Registration No. 33-23517
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. ________ [ ]
Post-Effective Amendment No. 8 [x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 10 [x]
(Check appropriate box or boxes)
SCM PORTFOLIO FUND, INC.
(Exact Name of Registrant as Specified in Charter)
123 Ole Hickory Trail, Carrollton, Georgia 30117
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 770-834-5839
Stephen C. McCutcheon
123 Ole Hickory Trail
Carrollton, Georgia 30117
(Name and Address of Agent for Service)
Copies to:
Joseph V. Del Raso, Esq.
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on April 29, 1996, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate,check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Calculation of Registration Fee Under the Securities Act of 1933
- --------------------------------------------------------------------------------
Title of Amount Being Proposed Maximum Proposed Maximum Amount of
Securities Registered Offering Price Aggregate Registration
Being Per Unit Offering Price Fee
Registered
Common
Stock 300,000 Shares $10.15 $3,045,000 $609*
*Previously paid
<PAGE>
SCM PORTFOLIO FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495
Form N-1A Item Page(s)
Part A Prospectus Caption
Item 1. Cover Page 1
Item 2. Synopsis 3
Item 3. Condensed Financial Information 4
Item 4. General Description of Registrant 3,4,5,6,7,8
Item 5. Management of the Fund 8
Item 6. Capital Stock and Other Securities 14
Item 7. Purchase of Securities Being Offered 10
Item 8. Redemption or Repurchase 10
Item 9. Pending Legal Proceedings 13
Part B Statement of Additional Information
Item 10. Cover Page B-1
Item 11. Table of Contents B-1
Item 12. General Information and History B-2
Item 13. Investment Objectives and Policies B-2
Item 14. Management of the Fund B-5
Item 15. Control Persons and Principal Holders of
Securities B-7
Item 16. Investment Advisory and Other Services B-5
Item 17. Brokerage Allocation and Other Practices B-8
Item 18. Capital Stock and Other Securities (Part A) 14
Item 19. Purchase, Redemption and Pricing of Securities B-5
Item 20. Tax Status B-9
Item 21. Underwriters N/A
Item 22. Calculations of Yield Quotations N/A
Item 23. Financial Statements B-12
Part C Other Information
Items 24 through 32 have been answered in order in Part C.
<PAGE>
SCM Portfolio Fund, Inc.
P.O. Box 947
Carrollton, Georgia 30117
Shareholder Services and Prospectus 770-834-5839
PROSPECTUS April 29, 1996
THE FUND AND INVESTMENT OBJECTIVE
SCM Portfolio Fund, Inc. (the "Fund") is a diversified management open-end
investment company whose investment objective is to realize a combination of
income and capital appreciation which will result in the highest total return
consistent with safety of principal.
FUND SHARE PURCHASE
Shares of the Fund are purchased directly from the Fund by sending a
completed account application to SCM Portfolio Fund, Inc., c/o Fidelity National
Bank (the "Custodian"), P.O. Box 105075, Atlanta, Georgia 30348. Shares are
purchased at the net asset value as next determined after the receipt of an
order in proper form. The minimum initial purchase is $2,500 with subsequent
purchases requiring a minimum of $250. Inquiries may be made to the Fund at the
above address or telephone number.
ADDITIONAL INFORMATION
This Prospectus, dated April 29, 1996, which should be retained for future
reference, sets forth concisely the information that a prospective investor
should know before investing in the Fund. A "Statement of Additional
Information," dated April 29, 1996, containing additional information about the
Fund has been filed with the Securities and Exchange Commission. Such statement
is incorporated herein by reference. A copy of the Statement may be obtained
without charge by writing or calling the Fund at the location or the telephone
number shown above.
_________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<PAGE>
TABLE OF CONTENTS
The Fund 3
Fund Expenses 3
Investment Objective and
Policies 4
Investment Restrictions 7
Fund Management and the
Investment Adviser 8
Purchase of Shares 10
Redemption of Shares 10
Net Asset Value 12
Distributions and Tax
Status 12
Custodian and Shareholder
Services 13
Reports to Shareholders 13
Auditors and Litigation 13
Description of Common Stock 14
Other Information 14
Share Purchase Application 14A
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THE FUND
The Fund was incorporated in Georgia on January 14, 1988 and its registered
office is in Carrollton, Georgia. It is registered under the Investment Company
Act of 1940 (the "Act") as an open-end diversified investment company. Its
investment adviser is SCM Associates, Inc. (the "Adviser").
FUND EXPENSES
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fee None 1
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees After Fee Waivers 0.00% 2
12b-1 Fees None
Other Expenses 1.47%
----
Total Fund Operating Expenses After Fee Waivers 1.47% 2
====
1 A redemption fee of 1% of the redemption price is imposed on shares held
less than 6 months. Fidelity National Bank charges a $15 fee for each wire
redemption.
2 For the fiscal year ended December 31, 1995, the Adviser voluntarily waived
its entire management fee equal to .74% of the Fund's average net assets,
or $6,286. Absent such voluntary waiver by the Adviser, the Fund's total
operating expenses would have been 2.20% of the Fund's average net assets
or $18,771. Pursuant to the investment advisory contract, the Adviser has
agreed to refund to the Fund the sum necessary to reduce the total expenses
of the Fund to not more than 2% of daily average assets under management.
The expenses shown above are based upon the Fund's expenses for the
previous fiscal year, but have been restated to reflect the Adviser's
contractual obligation to waive its fee so that the Fund pays no more than
2.00% in expenses.
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return,
(2) the same operating expense percentage that the Fund estimates for the 1996
fiscal year, (3) reinvestment of all dividends and capital gain distributions
and (4) redemption at the end of each time period.
1 year 3 years 5 years 10 years
$20.30 $62.75 $107.78 $232.73
The purpose of the table is to assist you in understanding the various
costs and expenses that an investor in the Fund will bear, directly or
indirectly. "Other Expenses," and therefore "Total Fund Operating Expenses," as
shown in the table, are estimates for the 1996 fiscal year.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
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FINANCIAL HIGHLIGHTS
The following financial information has been audited by McMullan and Company,
independent public accountants. The per share income and capital changes should
be read in accordance with the financial statements and related notes, which,
along with the auditors report thereon, are included in the Statement of
Additional Information, and can be obtained by shareholders free of charge by
writing or calling the Fund. Further information about the Fund's performance is
contained in the Fund's annual report, which shareholders may obtain from the
Fund without charge by writing or calling the Fund at the address or telephone
number listed on the cover page of this Prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value beginning of year $ 9.95 $10.41 $10.26 $10.49 $ 9.98 $ 9.96 $10.00
------- ------ ------ ------ ------ ------ ------
Income from investment
Operations:
Net investment income .32 .31 .31 .31 .44 .59 .75
Net realized and
unrealized gain (loss)
on investments 1.08 (.39) .35 (.08) .52 (.13) (.06)
------- ------ ------ ------ ------ ------ ------
Total from investment operations 1.40 (.08) .66 .23 .96 .46 .69
------- ------ ------ ------ ------ ------ ------
Less Distributions:
From net investment income (.34) (.29) (.29) (.30) (.44) (.44) (.73)
From net realized gain (.04) (.09) (.22) (.16) (.01) (.00) (.00)
------- ------ ------ ------ ------ ------ ------
Total distributions (.38) (.38) (.51) (.46) (.45) (.44) (.73)
------- ------ ------ ------ ------ ------ ------
Net asset value, end of the year $ 10.97 $ 9.95 $ 10.41 $ 10.26 $ 10.49 $ 9.98 $ 9.96
========= ====== ======= ======= ======= ====== ======
Total Return 14.11% (.76%) 6.57% 2.25% 9.78% 4.57% 6.69%
Ratios and Supplemental Data
Net assets, end of year $922,948 $812,629 $731,106 $655,028 $706,098 $693,383 $358,604
Ratio of expenses to average net asset 1.47% 1.59% 1.58% 1.83% 1.39% 1.70% 1.40%
Ratio of net investment income to
average net assets 4.52% 4.59% 4.36% 2.91% 4.22% 5.75% 7.20%
Portfolio turnover rate 14.84% 27.17% 21.00% 28.00% 35.00% 45.00% 0.00%
</TABLE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to realize a combination of income and
capital appreciation which will result in the highest total return consistent
with safety of principal.
In seeking to attain the Fund's objective, the Fund intends to pursue a
flexible investment policy and invest primarily in
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common stocks, both growth and income-oriented; corporate bonds and debentures;
U.S. Treasury notes and bonds; and short-term money market instruments, such as
U.S. Treasury bills, bank certificates of deposit and commercial paper. The Fund
seeks to generate real (inflation plus) growth during favorable investment
periods and will emphasize income and capital preservation during uncertain
investment periods.
The Fund may purchase common stocks and other equity-type securities,
limited to convertible bonds, preferred stocks, warrants, rights and convertible
preferred shares. The percentage of assets invested in common stocks, other
equity-type securities and in bonds, debentures and short-term money market
instruments, such as those set forth in the preceding paragraphs, is not fixed
and will vary from time to time depending upon the judgment of management as to
general market and economic conditions, trends in investment yields and interest
rates and changes in fiscal or monetary policies.
The Fund may purchase bonds (including debentures) and notes rated A or
better at the time of purchase by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"). Money market instruments will be
commercial paper rated A-1 or higher by S&P or Prime-1 by Moody's; bankers
acceptances, cash or short-term time deposits (maturities of 6 months or less,
and then no more than 10 percent of the Fund's total assets) in U.S. banks or
savings and loans which are members of the Federal Deposit Insurance
Corporation; and money market mutual funds which invest primarily in U.S.
Government Securities.
The Fund may also invest in debt securities issued or guaranteed by the
United States government and its agencies or instrumentalities. These securities
include U.S. Treasury obligations and obligations of certain agencies, such as
the Government National Mortgage Association, which are supported by the full
faith and credit of the United States, as well as obligations of certain other
agencies or instrumentalities, such as the Federal National Mortgage
Association, Federal Land Banks and the Federal Farm Credit Administration,
which are backed only by the right of the issuer to borrow limited funds from
the U.S. Treasury, by the discretionary authority of the U.S. Government to
purchase such obligations or by the credit of the agency or instrumentality
itself.
The Fund may invest in shares of other registered investment companies,
subject to its investment restrictions and limitations imposed under the Act,
and as such will bear its ratable share of those investment companies' expenses,
including management fees, while at the same time remaining subject to payment
of the advisory fee to the Adviser with respect to those assets.
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<PAGE>
At times the Fund may be 100 percent invested in common stocks and other
equity-type securities. On the other hand, when the Fund believes that, in the
light of the current economic and market conditions, its investment objectives
may be more readily attainable by investment in fixed-income securities, it may
invest up to 100 percent of its assets in corporate bonds and debentures, U.S.
Treasury notes or bonds, and in short-term money market instruments. The Fund
may invest up to two percent of its net assets in warrants which are not listed
on the New York or American Stock Exchange and an additional three percent in
warrants which are so listed.
Through its active management of the portfolio and flexible approach to
investing, the Adviser seeks to avoid or reduce the degree of negative change in
the Fund's net asset value per share and seeks to provide positive returns, even
in declining markets. However, there is no guarantee that the Adviser will be
successful in attaining these goals.
In seeking to further its investment objective of realizing the highest
total return with the assumption of reasonable risks, the distinction between
the realization of short-term capital gain taxable as ordinary income and
long-term capital gain will not be of primary importance. When the Fund
determines that a security should be sold, the security will be sold whether or
not it has been held for the required period of time to qualify as a long-term
capital gain. In addition, as indicated above, the Fund may purchase securities
with a short-term profit objective when the Adviser deems it advisable.
Except for the Fund's stated investment objective, the above-referenced
policies are not fundamental and the Fund's Board of Directors may change such
policies without an affirmative vote of a majority of the Fund's outstanding
voting securities.
The Fund's investment objective and investment policies may cause the
annual portfolio turnover rate to be higher than the average turnover rate of
many other investment companies. It is anticipated that the annual portfolio
turnover rate will not exceed 100 percent but may exceed this rate if the
Adviser deems changes to the portfolio are appropriate and consistent with the
Fund's stated investment objective and policies. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of securities by the
average monthly value of the Fund's portfolio securities.
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<PAGE>
INVESTMENT RESTRICTIONS
The By-laws of the Fund provide the following fundamental investment
restrictions, and the Fund may not, except by the vote of a majority of the
outstanding voting securities, change such restrictions. A majority of such
securities means the vote, at an annual or a special meeting of the shareholders
of the Fund duly called, of (i) 67 percent or more of the voting securities
present at such meeting, if the holders of more than 50 percent of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) more than 50 percent of the outstanding voting securities of the Fund,
whichever is less.
The Fund may not:
(1) (a) With respect to 75% of the Fund's total assets, invest in the
securities of any one issuer (excluding the U.S. Government, its agencies and
instrumentalities), if immediately thereafter and as a result of such investment
the acquisition cost of the holdings of the Fund in the securities of such
issuer exceeds 5% of the Fund's total assets, taken at market value, or
(b) Invest in the securities of any single issuer, if immediately
after and as a result of such investment, the Fund owns more than 10% of the
outstanding voting securities of such issuer.
(2) Act as an underwriter for securities of other issuers.
(3) Borrow money or purchase securities on margin, but may borrow money
from banks as may be necessary for clearances or purchases and sales of
securities for temporary or emergency purposes in an amount not to exceed 5
percent of the value of the Fund's assets at the time the loan is made.
(4) Sell securities short, except for short sales against- the-box.
(5) Invest more than 25 percent of its assets at the time of purchase in
any one industry, except for U.S. Government securities.
(6) Make investments in commodities, commodity contracts or real estate,
although the Fund may purchase and sell securities of companies which deal in
real estate or interests therein and whose securities are marketable.
(7) Make loans except the purchase of a portion of a readily marketable
issue of publicly distributed bonds, debentures or other debt securities will
not be considered the making of a loan.
