U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-2
[ X ] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[ X ] Amendment No. 17
Commission File Number 811-3135
PMD Investment Company
(Exact Name of Registrant as Specified in Charter)
10050 Regency Circle, Suite 315, Omaha, Nebraska 68114
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code
402-392-0608
J.G. Sawicki
10050 Regency Circle, Suite 315
Omaha, Nebraska 68114
(Name and Address of Agent for Service)
Copy to:
Howard J. Kaslow
Abrahams, Kaslow & Cassman
8712 West Dodge Road, Suite 300
Omaha, Nebraska 68114
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Items 1, 2, 3.2, 4, 5, 6 and 7. Omitted pursuant to Paragraph 3
of General Instruction G to Form N-2.
Item 3. Fee Table and Synopsis. Not applicable.
Item 8. General Description of the Registrant.
1. General.
a. The Registrant was organized as a corporation
under the laws of Nebraska on October 26, 1962.
b. The Registrant is classified as a Closed-end
Diversified Management Company under sections 4 and 5 of the
Investment Company Act of 1940.
2. Investment Objectives and Policies.
a. Recital of Investment Objectives: The investment
objective of the Registrant, which may not be changed without the
vote of the holders of a majority of the Registrant's outstanding
voting securities, is to obtain as high a level of interest
income as is consistent with prudent investment management and
the preservation of capital of the Registrant; 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 Registrant 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. Information
concerning the types of securities in which the Registrant
intends to invest and the types of securities which will
constitute the major portfolio emphasis of the Registrant appears
below in Item 8.2.c.
b. Recital of Fundamental Policies: The following
statements represent the policy of the Registrant with respect
to the indicated activities:
(1) The Registrant will not issue senior
securities.
(2) The Registrant will 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 Registrant will not write, purchase, or sell put
or call options, or combinations thereof, except that the
Registrant may write a call option for securities it owns at the
time of selling the option, not to exceed securities representing
10% of the Registrant's total assets, in which case the
Registrant will continue to hold the underlying security during
the life of the call option.
(3) The Registrant will 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
Registrant's total assets immediately prior to the time of the
loan.
(4) The Registrant will not underwrite securities
of other issuers and will 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
Registrant's investment advisor determines that such restricted
securities are readily marketable pursuant to an exemption from
registration under such Act.
(5) The Registrant will not concentrate its
investments in a particular industry or group of industries.
(6) The Registrant will not purchase or sell real
estate or real estate mortgage loans, but the Registrant 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 Registrant will 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 Registrant will not make loans to other
persons except through the purchase of a portion of an issue of
publicly distributed debt securities.
(9) At least 75% of the value of the Registrant's
total assets will 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
Registrant and to not more than 10% of the outstanding voting
securities of such issuer. Except upon complying with the
requirements of Section 12(d) of the Investment Company Act of
1940, the Registrant will not invest in securities of other
investment companies in aggregate amounts in excess of 10% of the
value of the Registrant's total assets, will not invest more than
5% of the value of the Registrant'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
Registrant may, however, acquire securities of other investment
companies in connection with a merger or similar combination.
c. Recital of Investment Policies: The significant
investment policies of the Registrant which are not deemed
fundamental and which may be changed without shareholder approval
are as follows:
(1) The Registrant does not intend to invest in
any issuer's securities for the purpose of exercising control of
such issuer.
(2) The Registrant does not intend to invest in
foreign securities or to engage in arbitrage activities.
(3) The Registrant will seek to accomplish its
investment objective stated in Item 8.2.a. 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.
(4) The Municipal Securities in the which the
Registrant may invest (or, if the Registrant 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
Registrant's investment advisor to be of comparable quality. The
Registrant 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 4, although the Registrant's
investment adviser shall consider whether continued investment in
such Municipal Security is consistent with the Registrant's
investment objectives and shall promptly after such Municipal
Security's rating is downgraded notify the Registrant of its
determination whether the Registrant should sell or otherwise
dispose of such Municipal Security.
(5) The Fixed-Income Securities in which the
Registrant 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 Registrant, 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 Registrant 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
Registrant's investment adviser shall consider whether continued
investment in such Fixed-Income Security is consistent with the
Registrant's investment objectives and shall promptly after such
Fixed-Income Security's rating is downgraded notify the
Registrant of its determination whether the Registrant should
sell or otherwise dispose of such Fixed-Income Security.
(6) The Registrant 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 its investment adviser, that such transactions, net of
costs including taxes, if any, would improve the overall return
on the Registrant's investment portfolio. However, the
Registrant's voluntary short-term trading will be limited to the
extent necessary to enable the Registrant to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986; accordingly, the Registrant 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.
d. During the years ended December 31, 1996 and 1997,
the Registrant's portfolio turnover rates were 19.8% and 12.0%,
respectively. The Registrant generally expects that its
investment objective will be pursued with limited portfolio
turnover (other than as a result of bond maturities), except as
required by prudent investment management and to obtain cash in
connection with the periodic redemptions of shares which the
Registrant may make from its shareholders who wish to have their
shares redeemed. See Item 8.2.c. concerning the Registrant's
policy with respect to short-term trading and Item 8.5.d.
concerning such periodic redemptions.
