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, 280 Abrahams Lane, Villanova, Pennsylvania 19085
Name and address of agent for service: John H. McCoy, President, NRM Investment Company, 280 Abrahams Lane, Villanova, Pennsylvania 19085
Registrant’s Telephone Number: (610) 995-0322
Date of fiscal year end: August 31
Date of Reporting Period: Semi-annual period ending February 28, 2009.
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.
ITEMS 7, 8 – PROXY VOTING POLICIES AND PURCHASES OF EQUITY SECURITIES:
The information requested is not applicable to this open-end company.
ITEM 9 – SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM – 10 CONTROLS AND PROCEDURES
The Fund operates through its five-member board of directors sitting as an executive committee of the whole; the board members receive only nominal director’s fees. The Fund has no employees other than its officers none of whom receives compensation in such role. (The Assistant Secretary to the Fund is its counsel who receives compensation only for legal work, not in his role as a Fund officer.) The Fund engages independent contractors to provide investment, financial and custodial services. The Fund’s principal executive and financial officer is its major shareholder and one of the five directors. In his view the following controls and procedures are effective to comply with the Regulations under the Investment Company Act.
Portfolio Procedures
1. The Investment Advisor has discretion in investing the Fund’s portfolio but only within the guidelines established by the Board of Directors, and those authorized to execute investment transactions act only on direction by the Board or Advisor.
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.
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: | 4/28/09 | ||
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: | 4/28/09 | ||
| By: | /s/ Edward Fackenthal | ||
| Edward Fackenthal, Counsel and Assistant Secretary | |||
| Date: | 4/28/09 | ||
NRM Investment Company
Semi-Annual Report
February 28, 2009
| NRM Investment Company |
Table of Contents
February 28, 2009
| 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 | 8-11 | |
| NRM Investment Company |
| Statement of Assets and Liabilities |
| February 28, 2009 |
| Assets | ||||
| Investments at fair value (cost $12,729,282) | $ | 8,443,934 | ||
| Interest and dividends receivable | 118,723 | |||
| Prepaid expenses | 1,666 | |||
| Total Assets | 8,564,323 | |||
| Liabilities | ||||
| Accrued expenses and other liabilities | 22,184 | |||
| Net Assets, Applicable to 3,518,427 Outstanding Shares, Equivalent to $2.43 a Share | $ | 8,542,139 |
See notes to financial statements.
1
| NRM Investment Company |
| Schedule of Investments |
| February 28, 2009 |
Principal Amount or Shares | Fair Value | |||||||
| Municipal Bonds -71.0% | ||||||||
| General Obligation Bonds – 12.5% | ||||||||
| Bucks County, Pennsylvania, 5.00%, due 6/15/11, callable 6/15/09 at 100 | 100,000 | $ | 101,268 | |||||
| Pittsburgh, Pennsylvania, 5.00%, due 9/1/12, callable 3/1/12 at 100 (AMBAC) | 250,000 | 268,533 | ||||||
| Philadelphia, Pennsylvania School District, 5.625%, due 8/1/15, callable 8/1/12 at 100 (FGIC) | 300,000 | 340,536 | ||||||
| Pittsburgh, Pennsylvania, Refunding, 5.25%, due 9/1/16 | 100,000 | 107,821 | ||||||
| Puerto Rico, 5.50%, due 7/1/17 | 250,000 | 240,613 | ||||||
| Total General Obligation Bonds | 1,058,771 | |||||||
| Housing Finance Agency Bonds - .9% | ||||||||
| Odessa, Texas Housing Finance Corporation, Home Mortgage Revenue Refunding, 8.45%, due 11/1/11, callable 11/1/05 at 103 | 5,715 | 5,718 | ||||||
| California Housing Finance Agency, Home Mortgage, 10.25%, due 2/1/14, callable 2/1/99 at 100 | 35,000 | 35,409 | ||||||
| Minnesota State Housing Finance Agency, Single-Family Mortgage, 5.95%, due 1/1/17, callable 1/1/07 at 101.50 | 30,000 | 30,019 | ||||||
| Total Housing Finance Agency Bonds | 71,146 | |||||||
| Other Revenue Bonds - 57.6% | ||||||||
| Parkland, Pennsylvania School District, 5.375%, due 9/1/15 (FGIC) | 170,000 | 197,022 | ||||||
| Faulkey Gully Municipal Utility District, Texas, 4.50%, due 3/1/09 (FSA) | 70,000 | 70,000 | ||||||
| Montgomery County, Pennsylvania Industrial Development Authority, 5.00%, due 11/1/10 | 250,000 | 261,455 | ||||||
| Allegheny County, Pennsylvania Industrial Development Authority, 5.00%, due 11/1/11 (MBIA) | 100,000 | 106,601 | ||||||
Philadelphia, Pennsylvania Gas Works, 18th Series, 5.00%, due 8/1/11 (CIFG) | 300,000 | 315,546 | ||||||
See notes to financial statements.