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<PAGE>
(8) Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, if more than ten
percent of the Fund's total assets would be invested in securities of other
investment companies, more than five percent of its total assets would be
invested in the securities of any one other investment company or the Fund would
own more than three percent of any other investment company's securities.
(9) Invest in companies for the purpose of acquiring control.
(10) Invest more than 5 percent of the total Fund assets taken at the
market value at the time of purchase in securities of companies, except
investment companies, with less than three years of continuous operation,
including the operation of any predecessor.
(11) Pledge, mortgage or hypothecate any of its assets.
(12) Invest more than 10 percent of the Fund's total assets in securities
that at the time of purchase have legal or contractual restrictions on resale or
which are not readily marketable (including repurchase agreements maturing in
more than seven days and over-the-counter options).
FUND MANAGEMENT AND THE INVESTMENT ADVISER
The Fund is controlled by the shareholders who elect the Board of Directors
who exercise authority over policy matters of the Fund. The day-to-day
operations of the Fund are managed by the Fund's officers subject to the By-laws
of the Fund and review of the Board of Directors. Information about the officers
and directors of the Fund is provided in the "Statement of Additional
Information."
The Fund has entered into an advisory agreement (the "Agreement") with SCM
Associates, Inc., 123 Ole Hickory Trail, Carrollton, Georgia 30117 (the
"Adviser") whereby the Adviser is authorized to manage the Fund's investments.
The Adviser has no current agreement for providing investment management
services to any other registered investment company. The Adviser served as
investment adviser to various entities prior to being employed as an investment
adviser of the Fund. Due to his percentage ownership of the Adviser, Dr. Stephen
C. McCutcheon, President and Director of the Fund, controls the Adviser. Dr.
McCutcheon also serves as the Portfolio Manager of the Fund, as he has done
since the Fund's inception in 1989. Prior to the formation of the Fund, Dr.
McCutcheon managed certain discretionary investment accounts for individuals,
corporations, trusts and retirement funds.
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<PAGE>
The Fund has an investment committee composed of Henry W. Blizzard, Vice
Chairman and Vice President of the Fund and the Adviser, and Dr. McCutcheon.
However, Dr. McCutcheon manages the portfolio of the Fund and makes the final
investment decisions.
The Agreement with the Adviser will continue on an annual basis provided
that approval is granted annually by a vote of a majority of the independent
directors or by a vote of the holders of a majority of the outstanding voting
securities of the Fund. In either condition, the Agreement must be approved (1)
by a majority of the directors of the Fund who are neither parties to the
Agreement nor interested persons as defined in the Act and (2) at a meeting
called for the purpose of voting such approval. The Agreement may be terminated
at any time, without the payment of any penalty by the Board of Directors or by
a vote of a majority of the outstanding voting securities of the Fund on not
more than sixty (60) days' written notice to the Adviser.
As compensation for its services, the Fund has agreed to pay the Adviser a
fee to be computed and paid monthly by multiplying the sum of 0.74% of the
average daily closing net assets of the Fund during the previous month by a
fraction, the numerator of which is the number of days in the previous month and
the denominator of which is 365 (366 in Leap Years). For the fiscal year ended
December 31, 1995, investment advisory fees were waived by the Adviser. During
such period, the Adviser waived its entire fee equal to .74% of the Fund's
average net assets.
The Fund will provide, at its own expense, legal, accounting and auditing
fees; insurance and bonding premiums; custodial fees; shareholder report fees;
transfer agent fees; registration fees; interest and extraordinary expenses.
However, the Adviser has borne the organizational expenses of the Fund.
Furthermore, the Agreement provides that should the management fee and other
expenses exceed two percent at the end of the fiscal year based on the Fund's
daily average net assets, the Adviser would refund the sum necessary to reduce
the total cost to the Fund to not more than two percent of the daily average net
assets under management during the fiscal year. For the fiscal year ended
December 31, 1995, the total expenses of the Fund were 1.47% of average net
assets.
The Fund has also entered into an Administrative Services Contract whereby
the Adviser will furnish the Fund with certain administrative services including
fund accounting, net asset value calculation and reporting. For its services
under the contract, the Fund pays to the Adviser a monthly fee equal to
one-twelfth of twenty-five one hundredths of one percent per month (the
equivalent of .25 of one percent per annum), of the daily average net assets of
the Fund during the month. For the fiscal year ended December 31, 1995, the Fund
paid the Adviser $2,124. For the fiscal years ending December 31, 1994 and
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<PAGE>
December 31, 1993, the Fund paid the Adviser $1,842 and $1,740, respectively.
PURCHASE OF SHARES
Shares of the Fund are purchased by sending a Share Purchase Application to
SCM Portfolio Fund, Inc., c/o Fidelity National Bank, P.O. Box 105075, Atlanta,
Georgia 30348. The offering price for the Fund's shares is equal to the net
asset value per share next determined after receipt of a purchase order by the
Fund. There are no sales charges or underwriting commissions. An initial
purchase of Fund shares must be at least $2,500, at the current offering price.
Subsequent purchases may be made in amounts of $250 or more. These minimums may
be changed at any time. Shareholders will be given at least 30 days' advance
notice of any increase in the minimums.
Purchase orders will be accepted only when accompanied by a Share Purchase
Application form and a check or money order in payment of the purchase price.
All orders to purchase shares are subject to acceptance or rejection by the Fund
and are not binding until so accepted. (Funds to purchase shares may be
transmitted to the custodian by wire. Please call 404-240-1557 for wiring or
express mail instructions.)
The Fund will not ordinarily issue certificates for shares purchased. Share
certificates representing whole shares are issued only upon the specific request
of a shareholder made in writing to the Fund. All shareholders will receive
confirmations showing purchases, redemptions and net shares owned.
The Fund will retain and reinvest automatically dividends and capital gains
distributions and use the same for the purchase of additional shares for the
shareholder at net asset value as of the close of business on the distributing
date. However, a shareholder may at the time of purchase or any time by letter
direct the Fund to pay dividends and capital gains distributions to such
shareholder in cash. Such change of election applies to dividends and
distributions the record dates of which fall on or after the date that the Fund
receives the written notice.
REDEMPTION OF SHARES
Shares will be redeemed on request of the shareholder in "proper form" to
the Fund: "Proper form" means that the request to redeem must meet all the
following requirements:
(1) It must be in writing sent to SCM Portfolio Fund, Post Office Box 947,
Carrollton, Georgia 30117;
(2) It must be signed by the shareholder (or shareholders) exactly in the
manner as the shares are registered, and must
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specify either the number of shares, or the dollar amount of shares, to be
redeemed;
(3) The signature (or signatures) of the redeeming shareholder (or
shareholders) must be guaranteed by a commercial bank, savings bank,
broker/dealer firm, clearing agency, or a registered stock exchange, and if the
shares are registered in more than one name, then the signature of each of the
shareholders must be guaranteed separately;
(4) If certificates have been issued for the shares being redeemed, the
request must be accompanied by such certificates together with a stock power
signed by the shareholder (or shareholders), with signature (or signatures)
guaranteed in the same manner as described in number three above; and
(5) If the shares being redeemed are registered in the name of an estate,
trust, custodian, guardian, retirement plan or the like, or in the name of a
corporation or partnership, documents must also be included which, in the
judgment of the Fund or its designated agent, are sufficient to legally
establish the authority of the person (or persons) signing the request, with
signature (or signatures) guaranteed in the same manner as described in number
three above.
The redemption price will be the net asset value per share next determined
after the request to redeem is received by the Fund in "proper form," as defined
above. In the event of redemption within six months of purchase of the shares
redeemed, one percent (1%) of the redemption amount will be charged by the Fund
to defray administrative costs incurred. The fee is treated by the Fund as other
income. The proceeds received by the shareholder may be more or less than the
cost of such shares, depending upon the net asset value per share at the time of
redemption. If, as a result of redemption, the net asset value of a
shareholder's remaining shares is less than $1,250, the Fund may involuntarily
redeem such remaining shares. Prior to any such involuntary redemption, a
redemption notice will be sent by first class mail to the shareholder at the
address on the Fund's records. The notice will specify a date no less than
thirty (30) days from the date it is mailed, and the remaining shares will be
redeemed at net asset value on such date unless the shareholder purchases
sufficient additional shares to raise the net asset value of his aggregate share
holdings to $1,250 by that date.
Payment by the Fund will ordinarily be made in cash and within seven (7)
days of receipt of the shareholder's request for redemption in "proper form."
Funds may also be wired to another bank or trust company. Fidelity National Bank
charges a $15 fee for each wire redemption. Please call the custodian (404-240-
1557) for instructions regarding transmittal of a redemption by wire. If shares
have been purchased by check, the Fund will make
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redemption proceeds available upon the clearance of the shareholder's purchase
check by the shareholder's bank, which, depending on the location of such bank,
could take up to fifteen (15) days or more.
The Fund reserves the right to suspend or postpone redemptions during any
period when the New York Stock Exchange is closed for other than customary
weekend and holiday closings or during which trading on the New York Stock
Exchange is restricted; or during which an emergency exists such as would make
disposal of securities owned by the Fund unreasonable or impracticable or would
make determination of the Fund's value impracticable; or for such other periods
as the Securities and Exchange Commission may by order permit for protection of
the Fund's shareholders.
NET ASSET VALUE
The net asset value for the Fund's shares is determined as of the close of
trading on each day the New York Stock Exchange is open by dividing the net
asset value (assets minus liabilities) of the Fund by the number of shares
outstanding, the result being adjusted to the nearest whole cent. Except on the
last business day of each calendar month, the Fund may omit the determination of
net asset value on days when no share purchase or share redemption requests are
received. In computing the net asset value of the Fund, securities listed on the
New York Stock Exchange, American Stock Exchange or other security exchanges,
and securities traded in the Over-The-Counter market shall be valued at their
closing sales prices. If no sale has been reported for that day, the last
published sale or the last recorded bid price, whichever is the more recent,
shall be used, unless in the opinion of the Board of Directors the value thus
obtained may not fairly indicate the actual market value, in which case these
securities, and any other assets for which market quotations are not readily
available, shall be valued at fair value as determined by the management and
approved in good faith by the Board of Directors. Debt securities having
maturities of less than sixty (60) days are valued by the amortized cost method
when the Board of Directors determines in good faith that amortization cost is
fair value. Expenses and fees, including the advisory fee, are accrued daily and
taken into account for the purpose of determining the net asset value.
DISTRIBUTIONS AND TAX STATUS
The Fund intends to distribute, at least annually, ordinary dividends and
net capital gains substantially equal to the Fund's net investment income and
net capital gains for each year. There can be no guarantee that the Fund will
have such net investment income or net capital gains for annual distribution.
All distributions will be automatically reinvested in shares of the
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Fund, unless the shareholder makes a written request for distributions in cash.
Such request must be sent to the Fund at its current mailing address.
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. As such, the Fund will not be subject
to Federal corporate income tax on net investment income and net capital gains
distributed to its shareholders. Shareholders are individually liable for income
taxes that may be due on net investment income and net capital gains
distributions by the Fund. Any distributions paid shortly after a purchase of
shares by an investor will have the effect of reducing the net asset value per
share by the amount of such distributions. These distributions, although in
effect a return of capital, are subject to taxation.
The Fund will inform shareholders each year of the amount and nature of the
distributions which are taxable to shareholders. Shareholders should consult
their own financial adviser concerning the federal, state, and local tax
consequences of share ownership. Further tax information is included in the
"Statement of Additional Information."
CUSTODIAN AND SHAREHOLDER SERVICES
Fidelity National Bank, 3490 Piedmont Road, Suite 750, Atlanta, Georgia
30305 (404-240-1557) acts as custodian of all cash and securities of the Fund.
SCM Portfolio Fund acts as transfer agent and dividend disbursing agent.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing audited financial
statements. In addition, at least semiannually, the Fund sends all shareholders
reports containing unaudited financial statements.
Shareholder inquiries regarding these reports should be addressed to the
Fund at P.O. Box 947, Carrollton, Georgia 30117 or by telephone to (770)
834-5839.
AUDITORS AND LITIGATION
McMullan and Company, independent certified public accountants, 1355
Peachtree Street, Atlanta, Georgia, act as independent auditors for the Fund.
As of the date of this Prospectus, there was no pending or threatened
litigation involving the Fund or its Adviser.
-13-
<PAGE>
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Georgia on January 14, 1988 with 10,000,000
authorized shares of common stock, $1.00 par value. All the outstanding shares
are, and the shares to be issued as contemplated herein will be, duly
authorized, fully paid and nonassessable. Each issued and outstanding share has
full voting rights and is entitled to one vote on all matters submitted to the
shareholders on the election of directors and the selection of independent
certified public accountants. No shareholder is entitled to cumulative voting
rights or to any preemptive right to acquire securities of the Fund. Each share
has equal dividend, distribution, and liquidation rights.
OTHER INFORMATION
On April 1, 1996, James M. Prather, Secretary and Director of the Fund and
the Adviser, owned beneficially 23.7 percent of the outstanding shares of the
Fund. Lititia H. Stone, an independent Director of the Fund, and her husband,
Robert J. Stone, participate in System & Methods, Inc. Pension and Profit
Sharing Plans, which owned beneficially on April 1, 1996 46.0 percent of the
outstanding shares of the Fund.
This Prospectus does not contain all the information set forth in the
registration statement the Fund has filed with the Securities and Exchange
Commission. The complete registration statement may be obtained from the
Securities and Exchange Commission upon payment of the fee prescribed by its
rules and regulations. Shareholders may also direct inquiries to the Fund by
writing or calling the Fund at the address or telephone number provided on the
first page of this Prospectus.
_________________________________
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the Statement
of Additional Information dated April 29, 1996 and, if given or made, such
information or representations may not be relied upon as having been authorized
by SCM Portfolio Fund, Inc. This Prospectus does not constitute an offer to sell
securities in any state or jurisdiction in which such offering may not lawfully
be made. The delivery of this Prospectus at any time shall not imply that there
has been no change in the affairs of SCM Portfolio Fund, Inc. since the date
hereon.
