PMD INVESTMENT COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 16, 1997
The Annual Meeting of Shareholders of PMD INVESTMENT COMPANY, a
Nebraska corporation, will be held on Monday, June 16, 1997, at
9:30 A.M., at the First National Bank of Omaha, Terrace Level, One
First National Center, Omaha, Nebraska, for the following purposes:
1. To elect a Board of Directors.
2. To ratify or reject the selection by the Board of Directors of
Deloitte & Touche LLP as the Corporation's independent accountants
for 1997.
3. To approve or disapprove the proposed Investment Advisory
Agreement between the Corporation and First National Bank of Omaha.
4. To transact such other business as properly may come before the
meeting and any adjournments thereof.
The stock transfer books of the Corporation will not be closed. The
Board of Directors of the Corporation has fixed the close of
business on April 28, 1997, as the record date for determining the
shareholders of the Corporation entitled to notice of and to vote
at the meeting.
Dated: May 1, 1997
BY ORDER OF THE BOARD OF DIRECTORS,
Herbert B. Underwood,
Secretary
PLEASE MARK, SIGN, AND DATE THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE ENCLOSED FOR YOUR USE. THE PROXY WILL NOT
BE USED IF YOU ATTEND THE MEETING IN PERSON AND SO REQUEST.
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PMD INVESTMENT COMPANY
PROXY STATEMENT
Annual Meeting of Shareholders
June 16, 1997
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors")
of PMD Investment Company (the "Corporation") of proxies from
holders of the Corporation's $0.50 par value Common Stock ("Common
Stock") for use at the annual meeting of the shareholders of the
Corporation to be held on June 16, 1997, at 9:30 A.M., at the First
National Bank of Omaha, Terrace Level, One First National Center,
Omaha, Nebraska, and at any adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The mailing address of the principal executive offices of the
Corporation is 10050 Regency Circle, Suite 315, Omaha, Nebraska
68114. This Proxy Statement and the accompanying form of Proxy are
first being sent to the holders of Common Stock on or about May 7,
1997.
The accompanying Proxy may be revoked by the person giving it at
any time prior to its being voted; such revocation may be
accomplished by a letter, or by a duly executed Proxy bearing a
later date, filed with the Secretary of the Corporation prior to
the Annual Meeting. If a shareholder who has given a Proxy is
present at the Annual Meeting and wishes to vote in person, such
shareholder may withdraw the Proxy at that time.
The annual report of the Corporation for the year ended December
31, 1996, including financial statements, previously has been
mailed to shareholders of the Corporation. Such report is not to be
regarded as proxy soliciting material or as part of this Proxy
Statement. The Corporation will furnish to shareholders upon
request a copy of such annual report and the most recent
semi-annual report succeeding such annual report. A shareholder
request for such reports should be directed to Ann Turco at First
National Bank of Omaha, Trust Department, One First National
Center, Omaha, NE 68102, or at the following toll-free telephone
number: 1-800-228-4411.
COMMON STOCK AND PRINCIPAL HOLDERS
The Board of Directors has fixed the close of business on April 28,
1997, as the record date for determining the shareholders of the
Corporation entitled to notice of and to vote at the Annual
Meeting.
On April 28, 1997, the Corporation had outstanding 3,476,862 shares
of Common Stock, each such share entitling the holder thereof to
one vote upon each matter to be voted upon at the Annual Meeting.
Shareholders entitled to vote at the Annual Meeting have cumulative
voting rights in the election of directors, and there are no
conditions precedent to the exercise of such rights. The existence
of cumulative voting rights means that a shareholder may cast a
total number of votes in the election for directors which is equal
to the number of directors to be elected multiplied by the number
of such shareholder's shares; such votes may be cast entirely for
one candidate or may be distributed equally or unequally among as
many candidates as the shareholder may consider appropriate.
In the election of directors, any action other than a vote for a
nominee will have the practical effect of a vote against such
nominee, but only votes in favor of a nominee will directly affect
the outcome of the election since the three nominees receiving the
greatest number of votes will be elected. Abstentions from voting
and broker "non-votes" on the selection of independent accountants
will have the practical effect of votes against such proposal but
will not affect the outcome of the voting on such proposal since
the approval of such proposal requires only a majority of the votes
cast with respect to such proposal.
Abstentions from voting and broker "non-votes" on the proposed
Investment Advisory Agreement with First National Bank of Omaha
will have the practical effect of votes against such proposed
Investment Advisory Agreement since the approval of such Investment
Advisory Agreement requires a minimum number of votes and not just
a majority of the votes cast. Abstentions and broker "non-votes"
are not deemed to be "votes cast" for any purpose but will be
included for purposes of determining whether a quorum is present at
the Annual Meeting. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular
matter because the nominee does not have discretionary authority to
vote on such matter and has not received voting instructions from
the beneficial owner of the shares involved.
The following table sets forth information as to the beneficial
ownership of Common Stock of each person or group who, as of March
10, 1997, to the knowledge of the Corporation, owned more than 5%
of the Common Stock.
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Ownership Class
Common D. J. Witherspoon 2,989,969(1) 86.00%
Stock 9723 Nottingham Drive
$0.50 Omaha, Nebraska 68114
par value
Common John Patrick Witherspoon 274,071(2) 7.88%
Stock 1211 Howard Street
$0.50 Omaha, Nebraska 68102
par value
(1) These shares are owned of record only by First National Bank of
Omaha, as conservator for D. J. Witherspoon; such conservator has
sole voting and investment power over such shares.