3. Risk Factors.
The principal risk factors associated with an investment in
the Registrant are the following:
a. There is no market for the Registrant's shares
other than the semi-annual redemption program that the Registrant
presently makes available to its shareholders. (See Item 8.5.d
below.) There is no requirement that such program continue to be
made available, although the Registrant does not presently
contemplate the termination of such program. The redemption
price is the applicable net asset value of the Registrant's
shares, which fluctuates as the market prices of the securities
held in the Registrant's portfolio fluctuate.
b. The income stream provided by the Registrant's
shares is dependent upon the interest payments that the
Registrant receives on its portfolio investments. As bonds with
a particular rate of interest mature or are called for early
redemption by the issuer, there is no assurance that the
Registrant will be able to replace such bonds with other bonds
that will have an equivalent yield. In recent years, as interest
rates in general have declined in the United States municipal
bond market, the overall yield on the Registrant's portfolio has
declined.
c. A default in the payment of principal by an issuer
of a bond held in the Registrant's portfolio could result in a
loss of some or all of the principal value of such bond, with a
corresponding reduction in the Registrant's assets and net asset
value per share. A default in the payment of interest by an
issuer of a bond held in the Registrant's portfolio could result
in a reduction in the Registrant's income available for the
payment of dividends to its shareholders.
4. Other Policies.
There are no investments that will be made by Registrant
that are not disclosed elsewhere in this Item 8.
5. Share Price Data.
a. The Registrant's Common Stock (its only security)
is not listed on any stock exchange.
b. Not applicable
c. The Registrant believes that the market for its
Common Stock has been inactive since April 1981. At December 31,
1997, the net asset value of the Registrant's Common Stock was
$4.34 per share.
d. If a market for the Registrant's Common Stock were
to develop, it is possible that the market price for the
Registrant's Common Stock would be less than the net asset value
per share of such Common Stock from time to time since closed-end
investment companies' securities frequently trade for amounts
less than the net asset value.
The Registrant has established an arrangement which permits
its shareholders, at such shareholders' option, to have their
shares of the Registrant's Common Stock redeemed at net asset
value on June 30 and December 31 of each year if certain
conditions (including but not limited to 90 days' advance notice
from a shareholder who intends to have shares redeemed) are
satisfied by such shareholders. The Registrant is unable to
predict the effect, if any, that such redemption arrangement
would have on the market price of the Registrant's Common Stock
if a market for such stock develops. The specific details of
such arrangement appear in Exhibit R to this registration
statement.
6. Business Development Companies.
Not applicable.
Item 9. Management.
1. General.
a. Board of Directors. The responsibilities of the
board of directors with respect to the management of the
Registrant consist of (i) periodic meetings with and reviews of
the performance of the Registrant's investment adviser, (ii)
periodic reviews of the Registrant's investment portfolio, (iii)
election of corporate officers of the Registrant, (iv)
declaration of dividends, and (v) in general, the direction of
the business and affairs of the Registrant.
b. Investment Advisers.
(1) The following information relates to the
Registrant's investment adviser:
(a) First National Bank of Omaha ("FNBO"),
One First National Center, 1620 Dodge Street, Omaha, Nebraska, 68102.
(b) FNBO has been engaged in the investment
advisory business, as a registered investment adviser under the
Investment Advisers Act of 1940, since 1962. 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.
(c) FNBO, the Registrant's investment
advisor, is a national banking association and is a subsidiary
of First National of Nebraska, Inc. a Nebraska corporation. First
National of Nebraska, Inc. currently owns 99.66% of the outstanding
voting securities of FNBO.
(d) No affiliated person of the Registrant
is also an affiliated person of FNBO.
(2) The following relates to the services
provided by the Registrant's investment adviser:
(a) Under the investment advisory agreement
between the Registrant and FNBO, FNBO is required to use its staff
and other facilities to perform a continuous review of the
Registrant's portfolio of securities and to determine what securities
should be purchased or sold by the Registrant (including the placing
of orders for the purchase and sale of such securities), what portion
of the assets of the Registrant should remain uninvested, and the
extent to which the Registrant should otherwise use its investment
powers (all in a manner consistent with the Registrant's investment
policies and restrictions). At its own expense FNBO 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 FNBO may deem necessary, appropriate, or
convenient for the discharge of its obligations under the agreement.
