PMD Investment Company
Semi-Annual Report
June 30, 1997
PMD Investment Company
10050 Regency Circle
Suite 315
Omaha, Nebraska 68114
Directors and Officers
J.G. Sawicki President, Treasurer, and Director
John Patrick Witherspoon Vice President and Director
H.B. Underwood Vice President, Secretary, and Director
Investment Advisor, Custodian and Transfer Agent
First National Bank of Omaha
Trust Department
One First National Center
Omaha, Nebraska 68102-1596
Independent Accountants
Deloitte & Touche LLP
2000 First National Center
Omaha, Nebraska 68102
Legal Counsel
Abrahams Kaslow & Cassman
8712 West Doge Road, Suite 300
Omaha, Nebraska 68114
PMD INVESTMENT COMPANY
Financial Statements for the
Six Months Ended June 30, 1997
and Independent Accountants' Review Report
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To The Shareholders and
The Board of Directors PMD Investment Company Omaha, Nebraska
We have reviewed the accompanying statement of assets and liabilities of PMD
Investment Company, including the schedule of investments, as of June 30,
1997, and the related statements of operations and changes in net assets for
the six months then ended. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing the limited assurance
described in the preceding paragraph concerning the financial statements
taken as a whole. The additional information in the supplementary
information-selected per share data and ratios included in footnote E for the
six months ended June 30, 1997, is presented only for the purpose of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
Company's management. Such information has been subjected to the inquiry and
analytical procedures applied in the review of the basic financial statements
and we are not aware of any material modifications that should be made
thereto in order for such information to be in conformity with generally
accepted accounting principles when considered in relation to the basic
financial statements taken as a whole.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of assets and liabilities of PMD Investment Company,
including the schedule of investments, as of December 31, 1996 and the
related statements of operations and changes in net assets for the year then
ended (not presented herein) and the additional information included in
footnote E for each of the four years in the period ended December 31, 1996;
and in our report dated January 20, 1997, we expressed an unqualified opinion on
those financial statements and additional information. In our opinion, the
information set forth in the accompanying statement of changes in net assets
for the year ended December 31, 1996 and the per share data and ratios for
each of the five years in the period ended December 31, 1996 is fairly
stated, in all material respects, in relation to the financial statements
from which it has been derived.
July 28, 1997
Omaha, Nebraska
PMD INVESTMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited - See Independent Accountants' Review Report)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at approximate market value,
amortized cost of $12,819,941 $13,033,289
Investment in tax-exempt money-market fund 1,602,458
___________
Total Investments 14,635,747
Interest receivable 186,115
___________
Total Assets 14,821,862
LIABILITIES:
Accrued expenses 21,465
___________
NET ASSETS (equivalent to $4.26 per share based on
3,476,862 shares of common stock outstanding at
June 30, 1997) $14,800,397
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C>
Approximate
Principal Amortize Fair
Amount Cost Value
Abby National PLC Sub, 6.69%, due
October 17, 2005 $ 550,000 $ 555,601 $ 540,265
Clark County, Washington Public
Utilities District #1 Electric Revenue,
6.3%, due January 1, 2004,
callable January 1, 2001 250,000 249,195 266,150
Denver Met Major League Baseball Stadium
District Colorado, 6.35%, due October 1, 250,000 250,000 270,125
2003
Federal Home Loan Mortgage Corporation,
7.0%, due June 1, 2024 1,984,740 1,992,943 1,952,191
Federal National Mortgage Association,
6.5%, due January 1, 2024 1,079,483 1,064,526 1,037,814
Federal National Mortgage Association, 7.8%,
7.8%, due March 29, 2005, callable 1,000,000 1,038,799 1,012,000
