N-30D 1 bif202.htm





BRIDGES INVESTMENT FUND, INC.


SECOND QUARTER OR SEMI-ANNUAL


2002






CONTENTS OF REPORT

Pages 1 to 4

Shareholder Letter
   

Exhibit 1 

Portfolio Transactions from April 1, 2002,

through June 30, 2002
   

Exhibit 2

Quarter-to-Quarter Changes in Financial Data
   

Pages F1-F13

Unaudited Financial Statements for the
 

Six Months Ended June 30, 2002







      This report has been prepared for the information of the shareholders 
      of Bridges Investment Fund, Inc. and is under no circumstances to be
      construed as an offering of shares of the Fund.  Such offering is made
      only by Prospectus, a copy of which may be obtained by inquiry to the
      Fund's office.

 

 

 

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BRIDGES INVESTMENT FUND, INC.
 8401 West Dodge Road
Omaha, Nebraska 68114

Telephone    402-397-4700
Facsimile    402-397-8617



Directors

Frederick N. Backer

Edson L. Bridges II

Edson L. Bridges III

N. P. Dodge, Jr.

John W. Estabrook

Jon D. Hoffmaster

John J. Koraleski

Roger A. Kupka

Gary L. Petersen

John T. Reed

Roy A. Smith

Janice D. Stoney

L.B. Thomas

John K. Wilson





Officers

Edson L. Bridges II

Chairman and 
 

Chief Executive Officer

Edson L. Bridges III

President and
 

Chief Investment Officer

Brian M. Kirkpatrick

Vice President

Mary Ann Mason

Secretary

Kathleen J. Stranik  

Assistant Secretary

Nancy K. Dodge

Treasurer

Linda J. Morris

Assistant Treasurer

Trinh Wu

Controller




Auditor

KPMG LLP

Two Central Park Plaza

Suite 1501

Omaha, Nebraska 68102-1617



Corporate Counsel

Counsel to Independent Directors
   

Baird, Holm

Koley, Jessen, P.C.

Attorneys at Law

Attorneys at Law

1500 Woodmen Tower

One Pacific Place, Suite 800

Omaha, Nebraska 68102

1125 South 103 Street
 

Omaha, Nebraska  68124


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BRIDGES INVESTMENT FUND, INC.

8401 West Dodge Road

Omaha, Nebraska  68114

 

Telephone 402-397-4700

 

 

 

 

July 23, 2002

Dear Shareholder:

Investment Results:

Bridges Investment Fund, Inc. had a total return of -14.76% during the Second Quarter of 2002 based on a March 31, 2002, net asset value of $30.04 per share and a June 30, 2002, net asset value of $25.57 per share. On a calendar year-to-date basis for the period ending June 30, the Fund had a total return of -17.54%, and on a trailing 12-month basis for the period ending June 30, the Fund had a total return of -23.86%. By comparison, the S&P 500 had total returns of -13.33% for the Second Quarter, -13.16% for the first six months of the calendar year, and -17.99% for the trailing 12 months' period ending June 30, 2002.

The following table summarizes the 10 largest equity holdings in the Fund as of June 30, 2002:
                       
   

06/30/02

%

% of

Ttl Rtn

Ttl Rtn

EPS

EPS

    

EPS Lt

No. of

  

Market

of

Total

% Chg

% Chg

5 Yr Hist

% Chg

P/E

P/E

Future

Shares

Company

Value

Equities

Assets

Qtd

12 Mos

Gr Rate

02 Vs 01

2002

2003

Gr Rate

45,000

Capital One

2,759,850

7.4%

5.4%

-4.4%

1.5%

30%

23%

17.1

14.2

20%

65,000

West Corporation

1,433,900

3.8%

2.8%

-30.3%

-10.7%

18%

10%

17.4

14.9

20%

20,000

Freddie Mac

1,224,000

3.3%

2.4%

-3.4%

-12.6%

21%

18%

12.3

10.8

14%

500

Berkshire Hathaway B

1,116,500

3.0%

2.2%

-5.7%

-2.9%

    