2
| NRM Investment Company |
| Schedule of Investments (Continued) |
| February 28, 2009 |
Principal Amount or Shares | Fair Value | |||||||
| Municipal Bonds - 71.0% (Continued) | ||||||||
| Other Revenue Bonds - 57.6% (Continued) | ||||||||
| Pennsylvania Infrastructure Investment Authority, 5.00%, due 9/1/12 | 500,000 | 558,050 | ||||||
| Pennsylvania State Higher Educational Facilities Authority, 5.50%, prerefunded 1/01/13 | 350,000 | 396,956 | ||||||
| Harrisburg, Pennsylvania Recovery Facilities, 5.00%, mandatory put 12/1/13 | 425,000 | 465,634 | ||||||
| Philadelphia, Pennsylvania Wastewater, 5.00%, due 7/1/14 | 250,000 | 275,203 | ||||||
| Pennsylvania State Turnpike Commission, 5.25%, due 12/1/14, callable 12/1/08 at 101 (AMBAC) | 170,000 | 173,076 | ||||||
| Pennsylvania State Turnpike Commission, 5.25%, due 12/1/15, callable 12/1/08 at 101 (AMBAC) | 150,000 | 152,813 | ||||||
| Allegheny County Sanitation Authority, Sewer Revenue, 5.00%, due 12/1/23, callable 12/1/15 | 300,000 | 304,434 | ||||||
| Allegheny County, Pennsylvania Higher Educational Building Authority, 5.50%, due 3/15/16, callable 6/15/12 at 100 (AMBAC) | 150,000 | 165,045 | ||||||
| Pennsylvania State Higher Educational Facilities Authority, 5.00%, due 6/15/16, callable 6/15/12 at 100 (AMBAC) | 100,000 | 106,232 | ||||||
| Philadelphia, Pennsylvania Gas Works, Fourth Series, 5.25%, due 8/1/16, callable 8/1/13 | 250,000 | 286,390 | ||||||
| Chester County, Pennsylvania Health and Educational Authority (Devereux), 5.00%, due 11/1/18 | 405,000 | 436,505 | ||||||
| Tobacco Settlement Financial Corporation, New Jersey, 5.00%, due 6/1/19, callable 6/1/17 | 200,000 | 168,632 | ||||||
| North Carolina Medical Care Community Mortgage Revenue (Chatham Hospital), 5.25%, due 8/1/26, callable 2/1/17 at 100 (MBIA) | 250,000 | 220,470 | ||||||
| Pennsylvania State Higher Educational Facilities Authority, 6.00%, due 6/15/31 | 200,000 | 202,126 | ||||||
| Total Other Revenue Bonds | 4,862,190 | |||||||
| Total Municipal Bonds (Cost $5,916,961) | 5,992,107 | |||||||
See notes to financial statements.
