To the Shareholders and Board of Directors
NRM Investment Company
Rosemont, Pennsylvania
The accompanying statement of assets and liabilities, including the
schedule of investments, as of February 29, 1996, and the related
statements of operations, changes in net assets and the financial
highlights, for the six month period then ended, were not audited by me
and, accordingly, I do not express an opinion on them.
The statement of changes in net assets for the year ended August 31,
1995 and the financial highlights for each of the years ended August 31,
1986 to August 31, 1995 were audited by another accounting firm who
issued their unqualified report thereon dated September 29, 1995, but
they have not performed any auditing procedures since that date.
CERTIFIED PUBLIC ACCOUNTANT
Newtown Square, Pennsylvania
March 9, 1996, except as to
Note 5, as to which the date
is April 20, 1996
STATEMENT OF ASSETS AND LIABILITIES
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
ASSETS
Investments at market value
(Cost $16,475,389) - Note 4 $ 17,270,858
Interest receivable 237,894
Prepaid expenses 1,323
------------
TOTAL ASSETS 17,510,075
------------
LIABILITIES
Dividend payable - Note 2 252,736
Accrued expenses and other liabilities 11,467
------------
TOTAL LIABILITIES 264,203
------------
NET ASSETS at market, applicable to
to 4,283,659 outstanding shares,
equivalent to $4.03 a share - Note 6 $ 17,245,872
============
See notes to financial statements.
SCHEDULE OF INVESTMENTS
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
Principal
Amount Description Market Value
------ ----------- ------------
MUNICIPAL BONDS - 98.4%
GENERAL OBLIGATION BONDS - 13.5%
$ 70,000 Pennsylvania State Public School Building
Authority, 9.75%, due 11/1/99, callable
11/1/98 at 100.0 $ 78,583
450,000 Rhode Island Public Buildings Authority, 8.20%,
due 2/01/08, callable 2/01/98 at 102.0 494,987
300,000 Leominster, Massachusetts, 6.25%, due 4/1/08 325,776
200,000 Upper Dublin Pennsylvania School District,
5.50%, due 11/15/08 (MBIA insured) 204,050
300,000 Lowell, Massachusetts, 5.50%, due 1/15/10 306,633
200,000 New York City, New York, 6.25% due 8/1/10 203,046
280,000 Port Houston Authority, Texas (Harris County
Port Improvements), 5.70%, due 10/1/12, call-
able 10/1/05 at 100(Subject to Alternative Min-
imum Tax) 281,999
400,000 Nevada State, 6.350%, due 10/1/12 431,524
----------
TOTAL GENERAL OBLIGATION BONDS 2,326,598
----------
HOUSING FINANCE AGENCY BONDS - 50.3%
100,000 New Mexico Mortgage Finance Authority, SFM,
7.90%, due 7/01/00 (FGIC insured) 104,265
100,000 Pasadena California Community Development,
Multi-Family Housing(Civic Center West Pro-
ject), 5.875%, due 12/1/02 (Subject to
Alternative Minimum Tax) 102,139
200,000 Pennsylvania Housing Finance Agency, Single-
Family Mortgage, 5.60%, due 4/1/05
(Subject to Alternative Minimum Tax) 203,034
100,000 Pennsylvania Housing Finance Agency, Single-
Family Mortgage, 5.80%, due 4/1/07
(Subject to Alternative Minimum Tax) 101,685
195,000 Rock Island, Illinois Residential Mortgage Rev.
Refunding, 7.70%, due 9/1/08, callable 9/1/02
at 102.0 208,047
325,000 Ford County, Kansas Single-Family Mortgage
Rev. Refunding, 7.90%, due 8/1/10, callable
8/1/02 at 103, callable 8/1/05 at 100 354,751
80,000 Montana State Board of Housing, 7.65%, Mort-
gage Revenue Refunding, 8.75%, due 7/1/11,
callable 7/1/02 at 102, 7/1/05 at 100 85,032
See notes to financial statements.