-14-
<PAGE>
SHARE PURCHASE APPLICATION
Please make checks payable to: SCM PORTFOLIO FUND, INC.
c/o Fidelity National Bank - Trust Dept.
P.O. Box 105075
Atlanta, GA 30348-5075
Amount of Investment Attached $____________ (minimum initial purchase $2,500)
All applications are accepted in Georgia and under Georgia laws.
(Not for use with IRAs, Keoghs or Simplified Employee Plans (SEP)).
- --------------------------------------------------------------------------------
INSTRUCTIONS Please Type or Print Clearly
Fill in where applicable
- --------------------------------------------------------------------------------
Individual
1. - -
- --------------------------------------------------------------------------------
First Name Initial Last Name Social Security Number
Joint Tenant, if any,
(with right of survivorship)
2. - -
- --------------------------------------------------------------------------------
First Name Initial Last Name Social Security Number
- --------------------------------------------------------------------------------
Uniform Gift to Minors
3.
- --------------------------------------------------------------------------------
Custodian's Name (Only one allowed by law) Minor's State of Residence
- -
- --------------------------------------------------------------------------------
Minor's Name (Only one allowed by Law) Minor's Social Security No.
- --------------------------------------------------------------------------------
Other
(Corporations, Trusts,
Associations, Partnerships)
4.
- --------------------------------------------------------------------------------
-
- --------------------------------------------------------------------------------
Tax Identification No.
- --------------------------------------------------------------------------------
Full Address
Number and Street -----------------------------------------------------------
City -------------------------------------- State ----- Zip -----------
Citizen of : |_| United States |_| Other (Specify) -----------
Home Telephone No. ----------------- Business Telephone No. -------------------
- --------------------------------------------------------------------------------
Signature
The undersigned has received a current copy of the Company's Prospectus,
understands that dividends and distributions will be reinvested in additional
shares unless payment in cash is requested in writing, certifies under penalty
of perjury that the applicant is not subject to back up withholding for
underreporting interest or dividends and the applicant's correct social security
(taxpayer identification) number is printed above, and has full authority and
legal capacity to purchase shares of the Company.
- ------------------------------------ -----------------------------------------
Individual (or Custodian) Corporate Officer of Trustee
- ------------------------------------ -----------------------------------------
Joint Tenant (if any) Title of Corporate Officer or Trustee
- --------------------------------------------------------------------------------
-14A-
<PAGE>
SCM PORTFOLIO FUND, INC.
P.O. BOX 947
CARROLLTON, GEORGIA 30117
STATEMENT OF ADDITIONAL INFORMATION
April 29, 1996
THIS STATEMENT IS NOT A PROSPECTUS BUT SHOULD BE READ IN CONJUNCTION WITH THE
CURRENT PROSPECTUS OF SCM PORTFOLIO FUND, INC. (THE "FUND") DATED APRIL 29,
1996. TO OBTAIN THE PROSPECTUS, PLEASE WRITE TO THE FUND AT THE ABOVE ADDRESS.
TABLE OF CONTENTS
THE FUND....................................................................B-2
INVESTMENT OBJECTIVES AND POLICIES..........................................B-2
INVESTMENT RESTRICTIONS.....................................................B-2
PORTFOLIO SECURITIES........................................................B-3
SHARE PURCHASES AND REDEMPTIONS.............................................B-5
NET ASSET VALUE.............................................................B-5
FUND MANAGEMENT AND THE INVESTMENT ADVISER..................................B-5
OFFICERS AND DIRECTORS OF THE FUND..........................................B-6
CONTROL PERSONS.............................................................B-7
BROKERAGE...................................................................B-8
TAX INFORMATION.............................................................B-9
CUSTODIAN AND TRANSFER AGENT...............................................B-10
REPORTS TO SHAREHOLDERS....................................................B-10
AUDITORS AND LITIGATION....................................................B-10
OTHER INFORMATION..........................................................B-10
FINANCIAL STATEMENTS.......................................................B-12
<PAGE>
THE FUND
The Fund is a diversified open-end management investment company which was
incorporated in Georgia on January 14, 1988. The registered office of the Fund
is 123 Ole Hickory Trail, Carrollton, Georgia, and the mailing address is P.O.
Box 947, Carrollton, Georgia 30117.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus under the heading "Investment Objective and Policies."
INVESTMENT RESTRICTIONS
The By-laws of the Fund provide the following fundamental investment
restrictions, and the Fund may not, except by the vote of a majority of the
outstanding voting securities, change such restrictions. A majority of such
securities means the vote, at an annual or a special meeting of the shareholders
of the Fund duly called, of (i) 67 percent or more of the voting securities at
such meeting, if the holders of more than 50 percent of the outstanding voting
securities of the Fund are present or represented by proxy, or (ii) more than 50
percent of the outstanding voting securities of the Fund, whichever is less.
The Fund may not:
(1) (a) With respect to 75% of the Fund's total assets, invest in the
securities of any one issuer (excluding the U.S. Government, its agencies and
instrumentalities), if immediately thereafter and as a result of such investment
the acquisition cost of the holdings of the Fund in the securities of such
issuer exceeds 5% of the Fund's total assets, taken at market value, or
(b) Invest in the securities of any single issuer, if immediately
after and as a result of such investment, the Fund owns more than 10% of the
outstanding voting securities of such issuer.
(2) Act as an underwriter for securities of other issuers.
(3) Borrow money or purchase securities on margin, but may borrow money
from banks as may be necessary for clearances or purchases and sales of
securities for temporary or emergency purposes in an amount not to exceed 5
percent of the value of the Fund's assets at the time the loan is made.
(4) Sell securities short, except for short sales against- the-box.
B-2
<PAGE>
(5) Invest more than 25 percent of its assets at the time of purchase in
any one industry, except for U.S. Government securities.
(6) Make investments in commodities, commodity contracts or real estate,
although the Fund may purchase and sell securities of companies which deal in
real estate or interests therein and whose securities are marketable.
(7) Make loans except the purchase of a portion of a readily marketable
issue of publicly distributed bonds, debentures or other debt securities will
not be considered the making of a loan.
(8) Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, if more than ten
percent of the Fund's total assets would be invested in securities of other
investment companies, more than five percent of its total assets would be
invested in the securities of any one other investment company or the Fund would
own more than three percent of any other investment company's securities.
(9) Invest in companies for the purpose of acquiring control.
(10) Invest more than 5 percent of the total Fund assets taken at the
market value at the time of purchase in securities of companies, except
investment companies, with less than three years of continuous operation,
including the operation of any predecessor.
(11) Pledge, mortgage or hypothecate any of its assets.
(12) Invest more than 10 percent of the Fund's total assets in securities
that at the time of purchase have legal or contractual restrictions on resale or
which are not readily marketable (including repurchase agreements maturing in
more than seven days and over-the-counter options).
PORTFOLIO SECURITIES
Though the Fund primarily intends to invest in publicly traded common
stocks, the following information provides brief descriptions of certain other
securities in which the Fund may invest. Prospective investors should read and
understand the factors disclosed in the "Investment Objective and Policies"
section of the Prospectus before purchasing shares in the Fund.
The Fund may invest in warrants which give the holder the right to purchase
a specified amount of a company's common stock at a stipulated price for a
specified period of time. Due to the
B-3
<PAGE>
leverage characteristics of warrants, market price volatility of these
securities is usually much greater than that of the related common stock.
The Fund may invest in rights which normally have a significantly
shorter-term life than warrants and give the holder the opportunity to purchase
a specified number of shares of a new issue of a company at a specified price.
The failure to exercise such rights results in a dilution of a shareholder's
interest in the company.
The Fund may invest up to 5% of its assets in GNMA Mortgage- Backed
Securities ("GNMA's"). GNMA's are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans, issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations, are either
insured by the Federal Housing Administration (FHA) or guaranteed by the
Veterans Administration (VA). A "pool" or group of such mortgages is assembled
and, after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, a Federal Government corporation within the U.S.
Department of Housing and Urban Development, the timely payment of interest and
principal on each mortgage is guaranteed by the full faith and credit of the
Federal Government. As mortgage-backed securities, GNMA's differ from bonds in
that principal is paid back by the borrower over the length of the loan rather
than returned in a lump sum at maturity. Also, the underlying mortgage loans may
be paid off prior to maturity due to a sale of the secured real estate or
refinancing due to changes in interest rates and the Fund may not be able to
replace those securities on similar terms.
The Fund, subject to its investment restrictions and limitations imposed
under the Act, may invest in American Depository Receipts ("ADRs") or in shares
of other registered investment companies whose portfolios are invested in
foreign securities. Investing in foreign securities involves substantial risks
not typically associated with investing in securities of domestic companies.
Investing in securities of foreign issuers and the attendant holding of foreign
currencies could cause the Fund to be affected favorably or unfavorably by
changes in currency exchange rates. In addition, less information may be
available about foreign companies than about domestic companies and foreign
companies may not be subject to reporting or accounting standards and
requirements comparable to those applicable to domestic securities and their
markets. Securities of some foreign companies may involve greater market risk
than securities of domestic companies and foreign brokerage commissions and
other fees are generally higher than those in the United States. Certain costs,
including currency exchange price spreads, are often incurred to cover currency
exchange service charges. Investments in foreign securities may also be subject
B-4
<PAGE>
to local economic or political risks, including instability of some foreign
governments, the imposition of withholding taxes on dividend or interest
payments, foreign exchange controls (which could suspend the ability to transfer
currency from a given country) and the potential for expropriation, confiscatory
taxation or nationalization of the assets of the companies issuing the
securities.
The Fund does not currently intend to enter into repurchase agreements or
reverse repurchase agreements, or purchase options or futures contracts.
SHARE PURCHASES AND REDEMPTIONS
The Prospectus describes the manner in which the Fund's shares may be
purchased or redeemed. See "Purchase of Shares" and "Redemption of Shares" in
the Prospectus.
NET ASSET VALUE
The Prospectus, under the heading "Net Asset Value," describes how and when
the Fund's net value is determined.
FUND MANAGEMENT AND THE INVESTMENT ADVISER
The Fund is controlled by the shareholders who elect the Board of
Directors, which exercises authority over policy matters of the Fund. The
officers of the Fund conduct the day-to-day management of the Fund, and SCM
Associates, Inc. (the "Adviser") serves as investment adviser. Dr. Stephen C.
McCutcheon, President and Director of the Fund, controls the Adviser due to his
percentage ownership of the Adviser, and is generally responsible for all of its
investment decisions. Dr. McCutcheon, prior to the formation of the Fund,
managed certain discretionary investment accounts for individuals, corporations,
trusts and retirement funds. Dr. McCutcheon has managed the portfolio of the
Fund since its inception.
The Fund has entered into an advisory agreement (the "Agreement") with the
Adviser whereby the Adviser is authorized to manage the Fund's investments. The
Agreement will continue on an annual basis provided that approval is granted
annually by a vote of a majority of the independent directors or by a vote of
the holders of a majority of the outstanding voting securities of the Fund. In
either condition, the Agreement must be approved (1) by a majority of the
directors of the Fund who are neither parties to the Agreement nor interested
persons as that term is defined in the Investment Company Act of 1940 and (2) at
a meeting called for the purpose of voting such approval. The Agreement may be
terminated at any time, without the payment of any penalty by the Board of
Directors or by a vote of a majority
B-5
<PAGE>
of the outstanding voting securities of the Fund on not more than sixty (60)
days' written notice to the Adviser.
As compensation for its services, the Fund has agreed to pay the Adviser a
fee to be computed and paid monthly by multiplying the sum of 0.74% of the
average daily closing net assets of the Fund during the previous month by a
fraction, the numerator of which is the number of days in the previous month and
the denominator of which is 365 (366 in Leap Years). For the fiscal years ended
December 31, 1995, 1994 and 1993, the Adviser waived its fee.
The Fund will provide legal, accounting and auditing fees; insurance and
bonding premiums; custodial fees; shareholder reports; transfer agent fees;
registration fees; Federal and state taxes; interest and extraordinary expenses.
Furthermore, the Agreement provides that should the management fee and other
expenses exceed two percent at the end of the fiscal year based on the Fund's
daily average net assets, the Adviser would refund the sum necessary to reduce
the total cost to the Fund to not more than two percent of the daily average
assets under management during the fiscal year.
OFFICERS AND DIRECTORS OF THE FUND
<TABLE>
<CAPTION>
Principal Occupation and
Name, Address and Age Position Affiliation for Past Five Years
<S> <C> <C>
Stephen C. McCutcheon*, 57 President and Director, Division of Continuing Education,
123 Ole Hickory Trail Director West Georgia College; President and Director
Carrollton, GA 30117 of SCM Associates, Inc. and Southern Capital
Management Company.
Henry W. Blizzard *, 56 Vice President Judge, 39th Judicial Circuit of Alabama; Vice
202 Wellington Road and Director President and Director of SCM Associates,
Athens, AL 35611 Inc. and Southern Capital Management
Company.
James M. Prather*, 51 Secretary and Dentist; Secretary and Director of SCM
175 Fairlawn Drive Director Associates, Inc. and Southern Capital
Carrollton, GA 30117 Management Company.
Cynthia B. McCutcheon (1), 57 Treasurer Operations Manager, Treasurer and Director
123 Ole Hickory Trail of SCM Associates, Inc. and Director of
Carrollton, GA 30117 Southern Capital Management Company.
William L. McGee, 49 Director Veterinarian
291 Tyus Carrollton Road
Carrollton, GA 30117
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation and
Name, Address and Age Position Affiliation for Past Five Years
<S> <C> <C>
Lititia Stone, 51 Director Treasurer/Director Systems & Methods,
130 Ole Hickory Trail Incorporated
Carrollton, GA 30117
<FN>
* "Interested Person" as that term is defined by the Investment Company Act
of 1940.
(1) Cynthia B. McCutcheon is the wife of Stephen C. McCutcheon.
