-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LC8oUr1YuaXktqvA2gEKS8MvqlPYmtHNGtsmD103cd+7evQ4baBqoPeIrtIXaX8T uqwOXfGhG+g8zYQ9WD2/jA== 0000950116-05-001778.txt : 20050510 0000950116-05-001778.hdr.sgml : 20050510 20050509174422 ACCESSION NUMBER: 0000950116-05-001778 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040831 FILED AS OF DATE: 20050510 DATE AS OF CHANGE: 20050509 EFFECTIVENESS DATE: 20050510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NRM INVESTMENT CO CENTRAL INDEX KEY: 0000313038 IRS NUMBER: 231922688 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02955 FILM NUMBER: 05813214 BUSINESS ADDRESS: STREET 1: 919 CONESTOGA RD STREET 2: ROSEMONT BUSINESS CAMPUS STE 112 BLDG 3 CITY: ROSEMONT STATE: PA ZIP: 19010 BUSINESS PHONE: 6105250904 MAIL ADDRESS: STREET 1: 919 CONESTOGA ROAD STREET 2: ROSEMONT BUSINESS CAMPUS STE 112 BLDG 3 CITY: ROSEMONT STATE: PA ZIP: 19010 N-CSR 1 n-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811 02995 --------- Exact name of registrant as specified in charter: NRM Investment Company ---------------------- Address of principal executive offices: NRM Investment Company, Rosemont -------------------------------- Business Campus, Suite 112, Building 1 - 919 Conestoga Road, Rosemont, - ---------------------------------------------------------------------- Pennsylvania 19010 - ------------------ Name and address of agent for service: John H. McCoy, President, NRM Investment ---------------------------------------- Company, Rosemont Business Campus, Suite 112, Building 1 - 919 Conestoga Road, - ------------------------------------------------------------------------------ Rosemont, Pennsylvania 19010 - ---------------------------- Registrant's Telephone Number: (610) 527-7009 -------------- Date of fiscal year end: August 31, 2004 --------------- ITEM 1 - REPORTS TO STOCKHOLDERS - -------------------------------- A copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act is attached hereto. ITEMS 2 - 5 - ----------- The within N-CSR is a semi-annual report and accordingly the information required by these items are not required at this time. ITEM 6 - SCHEDULE OF INVESTMENTS - -------------------------------- The information is included as part of the report to shareholders filed under Item 1 of this report and attached hereto. ITEM 9 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS - ----------------------------------------------------------- None. ITEM - 10 CONTROLS AND PROCEDURES - --------------------------------- The Fund operates through its five-member board of directors sitting as an executive committee of the whole. It has no employees other than its officers none of whom receives compensation other than nominal director's fees. It engages independent contractors to provide investment, financial and custodial services. PORTFOLIO PROCEDURES 1. The Investment Advisor and those authorized to execute investment transactions do not have discretion to change the Fund's portfolio outside of the guidelines established by the Board of Directors. 2. Any significant inflows or outflows of cash will be brought to the President's attention to confirm that a related purchase or sale of securities or other disbursement was authorized by him. INVESTMENT CUSTODY AND SHAREHOLDER SERVICES 1. All transactions with shareholders and the custody of the Fund's Securities is performed by an independent corporate custodian. Any changes to these functions must be authorized by the Board of Directors. ACCOUNTING AND REPORTING 1. The recording, summarizing and reporting of all financial data will be performed by a CPA who is independent of the buying and selling of securities as well as the disbursement of the Fund's cash and transfer of the Fund's assets. 2. Upon discovery, the CPA will bring any unusual transaction directly to the President and/or Board's attention. 