-----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, LBAC3OBTfSLQU4a2BDlAQielFIrzXpv4iiK334GBVPk7D1bS+oy9hTsu+lENuvBi BeXT2rMzzQjORWzTOQdp9Q== /in/edgar/work/0000014170-00-000010/0000014170-00-000010.txt : 20000928 0000014170-00-000010.hdr.sgml : 20000928 ACCESSION NUMBER: 0000014170-00-000010 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20000926 EFFECTIVENESS DATE: 20000926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIDGES INVESTMENT FUND INC CENTRAL INDEX KEY: 0000014170 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] IRS NUMBER: 476027880 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 002-21600 FILM NUMBER: 728898 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 485BPOS 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x] Pre-Effective Amendment No. ___ [ ] Post-Effective Amendment No. 44 [x] File No. 2-21600 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 30 [x] File No. 811-1209 BRIDGES INVESTMENT FUND, INC. (Exact Name of Registrant as Specified in Charter) 256 Durham Plaza, 8401 West Dodge Road, Omaha, Nebraska 68114 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code 402-397-4700 Edson L. Bridges II, 256 Durham Plaza, 8401 West Dodge Road, Omaha, NE 68114 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering N/A It is proposed that this filing will become effective (check appropriate box) [x] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: CAPITAL STOCK PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION __________________________________________________________________________ September 25, 2000 Bridges Investment Fund, Inc. CAPITAL STOCK 8401 West Dodge Road Omaha, Nebraska 68114 402-397-4700 __________________________________________________________________________ Special Notices . This Statement of Additional Information is not a Prospectus. . This Statement of Additional Information should be read in conjunction with the Prospectus of Bridges Investment Fund, Inc. dated February 25, 2000. . Other Information, Part C, of the filing dated September 25, 2000, by Bridges Investment Fund, Inc. with the Securities and Exchange Commission may contain useful material for prospective investors and shareholders. . A copy of the Prospectus of Bridges Investment Fund, Inc. and Part C may be obtained from the office of the Fund at the address shown above. . The date of this Statement of Additional Information is September 25, 2000. Bridges Investment Fund, Inc. 2 September 25, 2000 Statement -- Part B TABLE OF CONTENTS Location of Related Location Disclosure Info. Page No. in Prospectus in This Part A Information Required in Statement of Additional Information Part B - Cover Page...........................................1 - Table of Contents....................................2 - Fund History.........................................3 9 Description of the Fund and its Investments and Risks.3-6 9 Investment Policies, Strategies and Risks.........3 - Fund Policy Restrictions..........................3-5 - Portfolio Turnover................................5-6 11 Management of the Fund................................6 - Directors and Officers............................6-11 - Code of Ethics....................................12 - Compensation.........................................13-14 - Control Persons and Principal Holders of Securities...14-15 11-12 Investment Advisory and Other Services................15-18 - Control Persons...................................15-16 - Affiliated Persons................................16 12 Advisory Fees.....................................16 - Expense Limitation................................16 - Services Performed on Behalf of Fund..............16-17 Supplied or Paid for Substantially by Investment Adviser - Other Services....................................17 Independent Auditors...............................17-18 - Brokerage Allocation and Other Practices..............18-19 Investment Adviser's Trade Aggregation Policy.........19-20 13 Capital Stock and Other Securities....................20 Cumulative Voting.................................20 13-18 Purchase, Redemption, and Pricing of Securities.......20-21 Being Offered - General Information............................20-21 14 Valuation......................................21 Specimen Price Make Up Sheet...................21 - Other Disclosures..............................21 Description of Fund Plans.............................21-25 Standard Retirement Plan..........................21-22 - Individual Retirement Custodian Account Prototype.22-25 19 Tax Status.............................................26 - Underwriters...........................................26 - Calculation of Performance Data.......................26-29 - Financial Statements..................................30-47 Report of the Independent Public Accountants.......32 Schedule of Portfolio Investments.................33-39 Statement of Assets and Liabilities................40 Statement of Operations............................41 Statements of Changes in Net Assets................42 Notes to Financial Statements.....................43-47 Bridges Investment Fund, Inc. 3 September 25, 2000 Statement -- Part B Fund History The Fund was organized as an open-end investment company under the laws of Nebraska on March 20, 1963. The Fund commenced investment operations on July 1, 1963, and shares of Capital Stock were first sold to the general public on December 7, 1963. The Fund has conducted its business continuously since such time. The Fund was created primarily for the purpose of extending the services of the investment management firm of Bridges Investment Counsel, Inc. to investors whose funds are too small to permit economical administration as separate accounts. By acquiring shares of the Fund, investors with smaller accounts obtain securities diversification and continuous investment supervision, although an investment in the Fund does not remove the market risk inherently involved in making securities investments. Description of the Fund and Its Investments and Risks Investment Policies, Strategies and Risks -- The primary investment objective of the Fund is long-term capital appreciation. The development of a moderate amount of current income is a secondary investment objective of the Fund. The Fund will invest in common stocks and securities convertible into common stocks to achieve its capital growth objective, bonds, debentures, and preferred stocks to meet its income objective. Refer to the Fund Prospectus for a complete discussion of the investment policy objectives for the Fund and the strategies employed to attain the Fund's objectives. Fund Policy Restrictions -- The activities of the Fund and its investment policies are restricted as set forth in the Fund's Prospectus and in the following discussion. The restrictions described below cannot be changed without the approval of a majority of the outstanding voting securities of the Fund. The Fund will not concentrate its investments in a particular industry or group of industries by committing more than 25% of total assets to securities in any one industry. With the exception of investments in U.S. government securities, the Fund will not make investments which will cause more than 5% of the total value of its assets (at the time of purchase) to be invested in the securities of any one issuer. Furthermore, in initial or subsequent investments, the Fund may not acquire more than 10% of the voting stock of any one issuer, and the Fund may not acquire more than 10% of any one class of the outstanding securities of any one issuer. For the purposes of this restriction, all kinds of securities of a company representing debt are considered as a single class irrespective of their differences, and all kinds of preferred stock of a company are considered a single class irrespective of their differences. Bridges Investment Fund, Inc. 4 September 25, 2000 Statement -- Part B The Fund will not borrow money or pledge or mortgage its assets, except as a temporary measure, in which event total borrowings shall not exceed 10% of the value of its total assets. The Fund has never exercised the option to borrow money as a temporary measure. In addition, the Fund may not purchase securities on margin or make short sales. The Fund will not make investments which will cause more than 5% of the value of its total assets (at the time of purchase) to be invested in securities of issuers which have a record of less than three years' operation. The Fund will not invest in companies for the purpose of exercising control or management, and the Fund will not invest in securities of other investment companies except by purchase in open market, where no commission or profit to a sponsor or dealer results from such purchase other than the customary broker's commission, or where the acquisition is part of a plan of merger or consolidation. Such acquisitions, if any, of the securities of other registered investment companies by the Fund are not permitted if immediately after such purchase or acquisition: 1. The Fund owns in the aggregate more than 3% of the outstanding voting stock of another investment company; 2. The shares of the other registered investment company have an aggregate value in excess of 5% of the value of the total assets of the Fund; or 3. The shares of the other registered investment company and all other investment companies have an aggregate value in excess of 10% of the value of the total assets of the Fund. Each investment of the Fund will be made with the expectation that the security acquired will be held for the long term. The Fund will not purchase securities with a view towards rapid turnover for capital gains. However, the management may sell securities for short term gains or losses if new information or changes in market conditions indicate such selling action is advisable. The Fund will not invest outside of the area of securities. It will not purchase or sell real estate, commodities or commodity contracts. The Fund will not make loans to other persons. (The acquisition of a portion of an issue of publicly distributed bonds, debentures, or other debt securities is not to be considered the making of a loan.) The Fund will not engage in the underwriting of the securities of other issuers. The Fund will not purchase restricted or non-registered securities. Bridges Investment Fund, Inc. 5 September 25, 2000 Statement -- Part B The Fund will not purchase or sell put or call options, except the Fund may write or sell call options against shares held in its securities portfolio on the American Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, the Pacific Stock Exchange Incorporated, and the PBW Stock Exchange, provided that any such call options will be limited to shares of common stocks which have an aggregate market value of less than 10% of the total value of the Fund's assets at the time of the transaction, and further provided that not more than one-half of the shares held in any one issuer will be eligible for the writing of such call options. The Fund may purchase a call option with terms identical to a call option which has been previously written in order to liquidate or close an existing call option position. As of December 31, 1999, the Fund has not exercised its authority to write a covered call option. The Fund may purchase bonds, debentures, and preferred stocks which have one or more interest or dividend payments in arrears, but, nevertheless, offer prospects of resuming the payment of the arrearage plus the current income rate. Such securities may offer a significant price improvement from a depressed level, thereby creating a capital gain potential similar to the advancement possible for common stock selections. The risk of owning this type of security is that income payments will not be resumed or that the principal will never be repaid. Further, the Fund may acquire issues, sometimes known as "junk bonds", with above average yield and balance sheet risk. The purchase of this lower grade of securities will be limited to 5% of the value of the total assets of the Fund. This permitted investment policy has seldom been used in the past history of the Fund, and it would only be employed in an exceptionally attractive circumstance in the judgment of the investment manager. With respect to the ownership of U.S. Government securities, the Fund will invest primarily in issues of the U.S. Treasury that are backed by the full faith and credit of the United States of America. The Fund may purchase U.S. Treasury Bills, short term; U.S. Treasury Notes, intermediate term; and U.S. Treasury Bonds, long term instruments depending upon the attractiveness of interest rates and the expected trends of these yields in the future. Portfolio Turnover -- In the ten years ending December 31, 1999, the portfolio turnover rate for the Fund ranged from a high of 28% in 1991 to a low of 7% in 1992 and 1995. The median portfolio turnover for the past 10 years was 10.5% and the average portfolio turnover rate for such period was 14.5%. The portfolio turnover rate in 1999 was 16% while in 1998 was 24%. The Fund does not plan to materially change its portfolio turnover rate more than the ranges experienced in the past ten years; however, portfolio rates could increase significantly in order to respond to turbulent conditions in the securities market. Refer to Financial Highlights in the Prospectus for detailed year-to- year information on the portfolio turnover rate. Bridges Investment Fund, Inc. 6 September 25, 2000 Statement -- Part B The rate of portfolio turnover is calculated by dividing (a) the lesser of purchases or sales of portfolio securities for the reporting period by (b) the monthly average of the value of the portfolio securities owned by the Fund during the reporting period. Such monthly average is calculated by totaling the market values of the portfolio securities as of the beginning and end of the first month of the reporting period and as of the end of each of the succeeding months in the period and dividing the sum by the number of months in the period plus one. For purposes of this calculation, there is excluded from both the numerator and denominator all securities, including options, whose maturity or expiration date at the time of acquisition were one year or less. All long-term securities, including long-term U.S. Government securities, are included. Purchases include any cash paid upon the conversion of one portfolio security into another. Purchases also include the cost of rights or warrants purchased. Sales include the net proceeds from the sale of rights or warrants and the net proceeds of portfolio securities which have been called or for which payment has been made through redemption or maturity. In general, portfolio turnover rises when securities held need to be repositioned to adapt the Fund's investment position to new opportunities or to protect against unforeseen, adverse market circumstances. Management of the Fund Directors and Officers -- The Board of Directors of the Fund is responsible for the management of the business affairs of the Fund. The day-to- day operation of the Fund is handled by the officers who are chosen by, and accountable to, the Board of Directors. The officers have at their disposal the services of the investment adviser, Bridges Investment Counsel, Inc. This Firm is obligated under its investment advisory contract with the Fund to perform all services necessary in connection with the management of the Fund. The business experience of each of the officers and directors of the Fund and of the investment adviser during the past five years is described below. Directors who are "interested persons" of the Fund are indicated with an asterisk (*) in front of their name. The determination of an interested person is based on the definition in Section 2(a)(19) of the Investment Company Act of 1940, and the recent Securities and Exchange Commission Release (Release No. IC-24083, dated October 14, 1999), providing additional guidance to investment companies about the types of professional and business relationships that may be considered to be material for purposes of Section 2(a)(19). Interested persons include a director or officer of the Fund who has a significant or material business or professional relationship with the Fund's investment adviser, Bridges Investment Counsel, Inc. Frederick N. Backer, Age 67, Director of the Fund and member of the Audit Committee, 25720 West Dodge Road, Waterloo, Nebraska. Mr. Backer is currently Bridges Investment Fund, Inc. 7 September 25, 2000 Statement -- Part B the President of JAT Investments Limited, formerly JAT Corp., a private investment concern that operated a restaurant for twenty-five years. His responsibilities as President of JAT Corp. commenced in August, 1972. *Edson L. Bridges II, CFA, Age 67, Chairman and Chief Executive Officer, Director of the Fund, and member of the Executive Committee, 8401 West Dodge Road, Omaha, Nebraska. Mr. Bridges became Chairman and Chief Executive Officer of Bridges Investment Fund, Inc. on April 11, 1997, after serving as President from September 28, 1970 through April 11, 1997. In September, 1959, Mr. Bridges became associated with the predecessor firm to Bridges Investment Counsel, Inc. and is presently the President and Director of that Corporation. Mr. Bridges is also President and Director of Bridges Investor Services, Inc., a company that became Transfer Agent and Dividend Disbursing Agent effective October 1, 1987. Mr. Bridges is also President and Director of Provident Trust Company, chartered to conduct business on March 11, 1992. Mr. Bridges is also Managing Director of Bridges Investment Management, Inc. *Edson L. Bridges III, CFA, Age 41, President and Director of the Fund and member of the Planning Committee, 8401 West Dodge Road, Omaha, Nebraska. Mr. Bridges has been a full-time member of the professional staff of Bridges Investment Counsel, Inc. since August, 1983. Mr. Bridges has been responsible for securities research and the investment management for an expanding base of discretionary management accounts, including the Fund, for more than seven years. Mr. Bridges was elected President of Bridges Investment Fund, Inc. on April 11, 1997, and he assumed the position of Portfolio Manager at the close of business on that date. Mr. Bridges became a Director of Stratus Fund, Inc. in October, 1990. Stratus Fund, Inc. is an open-end, regulated investment company located in Lincoln, Nebraska. Mr. Bridges has been Executive Vice President- Investments of Bridges Investment Counsel, Inc. since February, 1993, and he is a Director of that Firm. Mr. Bridges is also an officer and a Director of Bridges Investor Services, Inc., Provident Trust Company and President of Bridges Investment Management, Inc. N. Phillips Dodge, Jr., Age 63, Director of the Fund and member of the Executive Committee, 8701 West Dodge Road, Omaha, Nebraska. Mr. Dodge is President of N. P. Dodge Company, a leading commercial and residential real estate brokerage concern in the area of Omaha, Nebraska. Mr. Dodge has held this position since July, 1978. Mr. Dodge is also a principal officer and director of a number of subsidiary and affiliated companies in the property management, insurance, and real estate syndication. Mr. Dodge became a Director of American States Water Company (formerly Southern California Water Company) in April, 1990, and a Director of the Omaha Public Power District as of January 5, 1995, for a six year term. John W. Estabrook, Age 72, Director of the Fund and member of the Audit Committee, 10542 Mullen Road, Omaha, Nebraska. Mr. Estabrook was the Chief Administrative Officer of the Nebraska Methodist Hospital and its holding Bridges Investment Fund, Inc. 8 September 25, 2000 Statement -- Part B company, Nebraska Methodist Health System, in Omaha, Nebraska, beginning June, 1959. Effective January 1, 1987, Mr. Estabrook relinquished the position of President of Nebraska Methodist Hospital, assuming the Presidency of the Nebraska Methodist Health System until his retirement