</FN>
</TABLE>
The Directors of the Fund met in person twice during fiscal year 1995, and
otherwise conducted the Fund's business four additional times by unanimous
written consent, in accordance with applicable law. No Director of the Fund
receives compensation from the Fund for acting as Director.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Systems & Methods, Inc. Pension and Profit Sharing Plans, 106 Wedgewood
Square, Carrollton, Georgia 30117, owned beneficially 46.0 percent of the
outstanding shares of the Fund on April 1, 1996. Due to its percentage ownership
of the shares of the Fund, the Plans are deemed to control the Fund and will
have a substantial effect on the outcome of any matter submitted to shareholders
of the Fund for a vote. Shareholders who owned five percent or more of the
shares of the Fund on April 1, 1996 are as follows:
% Record
Name Address Ownership
Ann P. and Donald G. Chandler 1294 Davis Road 5.5
Carrollton, GA 30117
James M. Prather 175 Fairlawn Drive 23.7
Carrollton, GA 30117
Daniel K. Blizzard 515 N. Jefferson Street 6.3
Athens, AL 35611
Henry W. Blizzard 202 Wellington Road 5.5
Athens, AL 35611
Lititia H. Stone, an independent director of the Fund, and her husband, Robert
J. Stone, are participants in System & Methods, Inc. Pension and Profit Sharing
Plans. As of April 1, 1996, the directors and officers as a group owned 80.05%
or 65,909.159 of the outstanding shares of the Fund.
B-7
<PAGE>
BROKERAGE
The Adviser is responsible for the investment decisions of the Fund and as
such will select members of securities exchanges, brokers and dealers
(collectively "brokers") for the execution of the Fund's portfolio transactions
and, when applicable, the negotiation of commissions in connection therewith.
Purchase and sale orders usually will be placed with brokers who are
considered by the Adviser as those able to achieve "best execution" of such
orders. "Best execution" means prompt and reliable execution at the most
favorable security price. The overall determination of what may constitute best
execution and price in the execution of a securities transaction by a broker
involves a number of considerations, including, without limitation, the overall
direct net economic result to the Fund (involving both price paid or received
and any commissions and other costs paid), the efficiency with which the
transaction is effected, the ability to effect the transactions at all where a
large block is involved, availability of the broker to stand ready to execute
possible difficult transactions in the future, and the financial strength and
stability of the broker. Such commissions are judgmental and are weighed by the
Adviser in determining the overall reasonableness of brokerage commissions.
The Adviser is authorized to allocate brokerage and principal business to
brokers who have provided brokerage and research services, as such services are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended, for
the Fund and, as to transactions to which fixed minimum commission rates are not
applicable, to cause the Fund to pay a commission for effecting a securities
transaction in excess of the amount another broker would have charged for
effecting that transaction, if the Adviser in making the recommendation in
question determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or the Adviser's
overall responsibilities with respect to the Fund and the other accounts, if
any, as to which it exercises investment discretion. In reaching such
determination, the Adviser is required to place or attempt to place a specific
dollar value on the research or execution services of a broker or on the portion
of any commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, the Adviser shall be prepared to show
that all commissions were allocated and paid for purposes contemplated by the
Fund's brokerage policy; that commissions were recommended or paid only for
products or services which provide lawful and appropriate assistance to the
Adviser in the performance of its investment research, advice and supervision
for the Fund; and that the commissions paid were within a reasonable range. The
determination that commissions
B-8
<PAGE>
were within a reasonable range shall be based on any available information as to
the level of commissions known to be charged by other brokers on comparable
transactions, but there shall be taken into account the Fund's policies (i) that
obtaining a low commission is deemed secondary to obtaining a favorable price
than to pay the lowest commission; and (ii) that the quality, comprehensiveness
and frequency of research studies which are provided for the Fund and the
Adviser are useful to the Adviser in performing its advisory services under its
contract with the Fund. Research services provided by brokers to the Fund or the
Adviser are considered to be in addition to, and not in lieu of, services
required to be performed by the Adviser under its contract with the Fund.
Research furnished by brokers through whom the Fund effects securities
transactions may be used by the Adviser for any accounts it may service, and not
all such research may be used by the Adviser for the Fund. When execution of
portfolio transactions is allocated to brokers trading on exchanges with fixed
brokerage commission rates, account may be taken of various services provided by
the broker deemed beneficial to the Fund.
The aggregate amount of brokerage commissions paid by the Fund for the
fiscal years ended December 31, 1995, 1994 and 1993 was $1,197.20, $1,801.02,
and $2,355.73, respectively.
Insofar as known to management, no Director or Officer of the Fund, nor the
Adviser or any persons affiliated with either of them, has any material direct
or indirect interest in any broker which may be employed by or on behalf of the
Fund.
TAX INFORMATION
The Fund intends to comply with all the requirements for qualification as a
regulated investment company; however, there can be no assurance that the Fund
will so qualify and maintain its status as a regulated investment company. In
any calendar year in which the Fund qualifies and elects to be treated as a
regulated investment company, it will be relieved of federal tax on
distributions of at least 97 percent of its ordinary income and 98 percent of
its capital gain net income, plus any undistributed income from the preceding
year. Alternatively, if the Fund were unable for any reason to maintain its
status as a regulated investment company for any taxable year, the Fund would be
subject to Federal income tax as an ordinary corporation on its taxable income,
if any, without any deduction for distributions to shareholders. In such event,
the amount of cash available for distributions to shareholders would be reduced
because of the Fund's tax liability and all distributions made to shareholders
(other than in liquidation) would be treated as ordinary income to the extent of
the Fund's earnings and profits.
B-9
<PAGE>
A description of the tax consequences of share ownership is contained in
the Prospectus under "Distributions and Tax Status."
CUSTODIAN AND TRANSFER AGENT
Fidelity National Bank, Securities Centre, 3490 Piedmont Road, Suite 750,
Atlanta, Georgia 30305 (404) 240-1557, acts as custodian of all cash and
securities of the Fund. SCM Portfolio Fund acts as transfer agent and dividend
disbursing agent.
REPORTS TO SHAREHOLDERS
Each time a shareholder invests, redeems or receives a distribution, the
Fund sends a confirmation showing the date, nature of the transactions; the
dollar amount; the number of shares added or subtracted in the account; the
value per share; and the total number of shares in the account after the
transaction. The Fund also sends all shareholders annual reports containing
audited financial statements and other periodic reports, and semiannually,
reports containing unaudited financial statements.
Shareholder inquiries should be addressed to the Fund at P.O. Box 947,
Carrollton, Georgia 30117 or by telephone to (770) 834-5839.
AUDITORS AND LITIGATION
McMullan and Company, Certified Public Accountants, 1355 Peachtree Street,
Atlanta, Georgia, have been selected by the Board of Directors of the Fund as
independent accountants and auditors. McMullan and Company have no direct or
indirect financial interest in the Fund or the Adviser. The Fund is not involved
in any pending legal proceedings.
OTHER INFORMATION
The Prospectus and Statement of Additional Information do not contain all
of the information included in the registration statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 with respect
to the securities offered hereby, certain portions of which have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The registration statement, including exhibits filed therewith, may be examined
at the office of the Securities and Exchange Commission in Washington, D.C.
Statements contained in the Prospectus and Statement of Additional
Information as to the contents of any contract or other documents referred to
are not necessarily complete and, in each instance, reference is made to the
copy of such contract or other documents filed as an exhibit to the registration
B-10
<PAGE>
statement, each such statement being qualified in all respects by such
reference.
B-11
<PAGE>
SCM PORTFOLIO FUND, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
B-12
<PAGE>
TABLE OF CONTENTS
Page
Independent Auditor's Report 1
Statement of Assets and Liabilities 2
Schedule of Investments 3 - 4
Statement of Operations 5
Statements of Changes in Net Assets 6
Notes to Financial Statements 7 - 8
Supplementary Information
Selected Per Share Data and Ratios 10
Auditor's Report on Internal Control Structures 11
B-13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
SCM Portfolio Fund, Inc.
We have audited the accompanying statement of assets and liabilities of SCM
Portfolio Fund, Inc., including the schedule of investments, as of December 31,
1995, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended December 31, 1995 and
1994, and selected per share data and ratios for the years ended December 31,
1995, 1994, 1993, 1992, 1991, 1990, and 1989. These financial statements, per
share data and ratios are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and per
share data and ratios based on our audit.
We conducted our audit 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 per share data
and ratios are free of material misstatement. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data,and
ratios referred to above present fairly, in all material respects, the financial
position of SCM Portfolio Fund, Inc. as of December 31, 1995, and the results of
its operations for the year then ended, the changes in its net assets for the
years ended December 31, 1995 and 1994, and the selected per share data and
ratios for the years ended December 31, 1995, 1994, 1993, 1992, 1991, 1990, and
1989, in conformity with generally accepted accounting principles.
/s/ McMullan and Company
CERTIFIED PUBLIC ACCOUNTANTS
January 15, 1996
Atlanta, Georgia
<PAGE>
SCM PORTFOLIO FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS
ASSETS
Investment in Securities, at market values
(identified cost - $480,670) $549,734
Cash equivalents 366,702
Cash in custodial account and premium reserve 1,985
Dividends and interest receivables 5,409
--------
$923,830
========
LIABILITIES
LIABILITIES
Accounts payable $ 882
NET ASSETS (Equivalent to $10.97 per share
based on 84,150.522 shares outstanding;
10,000,000 shares authorized) 922,948
--------
$923,830
========
Net assets consist of:
Capital paid in 852,599
Unrealized appreciation on investments 70,062
Accumulated undistributed net investment income 287
--------
$922,948
========
-2-
<PAGE>
SCM PORTFOLIO FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of
Shares of Market
Face Amount Value
<S> <C> <C>
CASH EQUIVALENTS (40.0%)
Fidelity National Bank Money Market Principal
(cost $366,702) $366,702 $366,702
========
SECURITIES (60.0%)
U.S. Government Obligations (11.1%)
U.S. Treasury Notes, 6.125%, December 31, 1996 $ 50,000 $ 50,513
U.S. Treasury Notes, 6.375%, January 15, 1996 $ 50,000 $ 51,577
Total (cost - $99,787) 102,090
--------
Preferred stocks (1.8%)
General Motors Corp., 9.125%, Series B 600 16,200
--------
Total (cost - $15,000) 16,200
--------
Common stocks (47.1%)
Business Equipment (.9%)
Hewlett Packard Company 100 8,375
Business Services (.8%)
Automotic Data Processing 100 7,425
Chemical - Basic Material (4.0%)
PPG Industries 400 18,300
Sigma Aldrich Corp. 400 19,800
Chemical - Specialty Material (.9%)
Pall Corp. 300 8,061
Consumer Goods - Apparel, Textiles (.5%)
Hartmarx Corp. 1,000 4,370
Consumer Goods - Drugs (6.6%)
Abbott Labs 400 16,648
Bristol Myers Squibb Co. 200 17,174
Merck & Co. 400 26,248
Consumer Goods - Foods (4.5%)
Coca Cola Company 100 7,425
Flowers Industries 1,000 12,120
H. J. Heinz 450 14,904
Sysco Corporation 200 6,500
Consumer Goods - Retail (4.8%)
Home Depot 500 23,875
Walmart Stores, Inc. 400 8,848
Fays, Inc. 1,000 7,500
Office Depot 200 3,924
</TABLE>
-CONTINUED-
The accompanying notes are an integral
part of these financial statements.
-3-
<PAGE>
SCM PORTFOLIO FUND, INC.
SCHEDULE OF INVESTMENTS - CONTINUES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of
Shares of Market
Face Amount Value
<S> <C> <C>
SECURITIES - CONTINUED
Energy - Coal, Gas & Pipe (.6%)
Quaker State Corp. 400 5,048
Energy - Oil - International (3.3%)
Occidental Petroleum Corp. 300 6,411
Texaco, Inc. 200 15,724
Pennzoil Co. 200 8,450
Energy - Miscellaneous (2.0%)
Noram Energy Corp. 1,200 10,644
Teco Energy, Inc. 300 7,686
Environmental Control Services (1.3%)
WMX Technologies, Inc. 400 11,900
Financial - Banks (1.6%)
Synovus Financial Corp. 500 14,250
Financial - Insurance (1.0%)
Torchmark Corp. 200 9,050
Household Products (1.1%)
Rubbermaid, Inc. 400 10,200
Paper and Allied Products (.7%)
Minnesota Mining & Manuf. Co. 100 6,637
Primary Metals Industries (.3%)
USX U.S. Steel 100 3,075
Railroads (.9%)
Norfolk Southern Corp. 100 7,937
Utilities - Electric (3.3%)
Dominion Resources, Inc. 200 8,250
Kansas City Power & Light 300 7,875
MDU Res. Group, Inc. 450 8,942
Southern Company 200 4,924
Utilities - Telephone (4.8%)
Bell Atlantic Corp. 200 13,374
GTE Corp. 700 30,709
Utilities - Gas (1.3%)
Atlanta Gas Light Co. 600 11,850
Wholesale Trade - Durable Goods (.9%)
Genuine Parts Company 200 8,200
Miscellaneous (1.0%)
Utilicorp United, Inc. 300 8,811
--------
Total (costs - $365,883) 431,444
--------
Total securities (cost - $480,670) $549,734
========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-4-
<PAGE>
SCM PORTFOLIO FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest $ 24,160
Dividends 14,216
--------
38,376
--------
Expenses
Administrative fees 2,124
Custodial fees 3,135
Fidelity bond 759
Legal expenses 929
Taxes and security fees 531
Registration and reports 350
Accounting and auditing 3,740
Miscellaneous fund expenses 917
--------
12,485
--------
Net investment income 25,891
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain and securities transaction 3,333
Change in unrealized appreciation of investments
for the year 82,899
--------
Net gain on investments 86,232
--------
Net increase in net assets resulting from operations $112,123
========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-5-
<PAGE>
SCM PORTFOLIO FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS
Net investment income $ 25,891 $ 22,302
Net realized gain on security transactions 3,333 7,468
Change in unrealized appreciation 82,899 (34,742)
--------- ---------
Increase (decrease) in net assets resulting
from operations 112,123 (4,972)
--------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from issuance of shares 148,000 110,600
Reinvestment of dividends 25,806 22,196
Reinvestment of gain distribution 3,333 7,468
Cost of shares redeemed (149,804) (24,105)
--------- ---------
Increase in net assets from capital
share transactions 27,335 116,159
--------- ---------
DIVIDEND PAID
From net investment income (25,806) (22,196)
From realized capital gains (3,333) (7,468)
--------- ---------
Decrease in net assets from dividends paid (29,139) (29,664)
--------- ---------
TOTAL INCREASE IN NET ASSETS 110,319 81,523
Balance at beginning of period 812,629 731,106
--------- ---------
Balance at end of period (including undistributed
net investment income of $287 and $202,
respectively) $ 922,948 $ 812,629
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-6-
<PAGE>
SCM PORTFOLIO FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The SCM Portfolio Fund, Inc. (the Fund) is a diversified, open-end, fully
managed investment company. The following is a summary of significant
accounting policies followed by the Fund in the preparation of its
financial statements.
