t62630a_ncsrsa.htm

See notes to financial statements.

NRM Investment Company

February 29, 2008

Schedule of Investments (Continued)

Principal

Amount

or Shares

Fair

Value

Municipal Bonds – 54.2% (Continued) Other Revenue Bonds - 42.7% (Continued) Philadelphia, Pennsylvania Gas Works, 18th Series, 5.00%, due 8/1/11 (CIFG)	300,000	$	316,788
Montgomery County Pennsylvania Higher Educatiional Authority, 5.00%, due 4/1/12 (Radian)	225,000		232,321
Pennsylvania State Higher Educational Facilities Authority, 5.375%, due 7/1/12, callable 7/1/09 at 100 (AMBAC)	100,000		103,726
Pennsylvania Infrastructure Investment Authority, 5.00%, due 9/1/12	500,000		535,625
Pennsylvania State Higher Educational Facilities Authority, 5.50%, prerefunded 1/01/13	350,000		380,796
Harrisburg, Pennsylvania Recovery Facilities, 5.00%, due 9/1/13, callable 9/1/08 at 101 (FSA)	100,000		102,269
Harrisburg, Pennsylvania Recovery Facilities, 5.00%, mandatory put 12/1/13	425,000		455,808
Philadelphia, Pennsylvania Wastewater, 5.25%, due 11/1/14, callable 11/1/12 at 100 (FGIC)	250,000		262,925
Philadelphia, Pennsylvania Wastewater, 5.00%, due 7/1/14	250,000		269,035
Pennsylvania State Turnpike Commission, 5.25%, due 12/1/14, callable 12/1/08 at 101 (AMBAC)	230,000		236,545
Pennsylvania State Turnpike Commission, 5.25%, due 12/1/15, callable 12/1/08 at 101 (AMBAC)	200,000		205,753
Allegheny County Sanitation Authority, Sewer Revenue, 5.00%, due 12/1/23, callable 12/1/15	300,000		296,757
Allegheny County, Pennsylvania Higher Educational Building Authority, 5.50%, due 3/15/16, callable 6/15/12 at 100 (AMBAC)	150,000		163,649
Pennsylvania State Higher Educational Facilities Authority, 5.00%, due 6/15/16, callable 6/15/12 at 100 (AMBAC)	100,000		103,572
Philadelphia, Pennsylvania Gas Works, Fourth Series, 5.25%, due 8/1/16, callable 8/1/13	250,000		271,113
Chester County, Pennsylvania Health and Educational Authority (Devereux), 5.00%, due 11/1/18	405,000		412,740
Tobacco Settlement Financial Corporation, New Jersey, 5.00%, due 6/1/19 , callable 6/1/17	200,000		192,806
North Carolina Medical Care Community Mortgage Revenue (Chatham Hospital), 5.25%, due 8/1/26, callable 2/1/17 at 100 (MBIA)	250,000		247,348

Total Other Revenue Bonds			5,953,843
Total Municipal Bonds (Cost $7,581,130)			7,544,844

See notes to financial statements.

NRM Investment Company

February 29, 2008

Schedule of Investments (Continued)

Principal

Amount

or Shares

Fair

Value

Preferred Stock – 43.1%

ABN Amro Capital Trust VI, 6.25%	20,000	470,000
Aegon NV , 6.50%	15,000	347,850
Aegon NV, 6.875%	10,000	247,500
Barclays Bank, PLC ADR	20,000	491,200
Deutsche Bank Contingent Cap Tr, 6.55%	15,000	348,000
Federal Home Loan Mortgage Corporation, 6.42%	5,000	247,250
Federal National Mortgage Association, 8.25%, Series S	8,000	208,400
Goldman Sachs Group, Inc. 1/1000 B	15,000	357,300
HSBC USA, Inc., 1/40 Series H	20,000	479,600
ING Groep NV, 7.05%	10,000	240,100
ING Groep NV, Perpetual Debt Security	16,000	370,560
Lehman Brothers Holdings, Inc. C Dep. 1/10	10,000	423,500
Metlife, Inc., 6.50%	17,500	420,000
Prudential PLC, 6.50%	12,500	309,125
Royal Bank of Scotland Group PLC ADR Series R	10,000	228,600
Royal Bank of Scotland Group PLC ADR Series Q	20,000	497,800
Santander Financial SA, 6.41%	14,000	327,600