3. The CPA will provide directly to the Board of Directors a Statement of Net Assets and a Statement of Operations in accordance with generally accepted accounting principles within ten business days of each month end. 2 CERTIFICATIONS I, John H. McCoy, President and Treasurer of the Fund certify that: 1. I have reviewed this report on Form N-CSR of NRM Investment Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 5/6/05 ------------------------------- /s/ John H. McCoy - ---------------------------------------- John H. McCoy, President and Treasurer 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: NRM Investment Company By: /s/ John H. McCoy -------------------------------------------- John H. McCoy, President and Treasurer Date: 5/6/05 ------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ John H. McCoy -------------------------------------------- John H. McCoy, President and Treasurer Date: 5/6/05 ------------------------------- By: /s/ Edward Fackenthal -------------------------------------------- Edward Fackenthal, Counsel and Assistant Secretary Date: 5/6/05 ------------------------------- 4 NRM INVESTMENT COMPANY SEMI-ANNUAL FINANCIAL STATEMENTS FEBRUARY 28, 2005 TABLE OF CONTENTS PAGE NO. FINANCIAL STATEMENTS: Statement of Assets and Liabilities 1 Schedule of Investments 2 Statement of Operations 6 Statements of Changes in Net Assets 7 Financial Highlights 8 Notes to Financial Statements 10
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Attachment to Item I - NRM Investment Company - NCSR Semi-annual STATEMENT OF ASSETS AND LIABILITIES UNAUDITED FEBRUARY 28, 2005 ----------------- ASSETS Investments at fair value (cost $15,479,053) $ 16,015,906 Interest and dividends receivable 104,623 Prepaid expenses 3,251 ----------------- TOTAL ASSETS 16,123,780 ----------------- LIABILITIES Dividends payable 202,135 Accrued expenses and other liabilities 128,142 ----------------- TOTAL LIABILITIES 330,277 ----------------- NET ASSETS, APPLICABLE TO 3,963,435 OUTSTANDING SHARES, EQUIVALENT TO $3.98 A SHARE $ 15,793,503 =================
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS FEBRUARY 28, 2005 - UNAUDITED - ------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT FAIR MUNICIPAL BONDS - 48.3% OR SHARES VALUE - ---------------------------------------------------------------------------- --------- ---------- GENERAL OBLIGATION BONDS - 13.6% Bucks County, Pennsylvania, 5.00, due 6/15/11, callable 6/15/09 at 100 100,000 $ 107,211 Pittsburgh, Pennsylvania, 5.00%, due 9/1/12, callable 3/1/12 at 100 (AMBAC) 250,000 269,548 Shelby County, Tennessee, 5.625%, due 4/1/14, callable 4/1/05 at 101 150,000 151,882 Berks County Pennsylvania, 5.00%, due 11/15/14, callable 11/15/08 at 100 (AMBAC) 100,000 106,193 Philadelphia, Pennsylvania School District, 5.625%, due 8/1/15, callable 8/1/12 at 100 (FGIC) 300,000 336,093 Philadelphia Pennsylvania School District, 5.25%, due 4/1/16, callable 4/1/09 at 100 (MBIA) 100,000 107,657 Montgomery County Texas Municipal Utility District 67, 6.00%, due 9/1/16, callable 9/1/05 at 100 (AMBAC) 250,000 254,857 Licking County, Ohio Joint Vocational School District, 5.50%, due 12/1/16, callable 12/1/12 at 100 (MBIA) 170,000 189,528 Pittsburgh, Pennsylvania, 5.50%, due 9/1/17, at 100 (FSA) 250,000 289,262 Fairfax County, Virginia, 5.50%, due 12/1/17, callable 12/1/07 at 102 135,000 147,550 Bucks County, Pennsylvania School District, 5.250%, due 12/1/17, callable 4/1/07 at 100 200,000 212,250 ---------- TOTAL GENERAL OBLIGATION BONDS 2,172,031 ---------- HOUSING FINANCE AGENCY BONDS - 6.4% Fort Worth, Texas Housing Finance Corporation, Home Mortgage Revenue Refunding Series 1991, 8.50%, due 10/1/11, callable 10/1/01 at 103 10,000 10,003 Odessa, Texas Housing Finance Corporation, Home Mortgage Revenue Refunding, 8.45%, due 11/1/11, callable 11/1/05 at 103 47,058 48,052 California Housing Finance Agency, Home Mortgage, 10.25%, due 2/1/14, callable 2/1/99 at 100 55,000 57,254 Nevada Housing Division, Single-Family Mortgage, 7.35%, due 10/1/15 5,000 5,001 See notes to financial statements. - ------------------------------------------------------------------------------------------------------------------- 2