Security Valuation
Investments in securities are stated at market values based on the latest
quoted market prices.
Cash Equivalents
Cash equivalents represent temporary investments in bank money market
account, and are stated at cost which approximates market value.
Federal Income Taxes
No provision for federal income taxes is considered necessary since the
Fund intends to distribute substantially all of its taxable net income,
including any realized net gains on investment, and to otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies. The identified Cost method of determining the cost of
investments for purposes of computing gains or losses from securities
transactions is used for tax purposes.
Other
As is common in the industry, security transactions are accounted for on
the date the securities are purchased or sold. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Realized gains and losses from securities transactions and unrealized
appreciation and depreciation of investments are reported on an identified
cost basis.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities other than United States government
obligations and cash equivalents aggregated $121,218 and $72,841,
respectively. During 1995, no United States government obligations were
purchased or redeemed. Sales (maturities) exceeded purchases of cash
equivalents by $27,550 for the year. For federal income tax purposes, the
identified cost of investments owned (securities and cash equivalents) as
of December 31, 1995, was $847,372.
-7-
<PAGE>
SCM PORTFOLIO FUND, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1995
NOTE 3 - CAPITAL STOCK
Transactions in capital stock for the year ended December 31, 1995, were as
follows:
Shares Amount
Shares sold 14,014.196 $ 148,000
Shares issued in reinvestment of:
Dividends 2,386.511 25,806
Capital gains distribution 303.814 3,333
----------- --------
16,704.521 177,139
Shares acquired (14,214.429) (149,804)
----------- --------
Net increase 2,490.092 $ 27,335
========= =========
NOTE 4 - INVESTMENT ADVISORY FEES AND ADMINISTRATIVE COSTS
The Company is party to an Investment Advisory Contract that provides for
fees to be computed at an annual rate of 0.74 percent of the Company's
average daily net assets. The Company's president is also president of the
investment adviser. The agreement provides for an expense reimbursement
from the investment adviser to the extent that the Company's total expenses
exceed 2% of the Company's daily net assets. For the year ended December
31, 1995, no fees were paid. The adviser waived the balance of its fees.
The Company is also party to an Administrative Services Contract with the
same adviser. This contract provides for fees to be computed at an annual
rate of 0.25% of the Company's average daily net assets. Fees under this
contract have been recognized for 1995 at $2,124.
-8-
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
SCM PORTFOLIO FUND, INC.
SUPPLEMENTARY INFORMATION
SELECTED PER SHARE DATA AND RATIOS
THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992, 1991
1990 AND 1989
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning
of year $ 9.95 $ 10.41 $ 10.26
-------------- -------------- --------------
Income from investment
Operations:
Net investment income .32 .31 .31
Net realized and
unrealized gain (loss)
on investments 1.08 (.39) .35
-------------- -------------- --------------
Total from investment
operations 1.40 (.08) .66
-------------- -------------- --------------
Less Distributions:
From net investment income (.34) (.29) (.29)
From net realized gain (.04) (.09) (.22)
-------------- -------------- --------------
Total distributions (.38) (.38) (.51)
-------------- -------------- --------------
Net asset value, end
of the year $ 10.97 $ 9.95 $ 10.41
============== ============== ==============
Total Return 14.11% (.76)% 6.57%
Ratios and Supplemental Data
Net assets, end of year $ 922,948.00 $ 812,629.00 $ 731,106.00
Ration of expenses to
average net assets 1.47% 1.59% 1.58%
Ratio of net investment
income to average net assets 4.52% 4.59% 4.36%
Portfolio turnover rate 14.84% 27.17% 21.00%
</TABLE>
-10-
<PAGE>
Year Ended December 31,
1992 1991 1990 1989
$ 10.49 $ 9.98 $ 9.96 $ 10.00
- -------------- -------------- -------------- --------------
.31 .44 .59 .75
(.08) .52 (.13) (.06)
- -------------- -------------- -------------- --------------
.23 .96 .46 .69
- -------------- -------------- -------------- --------------
(.30) (.44) (.44) (.73)
(.16) (.01) (.00) .00
- -------------- -------------- -------------- --------------
(.46) (.45) (.44) (.73)
- -------------- -------------- -------------- --------------
$ 10.26 $ 10.49 $ 9.98 $ 9.96
============== ============== ============== ==============
2.25% 9.78% 4.57% 6.69%
$ 655,028.00 $ 706,098.00 $ 693,383.00 $ 358,406.00
1.83% 1.39% 1.70% 1.40%
2.91% 4.22% 5.75% 7.20%
28.00% 35.00% 45.00% 0.00%
-11-
<PAGE>
AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE
Board of Directors
SCM Portfolio Fund, Inc.
In planning and performing our audit of the financial statements of SCM
Portfolio Fund, Inc. for the year ended December 31, 1995, we considered its
internal control structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of SCM Portfolio Fund, Inc. is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
December 31, 1995.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
/s/ McMullan and Company
CERTIFIED PUBLIC ACCOUNTANTS
January 15, 1996
Atlanta, Georgia
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Highlights - Part A
(2) Independent Auditors Report - Part B
(3) Statement of Assets and Liabilities - Part B
(4) Schedule of Investments - Part B
(5) Statement of Changes in Net Assets - Part B
(6) Notes to Financial Statements - Part B
(7) Supplementary Information - Selected Per Share Data and Ratios -
Part B
(b) Exhibits
(1) Articles of Incorporation
(2) Bylaws of the Company, as amended
(3) Voting Trust Agreement - Not Applicable
(4) Specimen of Capital Stock
(5) Investment Adviser Contract between Registrant and SCM
Associates, Inc.
(6) Underwriting or Distribution Contract - Not Applicable
(7) Pension, Bonus or Similar Contracts - Not Applicable
(8) Custodian Agreement between Registrant and Fidelity National Bank
(9) Other Material Contracts: Administrative Services Contract
between Registrant and SCM Associates, Inc.
(10) (a) Opinion and Consent of Counsel
(b) Representation Letter of Messrs. Stradley, Ronon, Stevens &
Young, legal counsel for Registrant
(11) Other Opinions and Consents: Consent of McMullan and Company
(12) Other Financial Statements - Not Applicable
(13) Initial Capital Agreements - Not Applicable
(14) Model Retirement Plan - Not Applicable
(15) Rule 12b-1 Plan - Not Applicable
(16) Schedule for Computation of Performance Quotations - Not
Applicable
(17) Financial Data Schedule
C-1
<PAGE>
Item 25. Persons Controlled By or Under Common Control with Registrant
Inapplicable.
Item 26. Number of Holders of Securities
Number of
Title of Class Record Holders
Common Stock, par value $1.00 per share 14
Item 27. Indemnification
Under Article Eleven, Section 11.01 of the Registrant's By-Laws, any
person who was or is a party or is threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or
former director or officer of the Registrant, or is or was serving
while a director or officer of the Registrant at the request of the
Registrant as a director, officer, partner, trustee, employee, agent
or fiduciary of another corporation, partnership, joint venture,
trust, enterprise or employee benefit plan, shall be indemnified by
the Registrant against judgments, penalties, fines, excise taxes,
settlements and reasonable expenses (including attorneys' fees)
actually incurred by such person in connection with such action, suit
or proceeding to the full extent permissible under the General Laws of
the State of Georgia, the Securities Act of 1933 and the Investment
Company Act of 1940, as such statutes are now or hereafter in force,
except that such indemnity shall not protect any such person against
any liability to the Registrant or any stockholder thereof to which
such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the foregoing provision, or
otherwise, Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or
proceeding) is asserted
C-2
<PAGE>
by such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
SCM Associates, Inc., 123 Ole Hickory Trail, Carrollton, GA 30117,
served as investment adviser to various entities prior to being
employed as investment adviser of the Registrant. Southern Capital
Management Company is a registered broker-dealer whose address is 123
Ole Hickory Trail, Carrollton, GA 30117. The officers and directors of
Adviser have held during the last two fiscal years the following
positions of a substantial nature:
Stephen C. McCutcheon: President and Director of the Fund; Director of
Division of Continuing Education and Associate Professor, West George
College, Carrollton, Georgia; President and Director of Adviser and
Southern Capital Management Company.
Henry W. Blizzard: Vice President and Director of the Fund; Circuit
Judge, 39th Judicial Circuit of Alabama, Athens, Alabama; Vice
President and Director of Adviser and Southern Capital Management
Company.
James M. Prather: Secretary and Director of the Fund; maintained a
dental practice in Carrollton, Georgia; Secretary and Director of
Adviser and Southern Capital Management Company.
Cynthia B. McCutcheon: Treasurer of the Fund; Operations Manager,
Treasurer and Director of Adviser and Director of Southern Capital
Management Company.
Item 29. Principal Underwriters
The Fund is the sole underwriter of its shares. No commissions are
charged by the Fund or paid to another party.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are maintained by SCM Associates, Inc., 123 Ole
Hickory Trail, Carrollton, Georgia 30117 or Fidelity National
C-3
<PAGE>
Bank, Securities Centre, 3490 Piedmont Road, Suite 750, Atlanta,
Georgia 30305.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its latest annual report to shareholders
upon request and without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Carrollton, and State of Georgia on this 22nd
day of April, 1996.
SCM PORTFOLIO FUND, INC.
(Registrant)
By:/s/ Stephen C. McCutcheon
Stephen C. McCutcheon
President
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Stephen C. McCutcheon President April 22, 1996
Stephen C. McCutcheon and Director Date
/s/ Henry W. Blizzard Vice President April 22, 1996
Henry W. Blizzard and Director Date
/s/ James M. Prather Secretary April 22, 1996
James M. Prather and Director Date
/s/ Cynthia B. McCutcheon Treasurer April 22, 1996
Cynthia B. McCutcheon Date
/s/ William L. McGee Director April 22, 1996
William L. McGee Date
/s/ Lititia H. Stone Director April 22, 1996
Lititia H. Stone Date
<PAGE>
EXHIBIT INDEX
Item No. Description Page No.
24(b)(1) Articles of Incorporation
24(b)(2) Bylaws of the Company, as amended
24(b)(4) Specimen of Capital Stock
24(b)(5) Investment Adviser Contract
between Registrant and SCM
Associates, Inc.
24(b)(8) Custody Agreement between
Registrant and Fidelity
National Bank
24(b)(9) Administrative Services Contract
between Registrant and
SCM Associates, Inc.
24(b)(10)(a) Opinion and Consent of Counsel
24(b)(10)(b) Representation Letter of
Messrs. Stradley, Ronon,
Stevens & Young
24(b)(11) Consent of McMullan and
Company
24(b)(17) Financial Data Schedule
ARTICLES OF INCORPORATION
OF
SCM PORTFOLIO FUND, INC.
The undersigned, for the purpose of forming a corporation pursuant to the
provisions of the Georgia Business Corporation Code, hereby adopt the following
articles of incorporation:
ARTICLE ONE
NAME
The name of the corporation is SCM Portfolio Fund, Inc. The corporation is
organized pursuant to the provision of the Georgia Business Corporation Code.
ARTICLE TWO
DURATION
The term of existence of the corporation is perpetual.
ARTICLE THREE
PURPOSE
The purpose or purposes for which the corporation is organized is to
operate as an open-end investment company by offering for sale its shares at
their net asset value, redeeming such shares upon demand at their net asset
value, and to invest the assets of the corporation in common stocks, U.S.
Government bonds, corporate bonds, and the shares of other open-end investment
companies, and to distribute to the shareholders such income, capital gains as
is required in order to qualify as a regulated investment company under
Sub-Chapter M of the Internal Revenue Code and to engage in any lawful business
or activities related to the stated purposes and to engage in any lawful act or
activity for which business corporations may be organized under the Georgia
Business Corporation Code.
ARTICLE FOUR
REGISTERED OFFICE
The address of the initial registered office of the corporation is 123 Ole
Hickory Trail, Carrollton, Georgia 30117.
The initial registered agent of the corporation is Stephen C. McCutcheon at
123 Ole Hickory Trail, Carrollton, Georgia 30117.
<PAGE>
ARTICLE FIVE
CAPITAL STOCK
The aggregate number of shares which the corporation has authority to issue
is 10,000,000 shares of common stock of $1.00 par value per share.
ARTICLE SIX
CAPITAL
The amount of capital with which the corporation will begin business is
$500.00.
ARTICLE SEVEN
DIRECTORS
The Board of Directors of the corporation shall initially consist of five
(5) members, which shall thereafter be fixed by the Bylaws of the corporation.
