SEMIANNUAL REPORT
June 30, 1996
Dear Shareholder(s),
Enclosed is the financial statement for the SCM Portfolio Fund for the
period, January 1-June 30, 1996. Please note that the Fund was invested
43.91% in common stocks; 1.7% in preferred stocks; 10.8% in U.S. Treasury
Notes; and 43.59% in short-term securities. We accumulated an above average
cash position in anticipation of a stock market correction and in order to
buy additional stocks at bargain prices.
The Fund's total return for the six-month period was 4.19% and for the
12-month period was 10.98%. The Fund's return was below the S & P 500 Index
for the periods, but the Fund was not fully invested in stocks as was the
Index, and thus the Fund was less volatile during market turndowns.
The expenses of the Fund were up 8.9% over this time last year, owing
primarily to legal, accounting, and electronic transmission expenses
necessitated by additional reporting requirements imposed by the Securities
and Exchange Commission. These additional expenses, of course, reduced the
return to the shareholders. However, most of the expenses have been paid
for the year.
The Fund's management will continue buying shares of companies that it
appraises as having fair value in relation to earnings and having excellent
growth prospects to the end of the decade. We will be looking for companies
with international sales and services whose share prices are discounted
because of small reductions from projected near-term earnings but with
long-term earnings potential still in place. We want to buy this kind of
company and hold it while its management grows earnings over the years,
and the share price will follow with higher values.
As always, if you have questions or comments, please feel free to call.
Sincerely,
Steve McCutcheon
July 30, 1996
<PAGE>
<TABLE>
SCM PORTFOLIO FUND INC
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<CAPTION>
ASSETS
<S> <C>
ASSETS
Cash equivalents 405,210
Interest Receivable 2,994
Dividends Receivable 1,292
Fidelity Bond Reserve at Market Value 2,743
Securities at Market Values 524,481
________
$936,720
========
<CAPTION>
LIABILITIES
<S> <C>
LIABILITIES
Accounts Payable $ 2,026
Securities Payable 5,988
NET ASSETS (Equivalent to $11.43 per share 928,706
based on 81,262.016 shares outstanding) _______
$936,720
========
Net assets consist of:
Capital Stock $820,599
Unrealized depreciation on investments 82,743
Accumulated undistributed net investment income 9,336
Realized Gains on Securities Transactions 16,028
________
$928,706
========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SCM PORTFOLIO FUND INC
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1996
(UNAUDITED)
<CAPTION>
<S> <C> <C>
CASH EQUIVALENTS (43.59%) $405,210
========
SECURITIES (56.41%)
U.S. Treasury Notes, 6.375%, Due 1/15/1999 50 $ 50,203
U.S. Treasury Notes, 6.125%, Due 12/31/1996 50 50,219
________
Total Government Securities $100,422
________
COMMON STOCKS 51.88%
Abbott Laboratories 400 $ 17,400
Office Depot 200 4,050
Genuine Parts 200 9,150
Teco Energy 300 7,575
Bristol Myers Squibb 200 18,000
Synovus Financial 750 16,219
G T E 700 31,325
Hartmarx 1000 6,250
Southern Company 200 4,925
Pennzoil 200 9,250
PPG Industries 400 19,500
Heinz 650 19,988
WalMart 400 10,150
Norfolk Southern 100 8,475
Atlanta Gas Light (AGL Resources) 600 11,325
Sigma Aldrich 400 21,400
Fay, Inc. 1000 7,875
Quaker State 400 6,000
Merck 400 25,850
Motorola 100 6,288
Intel 100 7,353
Coca Cola 200 9,800
Hewlett Packard 100 9,963
Sysco 200 6,850
U. S. Steel 100 2,838
Automatic Data Processing 200 7,675
Minnesota Mining & Manufacturing 100 6,900 ========
<PAGE>
<S> <C> <C>
Torchmark 200 8,750
Home Depot 500 27,000
Flowers Industries 1000 16,125
Bell Atlantic 200 12,750
Rubbermaid 400 10,900
WMX Technologies 400 13,100
Pall 300 7,238
------
Total Common Stocks $408,237
PREFERRED STOCK 1.70%
General Motors Pf Ser B 9.125% 600 15,822
------
Total Preferred Stocks $ 15,822
______
TOTAL SECURITIES $524,481
=======
TOTAL INVESTMENTS $929,691
=======
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
SCM PORTFOLIO FUND INC
STATEMENT OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
<S> <C>
INCOME
Interest $ 12,108
Dividends 6,703
________
Total Income 18,811
________
EXPENSES
Administrative Fee 1,145
Custodial Fee 672
Registrations and Reports 125
Audit and Accounting Fee 4,050
Taxes 522
Miscellaneous 1,493
Legal Expense 1,755
________
Total Expense 9,762
________
NET INVESTMENT INCOME 9,049
________
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net Realized Gain (Loss) from Securities
Transactions 16,028
Net Increase (Decrease) in Unrealized Appreciation 12,681
________
Net Realized and Unrealized Gain (Loss)
on Securities 28,709
________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 37,758
========
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
SCM PORTFOLIO FUND INC
STATEMENT OF CHANGES IN NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<CAPTION>
Six Mo. Year
Ended Ended
6/30/96 12/31/95
________ ________
<S> <C> <C>
OPERATIONS
Net Investment Income $ 9,049 $ 25,891
Realized Gain (Loss) on Investments 16,028 3,333
Change in Unrealized Gain (Loss) on
Investments 12,681 82,899
------- -------
Increase (Decrease) in Net Assets
Resulting from operations 37,758 112,123
_______ _______
CAPITAL SHARE TRANSACTIONS
Proceeds from Issuance of Shares ------ 148,000
Reinvestment of Dividends ------ 25,806
Reinvestment of Gain Distribution ------ 3,333
Cost of Shares Redeemed (32,000) (149,804)
________ ________
Increase (Decrease) in Net Assets from
Capital Share Transactions (32,000) 27,335
________ ________
DIVIDEND PAID
From Net Investment Income ------ (25,806)
From realized capital gains ------ (3,333)
________ ________
Decrease in Net Assets from
Dividends Paid ------ (29,139)
________ ________
TOTAL INCREASE(DECREASE) IN NET ASSETS 5,758 110,319
Balance at beginning of period 922,948 812,629
_______ _______
Balance at end of period $928,706 $922,948
======== ========
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
SCM PORTFOLIO FUND INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The SCM Portfolio Fund, Inc. (the Fund) is a diversified open-end management
company. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuation
Investments in securities are stated at market values based on the latest
quoted market prices.