FNBO also is required to maintain a continuous record of all of the
Registrant's securities and to furnish to the Registrant's Board of
Directors, upon request, a resume of the Registrant's securities
portfolio. FNBO also must report to the Registrant's Board of
Directors on all matters pertaining to FNBO's services as
investment adviser at the regular meetings of the Board and at
such other times as the Board may request. FNBO must pay
all of the costs and expenses of performing the services described
above. The Registrant, however, must pay all brokerage commissions
(if any) on its portfolio transactions.
(b) There is no expense limitation provision
in the agreement between the Registrant and FNBO.
(3) The following sets forth the compensation of
the Registrant's investment adviser:
(a) The investment advisory agreement
between the Registrant and FNBO provides for a monthly
fee equal to 1/12 of 0.25% of the first $10,000,000 of the net
asset value of the Registrant on the last day in each month on
which the New York Stock Exchange is open for trading and for a
monthly fee on the Registrant's net asset value in excess of
$10,000,000 on such last trading day equal to 1/12 of 0.15% of
such excess net asset value, with a minimum fee of $10,000 for
each successive 12-month period.
(b) The investment advisory fees paid to or
accrued for the year ended December 31, 1997, were
$27,798. $9,847 of such fees for the year ended December 31,
1997 were paid to or accrued for the Registrant's prior invest-
ment advisor, Mentor Investment Advisors, L.L.C., and $17,951 of
such fees were paid to or accrued for FNBO. The investment
advisory fees paid to or accrued for the Registrant's prior
investment advisor, Mentor Investment Advisors, L.L.C. (formerly
known as Commonwealth Investment Counsel, Inc.) for the year
ended December 31, 1996 were $36,307, and for the year ended
December 31, 1995 were $32,375.
c. Portfolio Management. Following are the names and
titles of the persons employed by or associated with the
investment adviser who are primarily responsible for the day-to-
day management of the Registrant's portfolio, the length of time
that each person has been primarily responsible for the management
of the Registrant's portfolio, and each person's business
experience during the past five years:
(1) Richard D. Chapman, Chief Investment Officer
and Fixed Income Portfolio Manager. Mr. Chapman has 27 years of
investment management experience. Mr. Chapman has been primarily
responsible for the management of the Registrant's portfolio
since June 1997. In 1971, Mr. Chapman received his B.S. degree
from the University of Nebraska at Omaha and joined the trust
department of FNBO.
(2) John G. Woolway, CFA, Fixed Income Portfolio
Manager. Mr Woolway has 11 years of investment management
experience. Mr. Woolway has been primarily responsible for the
management of the Registrant's portfolio since June 1997. Prior
to joining FNBO in 1993, Mr. Woolway was a Portfolio Manager at
FirsTier Bank and a Fixed Income Analyst at Chicago Title and
Trust Company in Chicago, Illinois. Mr. Woolway received his
B.S. degree from the University of Iowa in 1985 and his M.B.A.
from DePaul University in 1991.
(3) Michael D. Hansen, CFA, Fixed Income
Portfolio Manager. Mr. Hansen has 8 years of investment
management experience. Mr. Hansen has been primarily
responsible for the management of the Registrant's
portfolio since June 1997. Mr. Hansen joined FNBO in 1997
after seven years with the Nebraska Investment Council where
he served as the Fixed Income Portfolio Manager. Mr. Hansen
received his B.S. degree from the University of Nebraska at
Lincoln in 1988.
d. Administrator. The Registrant is not a party
to any "management related service contracts" not discussed
elsewhere in this registration statement.
e. Custodians.
(1) The custodian of the Registrant's portfolio
securities is First National Bank of Omaha ("FNBO"), One First
National Center, Omaha, Nebraska 68103. FNBO is a national
banking association which acts as custodian through its trust
department. Under the Custodian Agreement between the Registrant
and FNBO, FNBO is required to hold and dispose of, on behalf of
the Registrant, certain cash, securities and other property of
the Registrant (the "Property") pursuant to instructions from the
Registrant. FNBO is also required to collect and receive, for
the account of the Registrant, all income and other payments and
distributions included or to be included in the Property and to
provide other services as described in the Custodian Agreement.
(2) The Registrant's transfer agent and dividend-
paying agent is First National Bank of Omaha, One First National
Center, Omaha, Nebraska 68103.
f. Expenses. The Registrant must pay all of its own
expenses for its custodian, transfer agent and registrar,
accountants, and attorneys and for other expenses not covered by
the investment advisory agreement with FNBO. There are
no fees, expenses, or costs relating to the Registrant's business
as an investment company which are to be paid by anyone other
than the Registrant or FNBO. In connection with the sale
of the assets of the Registrant's previous retail business, the
purchaser assumed substantially all of the liabilities and
obligations of such previous business and is required to pay or
otherwise discharge such liabilities and obligations, although
the Registrant remains contingently liable for such liabilities
and obligations to the extent they have not been paid or
otherwise discharged.
g. Affiliated Brokerage. During the years ended
December 31, 1995, 1996, and 1997, the Registrant paid no
brokerage commissions since all of its portfolio transactions
were handled on a principal (net) basis.