20,000

Johnson & Johnson

1,050,000

2.8%

2.1%

-19.5%

4.5%

13%

16%

23.4

20.1

13%

20,000

Wells Fargo

1,001,200

2.7%

2.0%

1.3%

7.8%

12%

40%

15.2

13.6

12%

19,000

BP PLC

959,310

2.6%

1.9%

-4.9%

1.3%

18%

-29%

20.3

17.5

9%

25,000

Target

927,750

2.5%

1.8%

-11.6%

10.1%

17%

17%

20.9

18.2

15%

25,000

Home Depot

918,250

2.5%

1.8%

-24.4%

-21.1%

22%

22%

23.4

19.9

18%

20,000

Harrahs Entertainment

891,400

2.4%

1.7%

0.2%

25.6%

15%

38%

15.8

14.3

15%
                       
   

12,282,160

32.9%

24.0%

              
                       
 

Total Equities

37,303,096

73.0%

              
                       
 

Total Assets

51,084,925

                  

The Second Quarter of 2002 saw continued erosion in common stock prices as investors became increasingly disenchanted with the stock market. The S&P 500 had a total return of -13.33% during the Second Quarter, while the Dow Industrials had a total return of -10.71% and the NASDAQ Composite had a total return of -20.63%. From the end of the Second Quarter through July 22, the S&P 500 had declined an additional 15.29% while the Dow had declined 14.5% and the NASDAQ an additional 8.62%, bringing the year-to-date declines to -28.01% for the S&P 500, -21.51% for the Dow, and -34.11% for the NASDAQ.

July, 2002, through the 22nd stood as the fifth worst month EVER for the S&P 500, surpassed only by October, 1987, and three months during the 1929-1932 Depression in terms of negative S&P market performance.

Interestingly, the market's continued sharp sell off during the first several weeks of July has unfolded against the backdrop of the first quarter of positive year-over-year earnings comparisons for the S&P 500 since the Fourth Quarter of 2000. Clearly, investors are not focusing on current earnings results; other factors seem to be at work behind the relentless selling that has characterized both the last two years and last four months of equity trading.

 

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Shareholder Letter                                                2                                               July 23, 2002

We believe the factors that most concern investors in the present environment are:

1. The timing and magnitude of the next recovery in corporate earnings;

2. The seemingly endless problems with corporate management, board of directors, and public accounting firm integrity, and

3. Continued unease about the threat of additional terrorism events, both in the U.S. and abroad.

We believe the current environment is almost exactly the reverse of 1999 and early 2000. During that period, investors behaved as if the strong economic conditions would persist forever, and they valued equities accordingly. Almost all news was interpreted in the most favorable light. Investors' appetites for risk reached historical highs, as literally billions of dollars poured into initial public offerings of companies associated with the development of the Internet that had little or no lasting business substance.

In the current environment, investors appear to be interpreting all news in an extremely negative context and seem to be selling stocks without any measured assessment of long-term investment value. Instead of traditional security analysis, investors seem to be selling because they believe the current trend of lower stock prices day after day will continue indefinitely.

Stock market conditions over the past 24 months have been the most challenging and difficult since the early 1970's. Our approach during this difficult period has been to redouble our efforts to understand the companies that we own in the Fund: what they do, what makes them successful, how their financial performance is likely to progress over time, and what reasonable valuation levels for that financial performance should be, both in an absolute sense and relative to their competitors and to the probable long-term returns offered by other asset classes.

In the aggregate, the Fund's equities are currently trading at a significant discount to any reasonable or objective appraisal of fair value when viewed in the context of the typical valuation parameters that have characterized the last several decades. In other words, we believe that the portfolio's stocks have material upside potential from current levels just to get back to what we would consider to be median or fair valuation on the current year's base level of earnings. In addition, we believe further upside potential exists over the next three-to-five years, as an eventual economic recovery materializes and as our companies continue to execute day in and day out as they have for many years. That execution should drive significant growth in revenues, cash flow, and earnings for the Fund's companies, which, in turn, we believe will eventually be recognized by the equity market in the form of significantly higher stock prices.