March 29, 2000
Florida State, General Services Revenues,
6%, due July 1, 2001 220,000 219,775 232,100
Grand Island, Nebraska Sanitary Sewer
Revenue, 4.8%, due April 1, 2000 400,000 400,000 401,360
Hanover County, Virginia IDA Public
Facilities Lease Revenue, 6.75%,
due July 15, 2007 150,000 150,000 162,060
Jefferson County, West Virginia Residential
Mortgage Revenue, Refunding Series A, 7.75%
due January 1, 2012, callable January 1, 75,000 75,387 77,498
2001
Lincoln, Nebraska Hospital Revenue, 7%, due
December 1, 1999, callable December 1 , 180,000 180,000 190,440
1998
Lincoln, Nebraska Water Revenue, 6.7%, due
November 1, 2000 250,000 250,000 266,700
Milwaukee County, Wisconsin, Series A, 6.4%,
due December 1, 2003 200,000 201,454 206,200
Nebraska Educational Facility Authority,
Creighton University, Series A, 6.65%, due
September 1, 1998 250,000 250,000 257,550
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
JUNE 30, 1997 (Continued)
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C>
Approximate
Principal Amortized Fair
Amount Cost Value
Nebraska Investment Finance Authority, 6.9%,
due March 15, 2000 $ 275,000 $ 275,000 $ 284,295
Nebraska Investment Finance Authority, SFM
Revenue, GNMA Mortgage Backed Security
Program, Series D, 6%, due 210,000 210,000 210,798
September 15, 1997
Ohio State Highway, Series B, 4.5%, due
May 1, 2024 500,000 498,534 495,850
Omaha, Nebraska, 6.8%, due 365,000 365,308 385,477
December 1, 1999
Omaha, Nebraska, 4.15%, due 485,000 485,821 486,358
October 15, 1998
Omaha Public Power District, Nebraska Electric
Revenue, Series B, 5.9%, due 450,000 450,000 480,825
February 1, 2006
Omaha Public Power District, Nebraska Electric
Revenue, Series A, 5%, due 500,000 507,847 508,950
January 1, 2001
Puerto Rico Public Buildings Authority, Guaranteed
Public Education and Health Facilities, 7.75%,
due July 1, 2002, callable July 1, 345,000 345,123 351,900
1997
Richardson, Texas, 7%, due March 1, 500,000 495,724 519,950
2007
Sabine River Authority, Texas Water Supply
Facility, Lake Fork Project, 6.5%, due
December 1, 2001 265,000 264,428 281,907
Travelers Group Inc., Serial Note, 9.5%, due
March 1, 2002 500,000 549,704 554,150
Travelers Group Inc., Serial Note, 9.5%, due
March 1, 2002 50,000 55,674 55,415
Tucson, Arizona, G.O., Ref. 5.8%, 250,000 249,292 265,300
due July 1, 2005
University of Nebraska Facilities Corp., University
Medical Center, Series A, 7.2%, due July 1, 2004,
callable July 1, 1991 250,000 250,000 272,000
Vermont State, Series B, 5.7%, due 400,000 397,737 425,000
August 1, 2005
Washington State, Series A and AT-6, 5.8%, due
February 1, 2003 250,000 247,448 263,000
Wisconsin Housing and Economic Development,
Series 1, 7%, due October 1, 2003 295,000 294,621 319,661
___________ _________ ___________
Totals $12,729,223 $12,819,941 $13,033,289
=========== =========== ===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited - See Independent Accountants' Review Report)
<S> <C>
Interest Income:
From investments $ 430,291
Expenses:
Investment advisory fee 17,105
Custodian fees 3,821
Professional fees 25,148
Shareholders' servicing costs 3,630
Directors' fees 22,500
Other 2,716
__________
Total Expenses 74,920
__________
Net Investment Income 355,371
Realized gain from securities transactions:
Proceeds from sales 1,084,968
Cost of securities sold 1,082,790
__________
Net Realized Gain 2,178
Unrealized appreciation of investments:
Beginning of period 65,643
End of period 213,348
__________
Change in Unrealized Appreciation (52,295)
__________
Net Realized Gain and Decrease in Unrealized
Appreciation on Investments (50,117)
__________
Increase in Net Assets Resulting from Operations $ 305,254
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C> <C>
Accumulated
Undistributed Realized Unrealized
Common Stock Net Gain (Loss) Appreciation
$.50 Par Retained Investment on Sale of (Depreciation)
Shares Value Earnings Income Securities of Investments Total
Year ended
December 31, 1996:
Net investment income - $ - $ - $ 802,684 $ - $ - $ 802,684
Net realized gain from
securities transactions - - - - 35,986 - 35,986
Change in unrealized
appreciation of
investments - - - - - (340,895) (340,895)