2. Non-resident Managers.
Not applicable.
3. Control Persons.
The controlling shareholder of the Registrant is D. J.
Witherspoon, 9723 Nottingham Drive, Omaha, Nebraska 68114. Mr.
Witherspoon, who formerly was the president, treasurer, and a
director of the Registrant, owned 2,989,969 shares of the
Registrant's Common Stock, $0.50 par value, on March 6, 1998,
which represented 87.96% of the outstanding Common Stock of the
Registrant on such date. Mr. Witherspoon's shares presently are
held of record by First National Bank of Omaha, as conservator
for Mr. Witherspoon; such conservator, in its fiduciary capacity,
has sole voting and dispositive power with respect to such shares.
The Registrant's Common Stock is its only outstanding voting
security. Mr. Witherspoon's control has no effect on the voting
rights of other shareholders of the Registrant, each of whom is
entitled to vote all of his or her shares on all matters submitted
to a vote of the Registrant's shareholders.
Item 10. Capital Stock, Long-Term Debt, and Other Securities
1. Capital Stock.
a. The Registrant's only class of common stock is its
Common Stock, par value $0.50 per share. The holders of Common
Stock are entitled to receive dividends, out of funds legally
available for the payment of dividends, when and as they are
declared by the Registrant's Board of Directors. The holders of
Common Stock have one vote per share on all matters submitted to
a vote of shareholders and are entitled to cumulate their votes
in all elections for directors of the Registrant. Upon the
liquidation or dissolution of the Registrant, the holders of
Common Stock are entitled to share pro rata in the assets, if
any, legally available for distribution to shareholders. The
holders of Common Stock are not liable to further calls or to
assessments by the Registrant in respect of their shares. The
holders of Common Stock have no pre-emptive or conversion rights.
There are no redemption or sinking fund provisions applicable to
the Common Stock; however, as discussed in Item 8.5.d, the
Registrant has established a voluntary redemption arrangement for
those shareholders who wish to avail themselves of such
redemption opportunities. The details of the redemption
arrangement are set forth in Exhibit R to this registration
statement.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
f. Not applicable.
2. Long-Term Debt.
All of the long-term debt of the Registrant was assumed
by the purchaser in the asset sale transaction described in Part
B, Item 16 and has been or is required to be paid by such
purchaser, although the Registrant remains contingently liable
for such debt until it is paid.
3. General.
Registrant does not have any other classes of
authorized securities.
4. Taxes.
a. The Registrant believes that it is eligible to
elect and has elected the tax status of a "regulated investment
company" under the Internal Revenue Code of 1986 (the "Code") and
intends, for the foreseeable future, to maintain that status.
b. A "regulated investment company" which distributes
to its shareholders at least 90% of its investment company
taxable income, as defined in the Code, and meets certain other
conditions is not taxed on the amount of such income so
distributed. Dividends so distributed are taxed to the
shareholders at ordinary income rates and, subject to certain
limitations, qualify, in the case of eligible corporate
shareholders, for the 70% dividends received deduction available
under the Code (80% in the case of any dividend received after
1987 from a 20-percent owned corporation as defined in the Code).
A "regulated investment company" which fails to distribute at
least 90% of such investment company taxable income is taxed in
the same manner as any other corporation not qualifying as a
"regulated investment company", but a "regulated investment
company" is not required to distribute its realized net long-term
capital gain, if any.
A non-deductible excise tax is imposed by the Code on
certain undistributed income of a "regulated investment company",
effective for calendar years after 1986. The tax is equal to 4%
of the excess of (1) the "required distribution" (as defined in
the Code) for a calendar year over (2) the "distributed amount"
(as defined in the Code) for such calendar year. Subject to
certain adjustments prescribed by the Code, a "required
distribution" is the sum of 98% of the "regulated investment
company's" ordinary income for a calendar year (as determined
under the Code) plus 98% of the "regulated investment company's"
capital gain net income for the one-year period ending on October
31 of such calendar year.
A "regulated investment company" which invests at least 50%
of the value of its total assets, determined at the close of each
quarter of its taxable year, in certain obligations described in
Section 103(a) of the Code, the interest on which is exempt from
federal income taxes, may distribute, as federal income tax
exempt dividends to its shareholders, the interest earned on such
obligations if it designates such dividends as tax-exempt
interest dividends in a written notice mailed to its shareholders
and distributes annually at least 90% of such net tax-exempt
interest to its shareholders. The Registrant has invested and
presently intends to invest at least 50% of the value of its
total assets in such tax-exempt obligations and to distribute
substantially all of its net income to its shareholders so as to
avail itself of the Code provisions described in this paragraph.