on August 31, 1992. Jon D. Hoffmaster, Age 52, Director of the Fund and member of the Planning Committee, 8905 Farnam Court, Omaha, Nebraska. Since July 1999, Mr. Hoffmaster has been affiliated with eteetime.com, a golf software, reservation and e- commerce business located in La Quinta, California, and currently serves as Chief Executive Officer and a director of eteetime.com. From 1987 until June 1999, Mr. Hoffmaster served as a director of infoUSA (formerly known as American Business Information, Inc.), a leading business-to-business marketing information company located in Omaha, Nebraska, and until June 1999 served as its President and Chief Operating Officer. From 1980 to 1987, Mr. Hoffmaster was President and Chief Executive Officer of First National Bank of Bellevue, Nebraska. John J. Koraleski, Age 49, Director of the Fund and member of the Planning Committee, 1416 Dodge Street, Omaha, Nebraska. Mr. Koraleski is Executive Vice President-Marketing & Sales of the Union Pacific Railroad Company headquartered in Omaha, Nebraska. As the Executive Vice President, he has responsibility for all sales, marketing, and commercial activities for the railroad and its Union Pacific Distribution Services subsidiary. Prior to being promoted to his current position in March 1999, Mr. Koraleski was the Railroad's Chief Financial Officer, Controller of Union Pacific Corporation, and he also was responsible for the Railroad's Real Estate Department. Mr. Koraleski is a member of the Railroad's Operating Committee. He is Vice President-Finance and a member of the Board of Trustees of the Union Pacific Foundation. Mr. Koraleski is also a Board member of Automated Monitoring and Control International, Inc. (AMCI), a wholly-owned technology firm situated in Omaha, Nebraska. Roger A. Kupka, Age 69, Director of the Fund and member of the Audit Committee, 2305 South 103rd Street, Omaha, Nebraska. Mr. Kupka was the President and Chief Executive Officer of Nebraska Builders Products Co. of Omaha, Nebraska. He held this position from 1969 until November, 1986, when he retired. During the past five years, Mr. Kupka has been Vice Chairman of the Board of Directors of PSI Group, formerly known as Discount Mail Inc., headquartered in Omaha, Nebraska. Mr. Kupka is currently a member of the Board of Directors of PSI Group. In addition, Mr. Kupka serves as President of Kupka, Inc. and also serves on the Board of Directors of Micklin Home Improvement Co. All of these companies are located in Omaha, Nebraska. Gary L. Petersen, Age 56, Director of the Fund and member of the Executive Committee, P.O. Box 248, Walton, Nebraska 68461. Mr. Petersen is the retired President of Petersen Manufacturing Co. Inc. of DeWitt, Nebraska. Mr. Petersen commenced employment with the Company in February, 1966. He became President in Bridges Investment Fund, Inc. 9 September 25, 2000 Statement -- Part B May, 1979, and retired in June, 1986. Petersen Manufacturing Co. Inc. produced a broad line of hand tools for national and worldwide distribution under the brand names Vise-Grip, Unibit, Prosnip, and Punch Puller. John T. Reed, Age 56, Director of the Fund and member of the Audit Committee, 11336 Pine Street, Omaha, Nebraska. Mr. Reed is Chairman of McCarthy & Co. of Omaha, Nebraska, a registered broker-dealer and is a shareholder of its parent, McCarthy Group, Inc. Mr. Reed was formerly with Arthur Andersen & Co. for 32 years before retiring in August, 1996. Mr. Reed served as the managing partner of Arthur Andersen & Co.' s Omaha office while also serving as partner in charge of that office's tax and business consulting practices. Roy A. Smith, Age 65, Director of the Fund and member of the Planning Committee, 601 North 108th Circle, Omaha, Nebraska. Mr. Smith was President of H. P. Smith Motors, Inc. for decades until the Company was sold to a new owner in the Third Quarter of 1997. Mr. Smith is currently President of Old Mill Toyota of Omaha, Nebraska, and is a director of the Mid City Bank of Omaha. Janice D. Stoney, Age 59, Director of the Fund and member of the Executive Committee, 8912 Farnam Court, Omaha, Nebraska. Mrs. Stoney retired as Executive Vice President, Total Quality System, US WEST Communications in December, 1992. Mrs. Stoney began her career within the telephone industry as a service representative with the Northwestern Bell Telephone Company in August, 1959. She held various positions in operations and labor relations with her employer until she was elected Vice President of Human Relations in 1980, a responsibility she held for three years. Between 1983 and 1985, Mrs. Stoney fulfilled the position of Vice President _ Marketing of Communication Services. She was then advanced to lead Northwestern Bell Telephone Company as Executive Vice President and Chief Operating Officer, 1985 to 1987, and President and Chief Executive Officer for a $2.3 billion in revenue operation spanning a five- state area in the Midwest for the years 1987 to 1989. Mrs. Stoney's next advancement was to US WEST Communications in Denver, Colorado where she served as President, Consumer Division from 1989 to 1991. During her distinguished business career, Mrs. Stoney has served on the Board of Directors of the Federal Reserve Bank, Tenth District, Omaha Branch, from 1984 to 1988; the Northwestern Bell Telephone Company, 1985 to 1990; Tennant Company located in Minneapolis, Minnesota from 1986 to 1995; and US WEST Communications Group, Inc., 1989 to 1992. Mrs. Stoney formerly served on the Board of Directors of Guarantee Life Insurance Company of Omaha, Nebraska from 1987 to 1999, and the Premark International Corporation, Deerfield, Illinois, from 1989 to 1999. She is also a Director of the Whirlpool Corporation, headquartered in Benton Harbor, Michigan where she has served since 1987. Mrs. Stoney was also elected to the Williams Companies, Inc. Board of Directors in 1999. L.B. Thomas, Age 63, Director of the Fund and member of the Executive Committee, 7813 Pierce Circle, Omaha, Nebraska. Mr. Thomas retired in October, 1996, from ConAgra, Inc. He was Senior Vice President, Risk Officer and Bridges Investment Fund, Inc. 10 September 25, 2000 Statement -- Part B Corporate Secretary for ConAgra, Inc. at the time of his retirement. ConAgra has sales of approximately $25 billion world-wide and is the second largest major processor of food products in the United States. It is headquartered in Omaha, Nebraska. Mr. Thomas was also a member of ConAgra's Management Executive Committee. Mr. Thomas joined ConAgra as assistant to the Treasurer in 1960. He was named Assistant Treasurer in 1966; Vice President, Finance in 1969; Vice President, Finance and Treasurer in 1974; added the Corporate Secretary responsibility in 1982; and became Senior Vice President in 1991. Mr. Thomas is a director of Lozier Corp. located in Omaha, Nebraska and the Exchange Bank of Mound City, Missouri, and a member and treasurer of the Nebraska Methodist Health System Board of Directors. John K. Wilson, Age 45, Director of the Fund and member of the Planning Committee, 15942 Burt Street, Omaha, Nebraska. Mr. Wilson is President of Durham Resources, LLC and President of Great Plains Energy Corp. Durham Resources, LLC is a privately held investment company headquartered in Omaha, Nebraska. Great Plains Energy Corp. and its wholly owned subsidiary, Great Plains Natural Gas Co., is a retail distributor of natural gas to 19 communities in western Minnesota and eastern North Dakota. Mr. Wilson commenced his career with Durham Resources LLC, and Great Plains Energy Corp. in February, 1983. Prior to becoming President in May, 1994, Mr. Wilson served in the position of Secretary-Treasurer and Vice President-Finance. Mr. Wilson currently serves on the Advisory Board _ U.S. Bank National Association, Omaha, Nebraska. Nancy K. Dodge, Age 38, Treasurer of the Fund, 8401 West Dodge Road, Omaha, Nebraska. Mrs. Dodge has been an employee of Bridges Investment Counsel, Inc. since January, 1980. Her career has progressed through the accounting department of that Firm, to her present position as Vice President of Fund Services. Mrs. Dodge is the person primarily responsible for day to day operations for the Fund, and she is also the key person for handling relations with shareholders, the custodian bank, and the auditor. Mrs. Dodge is an officer and Director of Bridges Investor Services, Inc., and a Trust Administrator for Provident Trust Company. Brian M. Kirkpatrick, Age 28, Vice President of the Fund, 8401 West Dodge Road, Omaha, Nebraska. Mr. Kirkpatrick has been an employee of Bridges Investment Counsel, Inc. since August, 1992. His career has been mainly in the client accounting and security research areas. In 1998, Brian's role with Bridges Investment Counsel, Inc. expanded significantly into client counselling, portfolio management and Director of Security Research. Mr. Kirkpatrick was elected Vice President of the Fund on April 13, 1999. Mr. Kirkpatrick is also a Trust Assistant for Provident Trust Company. Mary Ann Mason, Age 47, Secretary of the Fund, 8401 West Dodge Road, Omaha, Nebraska. Mrs. Mason has been an employee of Bridges Investment Counsel, Inc. since June, 1981. Her career has been mainly in the staff services area as a secretary. Mrs. Mason is also Corporate Secretary for Bridges Investment Bridges Investment Fund, Inc. 11 September 25, 2000 Statement -- Part B Counsel, Inc., Secretary and Trust Administrator for Provident Trust Company, Secretary and Treasurer for both Bridges Investor Services, Inc. and Bridges Investment Management, Inc., and a Director of Bridges Investor Services. Linda J. Morris, Age 32, Assistant Treasurer of the Fund, 8401 West Dodge Road, Omaha, Nebraska. Mrs. Morris has been an employee of Bridges Investment Counsel, Inc. since August, 1992. Her career with Bridges Investment Counsel, Inc. has been largely in the client accounting area. In recent years, Linda has been the primary accounting person to determine the daily net asset value for the shares of the Fund. Mrs. Morris was elected Assistant Treasurer of the Fund on April 13, 1999. Mrs. Morris is also Associate Director of Accounting for Bridges Investment Counsel, Inc. and a Trust Assistant for Provident Trust Company. Kathleen J. Stranik, Age 56, Assistant Secretary of the Fund, 8401 West Dodge Road, Omaha, Nebraska. Mrs. Stranik has been an employee of Bridges Investment Counsel, Inc. since January, 1986. Mrs. Stranik has served as executive secretary to both Edson L. Bridges II and Edson L. Bridges III throughout her career with the Firm. She currently holds the position of Vice President of Administration for the Fund's investment manager. Mrs. Stranik is also an officer and Director of Bridges Investor Services, Inc., Assistant Secretary and Assistant Treasurer and Trust Officer for Provident Trust Company and Assistant Secretary and Assistant Treasurer for Bridges Investment Management, Inc. The Board of Directors of the Fund has three committees: an Audit Committee, an Executive Committee, and a Planning Committee. The members of these committees are appointed annually at the April meeting of the Board of Directors. The members of the Audit Committee currently are: Mr. Frederick N. Backer, Mr. John W. Estabrook, Mr. Roger A. Kupka, and Mr. John T. Reed. The members of the Executive Committee currently are: Mr. Edson L. Bridges II, Mr. N. P. Dodge, Jr., Mr. Gary L. Petersen, Mrs. Janice D. Stoney, and Mr. L.B. Thomas. The members of the Planning Committee currently are: Mr. Edson L. Bridges III, Mr. Jon D. Hoffmaster, Mr. John J. Koraleski, Mr. Roy A. Smith, and Mr. John K. Wilson. The Executive Committee reviews investment policies for the Fund, and members of this Committee take action on any matters which the Board should review at its next meeting for appropriate action. The Audit Committee establishes the scope of review for the annual audit by its independent auditor, and its members work with representatives of the independent auditor to establish such guidelines and tests for the audit which are deemed appropriate and necessary. The Planning Committee establishes and reviews long-term planning and directions for the Fund in light of the changing business and regulatory environment for investment companies in general and with respect to the Fund in particular. Bridges Investment Fund, Inc. 12 September 25, 2000 Statement -- Part B Code of Ethics -- Rule 17j-1 under the 1940 Act requires all registered investment companies and their investment advisers to adopt written codes of ethics and institute procedures designed to prevent "access persons" (as defined in Rule 17j-1) from engaging in any fraudulent, deceptive or manipulative trading practices. The Fund and Bridges Investment Counsel, Inc. originally adopted a code of ethics in January, 1982, which was amended in 1994. On October 12, 1999, the Board of Directors for the Fund and the Board of Directors for its investment adviser, Bridges Investment Counsel, Inc., adopted a joint Restated Code of Ethics (the "Code") that incorporates personal trading policies and procedures applicable to access persons of the Fund and of Bridges Investment Counsel, Inc. The Code has been designed to address potential conflict of interests that can arise in connection with the trading activities of the Fund and investment advisory personnel. Generally, under SEC Rule 17j-1, access persons include directors and officers of the Fund and Bridges Investment Counsel, Inc., as well as employees who in connection with their regular duties, make, participate in, obtain information regarding, or make recommendations concerning, the purchase or sale of securities by the Fund. Pursuant to the Code, access persons are generally permitted to engage in personal securities transactions, provided that such access person does not purchase or sell, directly or indirectly, any security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which to his or her actual knowledge at the time of such purchase or sale (a) is being considered for purchase or sale by the Fund; or (b) is being purchased or sold by the Fund; or (c) has been purchased or sold by the Fund within the most recent 15 days. In addition, the Code requires access persons to preclear personal securities investments before such transactions are initiated, and to internally report all personal securities transactions quarterly, as well as annual disclosure of all personal securities holdings and personal financial liabilities. Disinterested directors of the Fund are not required to make such reports unless the director knew, or in the ordinary course of fulfilling his or her duties, should have known, of the Fund's consideration of, or the actual purchase or sale of the security purchased or sold by the Fund within the applicable time period. Bridges Investment Fund, Inc. 13 September 25, 2000 Statement -- Part B Compensation The officers and directors of the Fund do not receive any salaries or fees from the Fund for their services to the Fund in such capacities. However, during 1999, the directors as a group received $13,400.00 from Bridges Investment Counsel, Inc. for compensation related to attendance at meetings of the Board of Directors, the Audit Committee, and the Executive Committee of the Fund. The following compensation information is provided for all directors of the Fund and for each of the executive officers or any affiliated person of the Fund (with annual compensation in excess of $60,000) for the most recently completed fiscal year (1999):
COMPENSATION TABLE __________________________________________________________________________ (1) (2) (3) (4) (5) Pension or Compensation Aggregate Retirement Estimated FromlRegistrant Compensation Benefits Accrued Annual and Fund Complex Name of Person, From as Part of Fund Benefits Upon Paid to Directors Position Registrant Expenses Retirement Executive Officers: Edson L. Bridges II None None None None Chairman and CEO, and Director Edson L. Bridges III None None None None President and Director Directors of the Fund: Frederick N. Backer None None None None N. P. Dodge, Jr. None None None None John W. Estabrook None None None None Jon D. Hoffmaster None None None None John J. Koraleski None None None None Roger A. Kupka None None None None Gary L. Petersen None None None None John T. Reed None None None None Roy A. Smith None None None None Janice D. Stoney None None None None L.B. Thomas None None None None John K. Wilson None None None None
Bridges Investment Fund, Inc. 14 September 25, 2000 Statement -- Part B Fund directors and officers do not receive any pension, retirement, or other plan benefits from the Fund. Control Persons and Principal Holders of Securities No person or shareholder has control of Bridges Investment Fund, Inc. Control is defined to mean the beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of the Fund. No person or shareholder owned of record or beneficially more than 5% of the Fund's outstanding capital stock as of January 31, 2000, when the Fund had a total of 1,544,980 shares outstanding: However, a group consisting of the family members of Edson L. Bridges II, beneficially owned 4.55%, as of January 31, 2000. The family of Edson L. Bridges II is composed of the following members: Sally S. Bridges, wife; Edson L. Bridges III, a married son; Jennifer B. Hicks, a married daughter; Robert W. Bridges, a married son; and Marvin W. Bridges, Jr., a brother. A complete description of ownership of Fund shares by Bridges' family members may be found in the Fund's 2000 Proxy Statement. The officers and directors of the Fund owned beneficially and of record, or had the power to vote, 133,195 shares of the Fund's stock. The members of the immediate families of officers and directors owned an additional 119,589 shares for a total beneficial ownership of these persons of 252,784 shares which was equal to 16.36% of the 1,544,980 shares outstanding as of January 31, 2000. With respect to the attributed beneficial share interests reported for officers of the Fund for holdings of the Fund by the Bridges Investment Counsel, Inc. Pension Plan and the Bridges Investment Counsel, Inc. Profit Sharing Trust, all shares allocated to the accounts of participants are estimates as of January 31, 2000. While the aggregate shareholding numbers are accurate, the Trustees of the Profit Sharing Trust will not report the allocations to participants for December 31, 1999, until March 15, 2000, because the financial information upon which the allocations are made to participants was not complete on the February 25, 2000, filing date for this Statement of Additional Information, and such information usually is not available for a variety of reasons and factors related to the calculation of bonuses for employees and the filing of the corporate Federal Income Tax for Bridges Investment Counsel, Inc. Accordingly, the disclosure of beneficial interests in the Pension Plan are stated as of December 31, 1999, while the allocations of percentage interests for the Profit Sharing Trust are attributed interests as of December 31, 1998. This methodology was used to disclose the beneficial interest in these trusts as of January 31, 2000. Bridges Investment Fund, Inc. 15 September 25, 2000 Statement -- Part B Bridges Investment Counsel, Inc. initiated a 401(k) additional feature to the Firm's Profit Sharing Trust in 1988. The National Bank of Commerce Trustee holds 6,684 shares for five participants who are officers of the Fund and its investment advisers: Edson L. Bridges III, whose ownership interest is 3,582 shares, Mary Ann Mason, whose ownership interest is 1,848 shares, Kathleen J. Stranik, whose ownership interest is 263 shares, Brian M. Kirkpatrick, whose ownership interest is 717 shares, and Linda J. Morris, whose ownership interest is 274 shares. Unless otherwise noted, all disclosures of shareholder ownership in this section of the Statement of Additional Information are made as of the close of business on January 31, 2000. Investment Advisory and Other Services Control Persons -- Two persons, Edson L. Bridges II and Edson L. Bridges III, of the