The abject pessimism of investors is clearly illustrated in the recent price action of several long-time investor favorites, including Clorox, Home Depot, Johnson & Johnson, and Pepsi. These four stocks are down on average 23% since July 5 (versus -17% for the S&P 500) and down 27% on average since June 17 (versus -21% for the S&P 500 over the same period of time). We are hard pressed to come up with any rational explanation as to how the long-term prospects for these four companies (and many others) have been somehow diminished by 25% over the past five weeks. Clearly, investors are selling stocks for reasons largely unrelated to long-term investment value.

 

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Shareholder Letter                                           3                                                          July 23, 2002

 

 

We believe the intense and pervasive pessimism that characterizes the current environment and the apparently irrational behavior that emanates from that pessimism sets the stage for good-to-excellent intermediate to long-term equity returns going forward. Obviously, we cannot pinpoint the bottom of the current market decline with any degree of accuracy; however, recent trading action, we believe, is of the type that historically has been prevalent near important market bottoms.

We remain very constructive on the intermediate to long-term outlook for the portfolio's equities because we believe the quality of the business franchises that we own in the portfolio is enduring and should provide the potential for significant investment returns over the long term. We appreciate your patience during these difficult times and would encourage you to contact us if you wish to discuss the portfolio and its holdings in greater detail.

Financial Statements

The Fund's unaudited financial statements appear on pages F-1 through F-13 and present the Schedule of Portfolio Investments, the Statement of Assets and Liabilities, the Statement of Operations, the Statement of Changes in Net Assets, and the Notes to Financial Statements as of June 30, 2002. These pages comprise our basic report to you. In addition, please refer to Exhibits 1 and 2 for information about the Fund's portfolio transactions for the First Quarter of 2002 and for the Fund's historical information with respect to net assets, shares outstanding, net asset value per share, dividends, and capital gains distributions from 1963 through 2001. Exhibit 1 also records quarterly information for the June 30, 2002, period compared to the June 30, 2001, results.

Cash Distributions

On July 9, 2002, the Board of Directors declared a $.05 per share dividend on the shares of capital stock that were outstanding on July 9, 2002 -- the record date for this income distribution. This dividend amount will be payable on or about July 22, 2002. This dividend is payable from net investment income earned during the April - July, 2002, Quarter.

Company-by-Company Earnings Forecasts

You will receive a separate letter that conveys updated earnings information about the companies and the common stocks held in our portfolio. There are two research thrusts behind the preparation of this information: (1) to identify the time frame when potential earnings per share are expected to reach new all-time highs or a less elevated level and (2) to track the crossover point when a quarterly earnings result is likely to end the recession downtrend for net income per share by moving ahead of the amount actually reported for the comparable period twelve months earlier.

In general, you will find from reading Assessment of Earnings Trends that a considerable number of companies will have held to their historic growth trends. Nonetheless, 21 out of 64 companies were expected to report lower earnings in 2002 than in 2001 -- a factor that may have been unanticipated last year at this time and a possible reason for a resumption of price weakness for some of our holdings this year after a fairly severe drubbing in 2001. There are 61 estimates of earnings per share for 2003, 34 estimates for 2004, and four estimates for 2005. This preliminary information points to two-thirds of the companies reaching new all-time highs for annual earnings in the next 12 to 24 months. Lastly, 61 out of 64 companies carry long-term growth rates in earnings per share for the next five years in double digit figures. Forty-six companies are expected to generate expansions in earnings per share at a level of 15% per year or higher for the next five years. These proclivities demonstrate a basic reason for including each common stock in the Fund's portfolio.

 

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Shareholder Letter                                             4                                                           July 23, 2002

 

 

Distrust of Earnings and the Near-Term Solution

The cumulative effect of Enron's financial woes, Arthur Andersen's audit responsibilities at Enron and WorldCom, WorldCom's fraudulent earnings reports, and a multitude of other disturbing disclosures regarding corporate governance and the misdeeds of executive officers have caused many investors to distrust the actual results and the forecasts for future earnings as they have been and will be released by American corporations. This distrust has a cumulative effect, and it is likely to be the most dominant negative market influence for mid-2002. Thus, to some degree, our Fund's expectations for constructive earnings results are irrelevant as a brake to the slide in stock prices until reassurances of many types are provided as they are certain to be.