Subject to certain exceptions in the Code, any loss on the
sale or exchange of stock in a "regulated investment company" is
disallowed to the extent the taxpayer received exempt-interest
dividends and held the stock for six months or less; this
provision is applicable to shares of stock whose holding period
began after March 28, 1985.
Net realized long-term capital gain (i) is excluded from the
taxable income of a "regulated investment company" to the extent
distributed to its shareholders and (ii) is taxed to a "regulated
investment company" at the corporate capital gain rate applicable
to ordinary corporations to the extent not distributed to its
shareholders. Moreover, long-term capital gain dividends
distributed to shareholders retain that character in the hands of
the shareholders, regardless of how long any shareholder has
owned his or her shares. Each shareholder is taxable at long-
term capital gain rates applicable to individuals on such long-
term capital gain dividends which are distributed to him or her.
Each shareholder also is required to report as taxable long-term
capital gain his or her proportionate share of any undistributed
capital gains which are designated for such purpose by the
"regulated investment company" but is allowed a tax credit in an
amount equal to the tax paid by the "regulated investment
company" on such proportionate share and also is allowed to
increase the tax basis of his or her shares of the "regulated
investment company" by an amount equal to 66% of such
proportionate share.
Any loss on the sale or exchange of stock in a "regulated
investment company" will be treated as a long-term capital loss
to the extent the taxpayer received distributions from the
"regulated investment company" which are treated as long-term
capital gain and held the stock for six months or less.
The foregoing discussion relates only to federal income tax
matters; state and local income tax treatment of the Registrant
and its shareholders will not necessarily be the same as the
federal income tax treatment.
c. The Registrant presently intends to continue its
policy of distributing substantially all of its net income to its
shareholders on a quarterly basis. If the Registrant sustains
any capital losses as a result of its investment activities, then
the Registrant may retain rather than distribute any subsequent
capital gains, at least to the extent of such capital losses, so
as to take advantage of capital loss carryovers available for
federal income tax purposes. The Registrant presently does not
intend to permit reinvestment of dividends paid to its
shareholders.
d. There are no special or unusual tax aspects of the
Registrant not disclosed or referred to above in this Item 10.4.
5. Outstanding Securities.
The following information relates to the Registrant's Common
Stock, $0.50 par value, which is the sole authorized class of
capital stock of the Registrant, and is given as of March 6, 1998:
(1) (2) (3) (4)
Amount Outstand-
Amount Held ing Exclusive
Title of Amount by Registrant or of Amount Shown
Class Authorized for its Account Under (3)
Common 20,000,000 None 3,399,370
Stock, shares shares
$0.50
par value
6. Securities Ratings. Not applicable.
Item 11. Defaults and Arrears on Senior Securities.
1. None. All long-term debt of the Registrant which was
outstanding on January 15, 1981, was assumed and is required to
be paid by the purchaser of the Registrant's previous retail
business (see Part B, Item 16), although the Registrant remains
contingently liable for such debt until it is paid.
2. None.
Item 12. Legal Proceedings.
Neither the Registrant nor the Registrant's investment
adviser is a party to any material pending legal proceedings.
Item 13. Table of Contents of the Statement of Additional
Information.
(1) Item 14. Cover Page.
(2) Item 15. Table of Contents.
(3) Item 16. General Information and History.
(4) Item 17. Investment Objectives and Policies.
(5) Item 18. Management.
(6) Item 19. Control Persons and Principal Holders of
Securities.
(7) Item 20. Investment Advisory and Other Services.
(8) Item 21. Brokerage Allocation and Other Services.
(9) Item 22. Tax Status.
(10) Item 23. Financial Statements.
STATEMENT OF ADDITIONAL INFORMATION
March 20, 1998
(Date of Statement of Additional Information)
PMD INVESTMENT COMPANY
(Name of Registrant)
This Statement of Additional Information is not a prospectus
and should be read with Part A of Amendment No. 17 to the
Registrant's Registration Statement on Form N-2 under the
Investment Company Act of 1940 dated March 20, 1998. A copy of
such Amendment No. 17 may be obtained by a written request sent
to the Registrant at 10050 Regency Circle, Suite 315, Omaha,
Nebraska 68114.
PART B - INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
Item 15. Table of Contents.
(1) Item 16. General Information and History.
(2) Item 17. Investment Objectives and Policies.
(3) Item 18. Management.
(4) Item 19. Control Persons and Principal Holders of
Securities.
(5) Item 20. Investment Advisory and Other Services.
(6) Item 21. Brokerage Allocation and Other Services.
(7) Item 22. Tax Status.
(8) Item 23. Financial Statements.
Item 16. General Information and History.
