Independent Registered Public Accounting Firm | |
| |
To the Shareholders and Board of Trustees of
CornerCap Group of Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of CornerCap Group of Funds, comprising CornerCap Balanced Fund, CornerCap Small-Cap Value Fund and CornerCap Large/Mid-Cap Value Fund (the "Funds") as of March 31, 2016, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. 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, 2016, 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 each of the Funds constituting CornerCap Group of Funds as of March 31, 2016, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
COHEN FUND AUDIT SERVICES, LTD.
Cleveland, Ohio
May 16, 2016
Additional Information (Unaudited) | |
| March 31, 2016 |
1. PROXY VOTING POLICY
A copy of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling the Funds toll‐free at (888) 813‐8637 or on the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12‐month period ended June 30 is also available without charge, upon request, by calling the Funds toll‐free at (888) 813‐8637 and on the SEC's website at http://www.sec.gov.
2. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
Each of the Funds files its complete schedule of positions with the SEC for the first and third quarters of each fiscal year on Form N‐Q. The Funds' Form N‐Q is available on the SEC website at http://www.sec.gov. The Funds' Form N‐Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1‐800‐SEC‐0330. If any of the Funds make the information on Form N‐Q available to shareholders on its website or upon request, the information may be obtained by calling the Funds toll‐free at (888) 813‐8637.
3. COMPENSATION OF TRUSTEES
No interested Trustee, officer, or employee of the Funds receives any compensation from the Funds or Adviser for serving as an officer or Trustee of the Funds. Each Independent Trustee receives $3,000 for each Trustees meeting attended in‐person and $2,000 for each Trustees meeting attended by telephone. Members of the Audit Committee are paid $1,000 per Audit Committee meeting, and the Audit Committee Chairman is paid $2,000 per Audit Committee meeting. The Audit Committee will normally meet twice a year. Independent Trustee and Audit Committee compensation is paid by the Adviser.
4. TAX DESIGNATIONS
Of the ordinary income (including short‐term capital gain) distributions made by the Funds during the year ended December 31, 2015, the percentages qualifying for the dividend received deduction available to corporate shareholders are as follows:
| Fund Name | | Percentage |
| CornerCap Balanced Fund | | 80.46% |
| CornerCap Small-Cap Value Fund | | 60.09% |
| CornerCap Large/Mid-Cap Value Fund | | 65.70% |
For the year ended December 31, 2015, the following percentages of total ordinary dividends paid by the Funds are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information should have already been reported in conjunction with the reporting of your distributions on Form 1099‐DIV. The percentages were as follows:
| Fund | | Percentage |
| CornerCap Balanced Fund | | 82.90% |
| CornerCap Small-Cap Value Fund | | 60.31% |
| CornerCap Large/Mid-Cap Value Fund | | 67.64% |
Pursuant to Section 852(b)(3) of the Internal Revenue Code, CornerCap Balanced Fund, CornerCap Small‐Cap Value Fund and CornerCap Large/Mid-Cap Value Fund designated $2,007,864, $4,231,458, and $1,449,202, respectively, as long‐term capital gain dividends.
Additional Information (Unaudited) | |
| March 31, 2016 |
5. TRUSTEES AND OFFICERS
The business affairs of the Funds are managed under the direction of the Funds' Board of Trustees in accordance with the laws of the State of Massachusetts. Information pertaining to the Trustees and Officers of the Funds are set forth below. Trustees who are not deemed to be "interested persons" of the trust as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), are referred to as "Independent Trustees." Trustees who are deemed to be interested persons of Funds as defined in the 1940 Act are referred to as "Interested Trustees". The Funds' Statement of Additional Information includes additional information about the trustees and is available upon request by calling toll-free 1-888-813-8637.
INTERESTED TRUSTEES
| Name, Address and Year of Birth | Position with the Trust, Term of Office and Tenure | Number of Funds in Complex Overseen by Trustee | Principal Occupation(s) during past 5 years | Other Trusteeships/Directorships by Trustee |
Thomas E. Quinn The Peachtree, Suite 1700 1355 Peachtree St. NE Atlanta, GA 30309 Born: 1945 | Trustee, President, Chief Financial Officer, and Treasurer since 1992 | 3 | Chief Executive Officer, CornerCap Investment Counsel; President, Church Investment Group (non-profit) 2013-present. | None |
INDEPENDENT TRUSTEES
| Name, Address* and Year of Birth | Position with the Trust, Term of Office and Tenure | Number of Funds in Complex Overseen by Trustee | Principal Occupation(s) during past 5 years | Other Trusteeships/Directorships by Trustee |
Richard L. Boger Born: 1946 | Trustee since 1992 | 3 | President & CEO, Lex-Tek International, Inc. (a financial services and software consulting company), (1991-present); Managing Trustee, Boger-Owen FNON (2012-present); Business Manager, Owen Holdings, LLLP (2003-2013); Heathland Holdings, LLLP (2004-present); and General Partner, Shawnee Meadow Holdings, LLLP (2004-present) (real estate and related companies). | Director, Gray Television, Inc., since 1991. |
Laurin M. McSwain Born: 1951 | Trustee since 1994 | 3 | Attorney, Letkoff, Duncan, Grimes, McSwain & Hass, (2003-present). | None |
Leslie W. Gates Born: 1955 | Trustee since 2006 | 3 | Retired, 2005. Partner, Williams Benater & Libby, LLP (CPA Firm) (1989-2004). | None |
G. Harry Durity Born: 1946 | Trustee - 1992-2004, since 2010 | 3 | Director, Overland Solutions, Inc. (Private Compnay) since January 2009; Senior Advisor, Consultant, New Mountain Capital, LLC since May 2005. | Director, National Medical Health Card; Director, WebSite Pros, Inc.; Director, Alexander Mann Solutions (Private Company). |
*All Independent Trustees can be contacted via the Funds at:
Three Canal Plaza, Suite 600, Portland, ME 04101.