Although research personnel employed by the Fund's investment manager have confidence that the vast majority of companies in the United States report balance sheets and income statements in accordance with generally accepted accounting principles and in compliance with Federal Statues and Regulations, the Securities and Exchange Commission has initiated a new "Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings" to restore the general level of investor confidence in financial statements for public companies. The new oath applies to all companies with revenues of $1.2 billion in their last fiscal year. There are about 947 companies for which the Commission expects to receive filings of Form 10K and Form 10Q to which the new oath will apply. Certifications for the previously filed reports will be due by August 14, 2002. Hopefully, the results from this initiative will clear away the sense of investor disaffection with Wall Street and corporate America that has been building now for many months.

Fortitude

You are a strong group of shareholders to wade through the current market environment with our Fund at depressed price levels. Many thanks for your patience. Time will be required to restore the damage to market values. We have tried to affirm the prospects for the portfolio through security research on a company-by-company basis to find an appropriate timing and an order of magnitude for a reasonable assurance that better days will return.

Sincerely yours,

/s/ Edson L. Bridges III

Edson L. Bridges III, CFA

President

/s/ Edson L. Bridges III

Edson L. Bridges II, CFA

Chairman

ELBIII:ELBII:kjs

 

 

 

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Exhibit 1

BRIDGES INVESTMENT FUND, INC.

PORTFOLIO TRANSACTIONS

DURING THE PERIOD FROM

APRIL 1, 2002, THROUGH JUNE 30, 2002

 

 

 

 

 

Securities

Common Stocks Unless

Described Otherwise

Bought or

Received

$1,000 Par

Value (M)

or Shares

Held After

Transaction

$1,000 Par

Value (M)

or Shares

 

 

Adobe Systems, Inc.

 4,000

10,000

(1) Applied Materials, Inc.

23,000

40,000

Applied Materials, Inc. 7.125% Sr. Notes due 10/15/17

  250M

   250M

Automatic Data Processing

3,000

10,000

(2) Best Buy, Inc.

          4,250

 7,500

Cardinal Health, Inc. 6.75% Notes due 02/15/11

           250M

  250M

Devry, Inc.

          3,000

13,000

Flextronics International Ltd.

          5,000

50,000

Gannett, Inc.

          7,000

 7,000

Illinois Tool Works

          2,000

 5,000

Level 3 Communications 9.125% Sr. Notes due 05/01/08

           100M

  500M

MBNA Corp.

         10,000

10,000

MBNA Corp. 7.50% Sr. Notes due 03/15/12

           250M

  250M

Outback Steakhouse, Inc.

         10,000

10,000

Paychex, Inc.

          5,000

10,000

Philip Morris Cos.

         10,000

10,000

Southwest Airlines Co.

          4,600

15,000

Tidewater, Inc.

          4,450

10,000

Wells Fargo & Co.

          5,000

20,000

(3) Yum! Brands, Inc.

          3,700

7,400

Various Issues of Commercial Paper Notes Purchased during 2nd Quarter, 2002

       102,327M

8,663M

 

 

 

 

 

 

Exhibit 1

BRIDGES INVESTMENT FUND, INC.

PORTFOLIO TRANSACTIONS

DURING THE PERIOD FROM

APRIL 1, 2002, THROUGH JUNE 30, 2002

(Continued)

 

 

Securities

Common Stocks Unless

Described Otherwise

Sold or

Exchanged

$1,000 Par

Value (M)

or Shares

Held After

Transacion

$1,000 Par

Value (M)

or Shares

 

 

 

American Express Co.

25,000

--

Analog Devices, Inc.

5,000

15,000

Applied Materials, Inc.

8,000

17,000

Bristol Myers Squibb

          8,000

--

CSG Systems Int'l., Inc.

