PMD INVESTMENT COMPANY
Financial Statements for the
Six Months Ended June 30, 1998 and
Independent Accountants' Review Report
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To The Shareholders and Board of Directors
PMD Investment Company
Omaha, Nebraska
We have reviewed the accompanying statement of assets and liabilities
of PMD Investment company (the Company), including the schedule of
investments, as of June 30, 1998, and the related statements of
operations and changes in net assets for the six months then ended.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and of making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them
to be in conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing the limited
assurance described in the preceding paragraph concerning the
financial statements taken as a whole. The additional information in
the supplementary information-selected per share data and ratios
included in footnote E for the six months ended June 30, 1998, is
presented only for the purpose of additional analysis and is not a
required part of the basic financial statements. This additional
information in the responsiblitiy of the Company's management. Such
information has been subjected to the inquiry and analytical procedures
applied in the review of the basic financial statements and we are not
aware of any material modifications that should be made thereto in
order for such information to be in conformity with generally accepted
accounting principles when considered in relation to the basic
financial statements taken as a whole.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of assets and liabilities of PMD
Investment company, including the schedule of investments, as of
December 31, 1997 and the related statements of operations and changes
in net assets for the year then ended (not presented herein) and the
additional information included in footnote E for each of the five
years in the period ended December 31, 1997; and in our report dated
January 23, 1998, we expressed an unqualified opinion on those
financial statements and additional information. In our opinion, the
information set forth in the accompanying statement of changes in net
assets for the year ended December 31, 1997 and the per share data and
ratios for each of the five years in the period ended December 31, 1997
is fairly stated, in all material respects, in relation to the financial
statements from which it has been derived.
Omaha, Nebraska
July 31, 1998
<TABLE>
PMD INVESTMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
(Unaudited - See Independent Accountants' Review Report
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at
approximate market value,
amortized cost of $13,792,770 $14,193,163
Investment in tax-exempt money-
market fund 304,275
___________
Total Investments 14,497,438
Interest receivable 224,650
___________
Total Assets 14,772,088
LIABILITIES:
Accrued expenses 13,335
___________
NET ASSETS (equivalent to $4.33 per
share based on 3,399,370 shares of
common stock outstanding at
June 30, 1998)
$14,708,753
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C>
Approximate
Principal Amortized Fair
Amount Cost Value
Abbey National PLC Sub, 6.69%, due
October 17, 2005 $ 550,000 $ 554,924 $ 564,245
Austin, Texas, Independent School District,
Go Unlimited PSF, 4.75%, due August 1, 2008
callable August 1, 2007 500,000 496,171 507,800
Clark County, Washington Public Utilities District #1
Electric Revenue, 6.3%, due January 1, 2004,
callable January 1, 2001 250,000 249,426 265,675
Denver Met Major League Baseball Stadium
District Colorado, 6.35%, due October 1, 2003 250,000 250,000 269,825
Federal Home Loan Mortgage Corporation, 7.0%,
due June 1, 2024 1,715,950 1,722,728 1,740,832
Federal National Mortgage Association, 6.5%,
due January 1, 2024 974,951 962,012 971,343
Federal National Mortgage Association, 7.8%,
due March 29, 2005, callable March 29, 2000 1,000,000 1,024,248 1,034,900
Florida State, General Services Revenues,
6%, due July 1, 2001 220,000 219,832 232,298
Grand Island, Nebraska Sanitary Sewer Revenue,
4.8%, due April 1, 2000 400,000 400,000 405,040
Hanover County, Virginia IDA Public Facilities