Total Preferred Stocks (Cost $6,235,795)

6,014,385

Short-Term Investments - at Cost Approximating Fair Value - 0.2.7%

Federated Pennsylvania Municipal Cash Trust #8 – (Cost $378,059)	378,059	378,059

Total Investments - 100% (Cost $14,194,984)

13,937,288

See notes to financial statements.

NRM Investment Company

February 29, 2008

Statement of Operations

Unaudited

Six-month

Period Ended

February 29,

2008

Investment Income

357,015

Expenses
Investment advisory fees			20,473
Custodian fees			9,750
Transfer and dividend disbursing agent fees			975
Legal and professional fees			30,300
Directors’ fees			4,333
Insurance			800
Capital stock tax			2,200
Provision for environmental claims			4,041
Miscellaneous			2,234

Total Expenses

75,106

Net Investment Income

281,909

Realized and Unrealized Gain (Loss) on Investments
Net realized loss from investment transactions	(12,052	)
Net unrealized depreciation of investments	(177,594	)

Net Realized and Unrealized (Loss) on Investments

(189,646

)

Net Increase in Net Assets Resulting from Operations

92,263

See notes to financial statements.

NRM Investment Company

February 29, 2008

Statements of Changes in Net Assets

	Period/ Year Ended
	Unaudited February 29, 2008		August 31, 2007

Increase (Decrease) in Net Assets from Operations

Net investment income	$	281,909		$	(473,880	)
Net realized gain (loss) from investment transactions		(12,052	)		22,720
Net unrealized (depreciation) of investments		(177,594	)		(336,446	)

Net Increase (Decrease) in Net Assets Resulting from Operations

92,263

(787,606

)

Distributions to Shareholders

(202,071

)

(606,212

)

Capital Share Transactions

Total Increase (Decrease) in Net Assets

(109,754

)

(1,393,754

)

Net Assets - Beginning of Year

12,815,018

14,208,772

Net Assets - End of Period/Year

12,705,264

12,815,018

See notes to financial statements.

NRM Investment Company

February 29, 2008
Financial Highlights

	Unaudited			August 31,
	February			2007			2006			2005			2004			2003
	29, 2008

PER SHARE DATA (FOR A SHARE
OUTSTANDING THROUGHOUT
THE INDICATED PERIOD/YEAR)

Net asset value, beginning of year	$	3.551		$	3.938		$	3.900		$	3.931		$	3.834		$	3.842


Net investment income		.078			.131			.110			.070			.119			.146

Net realized and unrealized gain (loss)
on investments		(.052	)		(.088	)		.059			.097			.096			.006

Total from Investment Operations		.026			(.219	)		.169			.167			.215			.152

Less distributions:
Dividends from capital gains		-			(.025	)		(.021	)		(.130	)		(.009	)		-
Dividends from net tax-exempt income		(.024	)		(.064	)		(.086	)		(.061	)		(.103	)		(.146	)
Dividends from net taxable income		(.032	)		(.079	)		(.024	)		(.007	)		(.006	)		-
Distribution in excess of net investment
income		-			-			-			-			-			(.014	)

Total Distributions		(.056	)		(.168	)		(.131	)		(.198	)		(.118	)		(.160	)

Net Asset Value, End of Period/Year	$	3.521		$	3.551		$	3.938		$	3.900		$	3.931		$	3.834


TOTAL RETURN		.71	%		(5.79	%)		4.40	%		3.76	%		5.59	%		3.96	%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (in thousands)	$	12,705		$	12,815		$	14,209		$	15,397		$	15,579		$	15,198

Ratio of expenses to average net assets		.59	%		8.62	%		1.05	%		1.23	%		.67	%		1.07	%


Ratio of net investment income to average
net assets		2.23	%		(3.43	%)		2.77	%		1.75	%		3.04	%		3.78	%

Portfolio turnover rate		6.58	%		18.00	%		88.85	%		56.38	%		47.45	%		37.90	%

See notes to financial statements.