The names and addresses of the first Board of Directors are:
NAME ADDRESS
Stephen C. McCutcheon 123 Ole Hickory Trail
Carrollton, Georgia 30117
William L. McGee 291 Tyus- Carrollton Road
Carrollton, Georgia 30117
James M. Prather 175 Fairlawn Drive
Carrollton, Georgia 30117
Letitia Stone 132 Ole Hickory Trail
Carollton, Georgia 30117
Henry W. Blizzard 202 Wellington Road
Athens, Alabama 35611
ARTICLE EIGHT
INCORPORATORS
NAME ADDRESS
Stephen C. McCutcheon 123 Ole Hickory Trail
Carrollton, Georgia 30117
-2-
<PAGE>
Cynthia B. McCutcheon 123 Ole Hickory Trail
Carrollton, Georgia 30117
Henry W. Blizzard 202 Wellington Road
Athens, Alabama 35611
ARTICLE NINE
PREEMPTIVE RIGHTS
No shareholder of this corporation shall have any preemptive or
preferential rights, as such rights are defined by law, to subscribe for or
purchase shares or securities which the corporation may from time to time issue
or sell.
ARTICLE TEN
SHARES
The corporation shall have the right, in accordance with the terms and
conditions set by its Bylaws to redeem its own shares and upon the redemption of
such shares, the shares are retired automatically. Shares retired are restored
to the status of authorized but unissued shares.
There shall be only one class of stock. The corporation shall not sell or
issue senior securities. Every share of stock shall be voting and shall have
equal voting rights with every other outstanding voting share.
The Board of Directors may from time to time sell or provide for the
issuance and sale of the authorized but unissued shares of the corporation. Any
shareholder desiring to dispose of his shares, may upon request and deposit of
certificate of shares if such has been issued, may have the shares redeemed at
its net asset value in accordance with the Bylaws of the corporation. Net asset
value of each share shall be determined in accordance with the corporation
current prospectus.
ARTICLE ELEVEN
DISTRIBUTIONS
The Board of Directors may from time to time declare and pay dividends and
declare dividends out of accumulated and undistributed net realized capital
gains, so as to avoid any liability for federal income tax. The Board of
Directors may also declare and distribute prorata among shareholders a stock
dividend out of authorized but unissued shares. The amount of such dividends or
payment or distributions shall be solely within the discretion of the Board of
Directors.
-3-
<PAGE>
IN WITNESS WHEREOF, we have hereunto subscribed our names on this the 8th
day of January, 1988.
s/ Stephen C. McCutcheon
Stephen C. McCutcheon - Incorporator
s/ Cynthia B. McCutcheon
Cynthia B. McCutcheon - Incorporator
s/ Henry W. Blizzard
Henry W. Blizzard - Incorporator
-4-
AMENDMENTS TO BYLAWS
Notice of Meetings
Add following to Article Two, Section 2.03, as amended April 22, 1989
The record date for shareholders entitled to notice of a shareholders
meeting or to vote thereat shall be sixty (60) days before the meeting and that
the President of the Corporation, or other officer at his direction, shall cause
to be made a list of the shareholders from the records of the custodian of
persons or entities of record sixty (60) days prior to a shareholders meeting
and such person or entities not of record sixty (60) days prior to the
shareholders meeting shall be entitled to notice of the meeting or to vote
thereat.
Investment Restrictions
Add the following to Article Five, Section 5.01, as amended March 6, 1993
With respect to 75% of its total assets, the Fund may not invest in
securities of any one issuer (excluding the U.S. Government, it agencies and
instrumentalities, and other investment companies which invest predominately in
securities of the U.S. Government, its agencies and instrumentalities), if
immediately thereafter and as a result of such investment the acquisition cost
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
Fund's total assets.
Revise Article Five, Section 5.01, paragraph (7) as follows and as amended March
6, 1993.
Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, if more than 5
percent of its total assets would be invested in the securities of any one
investment company or the Fund would own more than 3 percent of any other
investment company's securities.
<PAGE>
BYLAWS OF SCM PORTFOLIO FUND, INC.
ARTICLE I
SCM PORTFOLIO FUND, INC. REGISTERED OFFICE
1.01 The registered office of the corporation is located at 123 Ole Hickory
Trail, Carrollton, Georgia 30117.
ARTICLE TWO
SHAREHOLDERS MEETINGS
Place of Meetings
2.01 All meetings of the shareholders shall be held at the registered office of
the corporation, or any other place within or without the State of Georgia as
may be designated for that purpose from time to time by the Board of Directors.
Time of Annual Meeting
2.02 The annual meeting of the shareholders shall be held after July 1, 1989, at
a time and place set by the Board of Directors of the corporation.
Notice of Meeting
2.03 Written notice stating the place, day, and hour of the meeting and, in case
of special meetings, the general nature of the business to be transacted, shall
be delivered not less than ten (10) nor more than forty (40) days before the
date of the meeting, or in case of a merger or consolidation, not less than
twenty (20) nor more than forty (40) days before the date of the meeting, either
personally or by mail, by or at the direction of the president, or other officer
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his address as it
appears on the books of the corporation or as supplied by him to the corporation
for the purpose of notice, with postage thereon prepaid.
Special Meetings
2.04 Special meetings may be called at any time by the President or by the Board
of Directors or by any two or more Directors.
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Quorum
2.05 A majority of the outstanding shares constitutes a quorum for the
transaction of business. Business may be continued after withdrawal of enough
shareholders to leave less than a quorum.
Voting
2.06 Only persons in whose names shares appear on the share transfer books of
the corporation on the date on which said meeting is mailed shall be entitled to
vote at such meetings, unless some other day is fixed by the Board of Directors
for the determination of shareholders of record, but such date shall not be less
than ten (10) nor more than sixty (60) days before the date of the meeting, or
in the case of a merger or consolidation, not less than twenty (20) nor more
than sixty (60) days before the date of the meeting. Each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote, except that in all elections for Directors each shareholder shall have the
right to vote, in person or by proxy, for the number of shares owned by him, for
as many persons as there are Directors to be elected.
Proxies
2.07 At all meetings, any shareholder may vote either in person or by proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from the date
of its execution, unless otherwise provided in the proxy.
Consent of Absentees
2.08 No defect in the noticing of the shareholders' meeting will affect the
validity of any action at the meeting if a quorum was present, voting either in
person or by proxy.
ARTICLE THREE
DIRECTORS
Powers
3.01 The Directors shall act only as a board and an individual Director shall
have no power as such. The business and affairs of the corporation shall be
managed by the Board of Directors, subject, however, to such limitations as are
imposed by law, the articles of incorporation, or these bylaws, as to actions to
be authorized or approved by the shareholders. The Board of Directors may, by
contract or otherwise, give general or limited or special powers and authority
to the officers and employees of
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<PAGE>
the corporation to transact the general business, or any special business, of
the corporation, and may give powers to attorney to agents of the corporation to
transact any special business requiring such authorization.
Qualification of Directors
3.02 The Directors need not be shareholders of this corporation
or residents of the State of Georgia.
Election and Term of Office
3.03 The Directors shall serve for a term of three years. The Directors shall be
elected by the shareholders and shall hold office until the next succeeding
annual meeting and until their successors are elected and qualified.
Vacancies
3.04 Vacancies occurring on the Board of Directors to be filled by a reason of
increase in the number of directors or by resignation shall be filed by a
majority of the members of the Board to serve until the election at an annual
meeting or at a special meeting of the shareholders called for that purpose
provided, however, that two-thirds of the Directors must be elected before they
can fill vacancies on the Board. In the event that two-thirds of the Directors
then serving have not been elected to the Board, then in that event vacancies
must be filled by shareholders. The percentage of interested Directors, as
opposed to non-interested Directors, shall at all times conform with the Federal
Securities law for open-ended investment companies and its shall be required at
all times that the percentage of interested directors not exceed that which is
allowed under Federal Securities laws and regulations thereunder.
Place of Meetings
3.05 All meetings of the Board of Directors shall be held at such place as may
be designated by a majority of the Directors.
Regular Meetings
3.06 Regular meetings of the Board of Directors shall be held, from time to time
as may be determined by the Board of Directors, but shall be held at least
quarterly.
Special Meetings - Call and Notice
3.07 Special meetings of the Board of Directors for any purpose shall be called
at any time by the President or, if he is absent or unable to act, by the Vice
President or by any two Directors. Written notices of the special meetings,
stating the time, and in
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<PAGE>
general terms the purpose or purposes thereof, shall be mailed or served
personally on each Director not later than three (3) days before the meeting.
Notice of such meetings shall not be required where, a Director or Directors
waive notice of such meeting in writing.
Quorum
3.08 A majority of the Directors in office shall constitute a quorum for the
transaction of business. The act of the majority of the Directors present at the
meeting at which a quorum is present shall be the act of the Board of Directors.
Board Action Without Meeting
3.09 Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all the Directors and filed with the
Secretary of the corporation.
Compensation
3.10 Directors and members of committees may receive such compensation, if any,
for their services, and such reimbursement for expenses, as may be fixed or
determined by resolution of the Board.
Committees
3.11 The Board of Directors, by resolution, may designate other committees
consisting of not less than three (3) Directors each which shall have and may
exercise such powers as shall be conferred or authorized by the Board of
Directors. A majority of any such committee may determine its action and fix the
time and place of its meetings unless the Board of Directors shall provide
otherwise. The Board of Directors shall have the power to change the powers and
members of such committees, to fill vacancies and dispose of such committee.
ARTICLE FOUR
OFFICERS
Title and Appointment
4.01 The officers of the corporation shall consist of a President, a Vice
President, a Secretary and a Treasurer. The corporation may also have, at the
discretion of the Board of Directors, a Chairman, one or more additional Vice
Presidents or an assistant Secretary or assistant Treasurer. All officers
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<PAGE>
shall be elected by the Board of Directors and hold office at their pleasure and
the Board of Directors shall fix the compensation and tenure of all officers.
Powers and Duties of Officers
4.02 The officers of the corporation shall have such powers and duties as may
from time to time be determined by resolution of the Board of Directors.
ARTICLE FIVE
Investment Restrictions
5.01 The corporation shall not, except by approval of a majority of the
outstanding shareholders, perform any of the following act or acts which are
hereby declared fundamental investment policies of the corporation:
(1) Act as an underwriter for securities of other issuers.
(2) Borrow money or purchase securities on margin, but may borrow money
from banks as may be necessary for clearances or purchases and sales of
securities for temporary or emergency purposes in an amount not to exceed 5
percent of the value of the Fund's assets at the time the loan is made.
(3) Sell securities short, except for short sales- against-the-box.
(4) Invest more than 25 percent of its assets at the time of purchase in
any one industry.
(5) Make investments in commodities, commodity contracts or real estate,
although the Fund may purchase and sell securities of companies which deal in
real estate or interests therein and whose securities are marketable.
(6) Make loans except the purchase of a portion of a readily marketable
issue of publicly distributed bonds, debentures or other debt securities will
not be considered the making of a loan.
(7) Purchase securities of other investment companies, except in connection
with a merger consolidation, acquisition or reorganization, if more than 10
percent of the Fund's total assets would be invested in securities of other
investment companies, more than 5 percent of its total assets would be invested
in the securities of any one other investment company or
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<PAGE>
the Fund would own more than 3 percent of any other investment company's
securities.
(8) Invest in companies for the purpose of acquiring control.
(9) Invest more than 5 percent of the total fund assets taken at the market
value at the time of purchase in securities of companies, except investment
companies, with less than three years of continuous operation, including the
operation of any predecessor.
(10) Pledge, mortgage or hypothecate any of its assets.
(11) Invest more than 10 percent of the Fund's total assets in securities
that at the time of purchase have legal or contractual restrictions on resale or
which are not readily marketable (including repurchase agreements maturing in
more than seven days and over-the-counter options).
ARTICLE SIX
6.01 The Board of Directors may, in its discretion, determine the method and
designate the signatory officer or officers, or other person or persons to
execute any corporate instrument or documents or to sign the corporate names or
to sign the corporate name without limitation, except where otherwise provided
by law, and such execution or signature shall be binding upon the corporation.
ARTICLE SEVEN
ISSUANCE AND TRANSFER OF SHARES
Certificates for Paid and Unpaid Shares
7.01 Certificates for shares of the corporation shall be issued only when fully
paid, in cash at the net asset value next determined after receipt.
7.02 Shareholders may elect to have certificates of shares issued, or may elect
to have certificates shown only upon the account maintained for each shareholder
by the corporation. Certificates shall be redeemed only when signed by the
shareholder.
7.03 Certificates shall be in such form as shall be adopted by the Board of
Directors. Each certificate shall bear the name of the corporation, the name of
the registered shareholder and the
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<PAGE>
number of shares so issued and shall be signed by such an officer of the
corporation.
7.04 Every registered holder of stock may, deliver to the corporation for
redemption a certificate or certificates of stock or may request redemption of
stock for which certificates have not been issued and held for the shareholder
on account, whereupon the corporation shall redeem the shares out of the
underlying assets of the corporation, at net asset value. The net asset value of
the fund shares is determined as of the close of business of the New York Stock
Exchange on each business day of which the Exchange is open and the price shall
be determined by dividing the value of all its securities, plus cash and other
assets less all liabilities excluding capital and surplus by the number of
shares outstanding. Listed securities which have not recently been traded and
over the counter securities are valued at the last bid price and such market.
Short term paper are valued at cost which approximate market value. Other assets
are valued at fair value as determined in good faith by the Board of Directors.
Where on a business day share prices can not be determined, the net asset value
shall be established as soon as practical for value but net asset value shall
always be determined by 10:00 A.M. on the following business day.
ARTICLE EIGHT
8.01 The corporation shall select an investment advisor to advise the
corporation on the selection of investment. The Board of Directors shall select
the investment advisor and shall contract with such investment advisor who shall
be responsible for continuing review of the Portfolio Securities and recommend
to the Fund when and what extent of securities should be purchased or disposed
of. The corporation shall pay a fee to the investment advisor for its services
in accordance with the terms and conditions set forth in the contract entered
into by the Board of Directors and the investment advisor. The selection of the
investment advisor must be approved by the shareholders at its first annual
meeting and at each annual meeting thereafter.