Until January 15, 1981, for more than five years, the
Registrant was engaged, under the name "Pamida, Inc.", in the
operation of general merchandise discount department stores in
thirteen Midwestern, North Central, and Rocky Mountain states.
On January 15, 1981, the Registrant consummated the sale of its
discount store business and related operating assets to New
Pamida, Inc. and thereafter, on the same day, changed its
corporate name to "PMD Investment Company". On January 16, 1981,
the Registrant registered as an investment company under the
Investment Company Act of 1940 by filing a Notification of
Registration on Form N8-A with the Securities and Exchange
Commission, and since that time the Registrant has been engaged
in the business of an investment company. The Registrant has not
been a party to any bankruptcy, receivership, or similar
proceedings or any other material reorganization, readjustment,
or succession during the past five years.
Item 17. Investment Objectives and Policies.
All required information is contained in Part A, Item 8.
Item 18. Management.
1. The following information relates to the directors and
officers of the Registrant as of March 20, 1998; the Registrant
has no advisory board:
(1) (2) (3)
Principal
Positions Occupations
Name and Held with during Past
Address Registrant 5 Years
J. G. Sawicki Director, Since 1979, retired;
10340 Fieldcrest Court President, and previously, for more
Apt. 502 Treasurer than 5 years, vice
Omaha, NE 68114 president of
Mid-Continent Bottlers,
Inc. (soft drink
bottler)
Herbert B. Underwood Director, Vice Since 1991, retired;
4966 South 150th Plaza President, and previously, for
Omaha, NE 68137 Secretary more than 5 years, an
executive officer of
Pamida, Inc. (owner
and operator of
general merchandise
discount stores)
John Patrick Director, For more than 5
Witherspoon* Vice President years, engaged in the
1211 Howard Street business of real
Omaha, NE 68102 estate management
and development
There is no family relationship between any of such persons.
The Registrant has no executive or investment committee.
* John Patrick Witherspoon is the son of D.J. Witherspoon and
is an interested person as defined in Section 2(a) 19 of the
Investment Company Act of 1940 by reason of such relationship.
2. None of the persons named in Item 18.1 above has any
position with any affiliated person of the Registrant. The
Registrant has no underwriter.
3. Not applicable.
4. During the year ended December 31, 1997, each director
of the Registrant was 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 Registrant in excess of four which such
director attended during such fiscal year. The aggregate
remuneration paid to or accrued for the Registrant's officers and
directors for 1997 was $15,000. The Registrant does not expect
to pay any other or additional compensation or benefits to any of
its officers or directors.
Item 19. Control Persons and Principal Holders of Securities.
1. The controlling shareholder of the Registrant is D. J.
Witherspoon, 9723 Nottingham Drive, Omaha, Nebraska 68114. Mr.
Witherspoon, who formerly was the president, treasurer, and a
director of the Registrant, owned 2,989,969 shares of the
Registrant's Common Stock, $0.50 par value, on March 6, 1998,
which represented 87.96% of the outstanding Common Stock of the
Registrant on such date. Mr. Witherspoon's shares presently are
held of record by First National Bank of Omaha, as conservator
for Mr. Witherspoon. The Registrant's Common Stock is its only
outstanding voting security. Mr. Witherspoon's control has no
effect on the voting rights of other shareholders of the
Registrant, each of whom is entitled to vote all of his or her
shares on all matters submitted to a vote of the Registrant's
shareholders.
2. The following table sets forth the name, address, and
percentage of ownership of each person who owned of record on
March 6, 1998, or is known by the Registrant to have owned of
record or beneficially on such date, 5% or more of the
Registrant's outstanding Common Stock (its only outstanding
voting security):
Percent of
Name and Number of Outstanding
Address Shares Shares
First National Bank of 2,989,969 (a) 87.96%
Omaha, Conservator for
D. J. Witherspoon
One First National Center
1620 Dodge Street
Omaha, Nebraska 68102
John Patrick Witherspoon 274,071 (b) 8.06%
1211 Howard Street
Omaha, Nebraska 68102
a. These shares are owned of record by First
National Bank of Omaha, solely in its capacity as conservator for
D.J. Witherspoon; such conservator has sole voting and investment
power with respect to such shares.
b. 245,183 of these shares (7.21% of the outstanding
shares) are owned both of record and beneficially by John Patrick
Witherspoon. 28,888 of these shares (0.85% of the outstanding
shares) are owned of record only by Iris J. Norman, as trustee,
and beneficially only by John Patrick Witherspoon; such trustee,
in her fiduciary capacity, has sole voting and dispositive power
with respect to such shares.
3. No director or officer of the Registrant other than
John Patrick Witherspoon owned any shares of the Registrant's
Common Stock as of March 6, 1998. The Registrant has no
advisory board.
Item 20. Investment Advisory and Other Services.