Lease Revenue, 6.75%, due July 15, 2007 150,000 150,000 161,970
Jefferson County, West Virginia Residential
Mortgage Revenue, Refunding Series A, 7.75%
due January 1, 2012, callable January 1, 2001 65,000 65,270 69,102
Lincoln, Nebraska Hospital Revenue, 7%, due
December 1, 1999, callable December 1, 1998 180,000 180,000 185,868
Lincoln, Nebraska Water Revenue, 6.7%, due
November 1, 2000 250,000 250,000 264,800
Mecklenburg county, NC Pub Import Sevice,
4.4%, due February 1, 2011, callable
February 1, 2008 500,000 490,562 485,700
Memphis, Tennessee, Go Unlimited OID
4.65%, due July 1, 2007,
callable July 1, 2005 500,000 498,265 508,550
Milwaukee County, Wisconsin, Series A, 6.4%,
due December 1, 2003 200,000 201,224 202,140
Nebraska Educational Facility Authority,
Creighton University, Series A, 6.65%, due
September 1, 1998 250,000 250,000 251,125
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (Continued)
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C>
Approximate
Principal Amortized Fair
Amount Cost Value
Nebraska Investment Finance Authority,
SFM Revenue Proj. C, 6.9%
due March 15, 2000 $ 240,000 $ 240,000 $248,184
Ohio State Highway Cap IMPTS, Series B,
Go Unlimited, 4.5%, due May 1, 2024 500,000 498,750 505,200
Omaha, Nebraska, 6.8%, due December 1, 1999 365,000 365,182 376,607
Omaha, Nebraska, 4.15%, due October 15, 1998 485,000 485,170 485,825
Omaha Public Power District, Nebraska Electric
Revenue, Series B, 5.9%, due February 1, 2006 450,000 450,000 493,020
Omaha Public Power District, Nebraska Electric
Revenue, Series A, 5%, due January 1, 2001 500,000 505,631 512,650
Sabine River Authority, Texas Water Supply
Facility, Lake Fork Project, 6.5%, due
December 1, 2001 265,000 264,559 279,708
Travelers Group Inc., Senior Note, 9.5%, due
March 1, 2002 500,000 538,955 557,450
Travelers Group Inc., Senior Note, 9.5%, due
March 1, 2002 50,000 54,459 55,745
Tucson, Arizona, G.O., Ref. 5.8%, due July 1, 2005 250,000 249,381 267,250
University of Nebraska Facilities Corp.,
University Medical Center, Series A, 7.2%,
due July 1, 2004, callable July 1, 2000 250,000 250,000 267,675
Utah State, Go Unlimited DTD, 4.9%,
due July 15, 2009, callable July 15, 2007 500,000 497,979 514,000
Vermont State, Series B, 5.7%, due August 1, 2005 400,000 398,019 432,520
Wake County NC Pub Import Go Unlimited, 4.5%
due March 1, 2011, callable March 1, 2008 500,000 487,435 490,350
Washington State, Series A and AT-6, 5.8%, due
February 1, 2003 250,000 247,906 264,925
Wisconsin Housing and Economic Development,
Series 1, 7%, due October 1, 2003 295,000 294,682 320,841
----------- --------- ---------
Total $13,755,901 $13,792,770 $14,193,163
=========== ========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited - See Independent Accountants' Review Report)
<S> <C>
Interest Income:
From investments $421,189
Expenses:
Investment advisory fee 15,749
Custodian fees 1,200
Professional fees 36,209
Shareholders' servicing costs 2,447
Directors' fees 7,500
Other 3,550
--------
Total Expenses 66,655
--------
Net Investment Income 354,534
Realized and unrealized gain on investments:
Net realized gain on investments 14,021
Change in unrealized appreciation of investments
for the period (29,133)
--------
Net Realized Gain and Decrease in Unrealized
Appreciation on Investments (15,112)
--------
Increase in Net Assets Resulting from
Operations $339,422
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE SIX MONTHS ENDED
JUNE 30, 1998
(Unaudited - See Independent Accountants' Review Report)
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulated
Undistributed Realized Unrealized
Common Stock Net Gain (Loss) Appreciation
$.50 Par Retained Investment on Sale of (Depreciation)
Shares Value Earnings Income Securities of Investments Total
Year ended December 31, 1997:
Net investment income - $ - $ - $ 759,368 $ - $ - $ 759,368
Net realized gain from
securities transactions - - - - 9,323 - 9,323
Change in unrealized appreciation
of investments - - - - - 163,427 163,427
Increase in net assets from
operations - - - 759,368 9,323 163,427 932,118
Dividends - $.239 per share - - - (818,877) (9,229) - (828,106)