fourteen members of the Board of Directors of the Fund are also directors and officers of the investment adviser, Bridges Investment Counsel, Inc. Mr. Bridges is President and director of Bridges Investment Counsel, Inc. and Chairman and Chief Executive Officer and director of Bridges Investment Fund, Inc. The total of 600 shares of capital stock of the investment adviser are owned as follows: Edson L. Bridges II, 525 shares; Edson L. Bridges III, six shares; Sally S. Bridges, wife of Edson L. Bridges II, three shares; and National Bank of Commerce, as Trustee for the Bridges Investment Counsel, Inc. Profit Sharing Trust, 66 shares. Sally S. Bridges, Edson L. Bridges II, and Edson L. Bridges III are the three directors of Bridges Investment Counsel, Inc. Mr. and Mrs. Edson L. Bridges II have been directors of Bridges Investment Counsel, Inc. since January 2, 1963. Mr. Edson L. Bridges III was elected a Director on December 30, 1987. A change in the control of ownership of Bridges Investment Counsel, Inc., which would cause the current advisory agreement with the Fund to be terminated, may occur as a result of the death, disability or retirement of Edson L. Bridges II, who currently owns 87.5% of its common stock. As a result, and as part of its prudent long range planning to establish an orderly and well-managed transfer of advisory relationships, Bridges Investment Counsel, Inc. formed Bridges Investment Management, Inc., as a wholly-owned subsidiary in late 1994, and has provided working capital and other resources to it since 1995. Bridges Investment Management, Inc. filed a Form ADV with the Securities and Exchange Commission which became effective December 9, 1999, and is expected to commence its advisory business for clients other than the Fund in March, 2000. The directors of Bridges Investment Management, Inc. are currently Edson L. Bridges II, Edson L. Bridges III, and Deborah L. Grant. The officers of Bridges Bridges Investment Fund, Inc. 16 September 25, 2000 Statement -- Part B Investment Management, Inc. are currently Edson L. Bridges II, Managing Director; Edson L. Bridges III, President; Deborah L. Grant, Vice President; Mary Ann Mason, Secretary/Treasurer; and Kathleen J. Stranik, Assistant Secretary/Assistant Treasurer. Bridges Investment Counsel, Inc., as investment adviser to the Fund, has reviewed with the Fund Board of Directors the transfer of the investment advisory relationship from Bridges Investment Counsel, Inc. to Bridges Investment Management, Inc., and the Board of Directors has given preliminary favorable consideration to the transfer, subject to compliance with applicable legal requirements and Fund shareholder approval. Since the management and professional personnel associated with Bridges Investment Management, Inc. would be substantially the same as those currently associated with Bridges Investment Counsel, Inc., any such transfer would not be expected to change the investment policies or strategies used in the past with respect to the Fund. The possible transfer of the investment advisory relationship remains under review, and there is currently no specific schedule to propose any such transfer to Fund shareholders for consideration, and no assurance or commitment that such action will be taken. Investors may refer to the Fund's 1999 Annual Shareholder Report, and the Chairman's letter to Fund shareholders for further discussion of this matter. Affiliated Persons -- As directors and officers of both Bridges Investment Counsel, Inc. and Bridges Investment Fund, Inc., Mr. Edson L. Bridges II and Mr. Edson L. Bridges III are affiliated persons of both organizations. There are no other affiliated persons of the investment adviser and the Fund. Advisory Fees -- Bridges Investment Fund, Inc. paid Bridges Investment Counsel, Inc. the following dollar amounts for the last three fiscal years as an investment advisory fee: $170,328 in 1997, $209,938 in 1998, and $279,316 in 1999. These fees are based on the month-ending net assets, averaged for a three-month period, and a 1/8 of 1% fee basis is applied to the resulting number. The annual fee basis is 1/2 of 1%. The annual fee is the sum of the four quarterly fees. The advisory fee was not reduced by any credits during the last three fiscal years. Expense Limitation -- Bridges Investment Counsel, Inc. has agreed with the Fund to pay any expenses, properly owed by the Fund, which exceed 1 1/2% of the average net assets for any year. There have been no expense reimbursements during the last three fiscal years. Services Performed on Behalf of Fund -- Services which are supplied or paid for wholly or in substantial part by the investment adviser in connection with the investment advisory contract are: occupancy and office rental; registration and filing fees; salaries and compensation of the Fund's directors and officers; trading department for securities; and Prospectus preparation and printing. In effect, Bridges Investment Counsel, Inc. supplies all personnel, equipment, facilities, and administrative services at its expense that would be provided for all investment advisory clients of the Firm. In addition, Bridges Investment Counsel, Inc. pays for all expenses of maintaining federal and state Bridges Investment Fund, Inc. 17 September 25, 2000 Statement -- Part B registrations and the majority of legal expenses of the Fund including the costs associated with Master Plans for Standard Retirement Plans and Individual Retirement Act accounts. Lastly, the Investment Adviser performs all services not specifically identified to ensure an orderly business operation of the Fund. The Fund pays Bridges Investment Counsel, Inc. for accounting, clerical, and bookkeeping services related solely to special functions for the Fund and for postage, stationery, forms, supplies and printing -- including quarterly reports to shareholders. Bridges Investment Counsel, Inc. provides the staff personnel and services for these tasks, and the Advisory Firm is reimbursed at its cost for these services. Other Services -- The Fund pays for the services of the independent auditor. The Fund also pays the fees and costs of First National Bank of Omaha, Nebraska, the Fund Custodian. The Fund also bears the cost of the insurance premiums to provide $500,000 in fidelity and errors and omissions coverages under an Investment Company Blanket Bond effective April 1, 1988. ICI Mutual Insurance Company, P.O. Box 730, Burlington, Vermont 05402-0730 is the carrier supplying the coverage. Bridges Investor Services, Inc., 8401 West Dodge Road, Omaha, Nebraska 68114, acts as Dividend Disbursing and Transfer Agent for the Fund. For its services as transfer agent, Services is paid a quarterly fee by the Fund of $325 ($1,300 annually). This is a fixed fee which covers transfer agent costs, regardless of the number of Fund share transactions. For its services as dividend disbursing agent, Services is paid by the Fund a fixed fee quarterly of $300 ($1,200 annually). The Fund also pays Services a quarterly fee of $225 ($900 annually) for administrative services provided to the Fund, as well as a quarterly fee for reimbursement for Account Activity in the amount of $2,100 per quarter. In addition to these fixed fees, the Fund pays to Services a $1.00 per transaction fee for opening a new account and transfers in, and a $1.50 per transaction fee for Fund share redemptions and transfers out. Other administrative and operational services provided to the Fund, including preparation and mailing of tax forms on behalf of the Fund, are billed on a time basis of $28.50 per hour. The Fund reimburses Services for postage and other out-of-pocket disbursement costs. Services also charges transactional fees to shareholders of the Fund as described in the Fund's Prospectus. For the year ended December 31, 1999, the Fund paid a total of $15,738 to Services for all services provided to the Fund during 1999 (excluding reimbursement for expense disbursements by Services on behalf of the Fund). Independent Auditors -- KPMG LLP, 1501 Two Central Park Plaza, Omaha, Nebraska 68102 conducts the annual audit of the Fund's operation in accordance with generally accepted auditing standards, the applicable regulations of the Securities and Exchange Commission, and the provisions of the Internal Revenue Code. Representatives of KPMG LLP meet with the Audit Committee of the Board of Directors to establish the scope of each audit. The federal and state income Bridges Investment Fund, Inc. 18 September 25, 2000 Statement -- Part B tax returns are prepared by the staff of KPMG LLP. Lastly, KPMG LLP provides consents to permit the filing of financial statements with appropriate documents with the Securities and Exchange Commission at various times throughout the year, and a partner of the firm or his representative will be in attendance at the annual meeting of stockholders to answer any inquiries at that time. Brokerage Allocations and Other Practices Transactions in the Fund's portfolio of securities are effected through a number of brokers to reflect the availability of security research information, execution and other open market services, and goodwill or other factors. The total brokerage fees paid on securities transactions for the Fund for the last three fiscal years were: $23,917.11 in 1997, $45,224.00 in 1998, and $27,096.60 in 1999. The Fund's management has no plans to vary the brokerage commission activity from the pattern shown during the last three fiscal years. During 1999, brokerage commissions attributed to security research information were $25,096.60 or 92.62% of the total. There were $2,000 in commissions attributed to special brokerage services; there were no commissions attributed to good will in 1999. Twelve brokers were used by the Fund during 1999, resulting in an average compensation per brokerage firm of $2,091.38. The largest amount received by any firm was $5,811.25. The Fund has no plans to concentrate securities transaction orders with any single broker or group of brokers. There were no brokerage concerns or individuals acting as brokers who were affiliated with the Fund or its investment adviser, Bridges Investment Counsel, Inc. In 1999, the Fund purchased 500 shares of DLJDirect with a purchase value of $10,000, which is the electronic trading division of Donaldson Lufkin Jenrette, a brokerage firm used by the Fund from time to time. The Fund's position in DLJDirect was sold in 1999, and as of December 31, 1999, the Fund owned no shares of DLJDirect. As of December 31, 1999, the Fund owned shares of Merrill Lynch & Co., a brokerage firm used by the Fund from time to time, with a value of $249,938, representing 0.36% of Fund assets. The Fund paid Merrill Lynch $1,688 in brokerage commissions in 1999. The research information purchased with the Fund's brokerage commissions was provided to the Fund's investment adviser, Bridges Investment Counsel, Inc., and this material benefited all clients of that Firm, including the Fund. Many clients of Bridges Investment Counsel, Inc. participate in an informal program of placing brokerage transactions to obtain security research information; thus, the Fund and its investment adviser benefit from the brokerage transactions of many clients of the investment adviser. Most brokerage firms do not price their research services; therefore, it is not possible to place a monetary value on such services. Bridges Investment Fund, Inc. 19 September 25, 2000 Statement -- Part B The advent of negotiated brokerage commissions on May 1, 1975, ended the uniform commission schedule of New York Stock Exchange member firms. As a result, it is difficult to construct studies of comparable costs and services on each security transaction of the Fund. Accordingly, the disinterested directors of Bridges Investment Fund, Inc. have agreed that Bridges Investment Counsel, Inc. may cause the Fund to pay a member of an Exchange, broker, or dealer an amount of commission for effecting a securities transaction by the Fund in excess of the amount of commission which would have been charged by another person for effecting such transactions, providing that Bridges Investment Counsel, Inc. determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such Exchange member, broker, or dealer subject only to the limitations and definitions contained in Section 28(e) of the Securities Exchange Act of 1934 and to a periodic review by the disinterested directors of the actions of the investment adviser in directing the brokerage business of the Fund. Because of the practice of using securities transactions to purchase brokerage services and research, the Fund may not receive the lowest possible aggregate execution cost with respect to any given brokerage transaction. Bridges Investment Counsel, Inc. is able to secure discounts from the uniform brokerage commission schedule which was in effect on April 30, 1975, for listed securities during the period from May 1, 1975, through December 31, 1999. The Board of Directors reviews and approves the level of discounts and the actual brokerage costs on each transaction in the portfolio at each quarterly meeting. The investment adviser believes these discounts to be appropriate and similar to those earned by other institutional portfolios of the size of the Fund. Mr. Edson L. Bridges III, President of the Fund, selects the brokers to be employed for securities transactions of the Fund, and he determines the acceptability of the discount. Investment Adviser's Trade Aggregation Policy -- Bridges Investment Counsel, Inc. performs investment management and advisory services for various clients including the Fund. In certain instances, portfolio transactions for the Fund may be executed in an aggregated transaction to purchase or sell the same security for other accounts served by Bridges Investment Counsel, Inc. The objective of aggregated transactions is to obtain favorable execution and/or lower brokerage commissions, although there is no certainty that such objective will be achieved. Aggregated transactions in which the Fund participates will be effected only when Bridges Investment Counsel, Inc. believes that to do so will be in the best interest of the Fund. When this occurs, no client account will be favored over any other account. Each account that participates in an aggregated order will participate at the average share price for all Bridges Investment Counsel, Inc. transactions in that security on a given business day, with transaction costs shared pro rata based on each account's participation in the transaction. Bridges Investment Bridges Investment Fund, Inc. 20 September 25, 2000 Statement -- Part B Counsel, Inc. will prepare, before entering an aggregate order, a written statement (the "Allocation Statement") for each proposed aggregated order, specifying the participating client accounts and how it intends to allocate the order. An order may be allocated on a basis different from that specified in the Allocation Statement if all client accounts receive fair and equitable treatment and the reason for the different allocation is explained in writing and is approved in writing by a Bridges Investment Counsel, Inc. compliance officer. While it is possible that the use of aggregated orders may adversely affect the size of the position obtainable for the Fund, Bridges Investment Counsel, Inc. as the Fund investment adviser believes that the procedure generally contributes to better overall execution of the Fund's portfolio transactions. Bridges Investment Counsel, Inc. is not obligated to aggregate orders on behalf of clients, and its decision not to aggregate orders in any particular instance may result in less favorable execution of trades and in higher transaction costs to its clients, including the Fund. Capital Stock and Other Securities The Fund's capital structure consists of 3,000,000 authorized shares of capital stock (par value of one dollar per share) with 2,360,677 shares issued as of December 31, 1999. Fund shares have equal rights as to voting, redemption, dividends, and liquidation, with cumulative voting for the election of directors. The shares are redeemable on written demand of the holder and are transferable. The shares have no preemptive or conversion rights and are not subject to assessment. Fractional shares have the same rights proportionately as full shares, except they do not carry the right to vote. Shares redeemed by the Fund cannot be reissued, and the Fund's authorized capital stock shall be deemed to be reduced by the number of shares redeemed. As of December 31, 1999, 852,523 shares of the Fund had been redeemed since inception of the Fund in 1963. The Fund's net shares of capital stock outstanding were 1,508,154 on December 31, 1999. Cumulative Voting _ Fund shares are entitled to cumulative voting rights. This provision permits a shareholder to allocate the votes of his shares towards one or more directors in order to increase the influence of his ownership towards the director or directors selected for his support in an election of directors. Purchase, Redemption, and Pricing of Securities Being Offered General Information -- Shares of the Fund are offered and sold directly to investors at Net Asset Value per share through the Fund's office, which is the only point of distribution for the Prospectus, Part A, the Statement of Additional Information, Part B, and Other Information, Part C. The Fund does not have any arrangements with underwriters or broker dealers with respect to Bridges Investment Fund, Inc. 21 September 25, 2000 Statement -- Part B the purchase or sale of Fund shares, nor make any payments to underwriters or broker-dealers in connection with the purchase or sale of Fund shares. The Fund is not permitted to redeem shares involuntarily in accounts below a certain number or value of shares. The Fund will honor all properly documented requests for redemption irrespective of the length of time investors have maintained their account with the Fund. Information concerning the methods of purchase and redemption of Fund shares are set forth in the Fund's Prospectus. The Fund does not use letters of intent, contractual accumulation plans, withdrawal plans, or exchange privileges. Shareholders who require assistance in gathering cost history and share information regarding their account with the Fund should anticipate that Bridges Investor Services, Inc. as Transfer Agent, will bill the direct costs of such investigations directly to the shareholder with an explanation of the type of work conducted, the dates and time committed, and the expenses incurred by Services. In the normal situation, the maximum charge per inquiry of this type will be $25.00. Valuation -- The methods for determining the Net Asset Value per share of the Fund for purchase of shares and the Net Asset Value per share for the redemption of or sales of shares back to the Fund are described in the Fund's Prospectus. Specimen Price Make Up -- Please refer to Appendix A for a copy of the Price Make Up form used by the Fund. The example or illustration uses the actual data and methods used for the Fund on December 31, 1999. The audited Balance Sheet information will provide the same information with a different format and classification of items for the purpose of proper financial statement presentation. Other Disclosures -- The Fund prices its shares only once per day after the close of the New York Stock Exchange. There is no difference in the net offering price charged to the general public and that price which is charged to officers, directors, and employees of either the Fund or its investment adviser. The Fund does not use Rule 2a-7 under The General Rules and Regulations of The Investment Company Act of 1940 for the purpose of pricing its shares to the public. Description of Fund Plans Standard Retirement Plan -- Bridges Investment Fund, Inc. offers a master Standard Retirement Plan (as Amended and Restated as of January 1, 1989) for corporations, self-employed individuals, and partnerships and their employees. Investors may choose a Money Purchase Pension Plan, a Profit Sharing Plan which includes a