NRM Investment Company

Notes to Financial Statements

February 29, 2008

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 investment objective of the Fund is to maximize and distribute income and gains on a current basis. Its secondary objective is preservation of capital. 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. Dividend income is recognized on the ex-dividend date. 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.

NRM Investment Company

Notes to Financial Statements

February 29, 2008

Note 1 - Nature of Business and Significant Accounting Policies (Continued)

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.

Note 2 - Investment Advisor and Management Fees and Other Transactions with Affiliates

The Fund has an investment advisory agreement which provides that the Fund pays to the investment advisor, as compensation for services provided and expenses assumed, a fee at the annual rate of .30% of the Fund’s net asset value. The chief executive officer of the investment advisor is on the Board of Directors of the Fund. Furthermore, the Fund’s president and chairman of the Board owns 78.1% of the Fund’s outstanding shares as of February 29, 2008.

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 $917,457 and $889,047, respectively, during the period ended February 29, 2008.

At February 29, 2008, the cost of investment securities owned is the same for financial reporting and federal income tax purposes. Net unrealized depreciation of investment securities is $257,696 (aggregate gross unrealized appreciation of $61,711, less aggregate unrealized depreciation of $319,407).

Note 4 - 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. EPA thereafter asserted a cost-recovery and future cleanup claim against selected PRP’s.

EPA’s claim was divided into two parts: the first relates to groundwater contamination (OU-1), and the second (OU-2) relates to drummed waste, soil cleanup, and past costs incurred by the EPA.

NRM Investment Company

Notes to Financial Statements

February 29, 2008

Note 4 - Environmental Liability (Continued)

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 believed its linkage to this portion of the claim to be weak.

The Fund had accrued $150,000 at August 31, 2007 and this amount remains as of February 29, 2008 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 amounts asserted to date for the OU-1 and OU-2 matters are $3,700,000 and $2,500,000 respectively; in addition OU-2 includes past EPA costs of $7,500,000. There will be ongoing OU-1 operation and maintenance expenses for cleaning ground water for the indefinite future and for indefinite amounts. The OU-2 Group will seek cost recovery and contribution for the sums its members advanced plus interest from the date of advancement. 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, with interest.

In April 2007, Counsel for the Fund advised that, with minor exceptions, lengthy discovery proceedings have been concluded, the developed facts have been analyzed, and that all but six of the defendant PRP’s have settled. The Fund remains one of the six non-settling defendantshas begun settlement negotiations. After considering the facts and plaintiffs’ contentions, Counsel believes that a payment by the Fund either by settlement or by recovery following further litigation is probable and that, in addition to the OU-1 costs the Fund has already incurred, there will be additional exposure estimated to be between $750,000 and $1,500,000 and that $1,000,000 is the present best estimate of the Fund’s liability. This amount has been charged to the Fund in April 2007. There has been no changes to this estimate as of February 29, 2008.

In addition, the EPA has made an inquiry about another site which may lead to a future claim and whose materiality is unknown. No amounts have been accrued for any claim associated with this inquiry.

NRM Investment Company

Notes to Financial Statements

February 29, 2008

Note 5 - Transactions in Capital Stock and Components of Net Assets

Transactions in fund shares were as follows:

Period/Year Ended
Februaruy 29, 2008		August 31, 2007
Shares	Amount	Shares	Amount

Shares issued	-	$	-	191,368		$	690,808
Shares issued in reinvestment of dividends	14		54	24			94
Shares redeemed	-		-	(191,368	)		(690,838	)

Net Increase (Decrease)

The components of net assets at February 29, 2008 and August 31, 2007 are as follows:

2/29/2008

8/31/2007

Capital shares, par value $.01 per share, 3,608,431 shares and 3,608,416 shares issued and outstanding at February 29, 2008 and August 31, 2007 (10,000,000 full and fractional shares authorized); and capital paid-in	$	13,999,625		$	13,999,571
Net realized loss on sale of investments		(12,052	)		-
Unrealized (depreciation) appreciation of investments		(257,696	)		(80,101	)
Undistributed net investment income		88,815			8,976
Overdistributed net investment income*		(1,113,428	)		(1,113,428	)

Net Assets

12,705,264

12,815,018

For federal income tax purposes, there is undistributed net investment income. The book/tax difference arises from amounts reserved for environmental litigation described in Note 4 and not deducted for federal income tax purposes.