SCHEDULE OF INVESTMENTS - CONTINUED
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
Principal
Amount Description Market Value
------ ----------- ------------
MUNICIPAL BONDS - 98.4%, Continued
HOUSING FINANCE AGENCY BONDS - 50.3%, Continued
$ 115,000 City of Hobbs, New Mexico, Single-Family Mort-
gage Refunding Bonds, 8.75%, due 7/1/11,
callable 7/1/02 at 102, 7/1/05 at 100 $ 125,820
450,000 Fort Worth Texas Housing Finance Corporation,
Home Mortgage Revenue, Refunding Series 1991,
8.50%, due 10/1/11, callable 10/1/01 at 103 493,551
394,520 Odessa, Texas Housing Finance Corporation,
Single-Family Mortgage Revenue Refunding,
8.45%, due 11/1/11, callable 11/1/05 at 103 431,081
300,000 Idaho Housing Agency, Single-Family Mortgage,
6.15%, due 7/1/12 (Subject to Alternative
Minimum Tax) 301,620
570,000 Cameron County, Texas Housing Finance Corp.,
Single-Family Mortgage Rev. Refunding, 6.20%,
due 3/1/13, callable 9/1/05 at 100 584,387
60,000 Labette and Cowley Counties, Kansas, Single-
Family Mortgage Refunding Bonds, 9.50%, due
4/1/13, callable 10/1/01 at 103 64,565
125,000 Vicksburg Mississippi Lease Housing Corp.,
5.80%, due 8/15/13 125,154
60,000 California Housing Finance Agency, 10.25%,
due 2/01/14, callable 2/01/92 60,149
100,000 New Hampshire Housing Finance Agency, Single-
Family Mortgage Revenue, 6.50%, due 7/1/14,
callable 7/1/07 at 100 (Subject to Alternative
Minimum Tax) 102,161
360,000 Arkansas Development Finance Authority, 7.70%
due 12/01/14 376,074
220,000 Massachusetts State Housing Finance Agency,
Rental Housing, 6.35%, due 7/1/15, callable
7/1/07 at 100 (AMBAC insured)(Subject to Al-
ternative Minimum Tax) 228,078
280,000 Nevada Housing Division, Single-Family Mortgage,
7.35%, due 10/1/15 291,234
500,000 Louisiana Public Facilities Authority, Multi-
family Housing, 7.75%, due 11/1/16, callable
11/1/01 at 102 542,345
270,000 Utah State Housing Finance Agency, Single-
Family Mortgage, 6.30%, due 1/1/18 274,565
1,385,000 Troy, New York Housing Development Corp.,
Multi-Family Housing, 8.10%, due 2/1/22,
callable 2/1/02 at 100 1,492,642
See notes to financial statements.
SCHEDULE OF INVESTMENTS - CONTINUED
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
Principal
Amount Description Market Value
------ ----------- ------------
MUNICIPAL BONDS - 98.4%, Continued
HOUSING FINANCE AGENCY BONDS - 50.3%, Continued
$ 600,000 Quaker Hill Housing Corporation, Multi-Family,
7.55%, due 2/01/22 $ 644,550
110,000 Rhode Island Housing and Finance, 8.25%, due
10/1/22 115,460
1,160,000 St. Alfios Housing Corporation, Multi-Family,
8.20%, due 2/01/24, callable 8/01/03 at 100 1,271,708
----------
TOTAL HOUSING FINANCE AGENCY BONDS 8,684,097
----------
HOSPITAL AND HEALTH CARE REVENUE BONDS - 9.3%
300,000 Dauphin County, Pennsylvania Hospital Auth-
ority, HAPSCO Group, William Penn Hospital
Project, 5.50%, due 7/1/07 311,970
100,000 Rhode Island State Health and Educational
Building Corp.(New England Tech), 5.90%,
due 3/1/10 (CNLE insured) 104,847
200,000 New Jersey Economic Development, RWJ Health
Care Corp., 6.00%, due 7/1/11 (FSA insured) 210,692
400,000 Falls Township Pennsylvania Hospital Auth-
ority, Delaware Valley Medical Center,
6.90%, due 8/1/11, callable 8/1/02 at 102 421,344
500,000 Rochester, Minnesota, Health Care Facilities
Revenue(Mayo Foundation/Mayo Medical Center),
6.25%, due 11/15/12 551,070
----------
TOTAL HOSPITAL AND HEALTH CARE REVENUE BONDS 1,599,923
----------
OTHER REVENUE BONDS - 25.3%
200,000 Dallas Fort Worth Regional Airport, 4.20%,
due 11/1/99, callable 11/1/96 at 100 (Sub-
ject to Alternative Minimum Tax) 200,097
100,000 Metropolitan Nashville Airport Authority,
5.50%, due 7/1/02 103,782
200,000 Washington State Public Power Supply Nuclear
Project #1, 5.60%, due 7/1/05 208,852
200,000 Fitzgerald, Michigan Public School District,
Refunding Series, 5.00%, due 5/1/08 (MBIA
insured) 199,444
365,000 Grand Rapids, Michigan Downtown Development
Authority, 6.60%, due 6/1/08, callable 6/1/06
at 100 409,191
See notes to financial statements.
