-----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, NYMQ4K/4EDxR2S2EhevMk+o+23XNkM8G1NQGDLYqESs7BcOUgQV+1vAXUzna0t7c 2pI6k0t2hZV3uIcvGpRl+g== 0000014170-98-000011.txt : 19980803 0000014170-98-000011.hdr.sgml : 19980803 ACCESSION NUMBER: 0000014170-98-000011 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980729 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIDGES INVESTMENT FUND INC CENTRAL INDEX KEY: 0000014170 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 476027880 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01209 FILM NUMBER: 98673138 BUSINESS ADDRESS: STREET 1: 8401 W DODGE RD STREET 2: SUITE 256 CITY: OMAHA STATE: NE ZIP: 68114 BUSINESS PHONE: 4023974700 MAIL ADDRESS: STREET 1: 8401 WEST DODGE ROAD STREET 2: SUITE 256 CITY: OMAHA STATE: NE ZIP: 68114 N-30D 1 BRIDGES INVESTMENT FUND, INC. SECOND QUARTER OR SEMI-ANNUAL 1998 CONTENTS OF REPORT Pages 1 - 3 Shareholder Letter Exhibit 1 Portfolio Transactions from April 1, 1998, through June 30, 1998 Exhibit 2 Quarter-to-Quarter Changes in Financial Data Pages F1-F13 Unaudited Financial Statements for the Six Months Ended June 30, 1998 This report has been prepared for the information of the shareholders of Bridges Investment Fund, Inc. and is under no circumstances to be construed as an offering of shares of the Fund. Such offering is made only by Prospectus, a copy of which may be obtained by inquiry to the Fund's office. BRIDGES INVESTMENT FUND, INC. 8401 West Dodge Road Omaha, Nebraska 68114 Telephone 402-397-4700 Facsimile 402-397-8617 Directors Frederick N. Backer Edson L. Bridges II Edson L. Bridges III N. P. Dodge, Jr. John W. Estabrook Jon D. Hoffmaster John J. Koraleski Roger A. Kupka Gary L. Petersen Roy A. Smith L.B. Thomas Officers Edson L. Bridges II - Chairman and Chief Executive Officer Edson L. Bridges III - President Douglas P. Person - Vice President Mary Ann Mason - Secretary Kathleen J. Stranik - Assistant Secretary Nancy K. Dodge - Treasurer Auditor Arthur Andersen LLP 1700 Farnam Street Omaha, Nebraska 68102 Corporate Counsel Baird, Holm, McEachen, Pedersen, Hamann & Strasheim 1500 Woodmen Tower Omaha, Nebraska 68102 JULY 27, 1998 DEAR SHAREHOLDER: SECOND QUARTER AND FIRST HALF, 1998 REVIEW - ------------------------------------------ THE NET ASSET VALUE PER SHARE OF THE FUND WAS $33.58 ON JUNE 30, 1998. THIS RECORD HIGH CALENDAR QUARTER PRICE WAS 4.1% ABOVE THE $32.27 NET ASSET VALUE PER SHARE AT MARCH 31, 1998, AND UP 15.7% FROM THE YEAR-END, 1997 VALUATION OF $29.02. THE CASH AMOUNTS DISTRIBUTED FROM 1998 INVESTMENT INCOME DURING THE SIX MONTHS OF THIS YEAR WERE $.135 PER SHARE. THUS, THE TOTAL VALUE IMPROVEMENT WAS $4.695 PER SHARE THAT DEVELOPED FROM OPERATIONS IN THE FIRST HALF OF 1998 BY COMBINING $4.56 PER SHARE IN PRICE APPRECIATION ($33.58 LESS $29.02 EQUALS $4.56) WITH $.135 IN DIVIDEND INCOME. THIS $4.695 PER SHARE INCREASE IN VALUE, WHEN COMPARED TO THE BEGINNING NET ASSET VALUE OF $29.02, RESULTED IN A 16.2% TOTAL RETURN FOR THE FUND FOR THE FIRST SIX MONTHS OF 1998. THE POWERFUL UPWARD MOVEMENT FOR COMMON STOCK PRICES THAT DEVELOPED EARLY IN 1998 CONTINUED INTO THE SECOND QUARTER OF 1998, ALTHOUGH THE PACE OF THE IMPROVEMENT SLOWED CONSIDERABLY IN THE APRIL TO JUNE PERIOD COMPARED TO THE JANUARY TO MARCH INTERVAL. FUND OPERATIONS - --------------- THE NET ASSETS OF THE FUND WERE $43,600,764 ON JUNE 30, 1998, REPRESENTING THE HIGHEST VALUE FOR ANY CALENDAR QUARTER REPORTING DATE. NET ASSETS ADVANCED $2,187,109 FROM THE MARCH 31, 1998 TOTAL OF $41,413,655, AN INCREASE OF 5.3% FOR THE SECOND QUARTER OF 1998. FOR THE FIRST SIX MONTHS OF 1998, NET ASSETS WERE UP $6,953,229 OR 19.0% FROM THE $36,647,535 LEVEL AT DECEMBER 31, 1997. ON A TRAILING TWELVE MONTH BASIS (JUNE 30, 1997 TO JUNE 30, 1998) NET ASSETS GREW FROM $34,567,535 TO $43,600,764, A 26.1% IMPROVEMENT. THERE WERE 1,298,420 SHARES OF CAPITAL STOCK OUTSTANDING ON JUNE 30, 1998. THIS NUMBER REPRESENTED A RECORD HIGH FOR SHARES OUTSTANDING FOR ANY THREE-MONTH ACCOUNTING STATEMENT PERIOD IN THE HISTORY OF THE FUND. THE NET GAIN IN SHARES OUTSTANDING FOR THE FIRST SIX MONTHS OF 1998 WAS 35,602 UNITS, WHICH RESULTED IN A 2.8% ADVANCE IN COMPARISON TO THE 1,262,818 UNITS OUTSTANDING AT THE END OF 1997. NET INVESTMENT