(2) 245,183 of these shares (7.05% of the outstanding shares) are
owned both of record and beneficially by John Patrick Witherspoon.
28,888 of these shares (0.83% of the outstanding shares) are owned
of record only by Iris J. Norman, as trustee, and beneficially only
by John Patrick Witherspoon.
No director or officer of the Corporation other than John Patrick
Witherspoon owned any shares of the Corporation's Common Stock on
March 10, 1997.
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect a board of three
directors for a term extending until the 1997 annual meeting of the
shareholders of the Corporation and until their respective
successors have been elected and qualify. Proxies in the
accompanying form which are received by the Board of Directors in
response to this solicitation will, unless contrary instructions
are given therein, be voted by the persons named therein as proxies
in favor of the three nominees for directors listed below. The
persons named as proxies reserve the right, however, to vote such
proxies cumulatively and for the election of fewer than all of the
nominees for directors but do not intend to do so unless nominees
other than those listed below are nominated at the Annual Meeting.
The Board of Directors believes that all of the three nominees
listed below will be available to serve and will serve as directors
if elected; however, if any of such nominees is not so available at
the time of the election, the proxies will be voted in the
discretion of the persons named therein for the election of a
substitute nominee. The three nominees receiving the greatest
number of votes at the Annual Meeting will be elected as directors.
Set forth below is certain information as of March 10, 1997, with
respect to the nominees for election as directors of the
Corporation. The information relating to their respective business
experience was furnished to the Corporation by such persons. All of
the nominees presently are serving as directors of the Corporation,
and all of the nominees have been nominated for reelection by the
Board of Directors.
Nominees and Business Experience
J. G. Sawicki
Mr. Sawicki, age 83, retired in 1979 as a vice president of
Mid-Continent Bottlers, Inc. (soft drink bottlers) after having
served in such capacity for more than five years. He has been a
director of the Corporation since 1969. In addition, he has been
President and Treasurer of the Corporation since 1991.
Herbert B. Underwood
Mr. Underwood, age 70, retired in April 1991 as Vice President of
Pamida, Inc. (owner and operator of general merchandise discount
stores) after having served in such capacity for more than five
years. He has been a director of the Corporation since 1991. In
addition, he has been a Vice President and the Secretary of the
Corporation since 1991.
John Patrick Witherspoon*
Mr. Witherspoon, age 36, has been engaged in the business of real
estate management and development for more than five years. He has
been a director of the Corporation since 1994 and has been a Vice
President of the Corporation since 1994.
* Mr. Witherspoon is the son of D.J. Witherspoon and is an
"interested person" within the definition of Section 2(a) (19) of
the Investment Company Act of 1940 by reason of such relationship.
The persons named above are all of the executive officers of the
Corporation and hold the offices indicated in their respective
biographical paragraphs. All executive officers of the Corporation
may be removed from their respective positions as such officers at
any time by the Board of Directors.
Shareholdings
The following table sets forth information as to the Common Stock
beneficially owned as of March 10, 1997, by (i) all nominees and
present directors of the Corporation and (ii) all present directors
and officers of the Corporation as a group:
Amount and Nature of Percent
Name Beneficial Ownership of Class
J. G. Sawicki None
Herbert B. Underwood None
John Patrick Witherspoon 274,071 (1) 7.88%
All present directors and
officers as a group
(3 persons) 274,071 (1) 7.88%
(1) 245,183 of these shares (7.05% of the outstanding shares) are
owned of record and beneficially by John Patrick Witherspoon.
28,888 of these shares (0.83% of the outstanding shares) are owned
of record only by Iris J. Norman, as trustee, and beneficially only
by John Patrick Witherspoon.
The Board
During the year ended December 31, 1996, the Board of Directors met
three times and on eight other occasions acted by unanimous written
consent. The Corporation does not have a standing audit,
nominating, or compensation committee.
Compensation
The Corporation pays no compensation to any of its officers for
their service in such capacities. Each director of the Corporation
is entitled to receive an annual director's fee of $5,000 and an
additional $500 for each meeting of the Board of Directors of the
Corporation in excess of four which such director attends during
any fiscal year of the Corporation. The Corporation has not paid
and does not expect to pay any other or additional compensation or
benefits to any of its directors or officers. During the year ended
December 31, 1996, the total directors' fees paid or accrued by the
Corporation were
as follows:
Name of Person, Aggregate Compensation
Position From Fund
J. G. Sawicki, Director $5,000
Herbert B. Underwood, $5,000
Director
John Patrick Witherspoon, $5,000
Director
INVESTMENT ADVISORY AGREEMENT
Agreement with Mentor
The Corporation's current investment adviser is Mentor Investment
Advisors, LLC ("Mentor"). On November 1, 1996, Commonwealth
Investment Counsel, Inc. (formerly known as Investment Management
Group, Inc.), the Corporation's former investment adviser,
converted into Mentor, a Virginia limited liability company. Prior
to November 1, 1996, Commonwealth Investment Counsel, Inc. was a
wholly owned subsidiary of Mentor Investment Group, Inc. Also on
November 1, 1996, Mentor Investment Group, Inc. converted into a
Virginia limited liability company with the name Mentor Investment
Group, LLC ("Mentor Group"). Mentor Group currently owns 99% of the
outstanding membership interests of Mentor.