          6,000

20,000

Capital One Financial

          5,000

45,000

Centex Corp.

         10,000

--

Clear Channel Communications, Inc.

         15,000

--

D. R. Horton, Inc.

          5,500

--

Elan PLC-ADR

          5,000

15,000

General Electric

          4,000

20,000

Goldman Sachs

          3,000

10,000

Home Depot

          5,000

25,000

I2 Technologies, Inc.

          2,000

13,000

Intel Corp.

          5,000

35,000

Interpublic Group Cos.

         10,000

--

Level 3 Communications

         11,000

164,000

(4) Maytag Corp 9.75% Notes due 05/15/02

        100,000

--

Nextell Communications Class A

         40,000

--

Nokia

         10,000

40,000

Retek, Inc.

          5,000

15,000

Stilwell Financial, Inc.

         10,000

--

(5) U.S. Treasury Notes 7.50% due 05/15/02

           200M

--

Vodafone Group PLC-ADR

          5,000

35,000

West Corporation

         12,000

65,000

Various Issues of Commercial Paper Notes maturing during 2nd Quarter, 2002

        99,317M

--

 

 

  1. Received 23,000 shares in a 2-for-1 stock split on April 17, 2002.
  2. Received 2,500 shares in a 3-for-2 stock split on May 13, 2002.
  3. Received 3,700 shares in a 2-for-1 stock split on June 18, 2002.
  4. Matured at par on May 15, 2002.
  5. Matured at par on May 15, 2002.

 

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Exhibit 2

BRIDGES INVESTMENT FUND, INC.

SELECTED HISTORICAL FINANCIAL INFORMATION

-------------------------Year End Statistics -------------------------

Valuation

Date

Net

Assets

Shares

Outstanding

Net Asset

Value/Share

Dividend/

Share

Capital

Gains/Share
           

07-01-63

$ 109,000

10,900

$10.00

$ -

$ -

12-31-63

159,187

15,510

10.13

.07

-

12-31-64

369,149

33,643

10.97

.28

-

12-31-65

621,241

51,607

12.04

.285

.028

12-31-66

651,282

59,365

10.97

.295

-

12-31-67

850,119

64,427

13.20

.295

-

12-31-68

1,103,734

74,502

14.81

.315

-

12-31-69

1,085,186

84,807

12.80

.36

-

12-31-70

1,054,162

90,941

11.59

.37

-

12-31-71

1,236,601

93,285

13.26

.37

-

12-31-72

1,272,570

93,673

13.59

.35

.08

12-31-73

1,025,521

100,282

10.23

.34

.07

12-31-74

757,545

106,909

7.09

.35

-

12-31-75

1,056,439

111,619

9.46

.35

-

12-31-76

1,402,661

124,264

11.29

.38

-

12-31-77

1,505,147

145,252

10.36

.428

.862

12-31-78

1,574,097

153,728

10.24

.481

.049

12-31-79

1,872,059

165,806

11.29

.474

.051

12-31-80

2,416,997

177,025

13.65

.55

.0525

12-31-81

2,315,441

185,009

12.52

.63

.0868

12-31-82

2,593,411

195,469

13.27

.78

.19123

12-31-83

3,345,988

229,238

14.60

.85

.25

12-31-84

3,727,899

278,241

13.40

.80

.50

12-31-85

4,962,325

318,589

15.58

.70

.68

12-31-86

6,701,786

407,265

16.46

.688

.86227

12-31-87

7,876,275

525,238

15.00

.656

1.03960

12-31-88

8,592,807

610,504

14.07

.85

1.10967

12-31-89

10,895,182

682,321

15.97

.67

.53769

12-31-90

11,283,448

744,734

15.15

.67

.40297

12-31-91

14,374,679

831,027

17.30

.66

.29292

12-31-92

17,006,789

971,502

17.51

.635

.15944

12-31-93

17,990,556

1,010,692

17.80

.6225

.17075

12-31-94

18,096,297

1,058,427

17.10

.59

.17874

12-31-95

24,052,746

1,116,620

21.54

.575

.19289

12-31-96

29,249,488

1,190,831

24.56

.55

.25730

12-31-97

36,647,535

1,262,818

29.02

.5075

.30571

12-31-98

48,433,113

1,413,731

34.26

.44

2.11648

12-31-99

69,735,684

1,508,154

46.24

.30

.91088

12-31-00

71,411,520

1,850,301

38.59

.40

.80880716

12-31-01

60,244,912

1,940,494

31.05

.26

--

 