Salary Reduction Arrangement under Section 401(k) of the Code within the Standard Retirement Plan, including a SIMPLE Model Amendment for employers with less than 100 employees. The master plan includes a Standard Custodial Bridges Investment Fund, Inc. 22 September 25, 2000 Statement -- Part B Agreement (as Amended and Restated as of January 1, 1989) under which U.S. Bank National Association, Omaha, Nebraska, will act as Custodian. Bridges Investor Services, Inc. will invest all contributions to the Plan in the shares of the Fund at Net Asset Value, invest all dividends and cash distributions in shares of the Fund at Net Asset Value. Currently, the Custodian does not impose maintenance or other fees in connection with the above described Standard Retirement Plan; however the Custodian may impose such fees from time to time by written agreement between the Custodian and the employer. In addition, the Custodian is entitled to reimbursement for certain expenses and taxes, including securities transfer taxes. The Custodian may resign or be removed, and a successor Custodian may be appointed. If an investor desires to appoint a different bank as Custodian, he may make his own fee arrangements with the bank of his choice. For further details, see the form of Standard Retirement Plan No. 001, Profit Sharing, and No. 002, Money Purchase Pension, and their related Standard Custodial Agreements, copies of which may be obtained from the Fund's office at the address shown on the cover of this Prospectus. The amended documents as of January 1, 1989, were filed with the Internal Revenue Service for approval as prototype master plans in December, 1989. The IRS has assigned qualified serial numbers to these Plans. In undertaking such a Retirement Plan involving investments over a period of years, it is important for the individual to consider his needs and whether or not the investment objectives of the Fund, described in this Prospectus, are likely to fulfill them. An investor who contemplates establishment of such a Plan should consult with his attorney and/or his public accountant. The Prototype Standardized Profit Sharing Plan with CODA known in our Fund as Standard Retirement Plan No. 001 (As Amended and Restated as of January 1, 1989) Profit Sharing with a Salary Reduction Arrangement under Section 401(k) of the Internal Revenue Code received approval from the Internal Revenue Service on July 31, 1990. This Plan No. 001 is identified by Letter Serial No: D249067a. The Prototype Standardized Money Purchase Pension Plan described by our Fund as the Standard Retirement Plan No. 002 (As Amended and Restated as of January 1, 1989) Money Purchase Pension received approval from the Internal Revenue Service on July 31, 1990. This Plan No. 002 is identified by Letter Serial No: D249068a. Both Plans have incorporated model amendments published by the Internal Revenue Service which adopt all changes required by the tax laws since the Plans were restated. Individual Retirement Custodian Account Prototype An investor, referred to as a Depositor in this section of the Prospectus, may wish to purchase shares of Bridges Investment Fund, Inc. in conjunction with the retirement benefits provided by the Employee Retirement Income Security act Bridges Investment Fund, Inc. 23 September 25, 2000 Statement -- Part B of 1974. There is available through Bridges Investment Fund, Inc. a Prototype Individual Retirement Custodial Account with Application Form, Contribution Form, and Disclosure Statement. The Custodian Agreement provides that U.S. Bank National Association, Omaha, Nebraska, will furnish custodial services as required by such Act. Currently, the investor is not charged any maintenance or other fees in connection with the Individual Retirement Custodial Account; however, the Custodian may impose such fees from time to time by written agreement between Custodian and Depositor. The investor may be subject to additional charges, from time to time, as will reasonably compensate the Custodian for extraordinary services resulting from unusual administrative responsibilities. The Depositor or the Custodian shall have the right to terminate the Account upon 60 days' notice to the other party. In the event of such termination, the Custodian shall make distribution of the Account to the Depositor or to another qualified plan or successor Custodian designated by the Depositor. The Fund's Individual Retirement Custodial Account Prototype permits a maximum annual contribution of $2,000 or 100% of the Depositor's annual compensation for personal services, whichever is less. If an investor has a non-working spouse, an additional annual contribution of $2,000 is permitted to a separate IRA maintained by such non-working spouse for a total contribution of $4,000. Under the Prototype, the annual contribution may be deductible under certain conditions, and earnings, if any, accumulate tax-free until distribution after age 59 1/2. Normally, distributions from the Individual Retirement Custodial Account prior to age 59 1/2, unless specifically exempted by law, will result in tax penalties in addition to being included in taxable income. In addition, there is a penalty on excess contributions and a penalty on insufficient payouts after age 70 1/2. To establish an Individual Retirement Custodial Account, the Depositor is provided a copy of the Fund's current Prospectus, three copies of the Individual Retirement Account Custodial Agreement, three copies of the Application Form, three copies of the Contribution Form, and three copies of the Disclosure Statement. The Depositor executes and forwards to U.S. Bank National Association, Omaha, Nebraska, three copies of the Application Form and three copies of the Contribution Form. U.S. Bank National Association, Omaha, Nebraska, will return one acknowledged copy of each form to the Depositor and the Fund for retention by each party. The Depositor will sign and send one copy of the Disclosure Statement to the Fund at its office. The Depositor should retain the other executed copy for a permanent record in his files. The Custodial Agreement sets forth provisions governing the Depositor's Account, expresses the prohibited actions under the law, sets forth the provisions of distribution of payments, provides the rules for reports and other information, outlines the Custodian's responsibilities, and provides for Amendments to, and Termination of, the Custodial Account. Bridges Investment Fund, Inc. 24 September 25, 2000 Statement -- Part B The Application Form establishes the Custodial Account, collects pertinent information to govern the Custodial Account, and recites the applicable fees to be charged by U.S. Bank National Association, Omaha, Nebraska. By executing the Application Form, the Depositor acknowledges receipt of the Prospectus. The Contribution Form governs the method and type of contribution to the Custodial Account. The Disclosure Statement covers appropriate notices of applicable provisions of the Internal Revenue Code, the fees for the account, and other important information concerning the operation of the Individual Retirement Custodial Account. Prior to executing these documents, the Depositor should read all the documents constituting the Prototype. The Individual Retirement Custodial Account sponsored by the Fund was approved as a Prototype Plan pursuant to an opinion letter received from the Internal Revenue Service dated June 11, 1993. The Approval Letter carries the Serial No: D111476C. U.S. Bank National Association, Omaha, Nebraska, meets the applicable legal requirements to act as the Custodian under the Prototype. The provisions to redeem shares of the Fund, as described in this Prospectus, are not changed by the terms of the Prototype. The Depositor may revoke his Custodian Account within at least seven days of the date of establishment as provided in Article VI C of the Custodian Agreement, paragraph 9 of the Application Form, and in paragraph 3 (i) of the Disclosure Statement. A shareholder may wish to consider a redemption of the Fund shares as an alternative to revoking his Custodian Account. In undertaking such an Individual Retirement Custodian Account as provided by this Prospectus and related documents, involving investments over a period of years, it is important for the individual to consider his or her needs and whether or not the investment objectives of the Fund, described in this Prospectus, are likely to fulfill them. The individual who contemplates the establishment of the Prototype should consult with his or her attorney or tax adviser regarding appropriate advice as to the actions to be taken. Particular attention should be directed to changes in the deductibility of contributions to IRAs for tax years commencing January 1, 1987, or later for those persons who are covered by employer sponsored deferred benefit plans and other factors related to annual reported tax amounts of single and joint income. Reference to IRS Announcement 86-121 should also be helpful, copies of which may be obtained from the Fund's office. Additional consideration should be given by the individual who contemplates the establishment of a Prototype to new choices and opportunities that were created in 1997. Bridges Investment Fund, Inc. 25 September 25, 2000 Statement -- Part B 1)The SIMPLE Individual Retirement Custodial Account, as described in Section 408(p) of the Internal Revenue Code may be established in connection with a Salary Reduction Agreement. Under this funding choice, it is possible to set aside more than the $2,000 per year contribution limit for the traditional IRA account. Depending upon the circumstances involved, it may be possible to receive employer matching contributions in the account. This SIMPLE Plan is identified with the Internal Revenue Service through letter Serial No. D111476C. 2)The Roth Individual Retirement Custodial Account opportunity for investment was created by the Taxpayer Relief Act of 1997. The legislation provides for a non-deductible annual contribution of $2,000 for a working spouse and a $2,000 contribution for a non-working spouse. Benefits paid from the Roth IRA are to be non-taxable to the Depositor upon a qualified distribution from the IRA, which includes distributions made after the Depositor reaches age 59 1/2. The Roth Individual Retirement Custodial Account may be established through the execution of the Form 5305-RA issued under Section 408A of the Internal Revenue Code in conjunction with the standard, traditional IRA Custodial Account of the Fund as described above. Depositors may establish and maintain both the "Traditional" IRA and the "Roth" IRA Accounts, provided the assets are always maintained in separately segregated accounts and provided further that the titles therein accurately reflect the distinctions between the two types of funding permitted by statute. Depositors will still have a $2,000 annual limit per working spouse and non-working spouse, so that a choice must be made between the contribution amounts that would represent an income exclusion and the contribution amounts that would be taxable underneath the $2,000 annual ceiling. 3)An individual may deposit up to $500 a year into an Education Individual Retirement Custodial Account (Internal Revenue Service Form 5305-EA) for a child under age 18, provided the total contributions for the child during the year do not exceed $500. The contributor may be a parent, relative, friend, or other person, including the child him/herself. The ability to contribute to an Education IRA phases out at modified adjusted gross income levels between $95,000 and $110,000 for unmarried individuals and between $150,000 and $160,000 for joint return filers. Distributions from an Education IRA are tax-free up to the amount of qualified higher education expenses for a year. Qualified higher education expenses include tuition, fees, books, supplies, and, if the beneficiary is at least a half-time student, room and board. The Fund's office maintains a supply of SIMPLE Individual Retirement Custodial account forms and an inventory for the Form 5305-RA for the Roth IRA, and Form 5305-EA for the Education IRA to assist Depositors to establish these types of accounts. Bridges Investment Fund, Inc. 26 September 25, 2000 Statement -- Part B Tax Status The Fund is qualified or intends to qualify under Subchapter M of the Internal Revenue Code (26 U.S.C. 851-856). The Fund has no special or unusual tax aspects such as taxation resulting from foreign investment, or from states as a personal holding company, or from any tax loss carryforward. Underwriters: None Calculation of Performance Data From time to time, quotations of the Fund's performance may be included in advertisements, sale literature or reports to shareholders or prospective investors. These performance figures are calculated as described below. PAST PERFORMANCE OF FUND The bar chart and table on the following page show one measure of the risks of investing in the Fund, by showing the Fund's performance from year to year for the past ten calendar years and by showing how the average annual total returns of the Fund's shares compare to those of a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. PERFORMANCE HISTORY DEPICTED IN A BAR GRAPH IS AS FOLLOWS: Year % Return 1990 1.81% 1991 21.01% 1992 6.03% 1993 6.29% 1994 0.30% 1995 30.96% 1996 18.06% 1997 22.33% 1998 27.48% 1999 39.80% Bridges Investment Fund, Inc. 27 September 25, 2000 Statement -- Part B The Fund's highest and lowest returns for a calendar quarter during the past ten years are a return of 28.12% for the 4th Quarter 1999, and - -8.83% for the 3rd Quarter 1990. Average Annual Total Past One Past Five Past Ten Returns Year Years Years (for the periods ending December 31, 1999) Bridges Investment Fund, Inc. 38.90% 27.34% 16.64% S & P 500 21.01% 28.49% 19.16% Total Return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains. A cumulative total return reflects actual performance over a stated period of time. An average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative total return if performance had been constant over the entire period. Average annual total returns smooth out variations in performance; they are not the same as the actual year-by-year results. Bridges Investment Fund, Inc. 28 September 25, 2000 Statement -- Part B Table _ Line Chart Year BIF S & P 500 1989 10,000.00 10,000.00 1990 10,180.36 9,689.22 1991 12,318.63 12,318.63 1992 13,060.87 13,589.54 1993 13,881.48 14,950.48 1994 13,922.13 15,153.12 1995 18,230.79 20,826.41 1996 21,522.01 25,596.74 1997 26,326.60 34,125.56 1998 33,559.22 43,858.21 1999 46,614.11 53,075.17 (Amounts in table above represent year-end market values, and are plotted as data points on a line graph) Average Annual Total Return for Bridges Investment Fund, Inc.: 1 Year 38.90% 5 Year 27.34% 10 Year 16.64% Past Performance is not predictive of future performance. Bridges Investment Fund, Inc. 29 September 25, 2000 Statement -- Part B INFORMATION SUPPORTING AND SETTING QUALIFICATIONS FOR INVESTMENT RETURNS Assumptions 1.The initial investment was made at the public offering price last calculated on the business day before the first day of the first fiscal year. 2.The subsequent account values are based on the net asset values of the Fund last calculated on the last business day of the first and each subsequent fiscal year. 3.The calculation for the final account value assumes the account was closed and the redemption was at the price last calculated on the last business day of the most recent fiscal year. 4.All dividends and capital gains distributions by the Fund were reinvested at the price on the reinvestment dates. The dividend for the Standard & Poor's 500 Composite Index for the previous quarter was invested at the month-end price closest to the reinvestment date for the Fund. 5.Reinvestment fees for dividend and capital gains distributions were deducted before reinvestment in shares of the Fund. The Standard & Poor's 500 Composite Index was not charged with any brokerage commissions, reinvestment fees, or operating expenses. Appropriate Index The Fund is to select an "appropriate broad-based securities market index" that is administered by an organization that is not an affiliated person of the Fund or its investment adviser. The securities index chosen must be adjusted to reflect reinvestment of dividends on securities in the index, but not the expenses of the Fund. Use of Additional Indexes In addition to the required comparison to a broadly-based index, mutual fund registrants with the Securities and Exchange Commission are urged to compare their performances to other more narrowly-based indexes that reflect the market sectors in which they invest. Management has investigated commercial paper, Treasury Bill, Treasury Note, Treasury Bond, and Corporate Bond indexes to cover those portfolio segments not invested in the common stock market. Some problems with comparable information have been encountered particularly with respect to the difficulty of matching income reinvestment dates in the indexes with the reinvestment calendar scheme in effect for the Fund. Therefore, at this point in time, the Fund management has decided not to present the comparisons to the more narrow indices. Bridges Investment Fund, Inc. 30 September 25, 2000 Statement -- Part B From time to time, in reports and promotional literature: (1) the Fund's total return performance, ranking, or any other measure of the Fund's performance may be compared to any or combination of the following: (a) a broad-based index; (b) other groups of mutual funds tracked by independent research firms ranking entities, or financial publications; (c) indices of securities comparable to those in which the Fund invests; (2) the Consumer Price Index (or any other measure for inflation, government statistics, such as GNP) may be used to illustrate investment attributes of the Fund or the general economic, business, investment, or financial environment in which the Fund operates; and (3) various financial, economic and market statistics developed by brokers, dealers and other persons may be used to illustrate aspects of the Fund's performance. The Fund may also advertise the performance rankings assigned by various publications and statistical services, and any other data which may be presented from time to time by such analysts as Dow Jones and Morningstar, Inc., or as they appear in various financial and investment publications, including but not limited to The Wall Street Journal, Business Week, Forbes, Fortune, Money Magazine and other such publications. __________________________________________________________________________ As a prospective investor or shareholder, you may be interested in securing Part C of this filing, and you must receive Part A, the Prospectus, in order to make an investment in the Fund. You may request copies of Parts A, B, and C from the Fund's office at the address shown on the Cover of Part B. __________________________________________________________________________ Financial Statements The audited financial statements for the year ended December 31, 1999, appear on pages 30 - 47 in this Part B. As a unit, these statements include: The Report of Independent Public Accountants, the Schedule of Portfolio Investments, the Statement of Assets and Liabilities, the Statement of Operations, Statements of Changes in Net Assets, and Notes to Financial Statements. The Fund's Management and Board of Directors encourages prospective investors and shareholders to review the audited financial statements, particularly the Schedule of Investments, to obtain a useful perspective about securities owned by the Fund. The Price Make Up Sheet, Appendix A, is shown on page 31; then the financial statements follow as a unit to complete this Part B. Bridges Investment Fund, Inc. 31 September 25, 2000 Statement -- Part B APPENDIX A(Specimen) PRICE MAKE UP SHEET December 31, 1999