The present Investment Advisory Agreement with Mentor (the "Mentor
Advisory Agreement"), dated January 15, 1981, as amended, was
submitted to a vote and approved at the annual meeting of the
shareholders of the Corporation held on June 17, 1991. The purpose
of such submission was to obtain approval of a revised advisory fee
schedule. The Corporation has not had an investment advisory
agreement with anyone other than Mentor and its predecessors.
The Mentor Advisory Agreement was approved for continuance until
December 31, 1997, by unanimous action of the Board of Directors of
the Corporation on November 25, 1996. However, the Mentor Advisory
Agreement may be terminated by the Corporation at any time without
penalty, on 30 days' written notice to Mentor, by a resolution of
the Board of Directors or by the vote of a majority of the
outstanding shares of Common Stock (as defined in the Investment
Company Act of 1940). The Mentor Advisory Agreement provides that
it will terminate automatically in the event of its assignment.
Unless sooner terminated, the Mentor Advisory Agreement is to
continue after December 31, 1997 for successive one-year periods so
long as such continuation is specifically approved at least
annually in the manner required by the Investment Company Act of
1940.
The Mentor Advisory Agreement provides that Mentor shall perform a
continuous review of the Corporation's portfolio of securities and
shall determine the securities to be purchased or sold by the
corporation (including the placing of orders for the purchase and
sale of such securities), the portion of the Corporation's assets
which shall remain uninvested, and the extent to which the
Corporation shall use its investment powers. In performing such
services, Mentor is required to follow, among other guidelines, the
Corporation's investment policies and restrictions set forth in an
exhibit to the Mentor Advisory Agreement. In addition, Mentor is
required to compute the net asset value per share of the
Corporation's Common Stock as of the close of business on the last
day in each month on which the New York Stock Exchange is open for
trading and at such times as the corporation's Board of Directors
may direct. The Mentor Advisory Agreement provides that Mentor is
not required to give the corporation preferential treatment as
compared with the treatment given to any other investment company
or customer. At its own expense Mentor may employ, retain, or
otherwise avail itself of the services and facilities of other
persons or organizations for the purpose of obtaining such
statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional
transactions in specific securities, and such other information,
advice, or assistance as Mentor may deem necessary, appropriate, or
convenient for the discharge of its obligations under the Mentor
Advisory Agreement. Mentor also is required to maintain a
continuous record of all of the Corporation's securities and to
furnish to the Corporation's Board of Directors, upon request, a
resume of the corporation's securities portfolio. Mentor also must
report to the Corporation's Board of Directors on all matters
pertaining to Mentor's services as investment adviser at the
regular meetings of the Board and at such other times as the Board
may request. Mentor must pay all of the costs and expenses of
performing the services described above. The Corporation, however,
must pay all brokerage commissions (if any) on its portfolio
transactions and the expenses for its custodian, transfer agent,
registrar, accountants, and attorneys and for other expenses (such
as printing, postage, directors' fees, and state corporation fees)
not covered by the Mentor Advisory Agreement.
As compensation for Mentor's services under the Mentor Advisory
Agreement, the Mentor Advisory Agreement presently provides for the
Corporation's payment of a monthly fee to Mentor equal to (a) 1/12
of 0.25% of the first $10,000,000 of the net asset value of the
Corporation as of the last day of each month on which the New York
Stock Exchange is open for trading and (b) 1/12 of 0.15% of the net
asset value of the Corporation in excess of $10,000,000 as of the
last day of each month on which the New York Stock Exchange is open
for trading, with a minimum fee of $10,000 for each successive
12-month period. During the year ended December 31, 1996, the
Corporation paid or accrued $36,307 as advisory fees for Mentor.
Information Concerning Mentor
Mentor provides investment services on a discretionary basis
primarily to individuals, pension and profit-sharing plans,
individual retirement accounts, and educational institutions and on
a non-discretionary basis primarily to individuals.
The principal executive officers and managing directors of Mentor
are John G. Davenport, R. Preston Nuttal, Paul F. Costello,
Theodore W. Price, Paul M. Jones, Peter J. Quinn, and Karen H.
Wimbish. The address of all of such officers and managing directors
is 901 East Byrd Street, Richmond, Virginia 23219. All of such
officers' and managing directors' principal occupations are as such
officers and managing directors.
Wheat First Butcher Singer, Inc. owns 80% of the outstanding
membership interests of Mentor Group and EVEREN Securities
Holdings, Inc. owns 20% of the outstanding membership interests of
Mentor Group. The address of EVEREN Securities Holdings, Inc. is 77
West Wacker Drive, Chicago, Illinois 60601. The address of Wheat
First Butcher Singer, Inc. and Mentor Group is 901 East Byrd
Street, Richmond, Virginia 23219. The Wheat First Butcher Singer,
Inc. Assoicate Stock Ownership Plan owns 26% of the outstanding
common stock of Wheat First Butcher Singer, Inc. (as of March 21,
1997). No other person owns as much as 10% of the common stock of
Wheat First Butcher Singer, Inc.
Proposed Agreement with First National Bank of Omaha
The Board of Directors of the Corporation determined at a special
meeting of the Board of Directors of the Corporation on November
25, 1996, that it would be advisable for the Corporation to
terminate the Mentor Advisory Agreement and enter into a new
Investment Advisory Agreement with First National Bank of Omaha
("FNBO").