------- Current Quarter Compared to Same Quarter in Prior Year --------

Valuation

Date

Net

Assets

Shares

Outstanding

Net Asset

Value/Share

Dividend/

Share

Capital

Gains/Share
           

06-30-01

65,168,878

1,927,078

33.82

.085

-

06-30-02

51,084,925

1,997,604

25.57

.040

-

 

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F 1


BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS

JUNE 30, 2002

(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

      COMMON STOCKS  (73.0%)

 

 

 

 

 

 

 

Advertising  0.6%

 

 

 

  Omnicom Group, Inc.

  7,000

$   480,292

$ 320,600

 

 

 

 

Airlines  0.5%

 

 

 

  Southwest Airlines Co.

 15,000

$   303,021

$   238,500

 

 

 

 

Banking and Finance  5.5%

 

 

 

  Fifth Third Bancorp

  5,000

$   232,812

$   333,250

  First National of Nebraska, Inc.

    230

    346,835

    793,385

  State Street Corporation

 15,000

     62,367

    669,900

  Wells Fargo & Co. 

 20,000

    582,323

  1,001,200

 

 

$ 1,224,337

$ 2,797,735

 

 

 

 

Beverages  Soft Drinks  1.4%

 

 

 

  PepsiCo, Inc.

 15,000

$   192,169

$   723,000

 

 

 

 

Casino Hotels  1.7%

 

 

 

  Harrah's Entertainment, Inc.*

 20,000

$   652,056

$   891,400

 

 

 

 

Computers  Hardware and Software   4.6%

 

 

 

  Adobe Systems Incorporated

 10,000

$   385,934

$   285,000

  Cisco Systems, Inc.*

 40,000

    361,395

    558,000

  HNC Software, Inc.*

 18,000

    125,257

    300,600

  I2 Technologies, Inc.*

 13,000

    515,298

     19,500

  Microsoft Corporation*

 15,000

    266,000

    811,800

  Retek, Inc.*

 15,000

    331,354

    364,650

  Tibco Software, Inc.*

  6,000

    153,194

     33,300

 

 

$ 2,138,432

$ 2,372,850

 

 

 

 

Computers  Memory Devices  0.5%

 

 

 

  EMC Corporation/MASS*

 35,000

$   494,601

$   260,750

 

 

 

 

Computers  Micro  0.3%

 

 

 

  Sun Microsystems, Inc.*

 35,000

$   661,353

$   175,000

 

 

 

 

Data Processing and ManagemenT  1.6%

 

 

 

  Automatic Data Processing

 10,000

$   521,015

$   435,800

  CSG Systems International, Inc.*

 20,000

    678,776

    382,800

 

 

$ 1,199,791

$  818,600

 

 

 

 

Diversified Operations  2.2%

 

 

 

  Berkshire Hathaway Inc., Class B *

    500

$   600,020

$ 1,116,500

 

 

 

 

Drugs  Medicines  Cosmetics   6.1%

 

 

 

  Abbott Laboratories

 15,000

$   169,395

$   568,800

  Amgen, Inc.*

 15,000

    463,500

    628,200

  Elan Corporation PLC ADR*

 15,000

    371,827

     82,050

  Johnson & Johnson

 20,000

    366,297

  1,050,000

  Merck & Co., Inc.

 15,000

    272,235

    759,600

 

 

$ 1,643,254

$ 3,088,650

 

 

 

 

*Nonincomeproducing security

 

------------------------------------------------------------------------------------

 


F 2

BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

       COMMON STOCKS   (Continued)        

 

 

 

 

 

 

 

Electrical Equipment and Supplies   1.1%

 

 

 

  General Electric Co.