Journal Form, Ledger Form, Actual Balance Schedule, or or Market Account Number ACCOUNT (Cost Figures in Parentheses) Value Figures ASSETS 01a-DR-C Cash-Principal $ 5,852.87 01b-DR-C Cash-Income 118,075.45 02a-LF51 Dividends Receivable 37,205.00 02b-LF52 Interest Receivable 77,409.18 04a-CRDJ Accts. Receivable-Subscriptions to Capital Stock 841,773.64 04b-CRDJ Accts. Receivable-Securities Sold 638,361.51 07 -Schedule 7 Inv. in Securities (28,914,315.12) 68,265,291.02 CRS ______________ ______________________________________________________ ______________ ______________________________________________________ TOTAL ASSETS $69,983,968.67 LIABILITIES: 13a-CRDJ Accts. Pay.-Redemptions of Capital Stock $ _____3,800.00 13b-CRDJ Accts. Pay.-Purchase of Securities _______________ 14a-CRDJ Accrued Liab.-Operating Expenses 110,258.75 14b-CRDJ Accrued Liab.-Taxes _______________ 14 -CRDJ Distributions Payable $ 134,225.77 ______________ ______________________________________________________ ______________ ______________ ______________________________________________________ ______________ ______________ TOTAL LIABILITIES 248,284.52 19 NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES (Tot. Assets Minus Tot. Liab.) $69,735,684.15 20 -CRDJ DR-TA Capital Stock-Total Shares Outstanding 1,508,154.054 NET ASSET VALUE PER SHARE Purchase Price Per Share $46.24 46.24 Redemption Price Per Share $46.24 x Div.@ .089 Equalization Computation Net Investment Income 0.00 (Current Qtr.) (Current Qtr.) Dividend Income $105,617.16 Undistributed Net Income 0.00 Interest Income 129,378.18 (Previous Qtrs.) Total Income $234,995.34 Total Acct. 21b 0.00 Equalization/Share .00 Taxes Paid $__________ Orders / Expenses Unpaid 113,000.00 Net Shares Purch., Redemp. , , . Reimbursed Expenses (_________) Balance, Equalization 1,393.07 Tot.Exp.Post Close __________ Equalization Entry ______________ Equalization Forward ______________ Net Investment Inc. $121,995.34 Capital Shares Forward 1,508,154.054
Bridges Investment Fund, Inc. 32 September 25, 2000 Statement -- Part B REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and the Board of Directors of Bridges Investment Fund, Inc. We have audited the accompanying statement of assets and liabilities of Bridges Investment Fund, Inc. including the schedule of portfolio investments, as of December 31, 1999, the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for each of the years in the two year period then ended. These financial statements are the responsibility of Bridges Investment Fund, Inc. Our responsibility is to express an opinion on these financial statements based on our audit. The financial highlights for each of the years in the three year period ended December 31, 1997 were audited by other auditors whose report thereon dated January 16, 1998 expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1999 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Bridges Investment Fund, Inc. as of December 31, 1999, the results of its operations for the year then ended, the changes in its net assets and financial highlights for each of the years in the two year period then ended, in conformity with generally accepted accounting principles. KPMG LLP January 7, 2000 Bridges Investment Fund, Inc. -33- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1999
NUMBER TITLE OF SECURITY OF SHARES COST VALUET COMMON STOCKS - (86.3%) ADVERTISING _ 0.5% INTERPUBLIC GROUP OF COMPANIES, INC. (THE) 4,000 $ 106,953 $ 230,750 LAMAR ADVERTISING COMPANY* 2,000 92,125 121,125 $ 199,078 $ 351,875 AIRCRAFT _ MANUFACTURING - 0.7% THE BOEING COMPANY 12,000 $ 278,135 $ 497,250 AMUSEMENTS _ RECREATION _ SPORTING GOODS _ 0.3% NIKE, INC. 5,000 $ 171,270 $ 247,813 BANKING AND FINANCE - 3.2% CHASE MANHATTAN CORPORATION (THE) 2,000 $ 86,650 $ 155,375 FIRST NATIONAL OF NEBRASKA, INC. 230 346,835 552,000 MBNA CORPORATION 15,000 234,825 408,750 STATE STREET CORPORATION 8,000 66,525 584,500 U.S. BANCORP 5,000 166,370 119,063 WELLS FARGO & CO. 10,000 138,173 404,375 $ 1,039,378 $ 2,224,063 BEVERAGES _ SOFT DRINKS - 1.2% PEPSICO, INC. 24,000 $ 307,470 $ 846,000 BROADCAST SERVICE/PROGRAM _ 0.3% AT&T CORPORATION _ LIBERTY MEDIA* 3,500 $ 169,085 $ 198,844 CHEMICALS - 1.1% THE DOW CHEMICAL COMPANY 6,000 $ 396,947 $ 801,750 COMMUNICATIONS _ RADIO AND TELEVISION _ 1.3% CLEAR CHANNEL COMMUNICATIONS, INC.* 10,000 $ 366,954 $ 892,500 COMPUTERS _ HARDWARE AND SOFTWARE - 11.8% CISCO SYSTEMS, INC.* 18,000 290,726 1,928,250 DELL COMPUTER CORPORATION * 3,000 109,594 153,000 HNC SOFTWARE, INC.* 18,000 598,741 1,903,500 HEWLETT-PACKARD CO. 6,000 83,784 682,500 MICROSOFT CORPORATION* 20,000 93,361 2,335,000 TIBCO SOFTWARE, INC.* 2,000 153,194 306,000 TRANSACTION SYSTEMS ARCHITECTS, INC.* 32,000 1,102,118 896,000 $ 2,431,518 $ 8,204,250 COMPUTERS _ MEMORY DEVICES _ 2.5% EMC CORPORATION/MASS* 16,000 $ 358,855 $ 1,748,000 COMPUTERS _ MICRO _ 1.1% SUN MICROSYSTEMS, INC.* 10,000 $ 281,812 $ 774,375 *NONINCOME-PRODUCING SECURITY Bridges Investment Fund, Inc. -34- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 1999 NUMBER MARKET TITLE OF SECURITY OF SHARES COST VALUE COMMON STOCKS (CONTINUED) DATA PROCESSING AND MANAGEMENT _ 1.7% CSG SYSTEMS* 18,000 $ 509,169 $ 717,750 FIRST DATA CORPORATION 10,000 458,100 493,125 $ 967,269 $ 1,210,875 DIVERSIFIED OPERATIONS _ 0.6% BERKSHIRE HATHAWAY INC., CLASS B * 210 $ 150,375 $ 384,300 DRUGS - MEDICINES _ COSMETICS - 6.3% ABBOTT LABORATORIES 15,000 $ 169,395 $ 544,688 AMGEN, INC.* 12,000 248,688 720,750 BRISTOL-MYERS SQUIBB CO. 8,000 141,675 513,500 ELAN CORPORATION PLC ADR* 20,000 419,005 590,000 JOHNSON & JOHNSON 10,000 109,396 932,500 MERCK & CO., INC. 16,000 274,266 1,075,000 $ 1,362,425 $ 4,376,438 ELECTRICAL EQUIPMENT AND SUPPLIES - 1.8% GENERAL ELECTRIC CO. 8,000 $ 147,473 $ 1,238,000 ELECTRIC _ GENERATION _ 0.5% AES CORPORATION* 5,000 $ 277,053 $ 373,750 ELECTRONIC COMPONENTS _ CONDUCTORS _ 0.4% ALTERA CORPORATION* 6,000 $ 185,375 $ 297,375 ELECTRONICS - 4.1% INTEL CORPORATION 20,000 $ 334,735 $ 1,646,250 SOLECTRON CORPORATION * 13,000 301,136 1,236,625 $ 635,871 $ 2,882,875 FINANCE _ CREDIT CARDS _ 0.5% AMERICAN EXPRESS COMPANY 2,000 $ 165,255 $ 332,500 FINANCE _ DIVERSIFIED _ 0.6% MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. 3,000 $ 202,960 $ 428,250 FINANCE _ INVESTMENT BANKS _ 0.5% MERRILL LYNCH & CO., INC. 3,000 168,586 249,938 E*TRADE GROUP, INC.* 4,000 98,188 104,500 $ 266,774 $ 354,438 FINANCE - REAL ESTATE - 2.0% FREDDIE MAC 30,000 $ 470,320 $ 1,411,875 *NONINCOME-PRODUCING SECURITY Bridges Investment Fund, Inc. -35- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 1999 NUMBER MARKET TITLE OF SECURITY OF SHARES COST VALUE COMMON STOCKS (CONTINUED) FINANCE _ SERVICES - 2.7% CAPITAL ONE FINANCIAL CORPORATION 35,000 $ 683,206 $ 1,686,563 PAYCHEX, INC. 5,000 154,125 200,000 $ 837,331 $ 1,886,563 FOOD _ MISCELLANEOUS PRODUCTS - 0.5% PHILIP MORRIS COMPANIES, INC. 15,000 $ 263,604 $ 345,000 INSURANCE _ MULTILINE - 0.5% AMERICAN INTERNATIONAL GROUP, INC. 3,125 $ 118,455 $ 337,891 INSURANCE _ MUNICIPAL BOND _ 0.6% MBIA, INC. 8,000 $ 360,053 $ 422,500 INTERNET SOFTWARE _ 1.3% AMERICA ONLINE, INC.* 12,000 $ 529,238 $ 903,000 LINEN SUPPLY AND RELATED PRODUCTS - 0.3% CINTAS CORPORATION* 4,000 $ 166,578 $ 212,500 MOTION PICTURES AND THEATRES - 0.9% THE WALT DISNEY COMPANY 22,000 $ 236,300 $ 643,500 PETROLEUM PRODUCING - 4.4% BP AMOCO PLC-SPONSORED ADR 13,232 $ 246,135 $ 784,823 ATLANTIC RICHFIELD COMPANY 4,000 211,835 346,000 CHEVRON CORPORATION 10,000 340,535 866,250 EXXON MOBIL CORPORATION 13,280 325,810 1,069,870 $ 1,124,315 $ 3,066,943 PUBLISHING _ NEWSPAPERS - 1.0% GANNETT CO., INC. 8,000 $ 179,310 $ 652,500 PUBLISHING _ ELECTRONIC - 0.6% REUTERS GROUP PLC, ADR SPONSORED 5,199 $ 166,303 $ 420,144 RETAIL STORES _ APPAREL AND CLOTHING - 3.3% GAP, INC. 50,000 $ 521,360 $ 2,300,000 RETAIL STORES _ BUILDING MATERIALS AND HOME IMPROVEMENT _ 3.0% THE HOME DEPOT, INC. 30,000 $ 587,115 $ 2,062,500 *NONINCOME-PRODUCING SECURITY Bridges Investment Fund, Inc. -36- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 1999 NUMBER MARKET TITLE OF SECURITY OF SHARES COST VALUE COMMON STOCKS (CONTINUED) RETAIL STORES _ DEPARTMENT - 1.6% DAYTON HUDSON CORPORATION 15,000 $ 146,129 $ 1,101,563 STEEL - PRODUCERS _ 0.4% NUCOR CORPORATION 5,500 $ 122,061 $ 301,469 TELECOMMUNICATIONS - 9.6% LEVEL 3 COMMUNICATIONS * 12,000 $ 483,300 $ 982,500 MCI WORLDCOM, INC. * 19,500 466,188 1,034,719 SPRINT CORPORATION 10,000 83,964 673,125 SPRINT PCS CORPORATION * 5,500 188,878 563,750 VODAFONE AIRTOUCH PLC SPONSORED ADR 40,000 915,541 1,980,000 WEST TELESERVICES CORPORATION* 58,200 780,844 1,422,263 $ 2,918,715 $ 6,656,357 TELECOMMUNICATIONS _ EQUIPMENT _ 9.9% NOKIA CORPORATION SPONSORED ADR 12,000 $ 492,858 $ 2,292,750 QUALCOMM INCORPORATED * 26,000 273,901 4,582,500 $ 766,759 $ 6,875,250 TELEVISION _ CABLE _ 0.4% COMCAST CORPORATION* 6,000 $ 141,375 $ 303,375 TRANSPORTATION _ AIRFREIGHT _ 2.0% EAGLE USA AIRFREIGHT, INC. * 33,000 $ 416,042 $ 1,423,125 TRANSPORTATION _ RAILROADS - 0.3% UNION PACIFIC CORPORATION 4,000 $ 148,580 $ 174,750 TOTAL COMMON STOCKS (COST - $20,581,276) $20,581,276 $60,166,326 PREFERRED STOCKS (1.2%) BANKING AND FINANCE _ 0.7% CFB CAPITAL II 8.20% CUMULATIVE PREFERRED 5,000 $ 125,000 $ 101,875 CFC CAPITAL TRUST 9.375% PREFERRED, SERIES B 5,000 125,000 112,500 HARRIS PREFERRED CAPITAL CORP., 10,000 250,000 203,125 7.375%, SERIES A SILICON VALLEY BANCSHARES 5,000 125,000 92,500 8.25% PREFERRED SERIES I $ 625,000 $ 510,000 *NONINCOME-PRODUCING SECURITY Bridges Investment Fund, Inc. -37- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 1999 NUMBER MARKET TITLE OF SECURITY OF SHARES COST VALUE OIL COMP. _ EXPLORATION AND PRODUCTION _ 0.2% CANADIAN OCCIDENTAL PETROLEUM LTD. 5,000 $ 125,000 $ 111,563 9.375% PREFERRED _ SERIES 1 UTILITIES _ ELECTRIC _ 0.3% TENNESSEE VALLEY AUTHORITY 6.75% 10,000 $ 250,000 $ 216,250 VARIABLE PREFERRED SERIES D TOTAL PREFERRED STOCKS (COST - $1,000,000) $ 1,000,000 $ 837,813 TOTAL STOCKS (COST - $21,581,276) $21,581,276 $61,004,139 DEBT SECURITIES (10.4%) AUTO-CARS/LIGHT TRUCKS _ 0.4% GENERAL MOTORS CORPORATION 7.700% DEBENTURES DUE APRIL 15, 2016 $250,000 $ 252,320 $ 249,525 ENERGY _ ALTERNATE SOURCES - 0.3% CALENERGY CO., INC., 7.630% NOTES DUE OCTOBER 15, 2007 $200,000 $ 200,000 $ 197,217 HOTELS AND MOTELS _ 0.4% MARRIOT INTERNATIONAL 7.875% NOTES SERIES C DUE SEPTEMBER 15, 2009 $250,000 $ 250,068 $ 246,157 HOUSEHOLD APPLIANCES AND UTENSILS - 0.1% MAYTAG CORP., 9.750% NOTES, DUE MAY 15, 2002 $100,000 $ 102,200 $ 105,537 OFFICE EQUIPMENT AND SUPPLIES - 0.1% XEROX CORPORATION, 9.750% NOTES DUE MARCH 15, 2000 $100,000 $ 100,025 $ 100,621 RETAIL STORES _ DEPARTMENT - 0.4% DILLARD DEPARTMENT STORES, INC., 7.850% DEBENTURES, DUE OCTOBER 1, 2012 $150,000 $ 151,348 $ 139,046 SEARS ROEBUCK & CO., 9.375% DEBENTURES DUE NOVEMBER 1, 2011 100,000 $ 106,399 108,971 $ 257,747 $ 248,017 *NONINCOME-PRODUCING SECURITY Bridges Investment Fund, Inc. -38- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 1999 PRINCIPAL MARKET TITLE OF SECURITY AMOUNT COST VALUE DEBT SECURITIES (CONTINUED) TELECOMMUNICATIONS _ 0.3% LEVEL 3 COMMUNICATIONS, INC., 9.125% SENIOR $250,000 $ 241,938 $ 236,895 NOTES DUE MAY 1, 2008 U.S. GOVERNMENT _ 3.9% U.S. TREASURY, 8.750% NOTES, DUE AUGUST 15, 2000 200,000 $ 211,900 $ 203,406 U.S. TREASURY, 8.000% NOTES, DUE MAY 15, 2001 200,000 199,052 204,688 U.S. TREASURY, 7.500% NOTES, DUE MAY 15, 2002 200,000 214,098 205,406 U.S. TREASURY, 10.750% BONDS DUE FEBRUARY 15, 2003 200,000 219,525 224,062 U.S. TREASURY, 7.250% NOTES, DUE MAY 15, 2004 300,000 303,245 309,234 U.S. TREASURY, 7.500% NOTES, DUE FEBRUARY 15, 2005 300,000 305,871 313,030 U.S. TREASURY, 9.375% BONDS, DUE FEBRUARY 15, 2006 200,000 256,223 228,250 U.S. TREASURY, 7.625% BONDS, DUE FEBRUARY 15, 2007 300,000 307,910 305,718 U.S. TREASURY, 8.750% BONDS, DUE NOVEMBER 15, 2008 200,000 237,473 214,124 U.S. TREASURY, 9.125% BONDS, DUE MAY 15, 2009 200,000 234,910 218,312 U.S. TREASURY, 7.500% BONDS, DUE NOVEMBER 15, 2016 300,000 308,534 320,953 $ 2,798,741 $ 2,747,183 Bridges Investment Fund, Inc. -39- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1999 PRINCIPAL MARKET TITLE OF SECURITY AMOUNT COST VALUE DEBT SECURITIES (CONTINUED) COMMERCIAL PAPER _ SHORT TERM _ 4.5% AMERICAN EXPRESS CREDIT CORPORATION COMMERCIAL PAPER NOTE 6.250% DUE JANUARY 4, 2000 $1,260,000 $ 1,260,000 $ 1,260,000 AMERICAN EXPRESS CREDIT CORPORATION COMMERCIAL PAPER NOTE 5.000% DUE JANUARY 7, 2000 1,500,000 1,500,000 1,500,000 FORD MOTOR CREDIT CORPORATION COMMERCIAL PAPER NOTE 2.000% DUE JANUARY 7, 2000 370,000 370,000 370,000 $ 3,130,000 $ 3,130,000 TOTAL DEBT SECURITIES (COST - $7,333,039) $ 7,333,039 $ 7,261,152 TOTAL INVESTMENTS IN SECURITIES - (97.9%) (COST - $28,914,320) $28,914,320 $68,265,291 CASH AND RECEIVABLES LESS TOTAL LIABILITIES _ (2.1%) 1,470,393 NET ASSETS, DECEMBER 31, 1999 _ (100.0%) $69,735,684 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE.
Bridges Investment Fund, Inc. -40- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1999
ASSETS AMOUNT INVESTMENTS, AT MARKET VALUE COMMON AND PREFERRED STOCKS (COST $21,581,276) $61,004,139 DEBT SECURITIES (COST $7,333,039) 7,261,152 TOTAL INVESTMENTS $68,265,291 CASH 123,928 RECEIVABLES DIVIDENDS AND INTEREST 114,614 SUBSCRIPTIONS TO CAPITAL STOCK 841,774 SECURITIES SOLD 638,362 TOTAL ASSETS $69,983,969 LIABILITIES DIVIDEND DISTRIBUTIONS PAYABLE $ 134,226 REDEMPTION OF CAPITAL STOCK 3,800 INVESTMENT ADVISOR, MANAGEMENT AND SERVICE FEES PAYABLE 85,066 ACCRUED OPERATING EXPENSES 25,193 TOTAL LIABILITIES $ 248,285 NET ASSETS CAPITAL STOCK, $1 PAR VALUE AUTHORIZED 3,000,000 SHARES, 1,508,154 SHARES OUTSTANDING $ 1,508,154 PAID-IN SURPLUS - 27,816,382 NET CAPITAL PAID IN ON SHARES $29,324,536 NET UNREALIZED APPRECIATION ON INVESTMENTS 39,350,976 ACCUMULATED UNDISTRIBUTED NET REALIZED GAINS 1,058,779 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME 1,393 TOTAL NET ASSETS $69,735,684 NET ASSET VALUE PER SHARE $46.24 OFFERING PRICE PER SHARE $46.24 REDEMPTION PRICE PER SHARE $46.24 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT.
Bridges Investment Fund, Inc. -41- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
Amount Amount INVESTMENT INCOME Interest $406,559 Dividends (Net of foreign withholding taxes of $2,372) 434,888 Total Investment Income $ 841,447 EXPENSES Management fees $ 279,316 Custodian fees 36,932 Insurance and Other Administrative Fees 26,322 Bookkeeping services 18,578 Printing and supplies 13,279 Professional services 10,820 Dividend disbursing and transfer agent fees 15,738 Computer programming 5,000 Taxes and licenses 1,064 Total Expenses $ 407,049 NET INVESTMENT INCOME $ 434,398 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on transactions in investment securities $2,401,788 Net increase in unrealized appreciation of investments 16,580,965 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $18,982,753 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $19,417,151 The accompanying notes to financial statements are an integral part of this statement.
Bridges Investment Fund, Inc. -42- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
1999 1998 INCREASE IN NET ASSETS Operations - Net investment income $ 434,398 $ 573,399 Net realized gain on transactions in investment securities 2,401,788 2,816,870 Net increase in unrealized appreciation of investments 16,580,965 6,973,448 Net increase in net assets resulting from operations $ 19,417,151 $10,363,717 Net equalization credits 3,190 9,098 Distributions to shareholders from - Net investment income (434,398) (573,399) Net realized gain from investment transactions (1,343,009) (2,810,407) Return of capital (6,815) (9,316) Net capital share transactions 3,666,452 4,805,885 Total increase in Net Assets $ 21,302,571 $11,785,578 NET ASSETS: Beginning of year $ 48,433,113 $36,647,535 End of year $ 69,735,684 $48,433,113 The accompanying notes to financial statements are an integral part of these statements.
Bridges Investment Fund, Inc. -43- September 25, 2000 Statement -- Part B BRIDGES INVESTMENT FUND, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 (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.
1999 1998 Net Change Net unrealized appreciation (depreciation): Aggregate gross unrealized appreciation on securities $39,880,716 $23,102,283 Aggregate gross unrealized depreciation on securities (529,740) (332,272) Net $39,350,976 $22,770,011 $16,580,965
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. Bridges Investment Fund, Inc. -44- September 25, 2000 Statement -- Part B B. Federal Taxes - The Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and not be subject to federal income tax. Therefore, no income tax provision is required. The Fund also intends to distribute its taxable net investment income and realized gains, if any, to avoid the payment of any federal excise taxes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains or losses were recorded by the Fund. C. Distribution To Shareholders - The Fund accrues income dividends to shareholders on a quarterly basis as of the ex-dividend date. Distributions of net realized gains are made on an annual basis to shareholders as of 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. Bridges Investment Fund, Inc. -45- September 25, 2000 Statement -- Part B 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. There were no amounts reimbursed in the year ended December 31, 1999. (3) DIVIDEND DISBURSING AND TRANSFER AGENT 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 years ended December 31, was:
1999 1998 United States government obligations $ -- $ -- Other Securities 9,166,680 9,631,883 Total Cost $9,166,680 $9,631,883
Net proceeds from sales of long-term investments during the years ended December 31, were:
1999 1998 United States government obligations $ 200,500 $ 200,000 Other Securities 8,675,466 9,280,532 Total Net Proceeds $8,875.966 $9,480,532
(5) NET ASSET VALUE The net asset value per share represents the effective price for all subscriptions and redemptions. Bridges Investment Fund, Inc. -46- September 25, 2000 Statement -- Part B (6) CAPITAL STOCK Shares of capital stock issued and redeemed are as follows:
1999 1998 Shares sold 123,704 108,559 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 35,210 87,751 158,914 196,310 Shares redeemed 64,491 45,397 Net increase 94,423 150,913 Value of capital stock issued and redeemed is as follows: 1999 1998 Shares sold $4,777,640 $3,444,495 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 1,435,313 2,800,423 $6,212,953 $6,244,918 Shares redeemed 2,546,501 1,439,033 Net increase $3,666,452 $4,805,885
(7) DISTRIBUTION TO SHAREHOLDERS On December 7, 1999 a cash distribution was declared from net investment income accrued through December 31, 1999. This distribution was ultimately calculated as $.089 per share aggregating $134,226. The dividend will be paid on January 24, 2000, to shareholders of record on December 31, 1999. Bridges Investment Fund, Inc. -47- September 25, 2000 Statement -- Part B FINANCIAL HIGHLIGHTS* Per share income and capital changes for a share outstanding for each of the last five years were:
1999 1998 1997 1996 1995 Net Asset Value, Beginning of Period $34.26 $29.02 $24.56 $21.54 $17.10 Income From Investment Operations Net Investment Income $ .30 $ .44 $ .51 $ .55 $ .58 Net Gains or (Losses) on Securities (both realized and unrealized) 12.89 7.36 4.77 3.28 4.63 Total From Investment Operations $13.19 $ 7.80 $ 5.28 $ 3.83 $ 5.21 Less Distributions Dividends from net investment income $ (.30) $ (.44) $ (.51) $ (.55) $ (.58) Distributions from capital gains (.91) (2.12) (.31) (.26) (.19) Total Distributions $(1.21) $(2.56) $ (.82) $ (.81) $ (.77) Net Asset Value, End of Period $46.24 $34.26 $29.02 $24.56 $21.54 Total Return 38.90% 27.48% 22.33% 18.06% 30.96% Ratios/Supplemental Data Net Assets, End of Period (in thousands) $69,736 $48,433 $36,648 $29,249 $24,052 Ratio of Expenses to Average Net Assets** .73% .77% .81% .87% .89% Ratio of Net Investment Income to Average Net Assets ** .78% 1.37% 2.64% 3.23% 3.80% Portfolio Turnover Rate 16% 24% 8% 8% 7% * Per share income and capital change data is computed using the weighted average number of shares outstanding method. ** Average net asset data is computed using monthly net asset value figures.