INCOME WAS $297,308 FOR THE FIRST SIX MONTHS OF 1998, COMPARED TO $329,061 FOR THE SAME PERIOD IN 1997. NET REALIZED GAINS ON INVESTMENTS FOR THE FIRST SIX MONTHS OF 1998 WERE $1,588,997 VERSUS $119,720 FOR THE SAME TIME FRAME IN 1997. THE NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS WAS $4,143,454 FOR THE FIRST SIX MONTHS OF 1998, COMPARED TO $4,040,554 ACHIEVED DURING THE FIRST TWO CALENDAR QUARTERS OF 1997. PLEASE REFER TO EXHIBITS 1 AND 2 AND PAGES F-1 THROUGH F-13 FOR SPECIFIC DETAILS COVERING THE FUND'S RECENT PORTFOLIO TRANSACTIONS; THE HISTORICAL DATA WITH RESPECT TO DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS; AND OTHER FINANCIAL STATEMENT INFORMATION AS OF JUNE 30, 1998. Shareholder Letter -2- July 27, 1998 DIVIDEND - -------- ON JULY 14, 1998, THE BOARD OF DIRECTORS DECLARED A $.09 PER SHARE DIVIDEND ON THE SHARES OF CAPITAL STOCK OUTSTANDING ON THE JULY 14, 1998 RECORD DATE WITH THIS INCOME DISTRIBUTION AMOUNT TO BE PAYABLE ON OR ABOUT JULY 27, 1998. THIS DIVIDEND IS PAYABLE FROM THE NET INVESTMENT INCOME EARNED DURING THE APRIL _ JUNE, 1998 QUARTER. SECOND QUARTER CHANGES IN PORTFOLIO AND OTHER COMMENTS - ------------------------------------------------------ DURING THE QUARTER ENDING JUNE 30, 1998, THE FUND REMOVED NINE COMPANIES FROM THE PORTFOLIO THAT WERE DEEMED TO BE EITHER OVER-PRICED OR NO LONGER FULFILLING OUR EXPECTATIONS FOR FUTURE GROWTH. THERE WERE SIX HOLDINGS WHERE PARTIAL SALES WERE EFFECTED TO CAPTURE VALUES WHERE PRICES HAVE BEEN EXTENDED ON THE UPSIDE. PROCEEDS FROM SALES WERE MOVED INTO EXISTING COMPANY POSITIONS WITHIN THE PORTFOLIO WHERE POTENTIAL GROWTH SEEMS TO BE OUTSTANDING. THE SALES REFERENCED EARLIER ARE GENERATING SIGNIFICANT REALIZED CAPITAL GAINS THAT MAY BECOME DISTRIBUTABLE IN DECEMBER, 1998 IF THE PORTFOLIO DOES NOT DEVELOP CAPITAL LOSSES THAT BECOME REALIZED PRIOR TO OCTOBER 31, 1998. IF ALL OF THE UNREALIZED LOSSES IN THE PORTFOLIO AT JUNE 30, 1998 WERE TAKEN THROUGH SALES TO OFFSET THE NET GAINS ESTABLISHED BETWEEN NOVEMBER 1, 1997 AND JUNE 30, 1998, THE FUND WOULD HAVE $1,331,994 OR MORE THAN $1.00 IN GAINS PER CURRENTLY OUTSTANDING SHARE TO DISTRIBUTE NEXT DECEMBER. THIS PRESENTLY DISTRIBUTABLE AMOUNT WILL CHANGE UP OR DOWN AS NORMAL TRADES TAKE PLACE IN THE PORTFOLIO. THUS, NO SHAREHOLDER SHOULD ANTICIPATE ANY CAPITAL GAINS DISTRIBUTION UNTIL ONE ACTUALLY HAPPENS. ON THE OTHER HAND, A LARGER THAN NORMAL ANNUAL CAPITAL GAINS DISTRIBUTION MAY BE IN PROSPECT FOR 1998. TO SOME DEGREE, SUCH A PAYMENT WOULD OFFSET THE DECLINE IN QUARTERLY DIVIDEND DISTRIBUTIONS THAT ARE A REFLECTION OF A MORE AGGRESSIVE COMMON STOCK OWNERSHIP POLICY FOR THE FUND'S PORTFOLIO THAT HAS BEEN IN PLACE SINCE THE SECOND QUARTER OF 1997. THE TOTAL MARKET VALUE FOR COMMON STOCKS IN THE PORTFOLIO WAS $36,749,988 AT JUNE 30, 1998. THESE ASSETS REPRESENTED 84.3% OF TOTAL MARKET VALUE FOR THE PORTFOLIO. THE CURRENT DIVIDEND INCOME RETURN FROM THESE STOCKS WAS DOWN TO 1.0% AT THE END OF THE LAST QUARTER. THUS, TO SOME DEGREE, SPENDABLE OR REINVESTIBLE CASH FLOW TO THE FUND'S SHAREHOLDERS MAY HAVE TO FLOW FROM REALIZED CAPITAL GAINS _ AT LEAST IN THE IMMEDIATE, FORESEEABLE FUTURE. OUTLOOK - ------- THE CURRENT STOCK MARKET ENVIRONMENT IN THE UNITED STATES IS UNLIKE ANY OTHER WITNESSED IN THE LAST 100 OR MORE YEARS. THE BUYING POWER FOR EQUITIES SEEMS WELL SUSTAINED FROM INSTITUTIONAL SOURCES, CONTRIBUTIONS TO 401(K) SAVERS, FOREIGN INVESTORS WHO ARE AFRAID OF TROUBLES IN ASIA, AND OTHER FACTORS, INCLUDING ENTHUSIASM AND OPTIMISM RELATED TO ECONOMIC GROWTH. THE POSITIONING OF THE LONG TERM CAPITAL GAINS TAX RATE AT 20% FOR MOST INVESTORS AT A LEVEL BELOW THE 28% LEVEL FOR ORDINARY INCOME, REPRESENTS A STRONG INCENTIVE TO BUY AND HOLD COMMON STOCK, AND, EVENTUALLY, TO REALIZE LONG TERM CAPITAL GAINS AS A SOURCE OF HOPED FOR REGULAR INCOME. AS A RESULT, A MAJOR, NEW PURCHASING POWER SOURCE WAS SET IN PLACE IN THE SUMMER OF 1997. Shareholder Letter -3- July 27, 1998 VALUATIONS, IN TERMS OF HIGH PRICE TO EARNINGS RATIONS, HAVE BECOME SPECULATIVE IN COMPARISON TO NORMAL LEVELS THAT PREVAILED IN THE EARLY YEARS OF THE 1990'S. THUS, THE GENERAL LEVEL OF STOCK PRICES SHOULD BE VULNERABLE TO ADVERSE SURPRISES WHEN THEY OCCUR. YET, MANY COMPANIES IN THE FUND'S PORTFOLIO ARE VALUED IN A MANNER THAT ENCOURAGES THE MANAGEMENT TO BE POSITIVE ABOUT THEIR PROSPECTS. WE SHALL CONTINUE TO MAKE DECISIONS ON A COMPANY BY COMPANY BASIS. TED BRIDGES IS OUT OF TOWN ON A WELL-EARNED VACATION. CONSEQUENTLY, I AM SIGNING THIS COMMUNICATION ON BEHALF OF BOTH OF US. WE BOTH JOIN THE OTHER MEMBERS OF THE BOARD OF DIRECTORS IN THANKING YOU FOR YOUR CONTINUED INVESTMENT IN OUR FUND. SINCERELY YOURS, EDSON L. BRIDGES II CHAIRMAN ELBII:ELC EXHIBIT 1 BRIDGES INVESTMENT FUND, INC. PORTFOLIO TRANSACTIONS DURING THE PERIOD FROM APRIL 1, 1998, THROUGH JUNE 30, 1998