_______ ________ ________ _________ _________ _________ __________
Increase in net
assets from operations - - - 802,684 35,986 (340,895) 497,775
Dividends - $.265
per share - - - (763,314) (190,738) - (954,052)
Common stock
redeemed (Note B) (208,532) (104,266) (815,460) - - - (919,726)
________ _________ __________ _________ ________ ________
Total decrease in
net assets (208,532) (104,266) (815,460) 39,370 (154,752) (340,895) (1,376,003)
Net assets on
January 1, 1996 3,805,327 1,902,663 14,382,502 (144,418) 118,521 606,538 16,865,806
_________ _________ ___________ _________ _________ ________ ___________
Net assets on
December 31, 1996 3,596,795 $1,798,397 $13,567,042 $(105,048) $ 36,231 $ 265,643 $ 15,489,803
========= ========== =========== ========== ========= ========= ============
Six months ended June 30, 1997:
Net investment income - $ - $ - $ 355,371 $ - $ - $ 355,371
Net realized gain from
securities transactions - - - - 2,178 - 2,178
Change in unrealized
appreciation of
investments - - - - - (52,295) (52,295)
__________ __________ ___________ ___________ _________ __________ __________
Increase in net assets
from operations - - - 355,371 2,178 (52,295) 305,254
Dividends - $.078
per share - - - (271,956) - - (271,956)
Dividends - $.059
per share - - - (205,792) - - (205,792)
Common stock redeemed
(Note B) (119,933) (59,966) (456,946) - - - (516,912)
__________ __________ ____________ _________ _________ _________ ___________
Total decrease
in net assets (119,933 (59,966) (456,946) (122,377) 2,178 (52,295) (689,406)
Net assets on
January 1, 1997 3,596,795 1,798,397 13,567,042 (105,048) (36,231) 265,643 15,489,803
__________ __________ ___________ _________ _________ _________ ___________
Net assets on
June 30, 1997 3,476,862 $1,738,431 $13,110,096 $(227,425) $ (34,053) $ 213,348 $14,800,397
=========== =========== =========== ========== ========== ========= ============
See notes to financial statements.
</TABLE>
PMD INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited - See Independent Accountants' Review Report)
A. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of
1940, as amended, as a closed-end diversified management investment company.
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements.
Six-Month Financial Statements - The financial statements for the six months
ended June 30, 1997 reflect all adjustments which are, in the opinion of
management, necessary to fairly present statements of operations and changes
in net assets for the six month period presented.
Investment Securities - Investments in securities are valued at fair value as
determined by the Company's investment advisor at June 30, 1997.
Securities Transactions - Securities transactions are recorded on a trade
date basis. Cost of securities sold is determined using the identified cost
method.
Interest Income - Interest income, adjusted for amortization of premium or
accretion of discounts on investments in municipal bonds and notes, is earned
from settlement date and recorded on the accrual basis.
Income Taxes - It is the Company's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its income, including capital gains, to its
shareholders. No income tax provision has been made since substantially all
the income and capital gains are reported by the shareholders on their own
tax returns.
Management and Service Fees - The investment advisory fee, which is payable
monthly, is based on the value of net assets at each month-end at the annual
rate of one-quarter of one percent on the first $10,000,000 of the net asset
value and .15 percent of the net asset value in excess of $10,000,000, with a
minimum fee of $10,000 per year. Fees for the services of each of the
directors of the Company are $5,000 annually with an additional $500 for each
board or committee meeting attended in excess of four meetings each year. No
additional compensation or benefits are paid to officers or directors of the
Company. The investment advisor changed effective june 17, 1997 from Mentor
Investment Group to First National Bank of Omaha.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
B. REDEMPTION OF SHARES
At June 30, 1997, the Company had authorized 20,000,000 shares of
$.50 par value common stock.