PART C OTHER INFORMATION __________________________________________________________________________ OTHER INFORMATION Bridges Investment Fund, Inc. CAPITAL STOCK September 25, 2000 8401 West Dodge Road Omaha, Nebraska 68114 402-397-4700 __________________________________________________________________________ Contents Page No. Item 23. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 2-5 Item 24. Persons Controlled by or Under Common Control with the Fund .5 Item 25. Indemnification . . . . . . . . . . . . . . . . . . . . . . 5-6 Item 26. Business and Other Connections of Investment Adviser . . . .6-8 Item 27. Principal Underwriters . . . . . . . . . . . . . . . . . . . 8 Item 28. Location of Accounts and Records . . . . . . . . . . . . . . 8 Item 29. Management Services . . . . . . . . . . . . . . . . . . . . .8 Item 30. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . 8 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-10 Special Notices . This Other Information is not a Prospectus. . This Other Information should be read in conjunction with Part A, the Prospectus of Bridges Investment Fund, Inc. dated February 25, 2000, and Part B, Statement of Additional Information. . Copies of the Part A and Part B filings of Bridges Investment Fund, Inc. may be obtained from the office of the Fund at the address shown above. . The date of this Other Information is September 25, 2000. Bridges Investment Fund, Inc. 2 September 25, 2000 Other Information -- Part C XV. Item 23. Exhibits (a) The Fund Articles of Incorporation, filed with the Form N-8B-1 and amendments thereto, in File No. 811-1209, are hereby incorporated by reference. (b) (i) The Fund By-Laws, filed with the Form N-8B-1 and amendments thereto, in File No. 811-1209, are hereby incorporated reference. (ii) Amendment to Article III, Section 1 of Fund By-Laws increasing the number of Fund Directors from 11 to 14, Exhibit 23 (b)(ii) to Form N-1A, Amendment No. 27, filed April 19, 1999, is hereby incorporated by reference. (c) (i) The Specimen Stock Certificate, filed with the Form S-5 in File No. 2-21600, is hereby incorporated by reference. (ii) Account Application Form (Revision 10-25-99) filed as Exhibit 23 (c)(ii) to Form N-1A, Amendment No. 43, filed February 25, 2000, is hereby incorporated by reference. (d) The Investment Advisory Agreement and Amendatory Advisory Agreement filed with Amendment No. 2 to the Form N-8B-1 in File No. 811-1209 are hereby incorporated by reference. (e) Underwriting contracts: Not applicable. (f) Bonus or profit sharing contracts: Not applicable. (g) (i) The Custodian Agreement and Amendatory Custodian Agreement filed with Amendment No. 1 to the Form N-8B-1 in File No. 811- 1209 are hereby incorporated by reference. (ii) Custody agreement between Bridges Investment Fund, Inc. and the First National Bank of Omaha dated April 23, 1997, effective on July 1, 1997, Exhibit 26 to Form N-1A, Amendment No. 25, filed April 28, 1998, is hereby incorporated by reference. Bridges Investment Fund, Inc. 3 September 25, 2000 Other Information -- Part C Other Material Contracts (h) Copies of the model plans used by the Fund to establish retirement plans are hereby incorporated by reference as subparagraphs (i) through (ix) as follows: (i) Exhibit SE-1 filed with Post-Effective Amendment No. 1 to the Form S-5, File No. 2-21600, is hereby incorporated by reference, including Amendments thereto with Post-Effective Amendments No. 2, 3 and 13. These materials relate to the Self-Employed Retirement Keogh Plans. (ii) Amended and Restated Standard Retirement Plan, including Application Forms, Participant Request For Distribution Forms, and Designation of Beneficiary Forms, and the Standard Custodial Agreement, Exhibit 24(i) to Form N-1A, Amendment No. 21, filed February 24, 1994, is hereby incorporated by reference. (iii) Amended and Restated Standard Retirement Plan, corrected to final text approval by the Internal Revenue Service on July 31, 1990, Exhibit 24(j) to Form N-1A Amendment No. 18, filed February 22, 1991, is hereby incorporated by reference. (iv) Amended and Restated Individual Retirement Account Custodial Agreement corrected to final text approval the Internal Revenue Service on June 11, 1993, Exhibit 24(k), to Form N-1A, Amendment No. 21, filed February 24, 1994, is hereby incorporated by reference. (v) Amendment to Bridges Investment Fund, Inc. Standard Retirement Plan effective January 1, 1994, as adopted on March 29, 1994, Exhibit 24(l) to Form N-1A, Amendment No. 22, filed February 23, 1995, is hereby incorporated by reference. (vi) Model Amendment for Qualified Military Service, Model Amendment for SIMPLE 401(k) Provisions, and a new Profit Sharing Plan Application Form reflecting the SIMPLE 401(k) Provisions at Part III all related to the Standard Retirement Plan _ No. 001, Bridges Investment Fund, Inc. 4 September 25, 2000 Other Information -- Part C Exhibit 14(m) to Form N-1A, Amendment No. 25, filed April 28, 1998, is hereby incorporated by reference. (vii) Bridges Investment Fund, Inc. SIMPLE Individual Retirement Custodial Account Master Plan, including Application Form, Custodial Agreement, Disclosure Statement, Notice to Eligible Employees, Summary Description, Salary Reduction Agreement, Beneficiary Designation, and Request for Distribution Form, Exhibit 14(n) to Form N-1A, Amendment No. 25, filed April 28, 1998, is hereby incorporated by reference. (viii) Roth Individual Retirement Custodial Account (IRS Form 5305- RA) with standardized text Attachment for Article IX, Exhibit 14(o) to Form N-1A, Amendment No. 25, filed April 28, 1998, is hereby incorporated by reference. (ix) Education Individual Retirement Custodial Account (IRS Form 5305-EA) with standardized text Attachment for Article XI, Exhibit 14 (p) to Form N-1A, Amendment No. 25, filed April 28, 1998, is hereby incorporated by reference. (x) Agreement dated July 14, 1987, to appoint Bridges Investor Services, Inc. as Dividend Disbursing and Transfer Agent, Exhibit 19 to Form N-1A, Amendment No. 15, filed February 25, 1988, is hereby incorporated by reference. (xi) Agreement dated October 13, 1987, to establish jointly insured status under ICI Mutual Insurance Company fidelity blanket bond between Bridges Investment Fund, Inc.; Bridges Investor Services, Inc.; Bridges Investment Counsel, Inc.; and Edson Bridges II Investment Counsel in California, a proprietorship, Exhibit 21 to Form N-1A, Amendment No. 15, filed February 25, 1988, is hereby incorporated by reference. (i) (i) The opinion and consent of counsel dated July 12, 1963, as to the legality of securities issued, Exhibit F of the original Form S-5 in File No. 2-21600, are hereby incorporated by reference. Bridges Investment Fund, Inc. 5 September 25, 2000 Other Information -- Part C (ii) The opinion and consent of legal counsel, February 25, 1988, as to the legality of securities issued, Exhibit 22, to Form N-1A, Amendment No. 16, filed February 24, 1989, is hereby incorporated by reference. (j) Consent of KPMG LLP dated February 25, 2000, filed as Exhibit 23 (j) to Form N-1A, Amendment No. 43, filed February 25, 2000 is hereby incorporated by reference. (k) Omitted Financial Statements: Not applicable. (l) Initial Capital Agreements: Not applicable. (m) Rule 12b-1 Plan: Not applicable. (n) Financial Data Schedule meeting requirements of SEC Rule 483 filed as Exhibit 23 (n) to Form N-1A, Amendment No. 43, filed February 25, 2000 is hereby incorporated by reference. (o) Rule 18f-3 Plan: Not applicable. (p) Restated Code of Ethics of Bridges Investment Fund, Inc. & Bridges Investment Counsel, Inc. as adopted October 12, 1999, is filed herewith as Exhibit 23 (p). Item 24. Persons Controlled by or under Common Control with Registrant Not applicable Item 25. Indemnification Under the Nebraska Business Corporation Act, as enacted in 1995, a Nebraska Corporation, such as the Fund, is required to indemnify a director and officer who was wholly successful in the defense of any proceeding to which such person was a party because of his or her position as a director or officer against reasonable expenses, including attorney's fees, incurred in connection with such proceeding. A Nebraska Corporation, such as the Fund, is permitted, Bridges Investment Fund, Inc. 6 September 25, 2000 Other Information -- Part C but not required, to indemnify a director or officer against liability if such person conducted himself or herself in good faith, and the director or officer reasonably believed that his or her conduct was in the best interests of the corporation. The Fund has never been requested to provide indemnification by a director or officer, nor has the Fund taken any action or made any offer to indemnify a director or officer of the Fund. Item 26. Business and Other Connections of Investment Adviser Edson L. Bridges II is the President and a Director of Bridges Investment Counsel, Inc., as well as being Chairman and Chief Executive Officer and a Director of Bridges Investment Fund, Inc. Mr. Bridges II is President and a Director of Bridges Investor Services, Inc. Mr. Bridges II has a principal profession in investment counselling. During the last two fiscal years for the Fund, Mr. Bridges II acted for his own account in the capacity of director, officer, employee, partner or trustee in the following businesses or activities: Name and Principal Position with Business Address Business or Activity Edson L. Bridges II Proprietor Bridges Investment Advisers 8401 West Dodge Road Omaha, Nebraska 68114 Edson L. Bridges II Managing Director Bridges Investment Management, Inc. 8401 West Dodge Road Omaha, Nebraska 68114 N. P. Dodge Company Director Real Estate Brokers and Management 8701 West Dodge Road Omaha, Nebraska 68114 JAT Investments Limited Director 25720 West Dodge Road Waterloo, Nebraska 68069 Provident Trust Company President and 256 Durham Plaza Director 8401 West Dodge Road Omaha, Nebraska 68114 Store Kraft Manufacturing Company Director Beatrice, Nebraska 68310 Bridges Investment Fund, Inc. 7 September 25, 2000 Other Information -- Part C West Omaha Land & Cattle Company A Partner 8401 West Dodge Road Omaha, Nebraska 68114 The question in this item uses the terms substantial nature in requiring a response. None of the foregoing relationships are substantial in terms of time commitment or compensation received as they may require only several hours per month or per calendar quarter of Mr. Bridges' time. One exception to this statement would be Edson L. Bridges II, Bridges Investment Advisers, a proprietorship which is part of Mr. Bridges' principal profession. The other exception is Provident Trust Company, discussed in more detail below. Mr. Bridges II acts as a Trustee or Co-Trustee, primarily for revocable and testamentary trusts which have investment advisory client relationships with either Bridges Investment Counsel, Inc. or Bridges Investment Advisers. Mr. Edson L. Bridges III is Executive Vice President-Investments of Bridges Investment Counsel, Inc. and a Director of that Company. Mr. Bridges III is President and Director of Bridges Investment Fund, Inc. and Vice President and Director of Bridges Investor Services, Inc. Mr. Bridges III has a principal profession of investment counselling. During the last two fiscal years for the Fund, Mr. Bridges III acted for his own account in the capacity of director, officer, employee, partner, or trustee in the following businesses or activities: Name and Principal Position with Business Address Business or Activity Edson L. Bridges III President Bridges Investment Management, Inc. 8401 West Dodge Road Omaha, Nebraska 68114 Provident Trust Company Vice President 256 Durham Plaza and Director 8401 West Dodge Road Omaha, Nebraska 68114 Stratus Fund, Inc. Director 500 Centre Terrace 1225 "L" Street Lincoln, Nebraska 68508 Bridges Investment Fund, Inc. 8 September 25, 2000 Other Information -- Part C Provident Trust Company was granted a charter by the State of Nebraska Department of Banking on March 11, 1992. Trust business activities commenced on March 14, 1992. Provident has a Management Agreement with Bridges Investment Counsel, Inc. that was entered into on March 26, 1991. Mr. Bridges II and Mr. Bridges III were active during 1998 with assistance to Provident Trust Company for the conduct of its operations and services. On December 31, 1999, Provident Trust Company was responsible to 590 customer accounts with assets valued at in excess of $600 million. Item 27. Principal Underwriters Not applicable Item 28. Location of Accounts and Records The principal records for the Fund to maintain under Rule 31a-3 of The Investment Company Act of 1940 are maintained by the Fund and its investment adviser at the offices of the Fund, Suite 256, Durham Plaza, 8401 West Dodge Road, Omaha, Nebraska 68114. The persons in charge of the corporate records are Mrs. Mary Ann Mason, Secretary, and Mrs. Nancy K. Dodge, Treasurer. Documents of original entry regarding the safekeeping of securities, disbursing of dividends and transfer agency work are maintained by Bridges Investor Services, Inc. Item 29. Management Services Not applicable Item 30. Undertakings Not applicable Bridges Investment Fund, Inc. 9 September 25, 2000 Other Information -- Part C SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Omaha, and State of Nebraska, on the 25th day of September, 2000. BRIDGES INVESTMENT FUND, INC. /s/ Edson L. Bridges II______ Edson L. Bridges II, Chairman Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
/s/ Edson L. Bridges II_ Chairman September 25, 2000 Edson L. Bridges II Date /s/ Nancy K. Dodge______ Treasurer September 25, 2000 Nancy K. Dodge Date ________________________ Director __________________ Frederick N. Backer Date /s/ Edson L. Bridges II_ Director September 25, 2000 Edson L. Bridges II Date /s/ Edson L. Bridges III President September 25, 2000 Edson L. Bridges III Director Date /s/ N. P. Dodge, Jr.____ Director September 25, 2000 N. P. Dodge, Jr. Date /s/John W. Estabrook____ Director September 25, 2000 John W. Estabrook Date /s/ Jon D. Hoffmaster___ September 25, 2000 Jon D. Hoffmaster Director Date _______________________ Director __________________ John J. Koraleski Date Bridges Investment Fund, Inc. 10 September 25, 2000 Other Information -- Part C /s/ Roger A. Kupka_____ Director September 25, 2000_ Roger A. Kupka Date ________________________ Director __________________ Gary L. Petersen Date /s/ John T. Reed________ Director September 25, 2000 John T. Reed Date ________________________ Director __________________ Roy A. Smith Date ________________________ Director __________________ Janice D. Stoney Date /s/ L.B. Thomas_________ Director September 25, 2000 L.B. Thomas Date /s/ John K. Wilson______ Director September 25, 2000 John K. Wilson Date
EX-99.B.9 2 0002.txt EXHIBIT 23 (p) RESTATED CODE OF ETHICS OF BRIDGES INVESTMENT FUND, INC. & BRIDGES INVESTMENT COUNSEL, INC. PREAMBLE This Restated Code of Ethics represents a replacement to the Code of Ethics adopted by Bridges Investment Fund, Inc. and Bridges Investment Counsel, Inc. on January 12, 1982 and subsequently amended on December 6, 1994 and October 12, 1999. The restatement of the Code of Ethics is in response to an amendment to Rule 17j-1 of the General Rules and Regulations under the Investment Company Act of 1940, as amended. The effective date of this Code is retroactive to May 1, 1981. SECTION 1 _ DEFINITIONS The following definitions establish the applicability of this Code of Ethics to various persons and situations: (a) "Advisor" means Bridges Investment Counsel, Inc. and any other investment advisor for the Fund. (b) "Fund" means Bridges Investment Fund, Inc. (c) "Investment Company" means a company registered as such under the Investment Company Act of 1940 and for which the Advisor is the investment advisor. (d) "Access Person" means: (i) any director, officer, general partner or Advisory Person of the Fund; (ii) any director, officer, general partner or Advisory Person of an Adviser who is primarily engaged in a business or businesses other than advising investment companies registered under the Investment Company Act or other advisory clients as defined in paragraph (a)(1)(i)(B) of Rule 17j-1, who, with respect to an investment company registered under the Investment Company Act, makes any recommendation, participates in the determination of which recommendation will be made, or whose principal function or duties relate to the determination of which recommendation 2 will be made, or who, in connection with his or her duties, obtains any information concerning recommendations on Covered Securities being made by the Adviser to an investment company registered under the Investment Company Act; and (iii) any director, officer or general partner of the principal underwriter, if any, who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of Covered Securities by the Fund for which the principal underwriter acts, or whose functions or duties on the ordinary course of business relate to the making of any recommendation to the Fund regarding the purchase or sale of Covered Securities. (e) "Advisory Person" of the Fund or of the Advisor means: (i) any employee of the Fund or the Advisor, or of any company in a control relationship to the Fund or Advisor, who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Covered Securities by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (ii) any natural person in a control relationship to the Fund or Advisor who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of Covered Securities by the Fund. A person does not become an "Advisory Person" by virtue of the following conditions: (1) normally assisting in the preparation of public reports, or receiving public reports, but not receiving information about current recommendations or trading; or (2) a single instance of obtaining knowledge of current recommendations or trading activity, or infrequently and inadvertently obtaining such knowledge. The phrase " . . . makes the purchase or sale . . ." is intended to mean someone who places orders or otherwise arranges transactions for the Fund. 3 (f) "Affiliated Person" as defined in Section 2(a)(3) of the Investment Company Act of 1940 means: (i) a person directly or indirectly owning, controlling, or holding the power to vote, 5 percent or more of the outstanding voting securities of such other person; (ii) any person 5 percent or more of whose outstanding voting securities are directly or indirectly owned custodially or held with the power of vote by such other person; (iii)any person directly or indirectly controlling, controlled by, or under common control with such other person; (iv) any officer, director, partner, co-partner or employee of such other person; (v) if such other person is an investment company, any investment advisor thereof or any member of an advisory board thereof; and (vi) if such other person is an unincorporated investment company not having a board of directors, the depositor thereof. (g) "Beneficial Ownership" shall be interpreted in the same manner as it would be in determining whether a person is the beneficial owner of a security for purposes of section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. (h) "Control" shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act. (i) "Disinterested Director" means a director of the Fund who is not an "interested person" of the Fund within the meaning of section 2(a)(19) of the Investment Company Act. (j) "Purchase or sale of a Covered Security" includes, inter alia, the writing of an option to purchase or sell a Covered Security. (k) "Covered Security" means a security as defined in section 2(a)(36) of the Investment Company Act, except that it does not include: (i) Direct obligations of the Government of the United States; 4 (ii) Bankers' acceptances, bank certificates of deposit, commercial paper, and high quality short-term debt instruments, including repurchase agreements; and (iii)Shares issued by open-end investment companies registered under the Investment Company Act. (l) "Limited Offering" means an offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) or pursuant to rule 504, rule 505 or rule 506 under the Securities Act of 1933. (m) "Security Held or to be Acquired" means: (i) Any Covered Security which, within the most recent 15 days: (A) is or has been held by the Fund; or (B) is being or has been considered by the Fund or Advisor for purchase by the Fund; and (ii) Any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in Section 1(m)(i). SECTION 2 _ EXEMPTED TRANSACTIONS The prohibitions of Section 3A of this Code of Ethics shall not apply to: (a) Purchases or sales effected in any account over which an Access Person has no direct or indirect influence or control. (b) Purchases or sales of securities which are not eligible for purchase or sale by the Fund. (c) Purchases or sales which are non-volitional on the part of either the Access Person or the Fund. (d) Purchases which are part of an automatic dividend reinvestment plan. (e) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired. 5 (f) Purchases or sales which receive the prior approval of the President, Vice President or Treasurer of the Fund because they are not potentially harmful to the Fund because they would be very unlikely to affect a highly institutional market, or because they clearly are not related economically to the securities to be purchased, sold or held by the Fund. SECTION 3 _ PROHIBITIONS In determining the form and content of a prohibition, persons should bear in mind that Rule 17j-1 is not the exclusive source of restrictions on insider activities. Other provisions of the federal securities laws must also be considered. Employees of investment advisors, in particular, should be mindful of the anti-fraud and reporting provisions of the Investment Advisors Act of 1940, especially Section 204 and the rules thereunder. A. No Access Person shall purchase or sell, directly or indirectly, any Covered Security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which to his or her actual knowledge at the time of such purchase or sale (a) is