BOUGHT OR HELD AFTER RECEIVED TRANSACTION SECURITIES $1,000 PAR $1,000 PAR COMMON STOCKS UNLESS VALUE (M) VALUE (M) DESCRIBED OTHERWISE OR SHARES OR SHARES (1) ABBOTT LABORATORIES 8,000 16,000 ACCUSTAFF 2,000 7,000 AIRTOUCH COMMUNICATIONS 2,000 7,000 (2) AMOCO 5,000 10,000 CALENERGY, INC. 2,000 8,000 CENDANT CORP. 7.50% CONV. PFD. 3,000 3,000 SERIES I CISCO SYSTEMS, INC. 2,000 5,000 COMPAQ COMPUTER CORP. 3,000 5,000 (3) DAYTON HUDSON 10,000 20,000 DELL COMPUTER 3,000 5,000 EMC CORPORATION 3,000 5,000 ELAN PLC ADR 4,000 10,000 (4) ERICSSON L.M. TELEPHONE CO. 20,000 20,000 CLASS B ADR HEALTHSOUTH CORP. 5,000 10,000 HOME DEPOT, INC. 2,500 8,000 (5) NETWORK ASSOCIATES 1,500 4,500 (6) OUTDOOR SYSTEMS, INC. 6,350 19,050 SCHLUMBERGER LTD. 1,000 2,000 SILICON VALLEY BANCSHARES 5,000 5,000 8.25% PFD. (7) SYLVAN LEARNING SYSTEMS 2,500 7,500 TENNESSEE VALLEY AUTHORITY 10,000 10,000 6.75% PFD. SERIES D VARIOUS ISSUES OF COMMERCIAL 12,345M 1,515M PAPER NOTES PURCHASED DURING 2ND QTR., 1998 (1) - RECEIVED 8,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 1, 1998. (2) - RECEIVED 5,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON APRIL 29, 1998. (3) - RECEIVED 10,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 1, 1998. (4) - RECEIVED 10,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 22, 1998. (5) - RECEIVED 1,500 SHARES IN A 3-FOR-2 STOCK SPLIT ON JUNE 1, 1998. (6) - RECEIVED 6,350 SHARES IN A 3-FOR-2 STOCK SPLIT ON JUNE 1, 1998. (7) - RECEIVED 2,500 SHARES IN A 3-FOR-2 STOCK SPLIT ON MAY 26, 1998. -2- BRIDGES INVESTMENT FUND, INC. PORTFOLIO TRANSACTIONS DURING THE PERIOD FROM APRIL 1, 1998 THROUGH JUNE 30, 1998 (CONTINUED) SOLD OR HELD AFTER EXCHANGED TRANSACION SECURITIES $1,000 PAR $1,000 PAR COMMON STOCKS UNLESS VALUE (M) VALUE (M) DESCRIBED OTHERWISE OR SHARES OR SHARES ALBERTSONS, INC. 1,500 5,000 AMGEN 2,000 -- BRISTOL MYERS SQUIBB 1,000 5,000 CAPITAL ONE FINANCIAL 2,000 8,000 CONCENTRA MANAGED CARE, INC. 3,000 -- DAYTON HUDSON CORP. 500 20,000 FIRST DATA CORP. 6,000 -- GAP, INC. 2,500 20,000 INTERNATIONAL BUSINESS MACHINES 2,000 -- MOTOROLA 8,000 -- NATIONSBANK CORP. 6,000 -- PAYMENTECH, INC. 7,000 -- PHILIP MORRIS COMPANIES, INC. 10,000 20,000 SAVILLE SYSTEMS IRELAND PLC ADR 2,000 -- SCHWAB, CHARLES CORP. 1,000 -- UNION PACIFIC CORP. 6% 150M -- DUE 9/01/2003 (8) UNITED STATES TREASURY NOTES 200M -- 9% DUE 5/15/1998 VARIOUS ISSUES OF COMMERCIAL 11,345M -- PAPER NOTES MATURING DURING 2ND QTR., 1998 (8) _ MATURED 200M PAR VALUE ON MAY 15, 1998.
EXHIBIT 2 BRIDGES INVESTMENT FUND, INC. HISTORICAL FINANCIAL INFORMATION
NET SHARES NET ASSET DIVIDEND/ CAPITAL VALUATION ASSETS OUTSTANDING VALUE/SHARE SHARE GAINS/SHARE DATE 07-01-63 $ 109,000 10,900 $10.00 $ - $ - 09-30-63 109,764 10,900 10.07 - - 12-31-63 159,187 15,510 10.13 .07 - 03-31-64 202,354 19,105 10.59 .07 - 06-30-64 253,932 23,438 10.83 .07 - 09-30-64 310,307 28,286 10.97 .07 - 12-31-64 369,149 33,643 10.97 .07 - 03-31-65 434,523 38,531 11.28 .075 .028 06-30-65 491,068 44,667 10.99 .07 - 09-30-65 558,913 47,710 11.71 .07 - 12-31-65 621,241 51,607 12.04 .07 - 03-31-66 661,711 55,652 11.89 .085 - 06-30-66 643,920 57,716 11.16 .07 - 09-30-66 592,628 58,610 10.11 .07 - 12-31-66 651,282 59,365 10.97 .07 - 03-31-67 728,115 60,181 12.10 .085 - 06-30-67 753,075 61,364 12.27 .07 - 09-30-67 823,967 62,810 13.12 .07 - 12-31-67 850,119 64,427 13.20 .07 - 03-31-68 812,416 65,607 12.38 .105 - 06-30-68 1,013,629 72,214 14.04 .07 - 09-30-68 1,046,852 72,633 14.41 .07 - 12-31-68 1,103,734 74,502 14.81 .07 - 03-31-69 1,083,278 77,393 14.00 .15 - 06-30-69 1,030,784 79,169 13.02 .07 - 09-30-69 1,063,290 83,291 12.77 .07 - 12-31-69 1,085,186 84,807 12.80 .07 - 03-31-70 1,061,534 87,349 12.15 .16 - 06-30-70 843,133 88,367 9.54 .07 - 09-30-70 959,114 89,417 10.73 .07 - 12-31-70 1,054,162 90,941 11.59 .07 - 03-31-71 1,168,919 91,819 12.73 .16 - 06-30-71 1,198,777 92,573 12.94 .07 - 09-30-71 1,200,753 92,723 12.95 .07 - 12-31-71 1,236,601 93,285 13.26 .07 - 03-31-72 1,285,684 93,661 13.73 .14 .08 06-30-72 1,228,951 93,834 13.10 .07 - 09-30-72 1,208,454 92,258 13.10 .07 - 12-31-72 1,272,570 93,673 13.59 .07 - 03-31-73 1,152,089 96,695 11.91 .13 .07 06-30-73 1,073,939 97,943 10.96 .07 - 09-30-73 1,131,789 99,353 11.39 .07 - 12-31-73 1,025,521 100,282 10.23 .07 - EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION VALUATION NET SHARES NET ASSET DIVIDEND/ CAPITAL DATE ASSETS OUTSTANDING VALUE/SHARE SHARE GAINS/SHARE 03-31-74 988,697 101,763 9.72 .14 - 06-30-74 863,820 101,578 8.50 .07 - 09-30-74 667,051 101,292 6.59 .07 - 12-31-74 757,545 106,909 7.09 .07 - 03-31-75 909,125 106,162 8.56 .14 - 06-30-75 1,028,687 106,517 9.66 .07 - 09-30-75 954,187 107,651 8.86 .07 - 12-31-75 1,056,439 111,619 9.46 .07 - 03-31-76 1,230,953 115,167 10.69 .16 - 06-30-76 1,265,767 117,506 10.77 .07 - 09-30-76 1,313,363 121,229 10.83 .07 - 12-31-76 1,402,661 124,264 11.29 .08 - 03-31-77 1,335,592 126,714 10.54 .188 .062 06-30-77 1,456,451 134,575 10.82 .08 - 09-30-77 1,450,573 139,402 10.41 .08 - 12-31-77 1,505,147 145,252 10.36 .08 - 03-31-78 1,418,417 146,380 9.69 .211 .049 06-30-78 1,523,758 145,470 10.47 .09 - 09-30-78 1,672,364 150,729 11.10 .09 - 12-31-78 1,574,097 153,728 10.24 .09 - 03-31-79 1,724,695 162,627 10.61 .204 .051 06-30-79 1,773,427 163,640 10.84 .09 - 09-30-79 1,913,242 167,426 11.43 .09 - 12-31-79 1,872,059 165,806 11.29 .09 - 03-31-80 1,769,935 170,882 10.36 .25 .0525 06-30-80 1,974,288 169,675 11.64 .10 - 09-30-80 2,204,689 173,549 12.70 .10 - 12-31-80 2,416,997 177,025 13.65 .10 - 03-31-81 2,424,976 184,148 13.17 .29 .0868 06-30-81 2,356,007 186,307 12.65 .11 - 09-30-81 2,128,956 183,447 11.61 .11 - 12-31-81 2,315,441 185,009 12.52 .12 - 03-31-82 2,165,531 194,140 11.15 .39 .19123 06-30-82 2,074,816 190,067 10.92 .13 - 09-30-82 2,262,073 189,837 11.92 .13 - 12-31-82 2,593,411 195,469 13.27 .13 - 03-31-83 2,815,081 209,390 13.44 .40 .2500 06-30-83 3,030,744 212,068 14.29 .15 - 09-30-83 3,210,564 223,059 14.39 .15 - 12-31-83 3,345,988 229,238 14.60 .15 - 03-31-84 3,279,542 247,700 13.24 .32 .5000 06-30-84 3,322,155 262,695 12.65 .16 - 09-30-84 3,554,876 263,783 13.48 .16 - 12-31-84 3,727,899 278,241 13.40 .16 - 03-31-85 4,058,327 300,068 13.52 .22 .6800 06-30-85 4,351,707 305,496 14.24 .16 - 09-30-85 4,260,686 310,379 13.73 .16 - 12-31-85 4,962,325 318,589 15.58 .16 - 03-31-86 5,663,449 347,479 16.30 .208 .86227 06-30-86 6,174,120 365,531 16.89 .16 - EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION VALUATION NET SHARES NET ASSET DIVIDEND/ CAPITAL DATE ASSETS OUTSTANDING VALUE/SHARE SHARE GAINS/SHARE 09-30-86 6,392,215 399,871 15.99 ,16 - 12-31-86 6,701,786 407,265 16.46 .16 - 03-31-87 8,766,205 491,228 17.85 .196 .79447 06-30-87 9,214,305 509,569 18.08 .16 - 09-30-87 9,921,139 530,566 18.70 .16 - 12-31-87 7,876,275 525,238 15.00 .14 .24513 03-31-88 8,649,901 565,608 15.29 .16 - 06-30-88 9,027,829 574,563 15.71 .15 - 09-30-88 8,986,977 575,956 15.60 .16 - 12-31-88 8,592,807 610,504 14.07 .38 1.10967 03-31-89 9,103,009 618,331 14.72 - - 06-30-89 9,531,124 614,861 15.50 .16 - 09-30-89 10,815,006 652,207 16.58 .16 - 12-31-89 10,895,182 682,321 15.97 .35 0.53769 03-31-90 11,000,740 695,558 15.82 - - 06-30-90 11,521,748 696,414 16.54 .16 0.02646 09-30-90 10,534,037 706,268 14.92 .16 - 12-31-90 11,283,448 744,734 15.15 .35 0.40297 03-31-91 12,685,391 759,477 16.70 - - 06-30-91 12,485,281 766,387 16.29 .16 - 09-30-91 13,225,379 780,213 16.95 .16 - 12-31-91 14,374,679 831,027 17.30 .34 0.29292 03-31-92 14,428,305 851,349 16.95 - - 06-30-92 14,691,191 863,019 17.02 .15 - 09-30-92 15,940,013 910,936 17.50 .16 - 12-31-92 17,006,789 971,502 17.51 .325 0.15944 03-31-93 18,071,613 1,008,275 17.92 - - 06-30-93 17,621,101 992,755 17.75 .15 - 09-30-93 17,949,559 999,163 17.96 .15 - 12-31-93 17,990,556 1,010,692 17.80 .3125 0.17075 03-31-94 17,777,177 1,021,219 17.41 - - 06-30-94 17,953,364 1,033,984 17.36 .14 - 09-30-94 18,472,176 1,036,473 17.82 .15 - 12-31-94 18,096,297 1,058,427 17.10 .30 0.17874 03-31-95 19,835,494 1,072,309 18.50 - - 06-30-95 21,416,325 1,076,463 19.90 .14 - 09-30-95 22,527,409 1,082,829 20.80 .14 - 12-31-95 24,052,746 1,116,620 21.54 .295 0.19289 03-31-96 26,025,304 1,148,429 22.66 - - 06-30-96 27,108,210 1,157,425 23.42 .1325 - 09-30-96 27,451,784 1,165,788 23.55 .1325 - 12-31-96 29,249,488 1,190,831 24.56 .285 0.25730 03-31-97 30,255,441 1,210,627 24.99 - - 06-30-97 34,567,391 1,229,643 28.11 .1325 - 09-30-97 36,500,979 1,242,731 29.37 .135 - 12-31-97 36,647,535 1,262,818 29.02 .24 0.30571 03-31-98 41,413,655 1,283,322 32.27 - - 06-30-98 43,600,764 1,298,420 33.58 .135 -
F-1 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998 (UNAUDITED)
NUMBER MARKET OF SHARES VALUE TITLE OF SECURITY COMMON STOCKS - (84.3%) ADVERTISING - 1.2% OUTDOOR SYSTEMS, INC.* 19,050 $ 533,400 AIRCRAFT - MANUFACTURING - 1.2% THE BOEING COMPANY 12,000 $ 534,750 AMUSEMENTS - RECREATION - SPORTING GOODS - 0.7% NIKE, INC. 6,000 $ 292,125 BANKING AND FINANCE - 5.9% FIRST NATIONAL OF NEBRASKA, INC. 230 $ 908,500 MBNA CORPORATION 10,000 330,625 NORWEST CORPORATION 12,000 450,000 SLM HOLDING CORPORATION 7,000 343,000 STATE STREET CORPORATION 8,000 556,000 $ 2,588,125 BEVERAGES - SOFT DRINKS - 2.3% PEPSICO, INC. 24,000 $ 988,500 BUSINESS SERVICES - HUMAN RESOURCES - 0.5% ACCUSTAFF INCORPORATED* 7,000 $ 218,750 CHEMICALS - 4.2% THE DOW CHEMICAL COMPANY 7,000 $ 676,812 DU PONT (E.I.) DE NEMOURS & COMPANY 8,000 597,500 MONSANTO COMPANY 10,000 558,750 $ 1,833,062 COMMUNICATIONS - RADIO AND TELEVISION - 0.6% CLEAR CHANNEL COMMUNICATIONS, INC.* 2,500 $ 272,813 COMPUTERS - HARDWARE AND SOFTWARE - 12.0% AMERICA ONLINE, INC.* 3,000 $ 315,375 CISCO SYSTEMS, INC.* 5,000 460,312 COMPAQ COMPUTER CORPORATION 5,000 141,875 DELL COMPUTER CORPORATION * 5,000 464,062 EMC CORPORATION* 5,000 224,063 HNC SOFTWARE, INC.* 10,000 408,125 HEWLETT-PACKARD CO. 10,000 598,750 MICROSOFT CORPORATION* 15,000 1,625,625 NETWORK ASSOCIATES, INC. * 4,500 215,437 SUN MICROSYSTEMS, INC.* 4,000 173,750 SUNGARD DATA SYSTEMS, INC. * 3,200 122,800 TRANSACTION SYSTEMS ARCHITECTS, INC.* 13,000 500,500 $ 5,250,674 *NONINCOME-PRODUCING SECURITY F-2 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED) NUMBER MARKET OF SHARES VALUE TITLE OF SECURITY COMMON STOCKS (CONTINUED) DRUGS - MEDICINES - COSMETICS - 9.1% ABBOTT LABORATORIES 16,000 $ 656,000 BRISTOL-MYERS SQUIBB CO. 5,000 574,687 ELAN CORPORATION PLC ADR* 10,000 643,125 JOHNSON & JOHNSON 10,000 740,000 MERCK & CO., INC. 10,000 1,337,500 $ 3,951,312 ELECTRICAL EQUIPMENT AND SUPPLIES - 2.1% GENERAL ELECTRIC CO. 10,000 $ 908,750 ELECTRONICS - 1.8% INTEL CORPORATION 8,000 $ 593,000 SOLECTRON CORPORATION * 5,000 210,313 $ 803,313 ENERGY - ALTERNATE SOURCES - 0.6% CALENERGY CO., INC. * 8,000 $ 240,500 FINANCE - REAL ESTATE - 3.2% FREDDIE MAC 30,000 $ 1,411,875 FINANCE - SERVICES - 2.3% CAPITAL ONE FINANCIAL CORPORATION 8,000 $ 993,500 FOOD - MISCELLANEOUS PRODUCTS - 1.8% PHILIP MORRIS COMPANIES, INC. 20,000 $ 787,500 HEALTHCARE - COMMERCIAL SERVICES - 0.3% QUINTILES TRANSNATIONAL CORP.* 3,000 $ 147,563 INSURANCE - MORTGAGE - 0.7% MGIC INVESTMENT CORPORATION 5,000 $ 285,313 INSURANCE - MULTILINE - 1.7% AMERICAN INTERNATIONAL GROUP, INC. 1,500 $ 219,000 GENERAL RE CORP. 2,000 507,000 $ 726,000 INSURANCE - MUNICIPAL BOND - 1.7% MBIA, INC. 10,000 $ 748,750 LINEN SUPPLY - UNIFORM RENTAL & SALES - 0.5% CINTAS CORPORATION 4,000 $ 204,000 *NONINCOME-PRODUCING SECURITY F-3 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED) NUMBER MARKET TITLE OF SECURITY OF SHARES VALUE COMMON STOCKS (CONTINUED) MACHINERY - CONSTRUCTION & MINING - 0.7% CATERPILLAR INC. 6,000 $ 317,438 MEDICAL - SERVICES _ 1.1% HEALTHSOUTH CORPORATION * 10,000 $ 266,875 STERIS CORPORATION * 3,000 190,781 $ 457,656 METAL PRODUCTS - MISCELLANEOUS - 0.6% NUCOR CORPORATION 5,500 $ 253,000 MOTION PICTURES AND THEATRES - 1.7% THE WALT DISNEY COMPANY 7,000 $ 735,438 OIL SERVICES _ 0.3% SCHLUMBERGER, LTD. 2,000 $ 136,625 PETROLEUM PRODUCING - 5.6% AMOCO CORPORATION 10,000 $ 417,500 ATLANTIC RICHFIELD COMPANY 4,000 312,500 CHEVRON CORPORATION 10,000 837,500 EXXON CORPORATION 8,000 571,000 MOBIL CORPORATION 4,000 306,500 $ 2,445,000 PUBLISHING - NEWSPAPERS - 1.3% GANNETT CO., INC. 