SCHEDULE OF INVESTMENTS - CONTINUED
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
MUNICIPAL BONDS - 98.4%, Continued
Amount Market Value
------ ------------
OTHER REVENUE BONDS - 25.3%, Continued
$ 535,000 New York City, Industrial Development Auth-
ority, Special Facilities, 6.10%, due 1/1/09,
callable 1/1/95 at 100 $ 548,466
100,000 Lee County Florida Certificates of Partici-
pation, Master Lease Project, 4.20%, due
10/1/06(MBIA insured) 99,092
840,000 Shelby County, Indiana, Jail Building Corp.,
First Mortgage, 6.50%, due 7/15/09, callable
7/15/02 at 102 (MBIA insured) 925,621
400,000 Columbus, Georgia Airport, 94 Series, 6.30%,
due 1/1/10 (MBIA insured)(Subject to Alter-
native Minimum Tax) 432,540
300,000 Alaska Industrial Development and Export
Authority, 6.20%, due 4/1/10 316,272
300,000 New York State Letter of Credit, Governmental
Assistance Corporation, 5.375%, due 4/1/12 292,578
200,000 Philadelphia Pennsylvania Airport Revenue,
6.00%, due 6/15/15 (AMBAC insured)(Subject to
Alternative Minimum Tax) 207,118
335,000 Port Authority of New York/New Jersey, 6.40%,
due 7/15/15 360,199
70,000 Pennsylvania State Higher Education Assistance
Agency, Student Loan Revenue, 6.05%, due
1/1/19 (Subject to Alternative Minimum Tax) 72,102
-----------
TOTAL OTHER REVENUE BONDS 4,375,354
----------
TOTAL MUNICIPAL BONDS (Cost $16,190,503) 16,985,972
SHORT-TERM INVESTMENTS - at cost approximating
market - 0.6%
Shares
284,886 Federated Pennsylvania Municipal Cash Fund #8 284,886
-----------
TOTAL INVESTMENTS- 100 % (Cost $16,475,389) $17,270,858
===========
See notes to financial statements.
STATEMENT OF OPERATIONS
NRM INVESTMENT COMPANY
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996
(unaudited)
INVESTMENT INCOME
Interest $ 539,209
EXPENSES
Investment advisor fees - Note 3 5,000
Custodian fees 4,650
Transfer and dividend disbursing agent fees 1,350
Legal and professional fees 14,050
Directors fees 2,500
Insurance 1,050
Capital stock tax 1,800
Miscellaneous 700
---------
31,100
---------
NET INVESTMENT INCOME 508,109
---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain from investment transactions 2,346
Net unrealized appreciation of investments 267,644
---------
NET GAIN ON INVESTMENTS 269,990
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 778,099
=========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
NRM INVESTMENT COMPANY
For the Six For the Year
Months Ended Ended
February 29, 1996 August 31, 1995
----------------- ---------------
(unaudited)
CHANGES RESULTING FROM OPERATIONS
Net investment income $ 508,109 $ 1,012,956
Net realized gain/(loss) from
investment transactions 2,346 (101,880)
Net unrealized appreciation
of investments 267,644 345,218
----------- -----------
Net increase in net assets
resulting from operations 778,099 1,256,294
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (514,037) (1,019,507)
CAPITAL SHARE TRANSACTIONS
Net increase from capital
share transactions - Note 5 19 74
----------- -----------
Total increase in net assets 264,081 236,861
NET ASSETS
Beginning of year 16,981,791 16,744,930
----------- -----------
End of period/year $17,245,872 $16,981,791
=========== ===========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
NRM INVESTMENT COMPANY
<TABLE>
<CAPTION>
For the Six
Month Period
Ended Year Ended August 31,
----- ---------------------
February 29, 1996 1995 1994
----------------- ---- ----
(unaudited)
PER SHARE DATA
(for a share outstanding through-
out the indicated year/period)
<S> <C> <C> <C>
Net asset value, beginning of year $ 3.964 $ 3.909 $ 4.022
Net investment income .119 .237 .229
Net realized and unrealized
gain/(loss) on investments .063 .056 (.115)
------- ------- -------
Total from investment operations .182 .293 .114
------- ------- -------
Less distributions:
Dividends from net investment
income (.120) (.238) (.227)