3
| NRM Investment Company |
| Schedule of Investments (Continued) |
| February 28, 2009 |
Principal Amount or Shares | Fair Value | |||||||
| Preferred Stocks – 21.7% | ||||||||
| ABN Amro Capital Trust VI, 6.25% | 20,000 | 75,200 | ||||||
| Aegon NV, 6.50% | 15,000 | 84,900 | ||||||
| Aegon NV, 6.875% | 10,000 | 70,600 | ||||||
| Barclays Bank, PLC ADR | 20,000 | 125,000 | ||||||
| Deutsche Bank Contingent Cap Tr, 6.55% | 15,000 | 132,150 | ||||||
| Goldman Sachs Group, Inc. 1/1000 B | 15,000 | 258,750 | ||||||
| HSBC USA, Inc., 1/40 Series H | 20,000 | 159,000 | ||||||
| ING Groep NV, 7.05% | 10,000 | 58,800 | ||||||
| ING Groep NV, Perpetual Debt Security | 16,000 | 87,680 | ||||||
| Metlife, Inc., 6.50% | 17,500 | 240,625 | ||||||
| PNC Financial Group, 8.25%, Floating Rate | 300,000 | 189,279 | ||||||
| Prudential PLC, 6.50% | 12,500 | 103,750 | ||||||
| Royal Bank of Scotland Group PLC ADR Series R | 10,000 | 40,000 | ||||||
| Royal Bank of Scotland Group PLC ADR Series Q | 20,000 | 80,000 | ||||||
| Santander Financial SA, 6.41% | 14,000 | 129,600 | ||||||
| Total Preferred Stocks (Cost $5,478,020) | 1,835,334 | |||||||
| Common Stocks – 5.1% | ||||||||
| General Electric Co. | 14,000 | 127,650 | ||||||
| US Bancorp | 13,000 | 186,030 | ||||||
| Capital Trust, Inc. | 70,000 | 116,900 | ||||||
| Total Common Stocks (Cost $1,148,387) | 430,580 | |||||||
| Short-Term Investments - at Cost Approximating Fair Value - 2.2% | ||||||||
| Federated Pennsylvania Municipal Cash Trust #8 – (Cost $185,914) | 185,914 | 185,914 | ||||||
| Total Investments - 100% (Cost $12,729,282) | $ | 8,443,935 | ||||||
See notes to financial statements.
4
| NRM Investment Company |
| Statement of Operations |
| Period Ended February 28, 2009 |
| Investment Income | ||||
| Interest | $ | 129,798 | ||
| Dividends | 191,533 | |||
| $ | 321,331 | |||
| Expenses | ||||
| Investment advisory fees | 15,567 | |||
| Custodian fees | 7,900 | |||
| Transfer and dividend disbursing agent fees | 750 | |||
| Legal and professional fees | 41,817 | |||
| Directors’ fees | 5,333 | |||
| Insurance | 758 | |||
| Capital stock tax | 4,300 | |||
| Miscellaneous | 2,317 | |||
| Total Expenses | 78,742 | |||
| Net Investment Income | 242,589 | |||
| Realized and Unrealized Loss on Investments | ||||
| Net realized loss from investment transactions | (903,682 | ) | ||
| Net unrealized depreciation of investments | (3,001,550 | ) | ||
| Net Realized and Unrealized Loss on Investments | (3,905,232 | ) | ||
| Net Decrease in Net Assets Resulting from Operations | ($ | 3,662,643 | ) |
See notes to financial statements.
5
| NRM Investment Company |
| Statements of Changes in Net Assets |
| Period/Year Ended February 28, 2009 and August 31, 2008 |
| 2/28/09 | 8/31/08 | |||||||
| Increase in Net Assets from Operations | ||||||||
| Net investment income | $ | 242,589 | $ | 1,159.521 | ||||
| Net realized (loss) from investment transactions | (903,682 | ) | (12,051 | ) | ||||
| Net unrealized depreciation of investments | (3,001,550 | ) | (1,203,697 | ) | ||||
| Net Decrease in Net Assets Resulting from Operations | (3,662,643 | ) | (56,227 | ) | ||||
| Distributions to Shareholders | (110,778 | ) | (202,071 | ) | ||||
| Capital Share Transactions | (241,195 | ) | 35 | |||||
| Total Decrease in Net Assets | (4,014,616 | ) | (258,263 | ) | ||||
| Net Assets - Beginning of Year | 12,556,755 | 12,815,018 | ||||||
| Net Assets - End of Period/Year | $ | 8,542,139 | $ | 12,556,755 | ||||
See notes to financial statements.