Shareholders may redeem shares of stock and receive the net asset value per
share on any December 31 or June 30 by tendering the shares to be redeemed 90
days prior to the intended redemption date.
C. CONTINGENT LIABILITIES
On January 15, 1981, the Company sold substantially all of its assets which
had been used in its former operations as a discount store business.
Although the purchaser of the Company's operating assets assumed
substantially all of the Company's liabilities and obligations as part of the
purchase transaction, the Company remains contingently liable for such
liabilities and obligations, including obligations under long-term real
estate and equipment leases and real estate mortgages until released by the
obligees or until such liabilities and obligations have been satisfied or
discharged. The total of such liabilities and obligations not released by
the obligees amounted to approximately $5,113,758 as of December 31, 1996,
the most recent date for which such information is available.
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<CAPTION>
D. PURCHASES AND SALES OF SECURITIES
The following summarizes the approximate value of securities
transactions for the periods indicated.
<S> <C> <C> <C> <C>
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
Purchases Sales Purchases Sales
Tax Exempt:
Municipal bonds and notes $ 498,515 $ 952,000 $1,110,810 $ 761,000
Taxable:
Corporate - - - 526,375
Government agency 132,968 - 915,575
__________ __________ __________ __________
498,515 1,084,968 1,110,810 2,202,950
Other tax-exempt short-term
investments 1,529,084 1,550,805 2,657,682 2,468,982
---------- ---------- ---------- ----------
$2,027,599 $2,635,773 $3,768,492 $4,671,932
========== ========== ========== ==========
Net realized gain on sale of investments was $2,178 and $35,752
for the six months ended June 30, 1997 and 1996, respectively.
</TABLE>
<TABLE>
<CAPTION>
E. SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C> <C>
Six Months
Ended
June 30, Years Ended December 31,
1997 1996 1995 1994 1993 1992
(Unaudited)
Weighted average shares
outstanding 3,564,799 3,626,328 3,825,907 3,988,480 4,061,542 4,109,168
========== ========== ========== ========== ========== ==========
Interest income $ 0.121 $ 0.251 $ 0.240 $ 0.255 $ 0.268 $ 0.295
Expenses 0.018 0.030 0.024 0.025 0.024 0.024
__________ __________ __________ __________ __________ __________
Net investment
income 0.103 0.221 0.216 0.230 0.244 0.271
Distribution from
net investment income (0.135) (0.262) (0.228) (0.243) (0.251) (0.286)
Increase (decrease)
in unrealized
appreciation of
investments (0.015) (0.094) 0.098 (0.244) 0.116 (0.019)
Net realized gain
(loss) from securities
transactions 0.001 0.010 0.051 - (0.002) (0.005)
___________ __________ __________ ___________ ___________ ___________
Increase (decrease)
in net assets (0.046) (0.125) 0.137 (0.257) 0.107 (0.039)
Net asset value
at beginning of
period 4.306 4.431 4.294 4.551 4.444 4.483
___________ __________ __________ ___________ ___________ ___________
Net asset value
at end of period $ 4.260 $ 4.306 $ 4.431 $ 4.294 $ 4.551 $ 4.444
=========== ========== ========== =========== =========== ===========
Ratio of expenses
to average net
assets 0.4%* 0.7% 0.5% 0.6% 0.5% 0.5%
Ratio of net
investment income
to average net assets 2.4%* 5.0% 4.9% 5.2% 5.4% 6.2%
Portfolio turnover 3.3%* 19.8% 59.6% 2.3% 11.5% 14.9%
Number of shares
outstanding at
end of period
(in thousands) 3,477 3,597 3,805 3,979 4,072 4,074
* Ratio has not been annualized.
</TABLE>