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) FEBRUARY 28, 2005 - UNAUDITED - ------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT FAIR MUNICIPAL BONDS - 48.3% (CONTINUED) OR SHARES VALUE - -------------------------------------------------------------------------- --------- ---------- HOUSING FINANCE AGENCY BONDS - 24.6% (CONTINUED) Alabama Housing Finance Authority, Single-Family Mortgage, 6.00%, due 10/1/16, callable 4/1/06 at 102 155,000 $ 159,737 Minnesota State Housing Finance Agency, Single-Family Mortgage, 5.95%, due 1/1/17, callable 1/1/07 at 101.50 105,000 108,246 Hawaii State Housing Finance and Development Corporation, Single-Family Mortgage, 5.45%, due 7/1/17 callable 7/1/07 at 102, callable 7/1/09 at 100 50,000 51,740 Utah State Housing Finance Agency, Single-Family Mortgage, 6.30%, due 1/1/18 15,000 15,077 Florida Housing Finance Corp., 5.25%, due 12/1/18, callable 12/1/08 at 102, 12/1/10 at 100 100,000 104,473 New Jersey State Housing and Mortgage Finance Agency, Multi-Family Housing, 6.05%, due 11/1/20, callable 5/1/05 at 102 (AMBAC) 450,000 459,887 ---------- TOTAL HOUSING FINANCE AGENCY BONDS 1,019,470 ---------- HOSPITAL REVENUE BONDS - 2.1% Massachusetts State Health and Educational Facilities Authority, Newton Wellesley Hospital, 5.875%, due 7/1/15, callable 7/1/05 at 102, callable 7/1/07 at 100 (MBIA) 200,000 206,126 Kalamazoo Michigan Hospital Finance Authority, Bronson Methodist, 5.75%, due 5/15/16 callable 5/15/06 at 102 (MBIA) 125,000 132,487 ---------- TOTAL HOSPITAL REVENUE BONDS 338,613 ---------- OTHER REVENUE BONDS - 26.2% Grand Rapids, Michigan Downtown Development Authority, 6.60%, due 6/1/08, callable 6/1/06 at 100 365,000 373,165 Allegheny County Pennsylvania Industrial Development Authority, 5.00%, due 11/1/11 (MBIA) 100,000 109,773 Pennsylvania State Higher Educational Facilities Authority, 5.25%, due 1/1/12, callable 7/1/08 at 100 (MBIA) 175,000 186,916 Central and Western Chester County IDA, Heatherwood Project, 5.75%, due 2/1/12, callable 2/1/02 at 100 165,000 165,373 See notes to financial statements. - ----------------------------------------------------------------------------------------------------------------- 3
NRM INVESTMENT COMPANY - ----------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) FEBRUARY 28, 2005 - UNAUDITED - ----------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT FAIR MUNICIPAL BONDS - 48.3% (CONTINUED) OR SHARES VALUE - ------------------------------------------------------------------------- --------- -------- OTHER REVENUE BONDS - 26.2% Pennsylvania State Higher Educational Facilities Authority, 5.375%, due 7/1/12, callable 7/1/09 at 100 (AMBAC) 100,000 $108,427 Jackson Mississippi Redevelopment Authority, Jackson Street Area Project, 5.70%, due 4/1/13, callable 10/1/05 at 100 (MBIA) 100,000 101,729 Harrisburg Pennsylvania Recovery Facilities, 5.00%, due 9/1/13, callable 9/1/08 at 101 (FSA) 100,000 108,287 Rock Hill South Carolina Utility System, 5.125%, due 1/1/14, callable 1/1/10 at 101 (FSA) 125,000 135,310 Philadelphia Pennsylvania Wastewater, 5.25%, due 11/1/14, callable 11/1/12 at 100 (FGIC) 250,000 277,392 Pennsylvania State Turnpike Commission, 5.25%, due 12/1/14, callable 12/1/08 at 101 (AMBAC) 230,000 249,540 Pennsylvania State Turnpike Commission, 5.25%, due 12/1/15, callable 12/1/08 at 101 (AMBAC) 200,000 215,898 Rochester Minnesota Independent School District No. 535, 5.75%, due 2/1/16, callable 2/1/10 at 100 100,000 110,537 Allegheny County PA Higher Educational Building Authority, 5.00%, due 6/15/16, callable 6/15/12 at 100 (AMBAC) 150,000 172,307 Ohio State Mental Health Capital Facilities, 5.50%, due 6/1/16, callable 6/1/11 at 100 (MBIA) 250,000 275,142 Pennsylvania State Higher Educational Facilities Authority, 5.00%, due 6/15/16, callable 6/15/12 at 100 (AMBAC) 100,000 107,435 Philadelphia Pennsylvania Industrial Development Lease Revenue, 5.40%, due 2/15/17, callable 2/15/07 at 102 (MBIA) 100,000 106,734 Delaware River Port Authority PA & NJ, 5.75% due 1/1/18, callable 1/1/10 at 100 (FSA) 100,000 110,752 Las Vegas Nevada Convention and Visitors Authority, 5.75%, due 7/1/18, callable 7/1/09 at 101 (AMBAC) 100,000 110,754 Pennsylvania State Turnpike, Registration Fee Revenue, 5.375%, due 7/15/18, callable 7/15/11 at 101 (AMBAC) 100,000 109,555 Red River Texas Education Finance Corporation, St. Marks School, 6.00%, due 8/15/17, callable 2/15/10 at 100 300,000 332,571 Red River Texas Education Finance Corporation, St. Marks School, 6.00%, due 8/15/18, callable 2/15/10 at 100 150,000 166,357 Michigan Municipal Bond Authority, LOC Government Loans, 6.125%, due 12/1/18, callable 12/1/04 at 102, callable 12/1/06 at 100 (FGIC) 100,000 102,606 Placer County California Water Agency, Certificates of Participation, 5.50%, due 7/1/19, callable 7/1/09 at 101 (AMBAC) 320,000 350,810 See notes to financial statements. - ----------------------------------------------------------------------------------------------------------------- 4