 20,000

$   122,894

$   581,000

 

 

 

 

Electric  Generation  0.4%

 

 

 

  AES Corporation*

 40,000

$ 1,094,052

$   217,200

 

 

 

 

Electronic Components  Conductors  4.7%

 

 

 

  Altera Corporation*

 40,000

$ 1,042,102

$   544,000

  Analog Devices, Inc.*

 15,000

    613,640

    444,900

  Applied Materials, Inc.*

 40,000

   840,574

   760,800

  Intel Corporation

 35,000

    524,247

   639,450

 

 

$ 3,020,563

$ 2,389,150

 

 

 

 

Electronics   1.1%

 

 

 

  Flextronics International Ltd.*

 50,000

$ 1,361,828

$   356,500

  Solectron Corporation *

 34,600

    541,545

    212,790

 

 

$ 1,903,373

$  569,290

 

 

 

 

Fiduciary Banks  0.6%

 

 

 

  Northern Trust Co.

  7,000

$   360,010

$   308,350

 

 

 

 

Finance  Diversified  2.4%

 

 

 

  Citigroup, Inc.

  9,999

$   514,720

$   389,961

  Morgan Stanley Dean Witter & Co.

 20,000

  1,127,600

   861,600

 

 

$ 1,642,320

$ 1,251,561

 

 

 

 

Finance  Investment Banks  2.2%

 

 

 

  Goldman Sachs Group, Inc. (The)

 10,000

$  914,375

$  733,500

  Charles Schwab Corporation (The)

 35,000

    740,499

    392,000

 

 

$ 1,654,874

$ 1,125,500

 

 

 

 

Finance  Real Estate   2.4%

 

 

 

  Freddie Mac

 20,000

$   519,311

$ 1,224,000

 

 

 

 

Finance  Services   6.7%

 

 

 

  Capital One Financial Corporation

 45,000

$ 1,121,455

$ 2,759,850

  MBNA Corporation

 10,000

    380,600

    334,000

  Paychex, Inc.

 10,000

    300,067

    313,900

 

 

$ 1,802,122

$ 3,407,750

 

 

 

 

Insurance  Multiline   1.3%

 

 

 

  American International Group, Inc.

 10,000

$   566,397

$   682,300

 

 

 

 

Linen Supply and Related Products  0.6%

 

 

 

  Cintas Corporation

  6,000

$   166,578

$   296,400

 

 

 

 


*Nonincomeproducing security

 

------------------------------------------------------------------------------------

 

 

 


F 3


BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

       COMMON STOCKS   (Continued)        

 

 

 

 

 

 

 

Media Newspapers 1.1%

 

 

 

  Gannett Co., Inc.

  7,000

$   531,529

$   536,410

Medical Instruments  0.8%

 

 

 

  Medtronic, Inc.

 10,000

$   504,734

$   428,500

 

 

 

 

Metal  Aluminum  1.3%

 

 

 

  Alcoa Inc.

 20,000

$   754,702

$   663,000

 

 

 

 

Metal Products  Fasteners  0.7%

 

 

 

  Illinois Tool Works, Inc.

  5,000

$   369,449

$   344,600

 

 

 

 

Oil and Gas  Field Services  0.6%

 

 

 

  Tidewater Inc.

 10,000

$   416,477

$   330,000

 

 

 

 

Oil and Gas Integrated  International   3.6%

 

 

 

  BP PLCSponsored ADR

 19,000

$   443,238

$  959,310

  ChevronTexaco Corporation

 10,000

    340,535

    885,000

 

 

$   783,773

$ 1,844,310

 

 

 

 

Retail  Restaurants  1.1%

 

 

 

  Outback Steakhouse, Inc.

 10,000

$  354,994

$  351,000

  Yum! Brands, Inc.*

  7,400

   220,778

   219,780

 

 

$  575,772

$  570,780

 

 

 

 

Retail Stores  Apparel and Clothing   1.4%

 

 

 

  Gap, Inc.