Common stock redeemed (143,022) (71,511) (543,760) - - - (615,271)
------- ------- ------- ------- ------- ------- -------
Total decrease in net assets
(143,022) (71,511) (543,760) (59,509) 94 163,427 (511,259)
Net assets on January 1, 1997 3,596,795 1,798,397 13,567,042 (105,048) (36,231) 265,643 15,489,803
--------- --------- ---------- ------- -------- ------- -----------
Net assets on December 31, 1997
3,453,773 $1,726,886 $13,023,282 $(164,557) $ (36,137) $ 429,070 $14,978,544
========= ========== =========== ========== ========= ======== ===========
Six months ended June 30, 1998:
Net investment income - $ - $ - $ 354,534 $ - $ - $ 354,534
Net realized gain from
securities transactions - - - - 14,021 - 14,021
Change in unrealized appreciation
of investments - - - - - (29,133) (29,133)
--------- ---------- ----------- --------- ---------- --------- -----------
Increase in net assets from
operations - - - 354,534 14,021 (29,133) 339,422
Dividends - $.059 per share - - - (190,001) (9,227) - (199,228)
Dividends - $.051 per share - - - (173,876) - - (173,876)
Common stock redeemed
(Note B) (54,403) (27,202) (208,907) - - - (236,109)
--------- ---------- ----------- --------- ---------- --------- -----------
Total decrease in net assets (54,403) (27,202) (208,907) (9,343) 4,794 (29,133) (269,791)
Net assets on January 1, 1998 3,453,773 1,726,886 13,023,282 (164,557) (36,137) 429,070 14,978,544
--------- ---------- ----------- --------- ---------- ---------- ------------
Net assets on June 30, 1998 3,399,370 $1,699,684 $12,814,375 $(173,900) $ (31,343) $ 399,937 $14,708,753
========= ========== =========== ========= ========= = ======= ===========
See notes to financial statements.
</TABLE>
PMD INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited - See Independent Accountants' Review Report)
A. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940,
as amended, as a closed-end diversified management investment company.
The following is a summary of significant accounting policies followed
by the Company in the preparation of its financial statements.
Six Month Financial Statements - The financial statements for the six
months ended June 30, 1998 reflect all adjustments which are, in the
opinion of management, necessary to fairly present statements of
operations and changes in net assets for the six month period presented.
Investment Securities - Investments in securities are valued at
fair value as determined by the Company's investment advisor at
June 30, 1998.
Securities Transactions - Securities transactions are recorded on
a trade date basis. Cost of securities sold is determined using the
identified cost method.
Interest Income - Interest income, adjusted for amortization of
premium or accretion of discounts on investments in municipal bonds
and notes, is earned from settlement date and recorded on the accrual
basis.
Income Taxes - It is the Company's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its income,
including capital gains, to its shareholders. No income tax provision
has been made since substantially all the income and capital gains are
reported by the shareholders on their own tax returns.
Management and Service Fees - The investment advisory fee, which is
payable monthly, is based on the value of net assets at each month-end
at the annual rate of one-quarter of one percent on the first
$10,000,000, of the net asset value and .15 percent of the net asset
value in excess of $10,000,000, with a minimum fee of $10,000 per year.
Fees for the services of each of the directors of the Company are $5,000
annually with an additional $500 for each board or committee meeting
attended in excess of four meetings each year. No additional
compensation or benefits are paid to officers or directors of the
Company.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
B. REDEMPTION OF SHARES
At June 30, 1998, the Company had authorized 20,000,000 shares
of $.50 par value common stock.
Shareholders may redeem shares of stock and receive the net asset
value per share on any December 31 or June 30 by tendering the shares
to be redeemed 90 days prior to the intended redemption date.