B. Federal Income Taxes
No provision for federal income taxes is considered necessary since the Fund
intends to distribute all of its taxable net income during the tax year,
including any realized net gains on investments 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.
C. 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. INVESTMENT MANAGEMENT FEES
Pursuant to the Investment Advisory contract dated January 15, 1996, the
investment adviser receives a monthly fee equal to one-twelfth of seventy-
four one hundredths (.74) per cent of the daily average net assets of the
Fund during the month. Furthermore, the Contract provides that should the
management fee and other expenses exceed two (2) per cent at the end of the
fiscal year based on the Fund's average monthly assets, the adviser would
refund the sum necessary to reduce the total cost to the Fund to not more
than (2) per cent of the average monthly assets during the fiscal year.
During the period ending June 30, 1996, the adviser waived the fee during
January-June in order to control Fund expenses.
<PAGE>
NOTE 3. ADMINISTRATIVE SERVICES CONTRACT
Pursuant to the Administrative Services Contract dated January 15, 1996,
between the Fund and SCM Associates, Inc. (Administrator), the administrator
receives a monthly 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 net assets of the Fund during the month.
NOTE 4. CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTING
Fidelity National Bank, Trust Department, Atlanta, Georgia serves as cust-
odian, holding all cash and securities. The custodial fee is $15 per trans-
action in securities and .20 of 1% for the first $2,000,000 of assets with
a $400 minimum fee annually. The Fund serves as its own transfer agent,
and SCM Associates, Inc. under the Administrative Services Contract provides
daily pricing and fund accounting. McMullan and Company, Atlanta, Georgia,
serves as independent accountant and auditor.
<PAGE>
FINANCIAL HIGHLIGHTS
The following information provides a per share summary of investment income
and capital gains earned by the Fund and the distributions made by the Fund
in the form or dividends and capital gains to shareholders. The summary
also provides a beginning and ending net asset value (NAV) per share for
each year and the total return for each year, allowing the shareholder to
trace the value of the Fund over the years since the Fund's registration.
Data for 1989-95 has been audited by McMullan and Company, Atlanta, Georgia,
but data for the six months ending June 30, 1996, is unaudited.
<TABLE>
Year Ended December 31
________________________________________
6/30/1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $ 10.97 9.95 10.41 10.26 10.49 9.98 9.96 10.00
_____ ____ _____ _____ _____ _____ _____ _____
Income From Invest-
ment Operations
Net Investment Income .11 .32 .31 .31 .31 .44 .59 .75
Net Gain(Loss) on
Securities (realized
and unrealized) .35 1.08 (.39) .35 (.08) .52 (.13) (.06)
____ _____ _____ ____ _____ ____ _____ _____
Total from Investment
Operations .46 1.40 (.08) .66 .23 .96 .46 .69
___ _____ _____ ____ _____ ____ _____ _____
Less Distributions
Dividends (from Net
Investment Income) ---- (.34) (.29) (.29) (.30) (.44) (.44) (.73)
Distributions (from
Capital Gains) ---- (.04) (.09) (.22) (.16) (.01) --- ---
_____ _____ _____ _____ _____ _____ _____
Total Distributions ---- (.38) (.38) (.51) (.46) (.45) (.44) (.73)
____ _____ _____ _____ _____ _____ _____ _____
Net Asset Value
End of Period $ 11.43 10.97 9.95 10.41 10.26 10.49 9.98 9.96
===== ===== ==== ===== ===== ===== ==== ====
Total Return 4.19%* 14.19 (.76) 6.57 2.25 9.78 4.57 6.90
*Not Audited
</TABLE>
<PAGE>
Ratio/Supplemental Data
(All numbers are percentages, except Net Assets)
<TABLE>
Net Assets, End
of Period
<S> <C>
6/30/1996 928,706
1995 922,948
1994 812,629
1993 731,106
1992 655,028
1991 706,098
1990 693,383
1989 358,406
<C> <C> <C> <C> <C> <C> <C> <C>
6/30/1996 1995 1994 1993 1992 1991 1990 1989
Ratio of Expenses
to Average Net Assets 1.06%* 1.47 1.59 1.58 1.83 1.39 1.70 1.40
Ratio of Net Income to
Average Net Assets .98%* 4.52 4.59 4.36 2.91 4.22 5.75 7.20
Portfolio Turnover
Rate 3.68%* 14.84 27.17 21.00 28.00 35.00 45.00 0.00
* Not Annualized
</TABLE>
<PAGE>