being considered for purchase or sale by the Fund; or (b) is being purchased or sold by the Fund; or (c) has been purchased or sold by the Fund within the most recent 15 days. B. It is unlawful for any Affiliated Person of or principal underwriter for a Fund, or any Affiliated Person of the Advisor or principal underwriter for a Fund, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund: (1) To employ any device, scheme or artifice to defraud the Fund; (2) To make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading; (3) To engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or (4) To engage in any manipulative practice with respect to the Fund. SECTION 4 _ REPORTING REQUIREMENTS OF ACCESS PERSONS 4A. Reports Required. Unless excepted by paragraph 4B of this Section, 6 every Access Person of the Fund and every Access Person of the Advisor or principal underwriter for the Fund, will report to the Fund, Advisor or principal underwriter: (a) Initial Holdings Reports. (i) As required by Section 10(5), not later than 10 days after the person becomes an Access Person, the Access Person shall complete either the Confidential Disclosure of Personal Holdings and Liabilities Form, attached hereto as Exhibit 1, or the Initial Holdings Report, attached hereto as Exhibit 1-A, which shall contain at a minimum the following information: (1) The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person; (2) The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and (3) The date that the report is submitted by the Access Person. (ii) Exception: (1) A Disinterested Director of the Fund who would be required to make a report solely by reason of being the Fund director need not make an initial report. (b) Quarterly Transaction Reports. (i) As required by Section 10(5), not later than 10 days after the end of the calendar quarter, the Access Person shall complete the Quarterly Transactions Report, attached hereto as Exhibit 2, which shall contain at a minimum the following information: (1) With respect to any transaction during the quarter in a Covered Security in which the Access Person had any direct or indirect beneficial ownership: 7 (A) The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Covered Security involved; (B) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); (C) The price of the Covered Security at which the transaction was effected; (D) The name of the broker, dealer or bank with or through which the transaction was effected; and (E) The date that the report is submitted by the Access Person. (2) With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person: (A) The name of the broker, dealer or bank with whom the Access Person established the account; (B) The date the account was established; and (C) The date that the report is submitted by the Access Person. (ii) Exceptions: (1) A Disinterested Director of the Fund who would be required to make a report solely by reason of being the Fund director, need only make a quarterly transaction report if the director knew or, in the ordinary course of fulfilling his or her official duties as the Fund 8 director, should have known that during the 15-day period immediately before or after the director's transaction in a Covered Security, the Fund purchased or sold the Covered Security, or the Fund or the Advisor considered purchasing or selling the Covered Security. (2) An Access Person to the Advisor need not make a quarterly transaction report to the Advisor if all the information in the report would duplicate information required to be recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13) of the Investment Company Act of 1940. (3) An Access Person need not make a quarterly transaction report if the report would duplicate information contained in broker trade confirmations or account statements received by the Fund, Advisor or principal underwriter with respect to the Access Person in the time period required. (c) Annual Holdings Reports. (i) As required by Section 10(5), annually, the Access Person shall complete either the Confidential Disclosure of Personal Holdings and Liabilities Form, attached hereto as Exhibit 1, or the Annual Holdings Report, attached hereto as Exhibit 3, which shall contain at a minimum the following information (which information will be current as of a date no more than 30 days before the report is submitted): (1) The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership; (2) The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and (3) The date that the report is submitted by the Access Person. (ii) Exception: (1) A Disinterested Director of the Fund who would be required to make a report solely by reason of being the Fund director need not make an annual report. 9 4B. Exceptions from All Reporting Requirements. (a) An Access Person shall not be required to make any reports under this Section with respect to transactions effected for, and Covered Securities held in, any account over which such person does not have any direct or indirect influence or control. (b) An Access Person to a Fund's principal underwriter need not make a report to the principal underwriter under this Section 4 if: (i) The principal underwriter is not an affiliated person of the Fund (unless the Fund is a unit investment trust) or the Advisor of the Fund; and (ii) The principal underwriter has no officer, director or general partner who serves as an officer, director or general partner of the Fund or of the Advisor of the Fund. 4C. Review of Reports. Each Fund, Advisor and principal underwriter to which reports are required to be made by this Section 4 will institute procedures by which appropriate management or compliance personnel review these reports. 4D. Notification of Reporting Obligation. Each Fund, Advisor and principal underwriter to which reports are required to be made by this Section 4 will identify all Access Persons who are required to make these reports and will inform those Access Persons of their reporting obligation. 4E. Any report required by this Section may contain a statement that the report shall not be construed as an admission that the person making the report that he or she has any direct or indirect beneficial ownership in the Covered Security to which the report relates. 4F. Recordkeeping. The Fund and Advisor will maintain the following at its principal place of business: (a) A copy of each report made by an Access Person as required by this Section, including any information provided in lieu of the reports, will be maintained for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place; and (b) A record of all persons, currently or within the past five years, 10 who are or were required to make reports under Section 4, or who are or were responsible for reviewing these reports, will be maintained in an easily accessible place. SECTION 5 _ SANCTIONS Upon discovering a violation of this Code of Ethics, the board of directors of the Fund may impose such sanctions as it deems appropriate, including, inter alia, a letter of censure or suspension or termination of the employment of the violator. All material violations of this Code of Ethics and any sanctions imposed with respect thereto shall be reported periodically to the Board of Directors of the Fund. SECTION 6 _ 17 C.F.R. 270.17J-1 The full text of Investment Company Act Rule 17j-1 in effect on October 29, 1999 is attached as Appendix I for ease of reference to the regulatory standard to which the parties and persons affected by the Code of Ethics must adhere. SECTION 7 _ GENERAL FIDUCIARY PRINCIPLES The general fiduciary principles that govern person investment activities of our covered individuals under this Code of Ethics are: (1) the duty at all times to place the interest of Fund shareholders and Advisor clients first; (2) the requirement that all personal securities transactions be conducted consistent with this Code of Ethics and in such a manner as to avoid any actual or potential conflict of interest or any absence of an individual's position of trust and responsibility; and (3) the fundamental standard that the Fund and Advisor personnel should not take inappropriate advantage of their positions. SECTION 8 _ APPLICABILITY OF RESTRICTIONS AND PROCEDURE This Code of Ethics should apply to certain sets or categories of personnel and under different circumstances as set forth in this section. 1. Different Categories of Personnel Portfolio Managers _ The first set includes portfolio managers _ those employees entrusted with direct responsibility and authority to make investment decisions affecting the Fund, and who, therefore, are the persons best informed about the Fund's investment plans and interests. Investment Personnel _ Any employee of the Fund or Advisor (or of any company in a control relationship to the Fund or Advisor) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale 11 of securities by the Fund and any natural person who controls the Fund or Advisor and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund. This includes portfolio managers as well as other investment personnel, such as the security analysts and traders who provide information and advise to a portfolio manager or who help execute the portfolio analysis decisions. Access Persons _ The third and largest set of employees includes all Access Persons, as this term is used in Rule 17j-1 and has been applied in the securities industry. In addition to all portfolio managers and other investment personnel, Access Persons include all individuals who, in the course of their normal work force duties, obtain information about an investment company's, investment advisory client's, or a principal underwriter's purchase or sale of securities. In keeping with the spirit of Rule 17j-1, the category of Access Persons will be construed broadly to include all employees of the companies bound by this Code of Ethics and members of their families with respect to the trading prohibitions of Section 3. 2. Consideration of Different Circumstances This Code of Ethics will not apply to personal transactions involving certain types of securities that do not implicate the policies of the Rule. Personal transactions involving small amounts of securities that have very high market capitalization and high average daily trading volume may have an exception from this Code of Ethics, although the general rule will be broad applicability for all transactions. An Access Person who is also an investment advisory client of the companies bound by this Code of Ethics may be exempt from this Code of Ethics when a security transaction is undertaken as part of the conduct of the portfolio in the ordinary course of business for that account and for advisory clients with similar investment objectives and assets allocation policies. SECTION 9 _ SUBSTANTIVE RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES 1. Initial Public Offerings This Code of Ethics prohibits investment personnel from acquiring any securities in an initial public offering in order to preclude any possibility of their profiting improperly from their positions on behalf of an investment company. 12 2. Limited Offering This Code of Ethics requires express prior approval from the Fund or Advisor of any direct or indirect acquisition of beneficial ownership of any securities by investment personnel in a Limited Offering. This prior approval should take into account, among other factors, whether the investment opportunity should be reserved for the Fund and its shareholders or an investment advisory client, and whether the opportunity is being offered to an individual by virtue of his or her position with those companies. Investment personnel who have been authorized to acquire securities in a Limited Offering should be required to disclose that investment when they play a part in the Fund's or investment advisory client's subsequent consideration of an investment in the issuer. In such circumstances, the Fund's decision to purchase securities of the issuer should be subject to an independent review by investment personnel with no personal interest in the issuer. 3. Blackout Periods This Code of Ethics prohibits any Access Person from executing a securities transaction on a day during which any investment company in his or her complex has a pending "buy" or "sell" order in that same security until that order is executed or withdrawn. In addition, this Code of Ethics prohibits any portfolio manager from buying or selling a security within at least seven calendar days before or after an investment company that he or she manages trades in that security. Any profits realized on trades within the proscribed periods should be required to be disgorged. 4. Ban on Short-Term Trading Profits This Code of Ethics prohibits all investment personnel from profiting on the purchase and sale, or sale and purchase, of the same or equivalent securities within 60 calendar days. Any profits realized on such short-term trades will be required to be disgorged. 5. Gifts This Code of Ethics prohibits investment personnel from receiving any gifts of anything of more than de minims value from any person or entity that does business with or on behalf of the Fund or Advisor. 6. Service as a Director This Code of Ethics prohibits investment personnel from serving on the boards of directors of publicly traded companies, absent prior 13 authorization based upon a determination that the board service would be consistent with the interests of the Fund and its shareholders and the Advisor. In the relatively small number of instances in which board service is authorized, investment personnel serving as directors normally should be isolated from those making investment decisions through "Chinese Wall" or other procedures. SECTION 10 _ COMPLIANCE PROCEDURES 1. Preclearance This Code of Ethics requires all Access Persons to "preclear" personal securities investments before such transactions are initiated. 2. Records of Securities Transactions This Code of Ethics requires all Access Persons to direct their brokers, or other financial intermediaries that may pay for, hold, or receive securities, to supply to a designated compliance official for the Fund and/or Advisor, on a timely basis, duplicate copies of confirmations of all personal securities transactions and copies of periodic statements for all securities accounts. 3. NASD Rulemaking _ Opening of Accounts Upon adoption by the NASD of the appropriate Rule, this Code of Ethics requires all broker dealers to notify a registered investment advisor when any of its employees opens a brokerage account. Employees are hereby required to notify their employer that they have initiated an account opening at a broker, bank or other financial intermediary, and each employee will acknowledge that written instructions have been given to the broker or financial intermediary to send regular or normal transaction confirmations and statements of account to the employer. 4. Post-trade Monitoring The Fund and Advisor will implement appropriate procedures to monitor investment activity by Access Persons after preclearance has been granted. The system of procedures will seek to identify patterns of personal securities trading occurring before Fund or advisory clients trade. The system of procedures may involve sampling and comparison of trading activities of various accounts and individuals within our office environment. 14 5. Disclosure of Personal Holdings and Liabilities Under Section 4, this Code of Ethics requires that all employees of the Fund, the Advisor, and the principal underwriter, if any, disclose all personal securities holdings and personal financial liabilities upon commencement of employment and thereafter on an annual basis. Section 4 also requires quarterly transaction reports and updates for such individuals. 6. Certification of Compliance With Code of Ethics This Code of Ethics requires all Access Persons be required to certify annually that they have read and understand this Code and that they recognize that they are subject thereto. Further, Access Persons should be required to certify annually that they have complied with the requirements of this Code of Ethics and they have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of this Code. This Code of Ethics also requires the Fund, Advisor and principal underwriter, if any, to certify, when adopting or making any material changes to its code, that it has adopted procedures reasonably necessary to prevent Access Persons from violating this Code. 7. Review By the Board of Directors The management of the Fund, the Advisor and principal underwriter, if any, will prepare a written annual report to the Board of Directors of the Fund that, at a minimum _ (a) summarizes existing procedures concerning personal investing and any changes in the procedures made during the past year; (b) identifies any violations requiring significant remedial action during the past year and the sanctions imposed in response to the violations; (c) identifies any recommended changes in existing restrictions or procedures based upon the Fund's, Advisor's or principal underwriter's experience under the code of ethics, evolving industry practices, or developments in applicable laws or regulations; and (d) certifies that the Fund, Advisor or principal underwriter, if any, has adopted procedures reasonably necessary to prevent Access Persons from violating its code of ethics. 15 The Fund and Advisor will maintain a copy of each report at its principal place of business for at least five years after the end of the fiscal year in which it was made, the first two years in an easily accessible place. 8. Additional Disclosure The Fund will disclose in its Prospectus whether or not Access Persons are permitted to engage in personal securities transactions, and, if so, subject to what general restrictions and procedures. The Fund will also provide in its Prospectus whether it, the Advisor and principal underwriter, if any, has adopted codes of ethics and will file such codes as exhibits to its registration statement. SECTION 11 _ TRANSITIONAL PERIOD The management and employees of the Fund, the Advisor will be allowed a period from the date of adoption of this Restated Code of Ethics until March 1, 2000 to comply with Sections 4A(a), 4C, 4D and 4F(b), Section 9(2) and Section 10(8). The management and employees of the Fund and Advisor will be allowed a period from the date of adoption of this Restated Code of Ethics until April 10, 2000 to supply the new information required under Section 4A(b) and until September 1, 2000 to comply with Section 4A(c), Section 10(7) and Section 16. SECTION 12 _ AUTHORIZERS FOR PRECLEARANCE The President of the Fund and Advisor is the primary authorizing person for preclearance of personal securities transactions. In the absence or non- availability of the President, two officers elected at the last Annual Meeting of the Board of Directors for the respective companies may sign the authorization for a preclearance of a personal security transaction. SECTION 13 _ FILING OF REPORTS BY PORTFOLIO MANAGERS, INVESTMENT PERSONNEL, ACCESS PERSONS AND OTHER PERSONS AND ENTITIES Reports required to be filed under this Code of Ethics should be directed to the President of the Fund and the Advisor. The President may delegate review functions of these materials to officers or agents elected or appointed by the Board of Directors of the respective companies. SECTION 14 _ DISCIPLINE Employees and other persons who willfully violate this Code of Ethics may expect disciplinary action appropriate to the situation involved. Penalties applied by other investment advisors and investment companies are published in 16 industry association communications and SEC releases. These disciplinary actions should be described as harsh in the context of our subject companies; nonetheless, they could form the basis of actions and fine assessments taken by the management and directors of the entities bound by this Code of Ethics. SECTION 15 _ CONFIDENTIALITY Reports that are filed by persons or entities under this Code of Ethics will be handled in a confidential manner. The information will be reviewed only by senior corporate officers on a need to know basis or by a certified public accountant or attorney if the entities adopting this Code of Ethics desire to retain outside reviewers to prepare summary reports. SECTION 16 _ ADOPTION AND APPROVAL OF CODE OF ETHICS 1. This Code will be approved by the Board of Directors of the Fund, including a majority of directors who are not interested persons. The Board of Directors of the Fund will also approve any material changes to this Code no later than six months after the adoption of the material change. 2. The code of ethics of an Advisor or principal underwriter, if any, will be approved by the Board of Directors of the Fund before initially retaining the services of the Advisor or principal underwriter. The Board of Directors of the Fund will approve any material changes to these codes of ethics no later than six months after the adoption of the material change. 3. Before approving the codes or any material changes to the codes, the Board of Directors of the Fund will receive a certification from the Fund, Advisor or principal underwriter in accordance with the requirements of Section 10(6). 