FNBO is a national banking association and is a subsidiary of First
National of Nebraska, Inc., a Nebraska corporation. First National
of Nebraska, Inc., owns 99.66% of the outstanding voting securities
of FNBO. The address of both FNBO and First National of Nebraska,
Inc., is One First National Center, 1620 Dodge Street, Omaha,
Nebraska 68102. FNBO provides a full range of financial and trust
services to businesses, individuals, and government entities. The
FNBO trust division provides a full range of administrative
services including estate settlement, personal trust
administration, employee benefit administration and record keeping,
institutional custody, corporate trust services, and transfer and
paying agent services. FNBO does not act as an investment adviser
with respect to any other fund having a similar investment
objective to the investment objective of the Corporation but is the
investment adviser to a group of mutual funds as discussed below.
The following individuals all are principal executive officers and
directors of FNBO: F. Phillips Giltner, Chairman; Bruce R.
Lauritzen, President; John R. Lauritzen, Chairman Emeritus; Elias
J. Eliopoulos, Executive Vice President; J. William Henry,
Executive Vice President; Dennis A. O'Neal, Executive Vice
President; and Charles R. Walker, Executive Vice President; Marc M.
Diehl, Senior Vice President, Trust; James L. Doody, Senior Vice
President, First Bankcard Center; Charles H. Fries, Jr., Senior
Vice President, Corporate & Financial Institutions; Frances A.
Marshall, Senior Vice President, First Integrated Systems; Laurie
A. Minarik, Senior vice President, Retail Banking; James C. C.
Schmidt, Senior Vice President, Data Automation; Robert J. Urban,
Senior Vice President, Personnel; Timothy D. Hart, Vice President
& Comptroller, Corporate Administration; and Russell K. Oatman,
Vice President and Cashier, Operations. Howard M. Dietz and
Herbert J. Young also are directors of FNBO. The address of all of
such officers and directors is One First National Center, 1620
Dodge Street, Omaha, Nebraska 68102. All of such officers' and
directors' principal occupations are as such executive officers and
directors, with the exception of Howard M. Dietz and Herbert J.
Young, who are both retired trust officers.
John R. Lauritzen owns 46.4% of the outstanding common stock of
First National of Nebraska, Inc., and Thomas L. Davis owns 12.4% of
the outstanding common stock of First National of Nebraska, Inc.
Mr. Lauritzen's address is One First National Center, 1620 Dodge
Street, Omaha, Nebraska 68102. Mr. Davis' address is c/o Trust
Department, First National Bank of Omaha, One First National
Center, 1620 Dodge Street, Omaha, Nebraska 68102. No other person
owns as much as 10% of the common stock of First National of
Nebraska, Inc.
The proposed Investment Advisory Agreement with FNBO is attached
hereto as Exhibit "A" (the "FNBO Advisory Agreement"). The
proposed FNBO Advisory Agreement is substantively identical to the
Mentor Advisory Agreement. The proposed FNBO Advisory Agreement
requires FNBO to perform the same services for the Corporation as
are currently being performed by Mentor, and the Corporation would
pay the same compensation to FNBO as the Corporation currently pays
to Mentor.
The Corporation cannot enter into the FNBO Advisory Agreement
without the vote of the holders of a majority of the Corporation's
outstanding voting securities approving the FNBO Advisory
Agreement. In evaluating the advisability of recommending to the
shareholders that they approve the FNBO Advisory Agreement, the
Board of Directors of the Corporation considered many factors,
including, among other things, the qualifications of FNBO to serve
as the Corporation's investment adviser, the financial condition of
FNBO, the range of services provided by FNBO, the geographic
location of FNBO, and the cost savings that the Corporation would
enjoy by having FNBO serve as the Corporation's investment adviser.
Each of these factors is discussed below.
The Board of Directors of the Corporation determined that FNBO is
qualified to serve as the Corporation's investment adviser. FNBO
received its trust powers in 1929 and has been managing assets for
taxable and non-taxable clients since that time. FNBO currently
provides investment management services for more than 1,500 taxable
accounts involving high net worth individuals, trusts and corporations.
Such taxable accounts managed by FNBO have assets in excess of $900
million. FNBO also provides institutional management for a variety of
tax-exempt clients including public funds, endowments, foundations, and
pension, profit sharing, and 401(k) plans. The assets managed by FNBO
for the tax-exempt accounts exceed $1.8 billion.
FNBO also serves as investment adviser and custodian for the First
Omaha Family of Mutual Funds which consist of the First Omaha
Small-Cap Value Fund, the First Omaha Equity Fund, the First Omaha
Balanced Fund, the First Omaha Fixed Income Fund, the First Omaha
Short/Intermediate Fund, and the First Omaha U.S. Government
Obligations Fund. The funds were established in 1992 and have
total assets managed by FNBO of approximately $450 million.
The Board of Directors of the Corporation also believes that FNBO
has the financial strength necessary to serve as the Corporation's
investment adviser. First National of Nebraska, Inc., the parent
company of FNBO, had total assets of over $6.9 billion dollars on
December 31, 1996 and had net profits of over $70 million for the
year ended December 31, 1996. The 1996 Annual Report of First
National of Nebraska, Inc., stated that, as of December 31, 1996,
the most recent notification from the Office of the Comptroller of
the Currency categorized the Company's banking subsidiaries,
including FNBO, as well capitalized under the regulatory framework
for prompt corrective action.
All of the FNBO portfolio managers and other investment
professionals who would be assigned to the Corporation's account
are located in Omaha, Nebraska. The Corporation's office and all
of the officers and directors of the Corporation also are located
in Omaha, Nebraska. The Board of Directors of the Corporation
believes that the Corporation will benefit by having the
Corporation's investment adviser located in the same city as the
members of the Board of Directors.