Distributions in excess of
net investment income - - -
------- ------- -------
Total distributions (.120) (.238) (.227)
------- ------- -------
Net asset value, end of year/period $ 4.026 $ 3.964 $ 3.909
======= ======= =======
TOTAL RETURN 4.62% 7.52% 2.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year/period $17,246 $16,982 $16,745
Ratio of expenses to average
net assets .18% .37% .49%
Ratio of net investment income
to average net assets 2.95% 6.08% 5.77%
Portfolio turnover rate 4.45% 22.73% 13.56%
<CAPTION>
Year Ended August 31,
---------------------
1993 1992 1991 1990
---- ---- ---- ----
PER SHARE DATA
(for a share outstanding through-
out the indicated year/period)
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 3.540 $ 3.488 $ 3.635 $ 3.835
Net investment income .453 .265 .059 .157
Net realized and unrealized
gain/(loss) on investments .137 .055 .051 (.065)
------- ------- ------- -------
Total from investment operations .590 .320 .110 .092
------- ------- ------- -------
Less distributions:
Dividends from net investment
income (.108) (.265) (.059) (.157)
Distributions in excess of
net investment income - (.003) (.198) (.135)
------- ------- ------- -------
Total distributions (.108) (.268) (.257) (.292)
------- ------- ------- -------
Net asset value, end of year/period $ 4.022 $ 3.540 $ 3.488 $ 3.635
======= ======= ======= =======
TOTAL RETURN 16.69% 9.08% 3.00% 2.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year/period $17,636 $15,260 $15,659 $16,268
Ratio of expenses to average
net assets (5.03%) .81% 6.04% 3.90%
Ratio of net investment income
to average net assets 11.93% 7.25% 1.54% 4.07%
Portfolio turnover rate 40.06% 64.84% 101.88% 46.10%
<CAPTION>
Year Ended August 31,
---------------------
1989 1988 1987 1986
---- ---- ---- ----
PER SHARE DATA
(for a share outstanding through-
out the indicated year/period)
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 3.767 $ 3.949 $ 4.012 $ 3.657
Net investment income .278 .284 .327 .313
Net realized and unrealized
gain/(loss) on investments .084 (.138) (.070) .362
------ ------- ------- -------
Total from investment operations .362 .146 .257 .675
------ ------- ------- -------
Less distributions:
Dividends from net investment
income (.278) (.298) (.320) (.320)
Distributions in excess of
net investment income (.016) (.030) - -
------ ------- ------- -------
Total distributions (.294) (.328) (.320) (.320)
------ ------- ------- -------
Net asset value, end of year/period $3.835 $ 3.767 $ 3.949 $ 4.012
====== ======= ======= =======
TOTAL RETURN 10.29% 3.57% 6.70% 18.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year/period 17,094 $16,723 $17,461 $17,655
Ratio of expenses to average
net assets .52% .26% .28% .48%
Ratio of net investment income
to average net assets 7.28% 7.41% 8.16% 8.04%
Portfolio turnover rate 18.81% 37.78% 11.09% 13.07%
</TABLE>
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
Valuation of Investments: Investments in securities (other than debt
securities maturing in 60 days or less) traded in the over-the-counter
market, and listed securities for which no sale was reported on the last
business day of the period, are valued based on prices furnished by a
pricing service. This service determines the valuation using a matrix
pricing system based on common bond features such as coupon rate,
quality and expected maturity dates. These valuations are believed to
reflect accurately the fair market value of such securities. Securities
for which market quotations are not readily available are valued by
their fair market value by the Investment Advisor under the supervision
and responsibility of the Fund's Board of Directors. Investment in
securities that are traded on national security exchanges are valued at
the closing prices. Short-term investments are valued at amortized cost,
which approximates market value.