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) FEBRUARY 28, 2005 - UNAUDITED - ------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT FAIR MUNICIPAL BONDS - 48.3% (CONTINUED) OR SHARES VALUE - ------------------------------------------------------------------------ --------- ---------- OTHER REVENUE BONDS - 26.2% (CONTINUED) Brevard County Florida School Board Certificates, 5.50%, due 7/1/21, callable 7/1/06 at 102 (AMBAC) 100,000 $ 106,016 ----------- TOTAL OTHER REVENUE BONDS 4,193,386 ----------- TOTAL MUNICIPAL BONDS (COST $7,532,740) 7,723,503 ----------- OTHER REGULATED INVESTMENT COMPANIES - 18.7% Colomos Convertible Growth and Income Fund, Class A 32,832 977,407 Colomos Global Income Fund, Class A 119,838 1,017,426 North Track S&P 100 Index Fund 30,628 996,937 ----------- TOTAL OTHER REGULATED INVESTMENT COMPANIES (COST $2,895,302) 2,991,770 ----------- OTHER SECURITIES -24.3% UBS AG Enhanced Appreciation Securities, due 3/31/05 1,500,000 1,695,000 UBS AG Enhanced Appreciation Securities, due 5/31/05 750,000 780,000 UBS AG Enhanced Appreciation Securities, due 2/28/06 400,000 429,000 UBS AG Enhanced Appreciation Securities, due 3/31/06 250,000 262,500 UBS AG Enhanced Appreciation Securities, due 6/30/06 750,000 733,125 ----------- TOTAL OTHER SECURITIES (COST $3,650,000) 3,899,625 ----------- SHORT-TERM INVESTMENTS - AT COST APPROXIMATING FAIR VALUE - 8.7%, SEI TAX EXEMPT TRUST - PENNSYLVANIA TAX 1,401,011 1,401,011 FREE FUND ----------- TOTAL INVESTMENTS - 100% (COST $15,479,053) $16,015,906 =========== See notes to financial statements. - ------------------------------------------------------------------------------------------------------------------- 5
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS UNAUDITED SIX-MONTH PERIOD ENDED FEBRUARY 28, 2005 ------------------ INVESTMENT INCOME $ 250,808 ------------------ EXPENSES Investment advisory fees 5,000 Custodian fees 4,375 Transfer and dividend disbursing agent fees 1,850 Legal and professional fees 42,010 Directors' fees 4,000 Insurance 750 Capital stock tax 1,800 Provision for environmental claim 3,000 Miscellaneous 4,800 ------------------ TOTAL EXPENSES 68,585 ------------------ NET INVESTMENT INCOME 182,223 ------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain from investment transactions 147,802 Net unrealized appreciation of investments 220,176 ------------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 367,978 ------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 550,201 ================== See notes to financial statements. - ------------------------------------------------------------------------------------------------------------------- 6
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS UNAUDITED PERIOD/ YEAR ENDED -------------------------------- FEBRUARY 28, AUGUST 31, 2005 2004 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 182,223 $ 471,938 Net realized gain (loss) from investment transactions 147,802 565,490 Net unrealized appreciation (depreciation) of investments 220,176 (190,718) ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 550,201 846,710 DISTRIBUTIONS TO SHAREHOLDERS (335,703) (465,704) CAPITAL SHARE TRANSACTIONS (14) 15 ----------- ----------- TOTAL INCREASE IN NET ASSETS 214,484 381,021 NET ASSETS - BEGINNING OF YEAR 15,579,019 15,197,998 ----------- ----------- NET ASSETS - END OF YEAR $15,793,503 $15,579,019 =========== =========== See notes to financial statements. - ------------------------------------------------------------------------------------------------------------------- 7