4. The Fund, Advisor and principal underwriter will maintain a copy of its current code of ethics and any code of ethics that was in effect within the past five years in an easily accessible place at its principal place of business. APPENDIX I FULL TEXT OF RULE 17J-1 INVESTMENT COMPANY ACT 17 C.F.R. 270.17J-1 (EFFECTIVE OCTOBER 29, 1999) S 270.17J-1 PERSONAL INVESTMENT ACTIVITIES OF INVESTMENT COMPANY PERSONNEL. (a) Definitions. For purposes of this section: (1) Access Person means: (i) Any director, officer, general partner or Advisory Person of a Fund or of a Fund's investment adviser. (A) If an investment adviser is primarily engaged in a business or businesses other than advising Funds or other advisory clients, the term Access Person means any director, officer, general partner or Advisory Person of the investment adviser who, with respect to any Fund, makes any recommendation, participates in the determination of which recommendation will be made, or whose principal function or duties relate to the determination of which recommendation will be made, or who, in connection with his or her duties, obtains any information concerning recommendations on Covered Securities being made by the investment adviser to any Fund. (B) An investment adviser is "primarily engaged in a business or businesses other than advising Funds or other advisory clients" if, for each of its most recent three fiscal years or for the period of time since its organization, whichever is less, the investment adviser derived, on an unconsolidated basis, more than 50 percent of its total sales and revenues and more than 50 percent of its income (or loss), before income taxes and extraordinary items, from the other business or businesses. (ii) Any director, officer or general partner of a principal underwriter who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or 2 sale of Covered Securities by the Fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Fund regarding the purchase or sale of Covered Securities. (2) Advisory Person of a Fund or of a Fund's investment adviser means: (i) Any employee of the Fund or investment adviser (or of any company in a control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Covered Securities by a Fund, or whose functions relate to the making of any recommendations with respect to the purchases or sales; and (ii) Any natural person in a control relationship to the Fund or investment adviser who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of Covered Securities by the Fund. (3) Control has the same meaning as in section 2(a)(9) of the Act [15 U.S.C. 80a-2(a)(9)]. (4) Covered Security means a security as defined in section 2(a)(36) of the Act [15 U.S.C. 80a-2(a)(36)], except that it does not include: (i) Direct obligations of the Government of the United States; (ii) Bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and (iii) Shares issued by open-end Funds. (5) Fund means an investment company registered under the Investment Company Act. (6) An Initial Public Offering means an offering of securities registered under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which, immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934 [15 U.S.C. 78m or 78o(d)]. (7) Investment Personnel of a Fund or of a Fund's investment adviser means: (i) Any employee of the Fund or investment adviser (or of any company in a control relationship to the Fund or investment adviser) who, 3 in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund. (ii) Any natural person who controls the Fund or investment adviser and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund. (8) A Limited Offering means an offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) [15 U.S.C. 77d(2) or 77d(6)] or pursuant to rule 504, rule 505, or rule 506 [17 CFR 230.504, 230.505, or 230.506] under the Securities Act of 1933. (9) Purchase or sale of a Covered Security includes, among other things, the writing of an option to purchase or sell a Covered Security. (10) Security Held or to be Acquired by a Fund means: (i) Any Covered Security which, within the most recent 15 days: (A) Is or has been held by the Fund; or (B) Is being or has been considered by the Fund or its investment adviser for purchase by the Fund; and (ii) Any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in paragraph (a)(10)(i) of this section. (b) Unlawful Actions. It is unlawful for any affiliated person of or principal underwriter for a Fund, or any affiliated person of an investment adviser of or principal underwriter for a Fund, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund: (1) To employ any device, scheme or artifice to defraud the Fund; (2) To make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading; (3) To engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or (4) To engage in any manipulative practice with respect to the Fund. 4 (c) Code of Ethics. (1) Adoption and Approval of Code of Ethics. (i) Every Fund (other than a money market fund or a Fund that does not invest in Covered Securities) and each investment adviser of and principal underwriter for the Fund, must adopt a written code of ethics containing provisions reasonably necessary to prevent its Access Persons from engaging in any conduct prohibited by paragraph (b) of this section. (ii) The board of directors of a Fund, including a majority of directors who are not interested persons, must approve the code of ethics of the Fund, the code of ethics of each investment adviser and principal underwriter of the Fund, and any material changes to these codes. The board must base its approval of a code and any material changes to the code on a determination that the code contains provisions reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by paragraph (b) of this section. Before approving a code of a Fund, investment adviser or principal underwriter or any amendment to the code, the board of directors must receive a certification from the Fund, investment adviser or principal underwriter that it has adopted procedures reasonably necessary to prevent Access Persons from violating the investment adviser's or principal underwriter's code of ethics. The Fund's board must approve the code of an investment adviser or principal underwriter before initially retaining the services of the investment adviser or principal underwriter. The Fund's board must approve a material change to a code no later than six months after adoption of the material change. (iii)If a Fund is a unit investment trust, the Fund's principal underwriter or depositor must approve the Fund's code of ethics, as required by paragraph (c)(1)(ii) of this section. If the Fund has more than one principal underwriter or depositor, the principal underwriters and depositors may designate, in writing, which principal underwriter or depositor must conduct the approval required by paragraph (c)(1)(ii) of this section, if they obtain written consent from the designated principal underwriter or depositor. 5 (2) Administration of Code of Ethics. (i) The Fund, investment adviser and principal underwriter must use reasonable diligence and institute procedures reasonably necessary to prevent violations of its code of ethics. (ii) No less frequently than annually, every Fund (other than a unit investment trust) and its investment advisers and principal underwriters must furnish to the Fund's board of directors, and the board of directors must consider, a written report that: (A) Describes any issues arising under the code of ethics or procedures since the last report to the board of directors, including, but not limited to, information about material violations of the code or procedures and sanctions imposed in response to the material violations; and (B) Certifies that the Fund, investment adviser or principal underwriter, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the code. (3) Exception for Principal Underwriters. The requirements of paragraphs (c)(1) and (c)(2) of this section do not apply to any principal underwriter unless: (i) The principal underwriter is an affiliated person of the Fund or of the Fund's investment adviser; or (ii) An officer, director or general partner of the principal underwriter serves as an officer, director or general partner of the Fund or of the Fund's investment adviser. (d) Reporting Requirements of Access Persons. (1) Reports Required. Unless excepted by paragraph (d)(2) of this section, every Access Person of a Fund (other than a money market fund or a Fund that does not invest in Covered Securities) and every Access Person of an investment adviser of or principal underwriter for the Fund, must report to that Fund, investment adviser or principal underwriter: (i) Initial Holdings Reports. No later than 10 days after the person becomes an Access Person, the following information: 6 (A) The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person; (B) The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and (C) The date that the report is submitted by the Access Person. (ii) Quarterly Transaction Reports. No later than 10 days after the end of a calendar quarter, the following information: (A) With respect to any transaction during the quarter in a Covered Security in which the Access Person had any direct or indirect beneficial ownership: (1) The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Covered Security involved; (2) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); (3) The price of the Covered Security at which the transaction was effected; (4) The name of the broker, dealer or bank with or through which the transaction was effected; and (5) The date that the report is submitted by the Access Person. (B) With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person: (1) The name of the broker, dealer or bank with whom the Access Person established the account; (2) The date the account was established; and 7 (3) The date that the report is submitted by the Access Person. (iii) Annual Holdings Reports. Annually, the following information (which information must be current as of a date no more than 30 days before the report is submitted): (A) The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership; (B) The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and (C) The date that the report is submitted by the Access Person. (2) Exceptions from Reporting Requirements. (i) A person need not make a report under paragraph (d)(1) of this section with respect to transactions effected for, and Covered Securities held in, any account over which the person has no direct or indirect influence or control. (ii) A director of a Fund who is not an "interested person" of the Fund within the meaning of section 2(a)(19) of the Act [15 U.S.C. 80a-2(a)(19)], and who would be required to make a report solely by reason of being a Fund director, need not make: (A) An initial holdings report under paragraph (d)(1)(i) of this section and an annual holdings report under paragraph (d)(1)(iii) of this section; and (B) A quarterly transaction report under paragraph (d)(1)(ii) of this section, unless the director knew or, in the ordinary course of fulfilling his or her official duties as a Fund director, should have known that during the 15-day period immediately before or after the director's transaction in a Covered Security, the Fund purchased or sold the Covered Security, or the Fund or its investment adviser considered purchasing or selling the Covered Security. 8 (iii)An Access Person to a Fund's principal underwriter need not make a report to the principal underwriter under paragraph (d)(1) of this section if: (A) The principal underwriter is not an affiliated person of the Fund (unless the Fund is a unit investment trust) or any investment adviser of the Fund; and (B) The principal underwriter has no officer, director or general partner who serves as an officer, director or general partner of the Fund or of any investment adviser of the Fund. (iv) An Access Person to an investment adviser need not make a quarterly transaction report to the investment adviser under paragraph (d)(1)(ii) of this section if all the information in the report would duplicate information required to be recorded under SS 275.204-2(a)(12) or 275.204-2(a)(13) of this chapter. (v) An Access Person need not make a quarterly transaction report under paragraph (d)(1)(ii) of this section if the report would duplicate information contained in broker trade confirmations or account statements received by the Fund, investment adviser or principal underwriter with respect to the Access Person in the time period required by paragraph (d)(1)(ii), if all of the information required by that paragraph is contained in the broker trade confirmations or account statements, or in the records of the Fund, investment adviser or principal underwriter. (3) Review of Reports. Each Fund, investment adviser and principal underwriter to which reports are required to be made by paragraph (d)(1) of this section must institute procedures by which appropriate management or compliance personnel review these reports. (4) Notification of Reporting Obligation. Each Fund, investment adviser and principal underwriter to which reports are required to be made by paragraph (d)(1) of this section must identify all Access Persons who are required to make these reports and must inform those Access Persons of their reporting obligation. (5) Beneficial Ownership. For purposes of this section, beneficial ownership is interpreted in the same manner as it would be under S 240.16a-1(a)(2) of this chapter in determining whether a person is the beneficial owner of a security for purposes of section 16 of the 9 Securities Exchange Act of 1934 [15 U.S.C. 78p] and the rules and regulations thereunder. Any report required by paragraph (d) of this section may contain a statement that the report will not be construed as an admission that the person making the report has any direct or indirect beneficial ownership in the Covered Security to which the report relates. (e) Pre-approval of Investments in IPOs and Limited Offerings. Investment Personnel of a Fund or its investment adviser must obtain approval from the Fund or the Fund's investment adviser before directly or indirectly acquiring beneficial ownership in any securities in an Initial Public Offering or in a Limited Offering. (f) Recordkeeping Requirements. (1) Each Fund, investment adviser and principal underwriter that is required to adopt a code of ethics or to which reports are required to be made by Access Persons must, at its principal place of business, maintain records in the manner and to the extent set out in this paragraph (f), and must make these records available to the Commission or any representative of the Commission at any time and from time to time for reasonable periodic, special or other examination: (A) A copy of each code of ethics for the organization that is in effect, or at any time within the past five years was in effect, must be maintained in an easily accessible place; (B) A record of any violation of the code of ethics, and of any action taken as a result of the violation, must be maintained in an easily accessible place for at least five years after the end of the fiscal year in which the violation occurs; (C) A copy of each report made by an Access Person as required by this section, including any information provided in lieu of the reports under paragraph (d)(2)(v) of this section, must be maintained for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place; (D) A record of all persons, currently or within the past five years, who are or were required to make reports under paragraph (d) of this section, or who are or were responsible for reviewing these reports, must be maintained in an easily accessible place; and (E) A copy of each report required by paragraph (c)(2)(ii) of this section must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place. 10 (2) A Fund or investment adviser must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition by investment personnel of securities under paragraph (e), for at least five years after the end of the fiscal year in which the approval is granted. EXHIBIT 1 CONFIDENTIAL DISCLOSURE OF PERSONAL HOLDINGS AND LIABILITIES Section 10(5) of the Restated Code of Ethics of Bridges Investment Counsel, Inc. and Bridges Investment Fund, Inc. (the "Companies") requires all investment advisor and investment company employees to disclose all personal securities holdings and personal financial liabilities upon commencement of employment and annually thereafter. In fulfillment of this requirement, the Companies require all employees to complete the attached Financial Report (which is taken from the Interagency Biographical and Financial Report used by the Federal Banking Agencies) on a confidential basis. This certification form and the Financial Report will be submitted to Mr. Stan Matzke, Jr., who will review them on behalf of the Companies and may prepare a confidential report and review any issues raised thereby on a confidential basis with the Chairman of the Audit Committee of each respective company, and as deemed appropriate, with the Compliance Officer of such institution. In accordance with this requirement, I, the undersigned employee, hereby certify to the Companies that the attached Biographical and Financial Report is true and correct to the best of my knowledge and belief. This information is submitted by me to the Companies on a confidential basis. Dated: Signature Print Name of Employee EXHIBIT 1-A BRIDGES INVESTMENT FUND, INC. BRIDGES INVESTMENT COUNSEL, INC. INITIAL HOLDINGS REPORT Name: ________________________________ Date: __________________ This Initial Holdings Report shall be completed no later than 10 days after the undersigned becomes an Access Person. Covered Securities1 Please complete the following for Covered Securities in which you had any direct or indirect beneficial ownership as of the date you became an Access Person. Title of Securities Number of Shares Principal Amount (for debt securities) ____________________ _________________ ________________________ ____________________ _________________ ________________________ ____________________ _________________ ________________________ 1 A security as defined in section 2(a)(36) of the Investment Company Act, except that it does not include: direct obligations of the Government of the United States; bankers' acceptances, bank certificates of deposit, commercial paper, and high quality short-term debt instruments, including repurchase agreements; and shares issued by open-end investment companies registered under the Investment Company Act. 2 Account Institutions Please list the name of any broker, dealer or bank with whom you maintained an account in which any securities were held for your direct or indirect benefit as of the date you became an Access Person. ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ I hereby certify that the above information is true and correct to the best of my knowledge and belief. This information is submitted on a confidential basis. _____________________________ (signature) EXHIBIT 2 BRIDGES INVESTMENT FUND, INC. BRIDGES INVESTMENT COUNSEL, INC. QUARTERLY TRANSACTIONS REPORT Name: ________________________________ Date: __________________ This Quarterly Transactions Report shall be completed no later than 10 days after the end of the calendar quarter. Covered Securities1 Please complete the following for transactions in Covered Securities in which you had any direct or indirect beneficial ownership during the previous calendar quarter. If you had no transactions in Covered Securities during the previous calendar quarter, write "none" on the following line: ___________________________.
Date of Title of Number of Principal Amount, Nature of Price Name of broker, Transaction Securities Shares Interest Rate and Transaction (purchase/sale dealer or bank Maturity Debt (for (purchase, sale through which the debt securities) or any other transaction was type of effected acquisition or disposition) __________ __________ _________ ______________ _____________ ______________ _______________ __________ __________ _________ ______________ _____________ ______________ _______________ __________ __________ _________ ______________ _____________ ______________ ______________
1 A security as defined in section 2(a)(36) of the Investment Company Act, except that it does not include: direct obligations of the Government of the United States; bankers' acceptances, bank certificates of deposit, commercial paper, and high quality short-term debt instruments, including repurchase agreements; and shares issued by open-end investment companies registered under the Investment Company Act. Account Institutions Please list the name of any broker, dealer or bank with whom you maintained an account in which any securities were held for your direct or indirect benefit during the previous quarter . _________________________________________ _______________________________ __________________________________________ _______________________________ __________________________________________ ______________________________ _________________________________________ _______________________________ I hereby certify that the above information is true and correct to the best of my knowledge and belief. This information is submitted on a confidential basis. _____________________________ (signature) EXHIBIT 3 BRIDGES INVESTMENT FUND, INC. BRIDGES INVESTMENT COUNSEL, INC. ANNUAL HOLDINGS REPORT Name: ________________________________ Date: __________________ Covered Securities1 Please complete the following for Covered Securities in which you had any direct or indirect beneficial ownership within 30 days of the date of this report. Title of Securities Number of Shares Principal Amount (for debt securities) ___________________ _________________ _____________________ ___________________ _________________ _____________________ ___________________ _________________ _____________________ 1 A security as defined in section 2(a)(36) of the Investment Company Act, except that it does not include: direct obligations of the Government of the United States; bankers' acceptances, bank certificates of deposit, commercial paper, and high quality short-term debt instruments, including repurchase agreements; and shares issued by open-end investment companies registered under the Investment Company Act. 2 Account Institutions Please list the name of any broker, dealer or bank with whom you maintained an account in which any securities were held for your direct or indirect benefit within 30 days of the date of this report. ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ ________________________________ _____________________________ I hereby certify that the above information is true and correct to the best of my knowledge and belief. This information is submitted on a confidential basis. _____________________________ (signature) -----END PRIVACY-ENHANCED MESSAGE-----