6
| NRM Investment Company |
| Financial Highlights |
| Period/Years Ended |
| Unaudited | Years Ended August 31, | |||||||||||||||||||||||
| February 28, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
| Per Share Data (for a share outstanding throughout the indicated period/year) | ||||||||||||||||||||||||
| Net asset value, beginning of year | $ | 3.480 | $ | 3.551 | $ | 3.938 | $ | 3.900 | $ | 3.931 | $ | 3.834 | ||||||||||||
| Net investment income | .067 | .321 | .131 | .110 | .070 | .119 | ||||||||||||||||||
| Net realized and unrealized gain (loss) on investments | (1.082 | ) | (.336 | ) | (.088 | ) | .059 | .097 | .096 | |||||||||||||||
| Total from Investment Operations | (1.015 | ) | (.015 | ) | (.219 | ) | .169 | .167 | .215 | |||||||||||||||
| Less distributions: | ||||||||||||||||||||||||
| Dividends from capital gains | — | — | (.025 | ) | (.021 | ) | (.130 | ) | (.009 | ) | ||||||||||||||
| Dividends from net tax-exempt income | (.026 | ) | (.024 | ) | (.064 | ) | (.086 | ) | (.061 | ) | (.103 | ) | ||||||||||||
| Dividends from net taxable income | (.011 | ) | (.032 | ) | (.024 | ) | (.007 | ) | (.006 | ) | (.006 | ) | ||||||||||||
| Distribution in excess of net investment income | — | — | — | — | — | — | ||||||||||||||||||
| Total Distributions | (.037 | ) | (.056 | ) | (.168 | ) | (.131 | ) | (.198 | ) | (.118 | ) | ||||||||||||
| Net Asset Value, End of Period/Year | $ | 2.428 | $ | 3.480 | $ | 3.551 | $ | 3.938 | $ | 3.900 | $ | 3.931 | ||||||||||||
| Total Return | (29.33 | %) | .71 | % | (.37 | %) | (5.79 | %) | 4.40 | % | 3.76 | % | ||||||||||||
| Ratios/Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of year (in thousands) | $ | 8,542 | $ | 12,557 | $ | 12,815 | $ | 14,209 | $ | 15,397 | $ | 15,579 | ||||||||||||
| Ratio of expenses to average net assets | .76 | % | 1.33 | %* | 8.62 | % | 1.05 | % | 1.23 | % | .67 | % | ||||||||||||
| Ratio of net investment income to average net assets | 2.35 | % | 9.23 | % | (3.43 | %) | 2.77 | % | 1.75 | % | 3.04 | % | ||||||||||||
| Portfolio turnover rate | 9.91 | % | 9.27 | % | 18.00 | % | 88.85 | % | 56.38 | % | 47.45 | % | ||||||||||||
* Excludes the recovery of environmental claims and related costs.
7
| NRM Investment Company |
Notes to Financial Statements February 28, 2009 |
| 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 Fund generally invests in both bond and equity markets and is subject to the risks and uncertainty inherent therein. 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. | ||
8
| NRM Investment Company |
Notes to Financial Statements February 28, 2009 |
| 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 80.1% of the Fund’s outstanding shares as of February 28, 2009. | |||
| 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 $989,426 and $1,464,212, respectively, during the period ended February 28, 2009. | |||
| At February 28, 2009, the cost of investment securities owned is the same for financial reporting and federal income tax purposes. Net unrealized depreciation of investment securities is $4,285,347 (aggregate gross unrealized appreciation of $208,819, less aggregate unrealized depreciation of ($4,494,166). | |||
| Note 4 - Environmental Liability | |||
| The Fund operated a steel processing factory between 1974 and 1979. During this period, it disposed of a relatively harmless chemical waste product consisting of a weak ferrous chloride solution. The independent transporters represented that its destination was at an approved site. Following various investigations beginning in the 1980’s and continuing to the present, the United States Environmental Protection Agency (EPA) determined that property on Broad Street in Doylestown, Pa. was used as an unapproved disposal site for many hazardous chemicals. In March 2008, it designated the site, called Chem-Fab, a National Priority “Super Fund” site requiring environmental remediation. Among the chemicals supposedly deposited there was ferrous chloride. Operations at Chem-Fab included ferrous chloride of greater strength than the Fund’s waste product. The EPA, supported by what it deems to be relevant documents and a witness statement, determined that the Fund and three others were responsible parties for disposal at Chem-Fab, and pursuant to statutory authorization, invited the four to participate in investigation and remediation. The expected cleanup cost for the site is uncertain but has been estimated at $5,000,000. | |||