As discussed above, FNBO would provide the same investment advisory
services to the Corporation as Mentor has been providing to the
Corporation. In addition, FNBO currently acts as the custodian of
the Company's portfolio securities and as the Corporation's
transfer agent and dividend disbursing agent and would continue to
perform such services if FNBO was also the Corporation's investment
adviser. The Board of Directors believes that the Corporation
would benefit from the efficiencies which would be created by
having all of the services performed by FNBO.
The Corporation also would enjoy savings in custodian fees paid by
the Corporation to FNBO if FNBO also serves as the Corporation's
investment adviser. FNBO currently charges the Corporation $.50
per $1,000 of market value of securities held by FNBO as custodian.
For the year ended December 31, 1996, the Corporation paid $7,641
in custodian fees to FNBO. If FNBO serves as the Corporation's
investment adviser, FNBO would charge a flat fee of $4,000 for
performing the custody services for the Corporation. For the year
ended December 31, 1996, the Corporation also paid $5,185 to FNBO
for acting as the Corporation's transfer agent and disbursing
agent. FNBO would continue to perform such services for the
Corporation if FNBO also acted as the Corporation's investment
adviser. The fees charged by FNBO to act as the Corporation's
transfer agent and dividend disbursing agent will not change if the
FNBO Advisory Agreement is approved.
Based upon its review and analysis of the factors addressed above,
the Board of Directors of the Corporation has determined that it
would be advisable for the Corporation to terminate the Mentor
Advisory Agreement and enter into the FNBO Advisory Agreement. The
Board of Directors of the Corporation recommends that the
shareholders of the Corporation approve the FNBO Advisory
Agreement, and the following resolution will be offered for such
purpose by the Board of Directors at the Annual Meeting:
"RESOLVED, that the shareholders of PMD Investment Company ("this
corporation") hereby approve the Investment Advisory Agreement
between this corporation and First National Bank of Omaha in the
form which was attached to the PMD Investment Company Proxy
Statement dated May 1, 1997 (the "FNBO Advisory Agreement") and
hereby authorize and empower the directors and officers of this
corporation to take such actions as any of them may deem necessary
or appropriate to (i) execute, deliver and perform the FNBO
Advisory Agreement on behalf of this corporation and (ii) terminate
this corporation's existing Investment Advisory Agreement with
Mentor Investment Group, Inc."
Approval of such resolution requires the affirmative vote of the
holders of a majority of the outstanding shares of the Corporation.
The Board of Directors of the Corporation intends that proxies
solicited by this Proxy Statement will be voted in favor of such
resolution unless contrary instructions are given therein. The
Board of Directors recommends that shareholders of the Corporation
vote "FOR" such resolution.
FNBO acts as conservator for D.J. Witherspoon, the principal
shareholder of the Corporation. FNBO, as conservator for Mr.
Witherspoon, has sole voting and investment power over 86% of the
outstanding shares of Common Stock of the Corporation.
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
A majority of the members of the Board of Directors who are not
"interested persons" of the Corporation, as defined in the
Investment Company Act of 1940, have selected the firm of Deloitte
& Touche LLP to serve as independent accountants for the
Corporation for the year ending December 31, 1997. Deloitte &
Touche LLP or its predecessor has served the Corporation as its
independent accountants since 1969. Such selection is required by
the Investment Company Act of 1940 to be submitted to the
shareholders of the Corporation for ratification or rejection.
Accordingly, the following resolution will be offered by the Board
of Directors at the Annual Meeting:
"RESOLVED, that the selection by the Board of Directors of PMD
Investment Company of Deloitte & Touche LLP, independent certified
public accountants, to examine the financial statements of and to
serve as the independent public accountants for PMD Investment
Company for the year ending December 31, 1997, hereby is ratified."
Approval of such resolution requires the affirmative vote of a
majority of the shares voted with respect to such resolution. The
Board of Directors intends that proxies solicited by this Proxy
Statement will be voted in favor of such resolution unless contrary
instructions are given therein. The Board of Directors recommends
that shareholders of the Corporation vote "FOR" such resolution.
The Corporation expects that a representative of Deloitte & Touche
LLP will be present at the Annual Meeting, with the opportunity to
make a statement if he or she desires to do so, and that such
representative will be available to respond to appropriate
questions.
BROKERAGE COMMISSIONS
Purchases and sales of the type of assets in which the Corporation
presently invests usually are effected by the Corporation with the
seller or purchaser on a principal (net) basis, with no brokerage
commission being paid by the Corporation. Since all of the
Corporation's portfolio transactions were handled on a principal
(net) basis during the year ended December 31, 1996, the
Corporation paid no brokerage commissions during such year.
Mentor's policy in purchasing and selling portfolio securities for
the Corporation is to seek favorable net prices and reliable
execution. After these primary considerations have been satisfied,
Mentor may give additional consideration to other services, which
Mentor deems to be of value to the Corporation or to Mentor in
terms of the particular transaction or Mentor's overall
responsibilities to the Corporation. Although the Corporation's
securities transactions generally do not involve the payment of any
brokerage commissions, where brokerage commissions are payable
Mentor may be authorized, subject to the foregoing primary
considerations and to review by the Corporation's Board of
Directors, to execute orders with brokers in return for brokerage
and research services which are of use to the Corporation, even
though the commission rates at which such orders are executed may
be higher than those charged by other brokers. Such research
services also may be useful to Mentor in connection with its
services to other advisory clients, and Mentor may not use all of
such research services in connection with the performance of its
responsibilities to the Corporation.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors
knows of no other business which will be presented for
consideration at the Annual Meeting. As to other business, if any,
that properly may come before the Annual Meeting, the Board of
Directors intends that proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the
person or persons voting the proxies.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1998 annual
meeting of shareholders of the Corporation must be received by the
Corporation not later than January 7, 1998, for inclusion in the
Corporation's proxy statement and form of proxy relating to that
meeting.