ARTICLE NINE
9.01 All books and records provided by statute shall be open to inspection of
the shareholders from time to time to the extent expressly provided by statute,
and not otherwise. The Directors may examine such books and records at all
times.
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<PAGE>
ARTICLE TEN
AUDITORS AND COUNSELORS
10.01 The Board of Directors shall from time to time cause to be retained an
auditor for the purpose of conducting extensive audits to comply with the
federal and state laws and to insure that the records of the corporation are
properly kept and the best interests of the shareholders is protected. The
auditor selected by the Board of Directors shall serve until the next annual
meeting whereupon the auditor must be ratified by the shareholders and at each
annual meeting thereafter.
10.02 The Board of Directors shall, when necessary and from time to time, obtain
legal counsel to advise the Board of Directors, the officers or employees of the
corporation, and to represent the corporation in any litigation administrative
or other matters necessary for the best interests of the shareholders of the
Fund.
ARTICLE ELEVEN
INDEMNIFICATION AND INSURANCE
11.01 Indemnification of Directors and Officers. Any person who was or is a
party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
director or officer of the Corporation, or is or was serving while a director or
officer of the Corporation at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the General Laws of the State of Georgia, the
Securities Act of 1933 and the Investment Company Act of 1940, as such statutes
are now or hereafter in force, except that such indemnity shall not protect any
such person against any liability to the Corporation or any stockholder thereof
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
11.02 Advances. Any current or former director or officer of the Corporation
claiming indemnification within the scope of this
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<PAGE>
Article XI shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with proceedings to which he
is a party in the manner and to the full extent permissible under the General
Laws of the State of Georgia, the Securities Act of 1933 and the Investment
Company Act of 1940, as such statutes are now or hereafter in force; provided,
however, that the person seeking indemnification shall provide to the
Corporation a written affirmation of his good faith belief that the standard of
conduct necessary for indemnification by the Corporation has been met and an
undertaking to repay any such advance unless it is ultimately determined that he
is entitled to indemnification, and provided further that at least one of the
following additional conditions is met: (1) the person seeking indemnification
shall provide a security in form and amount acceptable to the Corporation for
his undertaking; (2) the Corporation is insured against losses arising by reason
of the advance; or (3) a majority of a quorum of directors of the Corporation
who are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding ("disinterested
non- party directors"), or independent legal counsel, in a written opinion,
shall determine, based on a review of facts readily available to the Corporation
at the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.
11.03 Procedure. At the request of any current or former director or officer, or
any employee or agent whom the Corporation proposes to indemnify, the Board of
Directors shall determine, or cause to be determined, in a manner consistent
with the General Laws of the State of Georgia, the Securities Act of 1933 and
the Investment Company Act of 1940, as such statutes are nor or hereafter in
force, whether the standards required by this Article XI have been met;
provided, however, that indemnification shall be made only following: (1) a
final decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
disabling conduct or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct, by (a) vote of a
majority of a quorum of disinterested non-party directors or (b) an independent
legal counsel in a written opinion.
11.04 Indemnification of Employees and Agents. Employees and agents who are not
officers or directors of the Corporation may be indemnified, and reasonable
expenses may be advanced to such employees or agents, in accordance with the
procedures set forth in this Article XI to the extent permissible under the
Investment Company Act of 1940, the Securities Act of 1933 and the General Laws
of the State of Georgia, as such statutes are now or
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<PAGE>
hereafter in force, and to such further extent, consistent with the foregoing as
may be provided by action of the Board of Directors or by contract.
11.05 Other Rights. The indemnification provided by this Article XI shall not be
deemed exclusive or any other right, in respect of indemnification or otherwise,
to which those seeking such indemnification may be entitled under any insurance
or other agreement, vote of stockholders or disinterested directors or
otherwise, both as to action by a director or officer of the Corporation in his
official capacity and as to action by such person in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
11.06 Insurance. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or who, while a directors, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust, enterprise or employee benefit plan, against any liability asserted
against and incurred by him in any such capacity, or arising out of his status
as such, provided that no insurance may be obtained by the Corporation for
liabilities against which it would not have the power to indemnify him under
this Article XI or applicable laws.
11.07. Constituent, Resulting or Surviving Corporations. For the purposes of
this Article XI, references to the "Corporation" shall include all constituent
corporations absorbed in a consolidation or merger as well the resulting or
surviving corporation so that any person who is or was a director, officer,
employee or agent of a constituent corporation or is or was serving at the
request of a constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under this Article XI with respect to the
resulting or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity.
ARTICLE TWELVE
12.01 The power to make, alter, amend, or repeal by the bylaws is vested in the
Board of Directors of this corporation except to the extent that such power is
reserved to the shareholders herein, or by statute.
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<PAGE>
I, the undersigned Secretary, hereby certify that the foregoing is a
true and correct copy of the Bylaws of the SCM Portfolio Fund Inc., adopted on
the 21st day of January, 1988, and as amended by the Board of Directors through
and on January 15, 1989.
/s/ James M. Prather
Secretary
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SCM PORTFOLIO FUND, INC.
INCORPORATED UNDER THE LAWS OF GEORGIA
COMMON STOCK
CUSIP
784021-8-10-7
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES, $1 PAR VALUE, OF THE COMMON STOCK OF
SCM PORTFOLIO FUND, INC. transferable in person or by duly authorized attorney
upon surrender of this Certificate, properly endorsed. This Certificate is not
valid until countersigned by the Transfer Agent.
WITNESS, the facsimile seal of the Corporation and the facsimile signature
of its duly authorized officers.
Dated:
/s/ James M. Prather /s/ Stephen C. McCutcheoon
Secretary President
[SEAL]
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INVESTMENT ADVISER CONTRACT
AGREEMENT, made by and between SCM Portfolio Fund Inc., a Georgia
Corporation, (hereinafter called "Fund") and SCM Associates, Inc., a Georgia
Corporation, (hereinafter called "Investment Adviser").
WITNESSETH:
WHEREAS, Fund engages in the business of investing and reinvesting its
assets and property in various stocks and securities and Investment Adviser
engages in the business of providing investment advisory services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Adviser, for the period set forth
in Paragraph 8 hereof, and on the terms set forth herein, to render investment
advisory services to the Fund, subject to the supervision and direction of the
Board of Directors of the Fund. The Investment Adviser hereby accepts such
employment and agrees, during such periods, to render the services and assume
the obligations herein set forth, for the compensation provided. The Investment
Adviser shall, for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any way be
deemed an agent of the Fund.
2. As a compensation for the services to be rendered to the Fund by the
Investment Adviser under the provisions of this Agreement, the Fund shall pay to
the Investment Adviser a monthly fee equal to one-twelfth of seventy-four one
hundredths of one per cent per month (the equivalent of .74 of one per cent per
annum), of the daily average net assets of the Fund during the month, less all
amounts paid as compensation to interested members of the Board of Directors of
the Fund in respect to the same period. The first payment of fee hereunder shall
be prorated on a daily basis from the date this Agreement takes effect.
3. It is expressly understood and agreed that the services to be rendered
by the Investment Adviser to the Fund under the provisions of this Agreement are
not to be deemed to be exclusive, and the Investment Adviser shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
<PAGE>
4. It is understood and agreed that directors, officers, employees, agents
and shareholders of the Fund may be interested in the Investment Adviser as
directors, officers, employees, agents and shareholders, of the Investment
Adviser may be interested in the Fund, as directors, officers, employees, agents
and shareholders or otherwise, and that the Investment Adviser, itself, may be
interested in the Fund as a shareholder or otherwise. Specifically, it is
understood and agreed that directors, officers, employees, agents and
shareholders of the Investment Adviser may continue as directors, officers,
employees, agents and shareholders of the Fund; that the Investment Adviser, its
directors, officers, employees, agents and shareholders may engage in other
business, may render investment advisory services to other investment companies,
or to any other corporation, association, firm or individual, may render
underwriting services to the Fund, or to any other investment company,
corporation, association, firm or individual.
5. The Fund shall bear expenses and salaries necessary and incidental to
the conduct of its business, including but not in limitation of the foregoing,
the costs incurred in the maintenance of its own books, records, and procedures;
dealing with its own shareholders; the payment of dividends; transfers of stock
(including issuance and redemption of shares); reports and notices to
shareholders; expenses of annual stockholders' meetings; miscellaneous office
expenses; and brokerage commissions, custodian fees, legal and accounting fees,
including preparation of tax returns; local, state and federal taxes; local,
state and federal registration fees and licenses. Officers, employees and agents
of the Investment Adviser who are, or may in the future be, directors and/or
senior officers of the Fund shall receive no salaries from the Fund for acting
in such capacities for the Fund.
6. In the conduct of the respective businesses of the parties hereto and in
the performance of this agreement, the Fund and Investment Adviser may share
common facilities and personnel common to each, with appropriate proration of
expenses.
7. The Investment Adviser shall give the Fund the benefit of its best
judgment and efforts in rendering these services, and except for negligence,
malfeasance, or violations of applicable laws, the Investment Adviser shall not
be liable hereunder for any action performed, any errors of judgment in managing
the fund or any losses that may be sustained in the purchase, holding or sale of
any security, provided that nothing herein shall constitute a waiver or
limitation of any right which a shareholder may have under any federal
securities laws.
8. This agreement shall continue in effect until the 22nd day of January,
1997, and thereafter, only so long as such continuance is approved at least
annually by votes of the Fund's
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<PAGE>
Board of Directors cast in person at a meeting called for the purpose of voting
on such approval, including the votes of a majority of the Directors who are not
parties to such agreement or interested persons of any such party, or by a
resolution of consent signed by all Directors and otherwise in compliance with
the laws of the State of Georgia.
This agreement may be terminated at any time upon 60 days' prior written
notice, without the payment of any penalty, by the Fund's Board of Directors or
by vote of a majority of the outstanding voting securities of the Fund. The
contract will automatically terminate in the event of its assignment by the
Investment Adviser (within the meaning of the Investment Company Act of 1940),
which shall be deemed to include a transfer of control of the Investment
Adviser. Upon the termination of this agreement, the obligations of all the
parties hereunder shall cease and terminate as of the date of such termination,
except for any obligation to respond for a breach of this Agreement committed
prior to such termination and except for the obligation of the Fund to pay to
the Investment Adviser the fee provided in Paragraph 2 hereof, prorated to the
date of termination.
9. This Agreement shall not be assigned by the Fund without prior written
consent thereto of the Investment Adviser. This Agreement shall terminate
automatically in the event of its assignment by the Investment Adviser unless an
exemption from such automatic termination is granted by order or rule of the
Securities and Exchange Commission.
10. In the event that the total expenses to the Fund exceed two percent
(2%) of the daily average net assets of the Fund for one fiscal year then in
that event the Adviser shall refund to the Fund an amount equal to the amount by
which the total expenses exceed such two percent (2&).
IN WITNESS WHEREOF, this 15th day of January , 1996.
SCM PORTFOLIO FUND, INC.
Attest:/s/ James M. Prather By/s/ Stephen C. McCutcheon
President
SCM ASSOCIATES, INC.
Attest:/s/ James M. Prather By/s/ Stephen C. McCutcheon
President
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CUSTODY AGREEMENT
This CUSTODY AGREEMENT (the "Agreement") made this 23rd day of March , 1995
by and between SCM Portfolio Fund, Inc. (the "Client") and Fidelity National
Bank (FNB).
1. Appointment of Custodian. The Client hereby affirms its appointment of FNB
as custodian to hold the assets of the Client which from time to time
constitute the Account. The Account shall consist of those assets listed in
the attached Inventory of Assets, together with the income, proceeds and
profits thereon. FNB hereby accepts its appointment as custodian of the
Account. FNB agrees to hold the assets of the Account in safekeeping
subject to the terms of this Agreement.
2. Duties of Custodian. For so long as the appointment of FNB as custodian
shall continue pursuant to this Agreement:
(a) FNB shall have no management, investment and reinvestment rights,
powers or duties with respect to the assets held in the Account and
shall not be held liable or responsible for any loss or depreciation
in the value of the Account.
(b) FNB shall make such distributions and transfers of assets held in the
Account as the Client shall from time to time direct.
(c) FNB may, pursuant to the direction of the Client, invest available
cash balances each day in a deposit at FNB or money market or other
short-term investment fund for which FNB or one of its affiliates acts
as investment advisor, custodian, transfer agent, registrar, sponsor,
distributor, manager or otherwise, and any fees paid to FNB or its
affiliate by such fund shall be in addition to the fees paid to FNB
under this Agreement.
(d) FNB shall sell assets of the Account upon the direction of the Client
accompanied by appropriately executed stock or bond powers, if
required to effect such a sale of property, and shall purchase assets
for the account as the Client directs, provided sufficient funds are
available for such purchases.
(e) FNB shall make its custodial records for the Account available to the
Client upon its request and to third parties upon the Client's written
request and shall preserve any such records for the periods prescribed
in Rule 31(a)(2) of the Investment Company Act.
<PAGE>
3. Additions and Withdrawals from the Account. At any time and from time to
time, the Client may direct that specified assets be added to or removed
from the Account. Any instruction for withdrawal of assets from the fund
shall comply with Section 9 hereof.
4. Statements of Account. A statement listing all income and principal
transactions of the Account and a statement listing the assets of the
Account shall be forwarded to the Client as soon as practicable after the
close of each calendar month. Each such statement shall be conclusive as to
the contents thereof unless the Client shall deliver written objections to
FNB within 60 days after receipt of such statement.
5. Ownership of the Account. Assets in the Account shall be owned by the
Client and any registration or retention in any other name shall be for
convenience only and to expedite the handling thereof. Registered
securities shall be held in the name of FNB's nominee or in such other form
as FNB shall determine best allows FNB to perform its duties and
responsibilities hereunder.
6. Communications with Issuers. Pursuant to SEC Rule 14b-2, the Client does
not authorize FNB to disclose its name, address and share position with
respect to securities held in the Account.