1. All information required by paragraphs 1-6 and 8 of
this Item 20 is contained in Part A, Item 9.
2. The Registrant's independent public accountant is
Deloitte & Touche LLP, 2000 First National Center, Omaha, Nebraska
68102-1578. Deloitte & Touche LLP conducts an annual audit of the
Registrant's financial statements; conducts a semi-annual review
of the Registrant's financial statements; prepares the
Registrant's tax returns; assists the Registrant in calculating
dividend amounts; assists the Registrant in preparing reports
which must be filed with the Commission; and prepares an annual
report on internal control structure for the Registrant.
Item 21. Brokerage Allocation and Other Services.
1. Purchases and sales of Fixed-Income Securities, the
type of securities in which the Registrant's assets presently are
invested and in which the Registrant intends to invest, usually
are effected by the Registrant with the issuer or with the
underwriter or primary market maker acting as principal on a net
basis, with no brokerage commissions being paid by the
Registrant. Transactions effected through dealers serving as
primary market makers reflect the spread between the bid and
asked prices for the Securities. First National Bank of Omaha
("FNBO"), the Registrant's investment adviser, places all orders
for purchases and sales of portfolio securities. The market for
any particular issue of Fixed-Income Securities from time to time
may be inactive. Such inactivity generally results in fewer
dealer bid and asked prices. Moreover, the market for Fixed-Income
Securities yielding a sufficient rate of return and having the
quality, character, and maturity to satisfy the investment
objective and policies of the Registrant may be limited from time
to time. Accordingly, at any particular time there may be only one
dealer or a limited number of dealers with whom FNBO may effect
transactions for the purchase or sale of particular Fixed Income
Securities for the Registrant. During the years ended
December 31, 1995, 1996, and 1997, the Registrant paid no brokerage
commissions since all of its portfolio transactions were handled on
a principal (net) basis.
2. None.
3. Subject to the foregoing, FNBO's policy in
purchasing and selling portfolio securities is to seek favorable
net prices and reliable execution in connection with the purchase
and sale of all portfolio securities. After these primary
considerations have been met, additional consideration may be
given by FNBO to other factors, such as the furnishing of
supplemental research and other services, which FNBO
deems to be of value to the Registrant or to FNBO in
terms of the particular transaction or FNBO's overall
responsibilities with respect to the Registrant. Although the
Registrant's securities transactions generally do not involve the
payment of any brokerage commissions, where brokerage commissions
are payable FNBO may be authorized, subject to the
foregoing primary considerations and to review by the
Registrant's Board of Directors, to execute orders with brokers
in return for brokerage and research services which are of use to
the Registrant, 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
FNBO in connection with its services to other advisory
clients, and FNBO may not use all of such research
services in connection with the performance of its
responsibilities to the Registrant.
4. Not applicable.
5. Not applicable.
Item 22. Tax Status. All relevant information is contained
in Part A, Item 10.4.
Item 23. Financial Statements.
The following financial statements of the Registrant are
contained in the Annual Report of the Registrant to its
shareholders which was filed with the Securities and Exchange
Commission on March 4, 1998; such financial statements (but no
other portion of such Annual Report) hereby are incorporated
herein by reference:
Independent Auditors' Report dated January 23, 1998
Statement of Assets and Liabilities - December 31, 1997
Statement of Operations - Year Ended December 31, 1997
Statement of Investments - December 31, 1997
Statements of Changes in Net Assets - Years Ended
December 31, 1997 and 1996
Notes to Financial Statements - Year Ended December 31,
1997
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial statements included in Part B of the
registration statement:
Independent Auditors' Report dated January 23, 1998
Statement of Assets and Liabilities - December 31, 1997
Statement of Operations - Year Ended December 31, 1997
Statement of Investments - December 31, 1997
Statements of Changes in Net Assets - Years Ended December
31, 1997 and 1996
Notes to Financial Statements - Year Ended December 31, 1997
2. Exhibits:
*A. Restated Articles of Incorporation of the
Registrant, as amended to date.
*B. Second Restated By-Laws of the Registrant.
C. None.
*D. (1) Specimen certificates for shares of
Common Stock, $0.50 par value, of the Registrant used prior to
May 1, 1981.
(2) Specimen certificate for shares of Common
Stock, $0.50 par value, of the Registrant used after April 30,
1981.
E. Not applicable.
F. Not applicable.
** G. Investment Advisory Agreement dated June 16,
1997, between the Registrant and First National Bank of Omaha.
H. Omitted pursuant to Paragraph 3 of General
Instruction G to Form N-2.
I. Not applicable.
*J. (1) Custodian Agreement dated January 15, 1981,
between the Registrant and First National Bank of Omaha.
(2) Letter agreement dated February 18, 1981,
between the Registrant and First National Bank of Omaha relating
to custodian's compensation.