ADDITIONAL INFORMATION
The cost of soliciting proxies in the accompanying form will be
borne by the Corporation. Officers and directors of the
Corporation, without compensation other than their regular
compensation, also may solicit proxies either by mail, personal
conversation, telephone, or telegraph. The Corporation will
reimburse brokerage firms, nominees, and others for their expenses
in forwarding solicitation material to the beneficial owners of
Common Stock.
Dated: May 1, 1997
BY ORDER OF THE BOARD OF DIRECTORS
Herbert B. Underwood,
Secretary
EXHIBIT "A"
INVESTMENT ADVISORY AGREEMENT
June 16, 1997
First National Bank of Omaha
One First National Center
1620 Dodge Street
Omaha, Nebraska 68102
Gentlemen:
The undersigned Nebraska corporation (the "Company") is an
investment company registered under the Investment Company Act of
1940 and engages in the business of investing and reinvesting its
assets in a portfolio of securities. The Company conducts its
business under the name "PMD Investment Company" and hereby engages
you to act as its Investment Adviser subject to the terms and
conditions set forth in this agreement.
SECTION 1. Investment Management Services.
You shall use your staff and other facilities to perform a
continuous review of the Company's portfolio of securities. From
time to time as required in the best interests of the Company you
shall determine what securities should be purchased or sold by the
Company (including the placing of orders for the purchase and sale
of such securities), what portion of the assets of the Company
should remain uninvested, and the extent to which the Company
should otherwise use its investment powers. In performing such
review and making such determinations, you shall follow the
Company's investment policies and restrictions set forth in Exhibit
A to this agreement, as such policies and restrictions may be
further delineated and limited by the statements contained in
documents filed with the Securities and Exchange Commission from
time to time, the policies and restrictions adopted by the Board of
Directors of the Company (the "Board") from time to time, and the
provisions of the Investment Company Act of 1940 and the rules
promulgated thereunder, so that at all times the Company shall be
in compliance with its investment policies and restrictions and the
Investment Company Act of 1940. The Company agrees to supply you
with copies of all such documents and to notify you of any changes
in its investment policies and restrictions on a timely basis.
In rendering such investment management services to the Company
pursuant to this agreement, you may at your own expense employ,
retain, or otherwise avail yourself of the services or activities
of other persons or organizations for the purpose of providing you
or the Company with such statistical and other factual information,
such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities, and such other
information, advice, or assistance as you may deem necessary,
appropriate, or convenient for the discharge of your obligations
under this agreement or otherwise helpful to the Company.
You and any person performing executive, administrative, or trading
functions for the Company whose services were made available to the
Company by you are authorized to recommend that the Company pay, or
to cause the Company to pay, brokerage commissions to any member of
a securities exchange or to a securities broker or dealer in excess
of the commissions which another member of such an exchange or
another securities broker or dealer would have charged for
effecting the same transaction, if you or such person determine in
good faith that the amount of such commissions is reasonable in
relation to the value of the brokerage and research services (as
such term is defined in Section 28(e)(3) of the Securities Exchange
Act of 1934 and the rules, regulations, and releases of the
Securities and Exchange Commission thereunder) provided by such
member or broker or dealer which are relevant to your investment
management services under this agreement, viewed in terms of either
the particular transaction or your overall responsibilities with
respect to the Company.
SECTION 2. Records, Resumes, and Reports.
You shall maintain a continuous record of all of the securities
which comprise the Company's portfolio and shall furnish to the
Board, at any time the Board so requests, a resume of such
portfolio in the form prescribed by the Board. You also shall
present to the Board, at its regularly scheduled meetings, and at
such other times as the Board may request, a report on all matters
pertaining to your services as Investment Adviser under this
agreement in the form prescribed by the Board.
SECTION 3. Multiple Capacities.
Nothing contained in this agreement shall be deemed to prohibit you
from acting, and being separately compensated for acting in one or
more capacities on behalf of the Company. Whenever you shall be
required to act in multiple capacities on behalf of the Company
either under this agreement or by virtue of this and any other
agreement between you and the Company, you shall maintain the
appropriate separate accounts and records for each such capacity.
The Company understands that you or your affiliates may act in one
or more capacities on behalf of other investment companies and
customers. While the information and recommendations which you
furnish to the Company shall, in your judgement, be appropriate
under the circumstances and in light of the investment objectives
of the Company, they may be different from the information and
recommendations which you or such affiliates furnish to other
investment companies and customers. You shall give the Company
equitable treatment under the circumstances in receiving
information, recommendations, and any other services requested of
you, but you shall not be required to give preferential treatment
to the Company as compared with the treatment given to any other
investment company or customer. The Company agrees that all advice
and recommendations which you furnish to the Company will be held
in confidence by the Company and will be used by the Company only
with respect to the Company's own investment portfolio.
SECTION 4. Payment of Expenses.
Unless otherwise provided in this agreement, you shall pay all of
the costs and expenses which you may incur in providing the
advisory and other services required to be furnished by you under
this agreement. The Company agrees to pay, or to reimburse you
for, the expenses of the Company relating to services not required
to be furnished by you under this agreement, including but not
limited to the charges of the Company's custodians, transfer
agents, registrars, accountants, and attorneys. The Company also
will pay all brokerage commissions on its portfolio transactions.