8,000 $ 568,500 PUBLISHING - ELECTRONIC - 0.8% REUTERS GROUP PLC, ADR SPONSORED 5,199 $ 356,131 RETAIL STORES - APPAREL AND CLOTHING - 2.8% GAP, INC. 20,000 $ 1,228,750 RETAIL STORES - BUILDING MATERIALS AND HOME IMPROVEMENT _ 1.5% THE HOME DEPOT, INC. 8,000 $ 664,500 RETAIL STORES - DEPARTMENT - 2.2% DAYTON HUDSON CORPORATION 20,000 $ 970,000 RETAIL STORES - VARIETY - 0.6% ALBERTSON'S INC. 5,000 $ 259,063 SCHOOLS - EDUCATIONAL SERVICES - 0.6% SYLVAN LEARNING SYSTEMS, INC. * 7,500 $ 245,625 *NONINCOME-PRODUCING SECURITY F-4 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED) NUMBER MARKET TITLE OF SECURITY OF SHARES VALUE COMMON STOCKS (CONTINUED) TELECOMMUNICATIONS - 5.7% AIRTOUCH COMMUNICATIONS, INC.* 7,000 $ 409,062 GTE CORPORATION 10,000 556,250 SPRINT CORPORATION 5,000 352,500 WEST TELESERVICES CORPORATION* 43,000 521,375 WORLDCOM, INC.* 13,000 629,688 $ 2,468,875 TELECOMMUNICATIONS _ EQUIPMENT _ 1.3% ERICSSON (L.M.) TELEPHONE SP ADR 20,000 $ 572,500 TRANSPORTATION _ AIRFREIGHT _ 2.7% EAGLE USA AIRFREIGHT, INC. * 23,000 $ 797,812 FDX CORPORATION * 6,000 376,500 $ 1,174,312 TRANSPORTATION - RAILROADS - 0.4% UNION PACIFIC CORPORATION 4,000 $ 176,000 TOTAL COMMON STOCKS (COST - $17,102,427) $36,749,988 PREFERRED STOCKS (2.9%) BANKING AND FINANCE - 1.4% CFC CAPITAL TRUST 9.375% PREFERRED, SERIES B 5,000 $ 130,937 CFB CAPITAL II 8.20% CUMULATIVE PREFERRED 5,000 128,750 HARRIS PREFERRED CAPITAL CORP., 10,000 250,000 7.375%, SERIES A SILICON VALLEY BANCSHARES CAPITAL 5,000 125,000 8.25% PREFERRED SERIES I $ 634,687 COMMERCIAL SERVICES _ 0.3% CENDANT CORPORATION 7.50% CONVERTIBLE 3,000 $ 112,313 PREFERRED _ SERIES I TELECOMMUNICATIONS - 0.6% AIRTOUCH COMMUNICATIONS, INC. 4.25% SERIES C 3,000 $ 247,500 CONVERTIBLE PREFERRED UTILITIES _ ELECTRIC _ 0.6% TENNESSEE VALLEY AUTHORITY 6.75% 10,000 $ 252,500 VARIABLE PREFERRED SERIES D TOTAL PREFERRED STOCKS (COST - $1,129,227) $ 1,247,000 TOTAL STOCKS (COST - $18,231,654) $37,996,988 *NONINCOME-PRODUCING SECURITY F-5 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED) NUMBER OF SHARES OR PRINCIPAL MARKET TITLE OF SECURITY AMOUNT VALUE DEBT SECURITIES (12.5%) ENERGY - ALTERNATE SOURCES - 0.5% CALENERGY CO., INC., 7.63% NOTES DUE OCTOBER 15, 2007 $200,000 $ 202,317 FOOD - MISCELLANEOUS PRODUCTS - 0.2% SUPER VALU STORES, INC., 8.875% PROMISSORY NOTES, DUE JUNE 15, 1999 $100,000 $ 102,649 HOUSEHOLD APPLIANCES AND UTENSILS - 0.2% MAYTAG CORP., 9.75% NOTES, DUE MAY 15, 2002 $100,000 $ 112,291 OFFICE EQUIPMENT AND SUPPLIES - 0.2% XEROX CORPORATION, 9.750% NOTES DUE MARCH 15, 2000 $100,000 $ 106,123 RETAIL STORES - DEPARTMENT - 0.7% DILLARD DEPARTMENT STORES, INC., 7.850% DEBENTURES, DUE OCTOBER 1, 2012 $150,000 $ 166,679 SEARS ROEBUCK & CO., 9.375% DEBENTURES DUE NOVEMBER 1, 2011 100,000 125,883 $ 292,562 U.S. GOVERNMENT _ 7.2% U.S. TREASURY, 9.125% NOTES, DUE MAY 15, 1999 200,000 206,094 U.S. TREASURY, 8.750% NOTES, DUE AUGUST 15, 2000 200,000 212,781 U.S. TREASURY, 8.000% NOTES, DUE MAY 15, 2001 200,000 212,906 U.S. TREASURY, 7.500% NOTES, DUE MAY 15, 2002 200,000 213,500 U.S. TREASURY, 10.750% BONDS DUE FEBRUARY 15, 2003 200,000 241,750 U.S. TREASURY, 7.250% NOTES, DUE MAY 15, 2004 300,000 325,594 U.S. TREASURY, 7.500% NOTES, DUE FEBRUARY 15, 2005 300,000 332,203 F-6 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED) PRINCIPAL MARKET AMOUNT VALUE TITLE OF SECURITY DEBT SECURITIES (CONTINUED) U.S. TREASURY, 9.375% BONDS, DUE FEBRUARY 15, 2006 200,000 247,000 U.S. TREASURY, 7.625% BONDS, DUE FEBRUARY 15, 2007 300,000 319,406 U.S. TREASURY, 8.750% BONDS, DUE NOVEMBER 15, 2008 200,000 228,344 U.S. TREASURY, 9.125% BONDS, DUE MAY 15, 2009 200,000 234,375 U.S. TREASURY, 7.500% BONDS, DUE NOVEMBER 15, 2016 300,000 360,094 $ 3,134,047 COMMERCIAL PAPER - SHORT TERM _ 3.5% FORD MOTOR CREDIT CORP. COMMERCIAL PAPER NOTE 5.61% DUE JULY 7, 1998 $ 790,000 $ 790,000 PRUDENTIAL FUNDING CORP. COMMERCIAL PAPER NOTE 5.70% DUE JULY 2, 1998 725,000 725,000 $ 1,515,000 TOTAL DEBT SECURITIES (COST - $5,290,305) $ 5,464,989 TOTAL INVESTMENTS IN SECURITIES (COST - $23,521,959) (99.7%) $43,461,977 CASH AND RECEIVABLES LESS TOTAL LIABILITIES (0.3%) 138,787 NET ASSETS, JUNE 30, 1998 (100.0%) $43,600,764 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE.