NRM Investment Company

Notes to Financial Statements

February 29, 200

Note 6 – Distributions to Shareholders

The tax character of distributions paid during the period/year ended February 29, 2008 and August 31, 2007 was as follows:

2/29/2008

8/31/2007

Distributions paid from:
Tax-exempt interest dividends	$	87,805	$	231,348
Taxable qualified dividends		114,266		285,798
Taxable ordinary dividends		-		-
Long-term capital gains		-		89,066

202,071

606,212

Note 7 – New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements.” The Statement defines fair value, establishing a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosure about fair value measurements. The Statement establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participation assumptions developed based on the best information available in the circumstances (unobservable inputs). The Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and is to be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied.

Management is evaluating the application of the Statement to the Fund, and is not in a position at this time to evaluate the significance of its impact, if any, on the Fund’s financial statements.

TABLE OF CONTENTS
	PAGE NO.

FINANCIAL STATEMENTS:





Statement of Assets and Liabilities	1

Schedule of Investments	2-4

Statement of Operations	5

Statements of Changes in Net Assets	6

Financial Highlights	7

Notes to Financial Statements	8-12

Investments at fair value (cost $14,194,984)	$	13,937,288
Interest and dividends receivable		136,734
Prepaid expenses		5,537

Securities purchases payable			208,400
Accrual for environmental claims			1,150,000
Accrued expenses and other liabilities			15,895

General Obligation Bonds – 10.7%

Bucks County, Pennsylvania, 5.00%, due 6/15/11, callable 6/15/09 at 100	100,000	$	103,134
Pittsburgh, Pennsylvania, 5.00%, due 9/1/12, callable 3/1/12 at 100 (AMBAC)	250,000		265,005
Pennsylvania State, First Series, 5.00%, due 7/1/13	300,000		321,363
Berks County, Pennsylvania, 5.00%, due 11/15/14, callable 11/15/08 at 100 (AMBAC)	100,000		101,028
Philadelphia, Pennsylvania School District, 5.625%, due 8/1/15, callable 8/1/12 at 100 (FGIC)	300,000		326,958
Pittsburgh, Pennsylvania, Refunding, 5.25%, due 9/1/16	100,000		109,148
Puerto Rico, 5.50%, due 7/1/17	250,000		260,530

Housing Finance Agency Bonds - .8%

Odessa, Texas Housing Finance Corporation, Home Mortgage Revenue Refunding, 8.45%, due 11/1/11, callable 11/1/05 at 103	12,819	12,876
California Housing Finance Agency, Home Mortgage, 10.25%, due 2/1/14, callable 2/1/99 at 100	35,000	35,725
Minnesota State Housing Finance Agency, Single-Family Mortgage, 5.95%, due 1/1/17, callable 1/1/07 at 101.50	55,000	55,234

Other Revenue Bonds - 42.7%

Parkland, Pennsylvania School District, 5.375%, due 9/1/15 (FGIC)	170,000	184,884
Grand Rapids, Michigan Downtown Development Authority, 6.60%, due 6/1/08, callable 6/1/06 at 100	365,000	366,142
Faulkey Gully Municipal Utility District, Texas, 4.50%, due 3/1/09 (FSA)	70,000	70,755
Montgomery County, Pennsylvania Industrial Development Authority, 5.00%, due 11/1/10	250,000	261,165
Allegheny County, Pennsylvania Industrial Development Authority, 5.00%, due 11/1/11 (MBIA)	100,000	105,273
Pennsylvania State Higher Educational Facilities Authority, 5.25%, due 1/1/12, callable 7/1/08 at 100 (MBIA)	175,000	176,048