SECTION 5. Compensation for Services.
As the sole and entire compensation for your investment management
services under this agreement, the Company will pay to you at the
end of each month a monthly fee equal to the sum of (a) 1/12 of
0.25% of the first $10,000,000 of the net asset value of the
Company as of the last day in such month on which the New York
Stock Exchange is open for trading and (b) 1/12 of 0.15% of the net
asset value of the Company in excess of $10,0000,000 as of the last
day in such month on which the New York Stock Exchange is open for
trading; provided, however, that such monthly fees shall not be
less than $10,000 in the aggregate for each successive 12-month
period during which this agreement is in effect (or a pro rata
portion of $10,000 if this agreement is in effect for less than any
such 12-month period). The net asset value of the Company shall
mean the total assets of the Company minus the total liabilities of
the Company (including all appropriate accruals) and shall be
determined in accordance with generally accepted accounting
principles, on a market value basis as to investments in
securities, and any supplemental instructions which the Board may
give. You shall determine the Company's net asset value as of the
close of business on the last day in each month on which the New
York Stock Exchange is open for trading and at such other times as
the Board may direct and promptly shall advise the Company of such
value.
If this agreement shall terminate other than on the last day of a
month, then your compensation under this agreement for such partial
month shall be based upon the foregoing percentages as applied to
the net asset value of the Company calculated on the last day
preceding the termination date on which the New York Stock Exchange
was open for trading and shall be that proportion of such month's
fee which the number of days in such partial month bears to the
number of days in the entire month.
SECTION 6. Liability of the Investment Adviser.
You agree to indemnify the Company and its officers, directors, and
shareholders (the "indemnitees") against and to hold the
indemnitees harmless from all loss, liability, damages, and
expenses (including reasonable attorneys' fees) incurred by the
indemnitees or any of them (whether before or after the termination
of this agreement) as a result of (a) a breach by you of applicable
federal or state securities laws or your fiduciary duty to the
Company or its shareholders or (b) your breach of any of your
obligations under this agreement, including but not limited to your
failure to conform to the investment policies and restrictions of
the Company in performing such obligations. Your obligations under
this paragraph shall survive the termination of this agreement.
The Company understands that securities in which the Company's
assets may be invested by you pursuant to this agreement will be
subject to market fluctuations. Except as set forth in the
foregoing paragraph or as otherwise provided by law, you shall not
be liable for any action taken or omitted by you in good faith.
SECTION 7. Duration of Agreement.
Unless sooner terminated, this agreement shall continue in effect
until December 31, 1997, and thereafter for successive one-year
periods; provided, that such continuation of this agreement after
December 31, 1997, is specifically approved at least annually in
the manner required by the Investment Company Act of 1940.
SECTION 8. Termination of Agreement, Assignment, Etc.
This agreement may be terminated at any time, without the payment
of any penalty, on 30 days' written notice to you, (i) by a
resolution duly adopted by the Board or (ii) by the vote of a
majority of the outstanding shares of Common Stock of the Company
(as defined in the Investment Company Act of 1940). This agreement
automatically shall terminate in the event of its assignment. The
termination of this agreement shall not affect the rights of the
parties under this agreement which have accrued prior to such
termination.
SECTION 9. Applicable Provisions of Law.
This agreement shall be subject to all applicable laws and
regulations, including but not limited to the Investment Company
Act of 1940 and the regulations issued thereunder. To the extent
that any provisions of this agreement now or hereafter conflict
with any such applicable laws or regulations, the latter shall
control.This agreement is executed and delivered in Omaha,
Nebraska, and the laws of the state of Nebraska shall govern its
construction, validity, and effect.
Yours very truly,
PMD INVESTMENT COMPANY
By:
Title:
Accepted and agreed:
FIRST NATIONAL BANK OF OMAHA
By:
Title:
Exhibit A
PMD INVESTMENT COMPANY
A. INVESTMENT OBJECTIVE AND FUNDAMENTAL POLICIES
1. The investment objective of PMD Investment Company (the
"Company") is to obtain as high a level of interest income as is
consistent with prudent investment management and the preservation
of capital of the Company; provided, that at all times at least
fifty percent (50%) of the value (as defined in Section 851(c)(4)
of the Internal Revenue Code of 1986 or the comparable provision of
any later internal revenue law of the United States) of the total
assets of the Company shall consist of obligations described in
Section 103(a) of the Internal Revenue Code of 1986 or the
comparable provision of any later internal revenue law of the
United States.
2. The Company will seek to accomplish its investment objective
stated above by:
a. Investing at least sixty percent (60%) of its assets in: (i)
debt obligations issued by states, territories, and possessions of
the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and their political subdivisions and
instrumentalities, the interest on which is, at the time of the
issuance of such debt obligations in the opinion of bond counsel
for the issuers, exempt from federal income tax (such debt
obligations generally being referred to as "Municipal Securities");
and (ii) securities of other regulated investment companies
(subject to applicable restrictions imposed by the Investment
Company Act of 1940) whose investments consist exclusively of
Municipal Securities; and
b. Investing up to forty percent (40%) of its assets in
fixed-income debt securities, the interest on which is not, at the
time of the issuance of such fixed-income debt securities, exempt
from federal income tax (such fixed-income debt securities
generally being referred to as "Fixed-Income Securities"); and (ii)
securities of other regulated investment companies (subject to
applicable restrictions imposed by the Investment Company Act of
1940) whose investments consist exclusively of Fixed-Income
Securities.