Investment Transactions and Related Investment Income: Investment
transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses from investment
transactions are reported on the basis of identified cost for both
financial and federal income tax purposes. Interest income is recorded
on the accrual basis for both financial and income tax reporting. In
computing investment income, the Fund amortizes premiums over the life
of the security, unless said premium is in excess of any call price, in
which case the excess is amortized to the earliest call date. Discounts
are accreted over the life of the security.
Transactions with Shareholders: Fund shares are sold and redeemed at
the net asset value. Transactions of these shares are recorded on
the trade date. Dividends and distributions are recorded by the
Fund on the ex-dividend date.
Federal Income Taxes: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and distribute substantially all of its net
investment income and realized net gain from investment transactions to
its shareholders and, accordingly, no provision has been made for
Federal income taxes.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
NOTE 2 - DIVIDENDS
On December 21, 1995 the Board of Directors declared a cash dividend
from net investment income of $.059 per share, payable February 29, 1996
to shareholders of record on February 22, 1996.
NOTE 3 - INVESTMENT ADVISOR AND MANAGEMENT FEES AND OTHER TRANSAC-
TIONS WITH AFFILIATES
Effective December 9, 1992, the Fund entered into a new investment
advisory agreement which provided that the Fund will pay to the
investment advisor, as compensation for services provided and expenses
assumed, a fee at the annual flat rate of $10,000. The chief executive
officer of the investment advisor is on the Board of Directors of the
Fund.
Advisory fees for the period ended February 29, 1996 amounted to $5,000.
NOTE 4 - COST, PURCHASES, AND SALES OF INVESTMENT SECURITIES
Cost of purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, aggregated $757,056 and
$750,834, respectively during the six month period ended February 29,
1996.
At February 29, 1996, the cost of investment securities owned is the
same for financial reporting and federal income tax purposes. Net
unrealized appreciation of investment securities is $795,469 (aggregate
gross unrealized appreciation of $809,190 less aggregate gross
unrealized depreciation of ($ 13,721).
NOTE 5 - LITIGATION, SUBSEQUENT EVENTS AND CONTINGENT LIABILITIES
The Fund is involved in three environmental matters which are in various
stages of proceedings. With regard to two of the matters, based on the
Fund's investigation and the information presently available, the Fund's
parties. Prior to April, 1996 the Environmental Protection Agency
requested a "cash out" offer from the industrial waste generators, of
which the Fund is a member, in exchange for a complete release from
further claims. In April, 1996 a settlement proposal was offered by this
group. The Fund's share of the settlement, if accepted, would be
approximately $39,000. The proposal has not been accepted or rejected as
of April 20, 1996.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NRM INVESTMENT COMPANY
FEBRUARY 29, 1996
(unaudited)
NOTE 5 - LITIGATION, SUBSEQUENT EVENTS AND CONTINGENT LIABILITIES
(Continued)
Should the settlement not be accepted, substantial litigation is
anticipated. The cost of this litigation and any potential environmental
claim would exceed the existing settlement offer. Present estimates
could raise the Fund's share of clean-up costs to an amount in excess of
$100,000. However, this amount is based on many assumptions which may or
may not occur. Accordingly, this amount could increase or decrease
substantially as additional investigation and litigation ensues. As of
February 29, 1996, no amounts have been provided for these potential
costs.
6. TRANSACTIONS IN CAPITAL STOCK AND COMPONENTS OF NET ASSETS
Transactions in Fund shares were as follows:
For the Six For the Year
Months Ended Ended
February 29, 1996 August 31, 1995
----------------- ---------------
Shares Amount Shares Amount
------ ------ ------ ------
Purchases - - - -
Shares issued to shareholders
in reinvestment of dividends 5 $ 19 19 $ 74
Redemptions - - - -
5 $ 19 19 $ 74
== ==== == =====
The components of net assets at February 29, 1996 are as follows:
Capital shares - par value $.01 per share,
4,283,659 shares issued and outstanding,
(10,000,000 full and fractional shares
authorized); and capital paid-in $17,769,157
Accumulated net realized loss on investment
transactions (1,325,995)
Net unrealized appreciation of investments 795,469
Undistributed net investment income 7,241
-----------
NET ASSETS $17,245,872
===========