7. Tax Liability For Account. FNB shall not be responsible or liable for
determination or payment of any taxes assessed against the Account or the
income thereof nor for the preparation or filing of any tax returns other
than withholding required by statute or treaty. The Client agrees to
provide FNB any information necessary to perform any such required
withholding.
8. Annual Statement of Income. FNB shall not prepare an annual statement of
income summarized for income tax purposes including gains and losses for
all investment changes of the Account. Should FNB be requested to provide
such statement, the Client agrees to provide all tax basis information
necessary to prepare such statement and to pay a fee in addition to that
paid under Section 10 for such services proportionate to the amount of
actual work involved in providing such services.
9. Client Instructions. Any instruction, direction, or notification given by
the Client to FNB in connection with this Agreement with regard to purchase
or sale of any security may be given by telephonic, telegraphic, or
facsimile communication with written confirmation to be furnished to FNB by
the Client the next business day
<PAGE>
following telephonic or telegraphic communication. No securities may be
accessible to or withdrawn by any officer, director, or employee of the
Client.
No withdrawal or cash, in the form of currency or check, may be delivered
on oral instructions. No withdrawal of cash, in the form of currency or
check, may be delivered on written instruction by an officer, director, or
employee of the Client without the co-signature of a director, and no
withdrawal of cash, in the form of currency or check, may be delivered on
written instruction by an officer, director, or employee of the Client to
an officer, director, or employee of the Client without the signatures of
two directors, one of whom must be a non-interested director. No officer,
director, or employee may sign a notice of cash withdrawal with another
officer, director, or employee who is related by birth or marriage.
The Chairman of the Audit Committee of the Client shall from time to time
certify to FNB the name or names of the persons authorized to act on its
behalf, indicating who are interested and non-interested directors and any
relationship by birth or marriage and shall promptly give notification to
FNB when any individual so certified shall cease to have the authority to
act on its behalf or have a change of status as being an interested or
non-interested director.
10. Fees and Expenses. FNB shall charge for its services an annual fee based on
its current published fee schedule(s) in effect at the regular fee payment
dates for custody services in accordance with FNB's practices and policies,
or such other fee as shall be mutually agreed upon in writing by the
parties and attached hereto. All expenses incurred by the Account,
including but not limited to, broker's commissions, stock transfer costs,
and postage, will be charged to the Account. A copy of the current agreed
on fee schedule is attached as Exhibit A.
11. Termination or Amendment. The Client and FNB on execution of this Agreement
agree to be bound by all its terms and conditions and further agree that
the Agreement shall remain in full force and effect until expressly revoked
or amended in writing. Either the Client or FNB may revoke this Agreement
upon 30 days written notice delivered to the other, which notice may be
waived by either party, and the same may be amended upon the mutual written
agreement of both.
12. Indemnification. In consideration of FNB accepting its appointment as
custodian of the assets of the Account, the Client agrees to indemnify and
hold harmless FNB from any and all costs, damage, expense, and liability
including
<PAGE>
attorney's fees, which FNB may incur by reason of any action taken or
omitted to be taken by it pursuant to this Agreement or upon direction of
the Client in connection with the Account. FNB's actions shall be
conclusive and binding upon all persons, and it shall incur no liability
whatsoever hereunder except for willful misconduct or gross negligence.
13. Governing Law. All questions relating to the validity, interpretation,
construction, operation or effect of this Agreement shall be governed by
the law of the State where FNB is located.
14. Arbitration. Any controversy or claim between the Client and FNB relating
to this Agreement shall be determined by binding arbitration under the
Federal Arbitration Act (or if not applicable, applicable state law), the
Rules of Practice and procedure for the Arbitration of Commercial Disputes
of Judicial Arbitration and Mediation Services, Inc. ("J.A.M.S.") and this
paragraph. Arbitration shall be conducted in the state where FNB is located
and shall be administered by J.A.M.S., which shall appoint an arbitrator.
If J.A.M.S. is unable or legally precluded from serving, then the American
Arbitration Association shall serve. Judgment upon the award so rendered
may be entered in any competent jurisdiction. Except as otherwise provided
herein, this paragraph does not waive any defenses or the rights of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
FIDELITY NATIONAL BANK
By: /s/ R. Payne Long
Title: Vice President
CLIENT
By: /s/ Stephen C. McCutcheon
Title:President
<PAGE>
FIDELITY NATIONAL BANK
TRUST AND INVESTMENTS
CUSTODIAL SERVICES
FEE SCHEDULE
Annual Fees: The annual fees will apply for duties and services usually
encountered in a custodian account having a diversified list of marketable
securities including research and advice, collection, remittance of income,
safekeeping securities, accounting, record keeping and the collection of
maturing and called bonds.
1. Custodian Fees
A. Annual custodian services: .20 of 1% of FMV on first $2,000,000
.15 of 1% of FMV on next $3,000,000
.10 of 1% of FMV over $5,000,000
of the assets under custody.
For those funds invested in Fidelity National Bank certificates of
deposit or money market accounts, the annual custodian services fee
shall be reduced by 25%.
B. Asset holding annual fees $ 15.00
(Custodian fees are computed at an annualized rate, but are billed
quarterly)
II. Activity Fees
A. Security transaction (buy, sell or transfer): $ 15.00 each
B. Account statements (Summary of Assets and
Transactions) in excess of two per year: $ 10.00 each
(Activity fees are billed quarterly)
III. Minimum Annual Fee $400.00
OTHER CONSIDERATIONS
This schedule of fees does not cover out-of-pocket expenses, such as
transportation costs, telephone tolls, etc., which will be billed to the client.
When unusual services not contemplated in this schedule of fees are required,
appropriate additional charges will be made. Such services include, but are not
limited to, the physical handling of eligible securities not in a depository
institution, automatic dividend reinvestment, the sale of restricted or control
securities, the preparation of statements or reports requiring special handling,
litigation, operation or supervision of a going business, extensive tax work,
valuation and other services relating to assets with limited marketability. Fees
for other special services will be charged only when such service is provided
for the account.
Fees not paid within 30 days will be charged to the account.
This fee schedule shall be effective for one year.
Negotiated fee 3/95
ADMINISTRATIVE SERVICES CONTRACT
AGREEMENT, made by and between SCM Portfolio Fund, Inc., a Georgia
Corporation, (hereinafter called "Fund") and SCM Associates Inc., a Georgia
Corporation, (hereinafter called "Administrator").
WITNESSETH:
WHEREAS, the Fund is engaged in the business of investing and reinvesting
its assets and properties in various stocks and securities and the Administrator
engages in the business of providing investment company administrative services.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Administrator to render administrative
services to the Fund subject to the supervision and direction of the Board of
Directors of the Fund. The Administrator hereby accepts such employment and
agrees, during the period of this agreement, to render the services and assume
the obligations set forth for the compensation provided. The Administrator
shall, for all purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed to be an agent
of the Fund.
2. The Administrator shall provide for the Fund the services of fund
accounting, calculating the daily net asset value, filing reports, providing
information for preparation of state and federal tax returns, and providing
various services to the shareholders of the Fund.
3. As compensation for the services to be rendered to the Fund by the
Administrator under the provisions of this Agreement, the Fund shall pay to the
Administrator monthly a fee equal to one-twelfth of twenty-five one hundredths
of one per cent per month (the equivalent of .25 of one per cent per annum), of
the daily average net assets of the Fund during the month.
4. The Fund shall bear expenses and salaries necessary and incidental to
the conduct of its business, including but not in limitation of the foregoing,
the expenses incurred for annual meetings and reports thereof to shareholders,
bonds and insurance, taxes, registration fees, custodian and transfer agent
fees, legal and audit fees, and any out of pocket expenses such as but not
limited to supplies, printing, and postage.
<PAGE>
5. This Agreement may be terminated at any time upon 60 days' prior written
notice without payment of any penalty by the Fund's Board of Directors or by
vote of a majority of the outstanding voting securities of the Fund. Upon the
termination of this Agreement the obligation of all parties shall cease and
terminate as of the date of such termination except for any obligation to
respond for breach of this Agreement committed prior to such termination and
except for the obligation of the Fund to pay the fee provided herein prorated to
the date of termination.
6. It is expressly understood and agreed that the services to be rendered
by the Administrator to the Fund under the provisions of this Agreement are not
to be deemed to be exclusive, and the Administrator shall be free to render
similar or different services to others as long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
7. This Agreement shall continue in effect until the 22nd of January, 1997.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
signed by their respective authorized officers on the 15th day of January ,
1996.
SCM PORTFOLIO FUND, INC.
/s/ James M. Prather /s/ Stephen C. McCutcheon
Attest President
SCM ASSOCIATES, INC.
/s/ James M. Prather /s/ Stephen C. McCutcheon
Attest President
MALONE & TOTTEN
Attorneys At Law
212 South Jefferson Street
Post Office Box 729
Athens, Alabama 35611
DAN C. Totten Telephone
W.W. Malone, Jr. (205) 232-1287
Of Counsel
July 25, 1988
SCM Portfolio Fund, Inc.
123 Ole Hickory Trail
P.O. Box 947
Carrollton, GA 30117
Gentlemen:
I have been asked to provide this opinion in connection with the
registration under the Securities Act of 1933 of 300,000 shares of the common
capital stock of SCM Portfolio Fund, Inc. ("Fund") (Par value $1.00 per share).
I have examined the Articles of Incorporation of the Fund, By-Laws of the
Fund, various corporate proceedings, and such other items considered to be
material to determine the legality of the sale of the authorized but unissued
shares of the Fund's common capital stock. With respect to the good standing of
the Fund, I am advised that the Fund is in good standing with the State of
Georgia, its state of incorporation, and that no taxes are due.
Based upon the foregoing, it is my opinion that upon effectiveness of the
Securities Act of 1933 Registration Statement of the Fund filed pursuant to the
provisions of Section 24(a) of the Investment Company Act of 1940 to register
300,000 shares of the Fund's common capital stock and during such time as such
Registration Statement is in effect, the Fund will be authorized to solicit and
cause to be solicited share purchase orders and to issue its shares for a cash
consideration, as described in the Fund's Prospectus and Statement of Additional
Information, which shares so issued will be validly issued, fully paid and
non-assessable shares.
I offer no opinion with respect to the offer and sale of the Fund's
securities under the Securities Laws of the several
<PAGE>
states, the District of Columbia, any territory of the United
States or of any foreign country.
I consent to the inclusion of this opinion as an exhibit to the Securities
Act, Registration Statement of the Fund and to the reference in the Fund's
Prospectus and/or Statement of Additional Information to the fact that this
opinion concerning the legality of the issue on behalf of the Fund, as issuer,
has been rendered by me.
Sincerely,
MALONE & TOTTEN
/s/ Dan C. Totten
Dan C. Totten
[LETTERHEAD]
April 18, 1996
U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: SCM Portfolio Fund, Inc.
Gentlemen:
We are counsel to SCM Portfolio Fund, Inc. (the "Fund"). As such, we have
reviewed Post-Effective Amendment No. 8 to the Registration Statement of the
Fund to be filed pursuant to paragraph (b) of Rule 485 promulgated under the
Securities Act of 1933.
In our judgment, Post-Effective Amendment No. 8 to the Registration
Statement does not contain disclosures which would render it ineligible to
become effective pursuant to paragraph (b) of Rule 485.
We consent to the inclusion of this written representation as an Exhibit to
Post-Effective Amendment No. 8 to the Registration Statement of the Fund.
Very truly yours,
STRADLEY RONON STEVENS & YOUNG, LLP
/s/
Joseph V. Del Raso
JDR/go
1355 Peachtree Street, NE, Suite 820, Atlanta, Georgia 30309
404 829-9900 o FAX 404 892-5882
McMullan and Company
CERTIFIED PUBLIC ACCOUNTANTS
March 25, 1996
To the Board of Directors
SCM Portfolio Fund, Inc.
P.O. Box 947
Carrollton, Georgia 30117
Gentlemen:
We hereby consent to the use of our auditor's report dated January 15, 1996, for
SCM Portfolio Fund, Inc. in the Statement of Additional Information of SCM
Portfolio Fund, Inc. dated April 30, 1996, in the Prospectus for SCM Portfolio
Fund, Inc. dated April 30, 1996.
/s/ McMullan and Company
CERTIFIED PUBLIC ACCOUNTS
Members American Institute of Certified Public Accountants,
SEC Practice Section and Private Companies Practice Section,
Members Georgia Society of Certified Public Accountants and
Members National Association of Certified Public Accounting Firms
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000837220
<NAME> SCM PORTFOLIO FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 480,670
<INVESTMENTS-AT-VALUE> 549,734
<RECEIVABLES> 5,409
<ASSETS-OTHER> 366,702
<OTHER-ITEMS-ASSETS> 1,985
<TOTAL-ASSETS> 923,830
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 882
<TOTAL-LIABILITIES> 882
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 852,599
<SHARES-COMMON-STOCK> 84,150
<SHARES-COMMON-PRIOR> 81,660
<ACCUMULATED-NII-CURRENT> 287
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 70,062
<NET-ASSETS> 922,948
<DIVIDEND-INCOME> 14,216
<INTEREST-INCOME> 24,160
<OTHER-INCOME> 0
<EXPENSES-NET> 12,485
<NET-INVESTMENT-INCOME> 25,891
<REALIZED-GAINS-CURRENT> 3,333
<APPREC-INCREASE-CURRENT> 82,899
<NET-CHANGE-FROM-OPS> 112,123
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25,806
<DISTRIBUTIONS-OF-GAINS> 3,333
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,014
<NUMBER-OF-SHARES-REDEEMED> 14,214
<SHARES-REINVESTED> 2,690
<NET-CHANGE-IN-ASSETS> 110,319
<ACCUMULATED-NII-PRIOR> 202
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,485
<AVERAGE-NET-ASSETS> 852,864
<PER-SHARE-NAV-BEGIN> 9.95
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> 1.08
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.97
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