3. The Municipal Securities in the which the Company may invest
(or, if the Company invests in securities of other regulated
investment companies, the Municipal Securities in which such other
regulated investment companies may invest) either will be rated (at
the time of purchase by the Registrant or such other regulated
investment company) by Moody's Investors Service, Inc. ("Moody's")
within its three highest rating categories for municipal
obligations (AAA, AA and A) or within Moody's short-term municipal
obligations top rating categories of MIG 1 and MIG 2 or by Standard
& Poor's Company ("S&P") within its three highest rating categories
for municipal obligations (AAA, AA and A) or if unrated will be
deemed by the Company's investment advisor to be of comparable
quality. The Company will not be required to dispose of a
Municipal Security held by it if such Municipal Security's rating
is downgraded by Moody's or by S&P to a rating below the minimum
ratings set forth in this paragraph 3, although the Company's
investment adviser shall consider whether continued investment in
such Municipal Security is consistent with the Company's investment
objectives and shall promptly after such Municipal Security's
rating is downgraded notify the Company of its determination
whether the Company should sell or otherwise dispose of such
Municipal Security.
4. The Fixed-Income Securities in which the Company may invest
must be of investment grade. A Fixed-Income Security will be
deemed to be of "investment grade" if, at the time of acquisition
by the Company, the Fixed-Income Security is rated at least Baa by
Moody's or BBB by S & P's, or at a comparable rating by another
nationally recognized rating organization. The Company will not be
required to dispose of a Fixed-Income Security held by it if such
Fixed-Income Security's rating falls below investment grade,
although the Company's investment adviser shall consider whether
continued investment in such Fixed-Income Security is consistent
with the Company's investment objectives and shall promptly after
such Fixed-Income Security's rating is downgraded notify the
Company of its determination whether the Company should sell or
otherwise dispose of such Fixed-Income Security.
5. The Company may invest in short-term Municipal Securities and
Fixed-Income Securities and may engage in short-term trading
(selling securities held for brief periods of time, usually less
than three months) if it believes, upon the advice of the Company's
investment adviser, that such transactions, net of costs including
taxes, if any, would improve the overall return on the Company's
investment portfolio. However, the Company's voluntary short-term
trading will be limited to the extent necessary to enable the
Company to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986; accordingly, the Company will limit
such trading to the extent necessary to preclude its deriving 30%
or more of its gross income in any taxable year from the sale or
other disposition of securities held for less than three months.
6. The Company shall operate under the Investment Company Act of
1940 as a closed-end, diversified management investment company.
Therefore, at least 75% of the value of the Company's total assets
must at all times consist of (i) cash and cash items (including
receivables), (ii) Government securities (securities issued or
guaranteed as to principal or interest by the United States or by
a person controlled or supervised by and acting as an
instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States), (iii)
securities of other investment companies, and (iv) other securities
limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the total assets of the Company and
to not more than 10% of the outstanding voting securities of such
issuer.
7. For each taxable year of the Company, at least 90% of the
Company's gross income shall be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale
or other disposition of stock or securities.
8. The Company's investments shall be in securities which have
been publicly distributed and for which a market exists.
B. INVESTMENT RESTRICTIONS
1. The Company shall not issue senior securities.
2. The Company shall not purchase securities on margin (except
such short-term credits as are necessary for the clearance of
transactions) or effect a short sale of any security. The Company
shall not write, purchase, or sell put or call options, or
combinations thereof, except that the Company may write a call
option for securities it owns at the time of selling the option,
not to exceed securities representing 10% of the Company's total
assets, in which case the Company will continue to hold the
underlying security during the life of the call option.
3. The Company shall not borrow money, except that as a temporary
measure for extraordinary or emergency purposes it may borrow from
banks, so long as the aggregate of any such borrowings does not
exceed 5% of the value of the Company's total assets immediately
prior to the time of the loan.
4. The Company shall not underwrite securities of other issuers
and shall not acquire restricted securities (securities that must
be registered under the Securities Act of 1933 before they may be
offered or sold to the public) unless the Company's investment
adviser determines that such restricted securities are readily
marketable pursuant to an exemption from registration under such
Act.
5. The Company shall not concentrate its investments in a
particular industry or group of industries.
6. The Company shall not purchase or sell real estate or real
estate mortgage loans, but the Company may invest in bonds or other
debt securities which are secured by real estate or interests
therein, including but not limited to real estate mortgages.
7. The Company shall not purchase or sell commodities or
commodity contracts, including but not limited to futures contracts
in a contract market or other futures market.
8. The Company shall not make loans to other persons except
through the purchase of a portion of an issue of publicly
distributed debt securities.
9. The Company shall not invest in any issuer's securities for
the purpose of exercising control of such issuer.
10. The Company shall not invest in foreign securities or engage
in arbitrage activities.
11. Except upon complying with the requirements of Section 12(d)
of the Investment Company Act of 1940, the Company shall not invest
in securities of other investment companies in aggregate amounts in
excess of 10% of the value of the Company's total assets, will not
invest more than 5% of the value of the Company's total assets in
any one investment company, and will not own more than 3% of the
total outstanding voting stock of any investment company. The
Company may, however, acquire securities of other investment
companies in connection with a merger or similar combination.
12. The Company shall abide by any other investment restrictions
contained in the Investment Company Act of 1940 or regulations
thereunder which are not expressly set forth in the preceding
paragraphs.