C. CONTINGENT LIABILITIES
On January 15, 1981, the Company sold substantially all of its assets
which had been used in its former operations as a discount store
business. Although the purchaser of the Company's operating assets
assumed substantially all of the Company's liabilities and obligations
as part of the purchase transaction, the Company remains contingently
liable for such liabilities and obligations, including obligations
under long-term real estate and equipment leases and real estate
mortgages until released by the obligees or until such liabilities and
obligations have been satisfied or discharged. The total of such
liabilities and obligations not released by the obligees amounted to
approximately $6,250,590 as of February 1, 1998, the most recent
date for which such information is available.
D. PURCHASES AND SALES OF SECURITIES
The following summarizes the approximate value of securities
transactions for the periods indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Six Months Ended Six Months Ended Ended
June 30, 1998 June 30, 1997
Purchases Sales Purchases Sales
Tax Exempt:
Municipal bonds and notes $ 977,480 $ 540,000 $ 498,515 $ 952,000
Taxable:
Government agency - 213,880 - 132,968
---------- ---------- ---------- ----------
977,480 753,880 498,515 1,084,968
Other tax-exempt short-term
investments 394,550 876,776 1,529,084 1,550,805
---------- ---------- ---------- ----------
$1,372,030 $1,630,656 $2,027,599 $2,635,773
========== ========== ========== ==========
</TABLE>
Net realized gain on sale of investments was $14,021 and $2,178 for
the six months ended June 30, 1998 and 1997, respectively.
The diversification of investments based on fair value at
June 30, 1998 is as follows:
State and municipal tax-exempt bonds 63.9%
U.S. government agency bonds 25.8
Corporate bonds 8.2
Short-term tax-exempt money market fund 2.1
------
100.0%
======
E. DISTRIBUTIONS TO SHAREHOLDERS
On July 21, 1998, a quarterly income distribution of
$0.05315 per share aggregating $180,647 was declared from investment
income realized during 1998. The dividend is payable to shareholders
of record on July 31, 1998.
F. SUPPLEMENTARY INFORMATION-SELECTED PER SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Six Months
Ended
June 30, Years Ended December 31,
1998 ---------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
Weighted average shares
outstanding 3,498,083 3,537,042 3,626,328 3,825,907 3,988,480 4,061,542
========= ========= ========= ========= ========= =========
Interest income $ 0.120 $ 0.243 $ 0.251 $ 0.240 $ 0.255 $ 0.268
Expenses 0.019 0.028 0.030 0.024 0.025 0.024
--------- --------- --------- --------- -------- ---------
Net investment income 0.101 0.215 0.221 0.216 0.230 0.244
Distribution from net
investment income (0.107) (0.234) (0.262) (0.228) (0.243) (0.251)
Increase (decrease)
in unrealized appreciation
of investments (0.008) 0.047 (0.094) 0.098 (0.244) 0.116
Net realized gain (loss)
from securities
transactions 0.004 0.003 0.010 0.051 - (0.002)
--------- --------- --------- --------- -------- ---------
Increase (decrease) in
net assets (0.010) 0.031 (0.125) 0.137 (0.257) 0.107
Net asset value at
beginning of period 4.337 4.306 4.431 4.294 4.551 4.444
--------- --------- ---------- --------- --------- ---------
Net asset value at end
of period $ 4.327 $4.337 $ 4.306 $ 4.431 $4.294 $4.551
========= ========= ========== ========= ========= =========
Ratio of expenses to
average net assets 0.4 %* 0.7 % 0.7 % 0.5 % 0.6 % 0.5 %
Ratio of net investment
income to average net
assets 2.4 %* 5.0 % 5.0 % 4.9 % 5.2 % 5.4 %
Portfolio turnover 5.1 %* 12.0 % 19.8 % 59.6 % 2.3 % 11.5 %
Number of shares
outstanding at end of
period (in thousands) 3,399 3,454 3,597 3,805 3,979 4,072
* Ratio has not been annualized.
</TABLE>