F-7 BRIDGES INVESTMENT FUND, INC. STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
ASSETS AMOUNT INVESTMENTS, AT MARKET VALUE COMMON AND PREFERRED STOCKS (COST $18,231,654) $37,996,988 DEBT SECURITIES (COST $5,290,305) 5,464,989 TOTAL INVESTMENTS $43,461,977 CASH 93,422 RECEIVABLES DIVIDENDS AND INTEREST 104,941 SUBSCRIPTIONS TO CAPITAL STOCK 16,650 TOTAL ASSETS $43,676,990 LIABILITIES INVESTMENT ADVISOR, MANAGEMENT AND SERVICE FEES $ 52,829 ACCRUED OPERATING EXPENSES 23,397 TOTAL LIABILITIES $ 76,226 NET ASSETS CAPITAL STOCK, $1 PAR VALUE - AUTHORIZED 3,000,000 SHARES, LESS 763,869 SHARES REDEEMED; 2,062,289 SHARES ISSUED; 1,298,420 SHARES OUTSTANDING $ 1,298,420 PAID-IN SURPLUS - EXCESS OVER PAR VALUE OF AMOUNTS RECEIVED FROM SALE OF 2,062,289 SHARES, LESS AMOUNTS PAID OUT IN REDEEMING 763,869 SHARES 20,649,352 NET CAPITAL PAID IN ON SHARES $21,947,772 ACCUMULATED NET REALIZED GAIN ON INVESTMENT TRANSACTIONS 1,582,534 NET UNREALIZED APPRECIATION ON INVESTMENTS 19,940,017 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME 130,441 TOTAL NET ASSETS $43,600,764 NET ASSET VALUE PER SHARE $33.58 OFFERING PRICE PER SHARE $33.58 REDEMPTION PRICE PER SHARE $33.58 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT.
F-8 BRIDGES INVESTMENT FUND, INC. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
AMOUNT AMOUNT INVESTMENT INCOME Interest $187,111 Dividends 269,760 Total Investment Income $456,871 EXPENSES MANAGEMENT FEES $ 102,426 Custodian fees 14,243 Insurance and Other Administrative Fees 11,488 Bookkeeping services 8,520 Printing and supplies 7,322 Professional services 5,450 Dividend disbursing and transfer agent fees 6,118 Computer programming 2,500 Taxes and licenses 533 Foreign Taxes Paid 963 Total Expenses $ 159,563 NET INVESTMENT INCOME $ 297,308 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on transactions in investment securities $1,588,997 Net increase in unrealized appreciation of investments 4,143,454 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $5,732,451 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,029,759 The accompanying notes to financial statements are an integral part of this statement.
F-9 BRIDGES INVESTMENT FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
1998 1997 INCREASE IN NET ASSETS OPERATIONS - NET INVESTMENT INCOME $ 297,308 $ 329,061 NET REALIZED GAIN ON TRANSACTIONS IN INVESTMENT SECURITIES 1,588,997 119,720 NET INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS 4,143,454 4,040,554 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,029,759 $4,489,335 NET EQUALIZATION CREDITS 1,079 1,548 DISTRIBUTIONS TO SHAREHOLDERS FROM - NET INVESTMENT INCOME (173,183) (160,379) NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS - - EQUALIZATION - - NET CAPITAL SHARE TRANSACTIONS 1,095,574 987,399 TOTAL INCREASE IN NET ASSETS $ 6,953,229 $5,317,903 NET ASSETS: BEGINNING OF YEAR 36,647,535 29,249,488 END OF YEAR (INCLUDING ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME OF $130,441 AND $174,962, RESPECTIVELY) $ 43,600,764 $34,567,391 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-10 BRIDGES INVESTMENT FUND, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BRIDGES INVESTMENT FUND, INC. (FUND) IS REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 AS A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY. THE PRIMARY INVESTMENT OBJECTIVE OF THE FUND IS LONG- TERM CAPITAL APPRECIATION. IN PURSUIT OF THAT OBJECTIVE, THE FUND INVESTS PRIMARILY IN COMMON STOCKS. THE FOLLOWING IS A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSISTENTLY FOLLOWED BY THE FUND IN THE PREPARATION OF ITS FINANCIAL STATEMENTS. THE POLICIES ARE IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. A. INVESTMENTS - SECURITY TRANSACTIONS ARE RECORDED ON THE TRADE DATE AT PURCHASE COST OR SALES PROCEEDS. DIVIDEND INCOME IS RECOGNIZED ON THE EX- DIVIDEND DATE, AND INTEREST INCOME IS RECOGNIZED ON AN ACCRUAL BASIS. SECURITIES OWNED ARE REFLECTED IN THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES AND THE SCHEDULE OF PORTFOLIO INVESTMENTS AT QUOTED MARKET VALUE. QUOTED MARKET VALUE REPRESENTS THE LAST RECORDED SALES PRICE ON THE LAST BUSINESS DAY OF THE CALENDAR YEAR FOR SECURITIES TRADED ON A NATIONAL SECURITIES EXCHANGE. IF NO SALES WERE REPORTED ON THAT DAY, QUOTED MARKET VALUE REPRESENTS THE CLOSING BID PRICE. THE COST OF INVESTMENTS REFLECTED IN THE STATEMENT OF ASSETS AND LIABILITIES AND THE SCHEDULE OF PORTFOLIO INVESTMENTS IS THE SAME AS THE BASIS USED FOR FEDERAL INCOME TAX PURPOSES. THE DIFFERENCE BETWEEN COST AND QUOTED MARKET VALUE OF SECURITIES IS REFLECTED SEPARATELY AS UNREALIZED APPRECIATION (DEPRECIATION) AS APPLICABLE.