Additional Information (Unaudited) | |
| March 31, 2016 |
OFFICERS
| Name, Address and Year of Birth | Position with the Trust, Term of Office and Tenure | Number of Funds in Complex Overseen by Trustee | Principal Occupation(s) during past 5 years | Other Trusteeships/Directorships by Trustee |
Richard T Bean The Peachtree, Suite 1700 1355 Peachtree St. NE Atlanta, GA 30309 Born: 1962 | Vice President of the Funds since 1996 | N/A | Vice President of the Funds and Portfolio Manager, CornerCap Investment Counsel. | N/A |
John A. Hackney The Peachtree, Suite 1700 1355 Peachtree St. NE Atlanta, GA 30309 Born: 1966 | Chief Compliance Officer since 2004 and Secretary of the Funds since 1999 | N/A | Chief Compliance Officer, CornerCap Investment Counsel. | N/A |
Gene A. Hoots The Peachtree, Suite 1700 1355 Peachtree St. NE Atlanta, GA 30309 Born: 1939 | Vice President of the Funds since 1992 | N/A | Vice President of the Funds and Chairman Emeritus of CornerCap Investment Counsel. | N/A |
ITEM 2. CODE OF ETHICS.
The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or any persons performing similar functions on behalf of the registrant. The registrant's Code of Ethics was filed as an Exhibit hereto under Item 12(a)(1) of this Form N-CSR on June 6, 2008. There have been no amendments to the Code of Ethics since it was last filed.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that there is no "audit committee financial expert" serving on its audit committee. In this regard, the Board also determined that having such a person serve on its audit committee was unnecessary in light of the structure of the registrant's operations and the broad range of experience and expertise in financial matters possessed by the members of the audit committee, even though no such member was considered to have been an audit committee financial expert under the relatively narrow definition of such term.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees - The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant for the audit of the Registrant's annual financial statements, or services that are normally provided by the principal accountant in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $25,600 in 2015 and $26,500 in 2016.
(b) Audit-Related Fees – The aggregate fees billed in the Reporting Periods for assurance and related services rendered by the principal accountant that were reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $0 in 2015 and $0 in 2016.
(c) Tax Fees - The aggregate fees billed in the Reporting Periods for professional services rendered by the principal accountant to the Registrant for tax compliance, tax advice and tax planning were $5,250 in 2015 and $6,000 in 2016. These services consisted of review or preparation of U.S. federal, state, local and excise tax returns.
(d) All Other Fees - The aggregate fees billed in the Reporting Periods for products and services provided by the principal accountant to the Registrant, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2015 and $0 in 2016.
(e) (1) Audit Committee Pre-Approval Policies and Procedures: The registrant's Audit Committee has not adopted pre-approval policies and procedures. Instead, the Audit Committee approves each audit and non-audit service before the accountant is engaged to provide such service.
(e) (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable
(g) The aggregate non-audit fees billed by the principal accountant for services rendered to the Registrant for the Reporting Periods were $0 in 2015 and $0 in 2016. There were no fees billed in either of the Reporting Periods for non-audit services rendered by the principal accountant to the Registrant's investment adviser or any Affiliate.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
| (a) | Included as part of the report to shareholders under Item 1. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Note applicable.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant's Principal Executive Officer and Principal Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) are effective, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as of a date within 90 days of the filing date of this report.
(b) There were no changes in the Registrant's internal control over financial reporting (as defined in
Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) The registrant's Code of Ethics for Principal Executive and Senior Financial Officers that applies to the registrant's principal executive officer and principal financial officer and as described in Item 2 hereof is incorporated by reference to Exhibit 99.12(a)(1) to the registrant's Form N-CSR for its fiscal year ended March 31, 2008, filed electronically with the Securities and Exchange Commission on June 6, 2008.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Act, and Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibits filed herewith).
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Act, and Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant CornerCap Group of Funds
By /s/ Thomas E. Quinn
Thomas E. Quinn
President
Date May 16, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Thomas E. Quinn
Thomas E. Quinn
President (Principal Executive Officer) and Treasurer (Principal Financial Officer)
Date May 16, 2016
Atlantic Fund Services, LLC