NRM INVESTMENT COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS UNAUDITED FEBRUARY 28, AUGUST 31, ------------ --------------------------------------------------------------- 2005 2004 2003 2002 2001 2000 ------- ------- ------- ------- ------- ------- PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED YEAR) Net asset value, beginning of year $ 3.931 $ 3.834 $ 3.842 $ 3.837 $ 3.794 $ 3.921 Net investment income .046 .119 .146 .163 .199 .184 Net realized and unrealized gain (loss) on investments .093 .096 .006 .006 .054 (.135) ----------------------------------------------------------------------------- TOTAL FROM INVESTMENT OPERATIONS .139 .215 .152 .169 .253 .049 ----------------------------------------------------------------------------- Less distributions: Dividends from capital gains (.037) (.009) - - - - Dividends from net tax-exempt income (.044) (.103) (.146) (.163) (.199) (.174) Dividends from net taxable income (.004) (.006) - - - (.002) Distribution in excess of net investment income (.014) (.001) (.011) - ----------------------------------------------------------------------------- TOTAL DISTRIBUTIONS (.085) (.118) (.160) (.164) (.210) (.176) ----------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD/YEAR $ 3.985 $ 3.931 $ 3.834 $ 3.842 $ 3.837 $ 3.794 ============================================================================= TOTAL RETURN 3.13% 5.59% 3.96% 4.40% 6.70% 1.17% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) 15,794 $15,579 $15,198 $15,285 $15,322 $16,268 Ratio of expenses to average net assets .44% .67% 1.07% 1.43% .95% .77% Ratio of net investment income to average net assets 1.16% 3.04% 3.78% 4.24% 4.93% 4.83% Portfolio turnover rate 12.92% 44.18% 37.90% 16.82% 14.21% 77.12% See notes to financial statements. - ----------------------------------------------------------------------------------------------------------------------------------- 8
NRM INVESTMENT COMPANY - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS NRM Investment Company (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. VALUATION OF INVESTMENTS Investments in securities (other than debt securities maturing in 60 days or less) traded in the over-the-counter market, and listed securities for which no sale was reported on the last business day of the year, are valued based on prices furnished by a pricing service. This service determines the valuations using a matrix pricing system based on common bond features such as coupon rate, quality and expected maturity dates. Securities for which market quotations are not readily available are valued by the Investment Advisor under the supervision and responsibility of the Fund's Board of Directors. Investments in securities that are traded on a national securities exchange are valued at the closing prices. Short-term investments are valued at amortized cost, which approximates fair value. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME Investment transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses from investment transactions are reported on the basis of identified cost for both financial and federal income tax purposes. Interest income is recorded on the accrual basis for both financial and income tax reporting. In computing investment income, the Fund amortizes premiums over the life of the security, unless said premium is in excess of any call price, in which case the excess is amortized to the earliest call date. Discounts are accreted over the life of the security. TRANSACTIONS WITH SHAREHOLDERS Fund shares are sold and redeemed at the net asset value. Transactions of these shares are recorded on the trade date. Dividends and distributions are recorded by the Fund on the ex-dividend date. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute substantially all of its net investment income and realized net gain from investment transactions to its shareholders and, accordingly, no provision has been made for federal income taxes. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. - -------------------------------------------------------------------------------- 9 NRM INVESTMENT COMPANY - -------------------------------------------------------------------------------- NOTE 2 - INVESTMENT ADVISOR AND MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has an investment advisory agreement which provides that the Fund will pay to the investment advisor, as compensation for services provided and expenses assumed, a fee at the annual flat rate of $10,000. The chief executive officer of the investment advisor is on the Board of Directors of the Fund. NOTE 3 - COST, PURCHASES AND SALES OF INVESTMENT SECURITIES Cost of purchases and proceeds from sales and maturities of investment securities, other than short-term investments, aggregated $2,000,000 and $3,254,755, respectively, during the period ended February 28, 2005. At February 28, 2005, the cost of investment securities owned is the same for financial reporting and federal income tax purposes. Net unrealized appreciation of investment securities is $536,853 (aggregate gross unrealized appreciation of $575,069,less aggregate unrealized depreciation of $38,216). NOTE 4 - DIVIDENDS PAYABLE On December 16, 2004 the Board of Directors declared a quarterly dividend of $.051 per share to shareholders of record as of February 22, 2005, payable March 1, 2005 NOTE 5 - ENVIRONMENTAL LIABILITY The Fund has been identified as a potentially responsible party ("PRP") by the Environmental Protection Agency ("EPA") in remedial activities related to an environmental matter. The claim is divided into two parts: the first relates to groundwater contamination (OU-1), and the second relates to drummed waste and soil cleanup (OU-2). In addition, there are past costs incurred by the EPA. The Fund has joined a group (OU-1 Group) of defendants to share the costs of the OU-1 matter and has declined to join a group (OU-2 Group) to share the costs of the OU-2 matter as the Fund believes its linkage to this portion of the claim to be weak. The Fund has accrued $115,000 at February 28, 2005 as its estimate of the remaining commitment to the OU-1 Group. The Fund's share of the costs is subject to reallocation after all available evidence is analyzed. The OU-2 Group has begun a cost recovery suit against the Fund and others for the OU-1 and OU-2 work as well as past EPA costs. The total amount asserted for both the OU-1 and OU-2 matters is $3,000,000 and for the past EPA costs is $7,000,000. Of the amounts the Fund has already paid or will pay because of its OU-1 contract commitment, it will seek contribution or reimbursement from the other defendants. The Fund believes there is little evidence to link it to the OU-2 matter but the OU-2 Group will assert otherwise. Ultimately there will be an allocation of responsibility under court supervision which will ultimately resolve contracted and contributed claim costs. However, the outcome to the Fund is clearly uncertain and cannot be measured. - -------------------------------------------------------------------------------- 10 NOTE 5 - ENVIRONMENTAL LIABILITY (CONTINUED) Therefore, no amount has been accrued in the financial statements relating to the OU-2 matter at February 28, 2005. NOTE 6 - TRANSACTIONS IN CAPITAL STOCK AND COMPONENTS OF NET ASSETS Transactions in fund shares were as follows:
PERIOD/YEAR ENDED -------------------------------------------------------------------------- FEBRUARY 28, 2005 AUGUST 31, 2004 ---------------------------------- ------------------------------------ SHARES AMOUNT SHARES AMOUNT ---------------------------------- ------------------------------------ Shares issued in reinvestment of dividends 7 $25 13 $52 Shares redeemed 10 (39) 9 (37) ---------------- ---------------- ---------------- ---------------- NET DECREASE (3) ($14) 4 $15 ================ ================ ================ ================
The components of net assets at February 28, 2005 and August 31, 2004 are as follows:
FEBRUARY 28, AUGUST 31, -------------- ----------- 2005 2004 -------------- ---------- Capital shares, par value $.01 per share, 3,963,438 shares and 3,963,441 shares issued and outstanding at February 28, 2005 and August 31, 2004 (10,000,000 full and fractional shares authorized); and capital paid-in $15,383,491 $15,383,505 Unrealized appreciation of investments 536,853 316,676 Overdistributed net investment income (126,841) (121,162) -------------- ----------- NET ASSETS 15,793,503 $15,579,019 ============== ===========
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