9
| NRM Investment Company |
Notes to Financial Statements February 28, 2009 |
| Note 4 - Environmental Liability (Continued) | |||
| The Fund believes the EPA evidence of the Fund’s connection with the Chem-Fab site is weak and that any ferrous chloride of the kind the Fund produced and that may have been taken there caused no environmental harm. Based thereon, the Fund’s board of directors declined the invitation to remediate. EPA or third parties may thereafter determine that the Fund is not liable and remediate without its participation, or it, or they, may bring formal action for reimbursement. Although the Fund will defend vigorously any such action that might be brought, counsel, at this early stage of its investigation, is unable to evaluate the risk other than to say it is serious and for the indefinite future should be regarded as material. | |||
| Note 5 - Transactions in Capital Stock and Components of Net Assets | |||
| Transactions in fund shares were as follows: | |||
| Period Ended | Year Ended | |||||||||||||||
| February 28, 2009 | August 31, 2008 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Shares issued | — | $ | — | — | $ | — | ||||||||||
| Shares issued in reinvestment of dividends | 5 | 13 | 15 | 54 | ||||||||||||
| Shares redeemed | (90,031 | ) | ($ | 241,208 | ) | (6 | ) | (19 | ) | |||||||
| Net (Decrease) Increase | (90,026 | ) | ($ | 241,195 | ) | 9 | $ | 35 | ||||||||
| The components of net assets at February 28, 2009 and August 31, 2008 are as follows: |
| February 28, 2009 | August 31, 2008 | ||||||||
| Capital shares, par value $.01 per share, 3,608,425 shares and 3,518,427 shares issued and outstanding at February 28, 2009 and August 31, 2008 (10,000,000 full and fractional shares authorized); and capital paid-in | $ | 13,758,411 | $ | 13,999,606 | |||||
| Net realized loss on sale of investments* | (915,733 | ) | (12,051 | ) | |||||
| Unrealized depreciation of investments | (4,285,347 | ) | (1,283,798 | ) | |||||
| Undistributed net investment income | (15,192 | ) | 104,514 | ||||||
| Overdistributed net investment income** | — | (251,516 | ) | ||||||
| Net Assets | $ | 8,542,139 | $ | 12,556,755 | |||||
| * | Realized losses are the same for federal income tax purposes. Realized losses can be carried forward until the year ended August 31, 2016 ($12,051) and August 31,2017 ($903,682). | |
| ** | For federal income tax purposes, there was $110,719 of undistributed net investment income as of August 31, 2008. The book/tax difference arises from amounts reserved for environmental litigation and not deducted for federal income tax purposes. |
10
| NRM Investment Company |
Notes to Financial Statements February 28, 2009 |
| Note 6 - Distributions to Shareholders | |
| The tax character of distributions paid during the period/year ended February 28, 2009 and August 31, 2008 was as follows: | |
| 2009 | 2008 | ||||||||
| Distributions paid from: | |||||||||
| Tax-exempt interest and dividends | $ | 76,398 | $ | 231,348 | |||||
| Taxable qualified dividends | 34,319 | 285,798 | |||||||
| Taxable ordinary dividends | 61 | — | |||||||
| Long-term capital gains | — | 89,066 | |||||||
| $ | 110,778 | $ | 606,212 | ||||||
| Note 7 – New Accounting Pronouncements | |
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements” and in October, 2008 the FASB issued Staff Position 157-3 “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.” The Statement and Staff Position 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 and Staff Position 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 and Staff Position 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 and Staff Position is initially applied. | |
| Management has evaluated the application of the Statement and Staff Position to the Fund and does not expect FAS 157 or the Staff Position to have a material impact on the financial statements. | |
11