1998 1997 NET CHANGE NET UNREALIZED APPRECIATION (DEPRECIATION): AGGREGATE GROSS UNREALIZED APPRECIATION ON SECURITIES $20,246,329 $14,513,051 AGGREGATE GROSS UNREALIZED DEPRECIATION ON SECURITIES (306,312) (132,704) NET $19,940,017 $14,380,347 $5,559,670
THE NET REALIZED GAIN (LOSS) FROM THE SALES OF SECURITIES IS DETERMINED FOR INCOME TAX AND ACCOUNTING PURPOSES ON THE BASIS OF THE COST OF SPECIFIC SECURITIES. THE GAIN COMPUTED ON THE BASIS OF AVERAGE COST WOULD HAVE BEEN SUBSTANTIALLY THE SAME AS THAT REFLECTED IN THE ACCOMPANYING STATEMENT OF OPERATIONS. F-11 B. FEDERAL INCOME TAXES - IT IS THE FUND'S POLICY TO COMPLY WITH THE REQUIREMENTS OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, APPLICABLE TO REGULATED INVESTMENT COMPANIES, INCLUDING THE DISTRIBUTION OF SUBSTANTIALLY ALL TAXABLE INCOME INCLUDING NET REALIZED GAINS ON SALES OF INVESTMENTS. THEREFORE, NO PROVISION IS MADE FOR FEDERAL INCOME TAXES. C. DISTRIBUTION TO SHAREHOLDERS - THE FUND ACCRUES DIVIDENDS TO SHAREHOLDERS ON THE EX-DIVIDEND DATE. D. EQUALIZATION - THE FUND USES THE ACCOUNTING PRACTICE OF EQUALIZATION BY WHICH A PORTION OF THE PROCEEDS FROM SALES AND COSTS OF REDEMPTION OF CAPITAL SHARES, EQUIVALENT ON A PER SHARE BASIS TO THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME ON THE DATE OF THE TRANSACTIONS, IS CREDITED OR CHARGED TO UNDISTRIBUTED INCOME. AS A RESULT, UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE IS UNAFFECTED BY SALES OR REDEMPTION OF CAPITAL SHARES. E. 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. (2) INVESTMENT ADVISORY CONTRACT UNDER AN INVESTMENT ADVISORY CONTRACT, BRIDGES INVESTMENT COUNSEL,INC. (INVESTMENT ADVISER) FURNISHES INVESTMENT ADVISORY SERVICES AND PERFORMS CERTAIN ADMINISTRATIVE FUNCTIONS FOR THE FUND. IN RETURN, THE FUND HAS AGREED TO PAY THE INVESTMENT ADVISER A FEE COMPUTED ON A QUARTERLY BASIS AT THE RATE OF 1/8 OF 1% OF THE AVERAGE NET ASSET VALUE OF THE FUND DURING THE QUARTER, EQUIVALENT TO 1/2 OF 1% PER ANNUM. CERTAIN OFFICERS AND DIRECTORS OF THE FUND ARE ALSO OFFICERS AND DIRECTORS OF THE INVESTMENT ADVISER. THESE OFFICERS DO NOT RECEIVE ANY COMPENSATION FROM THE FUND OTHER THAN THAT WHICH IS RECEIVED INDIRECTLY THROUGH THE INVESTMENT ADVISER. THE CONTRACT BETWEEN THE FUND AND THE INVESTMENT ADVISER PROVIDES THAT TOTAL EXPENSES OF THE FUND IN ANY YEAR, EXCLUSIVE OF STAMP AND OTHER TAXES, BUT INCLUDING FEES PAID TO THE INVESTMENT ADVISER, SHALL NOT EXCEED, IN TOTAL, A MAXIMUM OF 1 AND 1/2% OF THE AVERAGE MONTH END NET ASSET VALUE OF THE FUND FOR THE YEAR. AMOUNTS, IF ANY, EXPENDED IN EXCESS OF THIS LIMITATION ARE REIMBURSED BY THE INVESTMENT ADVISER AS SPECIFICALLY IDENTIFIED IN THE INVESTMENT ADVISORY CONTRACT. F-12 (3) DIVIDEND DISBURSING AND TRANSFER AGENT EFFECTIVE OCTOBER 1, 1987, DIVIDEND DISBURSING AND TRANSFER AGENT SERVICES ARE PROVIDED BY BRIDGES INVESTOR SERVICES, INC. (TRANSFER AGENT). THE FEES PAID TO THE TRANSFER AGENT ARE INTENDED TO APPROXIMATE THE COST TO THE TRANSFER AGENT FOR PROVIDING SUCH SERVICES. CERTAIN OFFICERS AND DIRECTORS OF THE FUND ARE ALSO OFFICERS AND DIRECTORS OF THE TRANSFER AGENT. (4) SECURITY TRANSACTIONS THE COST OF LONG-TERM INVESTMENT PURCHASES DURING THE THREE MONTHS ENDED JUNE 30, WAS:
1998 1997 UNITED STATES GOVERNMENT OBLIGATIONS $ -- $ -- OTHER SECURITIES 4,562,421 3,033,013 TOTAL COST $4,562,421 $3,033,013
NET PROCEEDS FROM SALES OF LONG-TERM INVESTMENTS DURING THE THREE MONTHS ENDED JUNE 30, WERE:
1998 1997 UNITED STATES GOVERNMENT OBLIGATIONS $ 200,000 $ -- OTHER SECURITIES 4,068,066 1,518,313 TOTAL NET PROCEEDS $4,268,066 $1,518.313 TOTAL COST BASIS OF SECURITIES SOLD $2,679,069 $1,398,593
(5) NET ASSET VALUE THE NET ASSET VALUE PER SHARE REPRESENTS THE EFFECTIVE PRICE FOR ALL SUBSCRIPTIONS AND REDEMPTIONS. F-13 (6) CAPITAL STOCK SHARES OF CAPITAL STOCK ISSUED AND REDEEMED ARE AS FOLLOWS:
1998 1997 SHARES SOLD 48,035 62,142 SHARES ISSUED TO SHAREHOLDERS IN REINVESTMENT OF NET INVESTMENT INCOME AND REALIZED GAIN FROM SECURITY TRANSACTIONS 8,800 11,268 56,835 73,410 SHARES REDEEMED 21,233 34,598 NET INCREASE 35,602 38,812
VALUE OF CAPITAL STOCK ISSUED AND REDEEMED IS AS FOLLOWS:
1998 1997 SHARES SOLD $1,494,288 $1,586,209 SHARES ISSUED TO SHAREHOLDERS IN REINVESTMENT OF NET INVESTMENT INCOME AND REALIZED GAIN FROM SECURITY TRANSACTIONS 268,623 284,687 $1,762,911 $1,870,896 SHARES REDEEMED 667,337 883,497 NET INCREASE $1,095,574 $ 987,399
(7) DISTRIBUTION TO SHAREHOLDERS ON JULY 14, 1998 A DISTRIBUTION OF $.09 PER SHARE AGGREGATING $116,894.84 WAS DECLARED TO SHAREHOLDERS OF RECORD ON JULY 14, 1998, TO BE PAYABLE ON JULY 27, 1998. (8) DERIVATIVE FINANCIAL INSTRUMENTS IN OCTOBER, 1994, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 119, DISCLOSURE ABOUT DERIVATIVE FINANCIAL INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS. THE FUND HAS NOT ENTERED INTO ANY SUCH INVESTMENT OR INVESTMENT CONTRACTS. A COVERED CALL OPTION CONTRACT IS A FORM OF A FINANCIAL DERIVATIVE INSTRUMENT. THE FUND'S INVESTMENT AND POLICY RESTRICTIONS DO PERMIT THE FUND TO SELL OR WRITE COVERED CALL OPTION CONTRACTS UNDER CERTAIN CIRCUMSTANCES AND LIMITATIONS AS SET FORTH IN THE FUND'S PROSPECTUS. -----END PRIVACY-ENHANCED MESSAGE-----