K. None.
L. Omitted pursuant to Paragraph 3 of General
Instruction G to Form N-2.
M. Not applicable.
N. Omitted pursuant to Paragraph 3 of General
Instruction G to Form N-2.
O. Omitted pursuant to Paragraph 3 of General
Instruction G to Form N-2.
P. Not applicable.
Q. Not applicable.
***R. PMD Investment Company Periodic Stock Redemption
Arrangement, January 1, 1983.
* Filed with the Registrant's original Registration
Statement on Form N-2 and unchanged as of the date of this
amendment.
** Filed with Registrant's Semi-Annual Report for
Registered Investment Companies on Form N-SAR for the six month
period ended June 30, 1997, and unchanged as of the date of this
amendment.
*** Filed with Amendment No. 2 to the Registrant's
Registration Statement on Form N-2 and unchanged as of the date
of this amendment.
Item 25. Marketing Arrangements. None.
Item 26. Other Expenses of Issuance and Distribution. Not
applicable.
Item 27. Persons Controlled by or Under Common Control. None.
Item 28. Number of Holders of Securities. The following table
shows, as of March 6, 1998, the number of record holders of the
Registrant's Common Stock, $0.50 par value, which is its only
class of securities:
(1) (2)
Number of Record
Title of Class Holders
Common Stock, 444
$0.50 par value
Item 29. Indemnification. Section 21-20,103 of the Business
Corporation Act of Nebraska gives the Registrant power to
indemnify its directors, officers, employees, and agents against
certain expenses incurred by them in certain threatened, pending,
or completed civil and criminal actions, suits, or proceedings by
reason of their service in such capacity, subject to certain
specified conditions. To the extent that a director or officer
of the Registrant is successful on the merits or otherwise in the
defense of any such action, suit, or proceeding, he is entitled
under Sections 21-20,104 and 21-20,108 of the Business
Corporation Act of Nebraska to be indemnified by the Registrant
against reasonable expenses incurred by him or her in connection
with the proceeding. The foregoing is merely a statement of the
general effect of such statutes, to which reference hereby is
made for the exact provisions thereof.
Article X of the Second Restated By-Laws of the Registrant
provides, in part, that the Registrant shall indemnify its
directors, officers, and certain other persons against certain
costs and expenses actually and reasonably incurred by them in
connection with the defense, settlement, or other disposition of
various types of threatened, pending, or completed civil and
criminal actions, suits, or proceedings in which they may be
involved by reason of their service in such capacity, except in
relation to matters as to which they have been adjudged liable
for negligence or misconduct in the performance of their duties
to the Registrant in such capacity or when other "disabling
conduct" has been alleged, in which cases certain conditions must
be met before indemnification is required or permitted. The
foregoing is merely a statement of the general effect of such by-
law provision, to which reference hereby is made for the exact
provisions thereof.
Item 30. Business and Other Connections of Investment Adviser.
The principal occupation of all managing directors and officers
of FNBO is either with such corporation or its parent, First
National of Nebraska, Inc. See also Part A, Item 9.1.b., above.
Item 31. Location of Accounts and Records. The accounts, books,
or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the Rules promulgated
thereunder are being maintained by First National Bank of Omaha
("FNBO"), as custodian, investment advisor or transfer agent,
by the Registrant, or by Abrahams Kaslow & Cassman ("AKC"), as
the Registrant's investment adviser, and as the Registrant's legal
counsel, as indicated in the following table, which refers to
the various items listed in Regulation 31a-1(b):
Item Responsible Person
(b)(1) FNBO
(b)(2)(A) FNBO
(b)(2)(B) FNBO
(b)(2)(C) FNBO
(b)(2)(D) FNBO
(b)(2)(E) FNBO
(b)(2)(F) FNBO
(b)(3) Not applicable
(b)(4) AKC
(b)(5) FNBO
(b)(6) FNBO
Item Responsible Person
(b)(7) Not applicable
(b)(8) FNBO
(b)(9) FNBO
(b)(10) Registrant
(b)(11) Registrant
(b)(12) FNBO
The address of First National Bank of Omaha appears in Part A,
Item 9.1.b, above; the address of the Registrant
appears on the cover of this registration statement; the address
of Abrahams, Kaslow & Cassman is 8712 West Dodge Road, Suite 300,
Omaha, Nebraska 68114.
Item 32. Management Services. None.
Item 33. Undertakings. Not applicable.
Signature follows on next page.
SIGNATURE
Pursuant to the requirements of the Investment Company Act
of 1940, the Registrant has duly caused this Registration
Statement (Amendment No. 17) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Omaha and
State of Nebraska, on the 20th day of March, 1998.
PMD Investment Company
(Registrant)
By: /s/ J.G. Sawicki
J.G. Sawicki, President