 50,000

$   521,360

$   710,000

 

 

 

 

Retail Stores  Building Materials and Home
                   Improvement  1.8%

 

 

 

  The Home Depot, Inc.

 25,000

$   527,832

$  918,250

 

 

 

 

Retail Stores  Consumer Electronics  0.5%

 

 

 

  Best Buy Company, Inc.*

  7,500

$   351,637

$   272,250

 

 

 

 

Retail Stores  Department   1.8%

 

 

 

  Target Corporation

 25,000

$   122,927

$  927,750

 

 

 

 

Schools  0.6%

 

 

 

  DeVry, Inc.*

 13,000

$   383,850

$   296,920

 

 

 

 

Telecommunications   4.9%

 

 

 

  Level 3 Communications *

164,000

$ 1,788,182

$   485,440

  Sprint PCS Corporation *

 20,000

    581,333

     89,800

  Vodafone Group PLC

 35,000

    848,863

    477,750

  West Corporation *

 65,000

  1,087,232

  1,433,900

  WorldCom, Inc. *

 25,000

    565,758

     2,250

 

 

$ 4,871,368

$ 2,489,140

 

 

 

 


*Nonincomeproducing security

 

------------------------------------------------------------------------------------

 

 

F 4



BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

       COMMON STOCKS (Continued)

 

 

 

 

 

 

 

Telecommunications  Equipment  1.7%

 

 

 

  Nokia Corporation Sponsored ADR

 40,000

$   421,175

$  575,600

  Qualcomm Incorporated *

 10,000

    117,265

    274,800

 

 

$   538,440

$  850,400

 

 

 

 

Television  Cable  0.5%

 

 

 

  Comcast Corporation  Special Class A *

 10,000

$   309,375

$   234,300

 

 

 

 

Tobacco 0.9%

 

 

 

  Philip Morris Companies, Inc.

 10,000

$   531,800

$   436,800

 

 

 

 

Transportation  Airfreight  1.2%

 

 

 

  EGL, Inc. *

 35,000

$   466,542

$   593,600

 

 

 

 

 

 

 

 

       TOTAL COMMON STOCKS (Cost  $35,003,387)

 

$35,003,387

$37,303,096

 

 

 

 

 

 

 

 

    PREFERRED STOCKS  (1.9%)

 

 

 

 

 

 

 

Banking and Finance  1.2%

 

 

 

  CFB Capital II 8.20% Cumulative Preferred

  5,000

$   125,000

$   125,500

  CFC Capital Trust 9.375% Preferred, Series B

  5,000

    125,000

    124,500

  Harris Preferred Capital Corp.,
     7.375%, Series A 

 10,000

    250,000

    250,500

  Silicon Valley Bancshares 
     8.25% Preferred Series I

  5,000

    125,000

    115,000

 

 

$   625,000

$   615,500

 

 

 

 

Oil Comp.  Exploration and Production  0.2%

 

 

 

  Nexen, Inc. 9.275% Preferred  Series I

  5,000

$   125,000

$   123,750

 

 

 

 

Utilities  Electric  0.5%

 

 

 

  Tennessee Valley Authority 6.75% 
    Variable Preferred Series D

 10,000

$   250,000

$   256,000

 

 

 

 

     Total Preferred Stocks (Cost  $1,000.000) 

 

$ 1,000,000

$   995,250

 

 

 

 

       Total Stocks 

 

$36,003,387

$38,298,346

 

 

 

 

 

 

 

 

      DEBT SECURITIES (24.6%)

 

 

 

 

 

 

 

AutoCars/Light Trucks  0.5%

 

 

 

  General Motors Corporation 7.700% Debentures
     due April 15, 2016


$250,000


$   252,320


$   262,630

 

 

 

 

*Nonincomeproducing security

 

-----------------------------------------------------------------------------------

 

 

 

 

F 5


BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

 

 

 

 

Electronic Components Conductors 0.5%

 

 

 

  Applied Materials, Inc. 7.125% Senior Notes
    due October 15, 2017

$250,000

$   256,472

$   261,324

 

 

 

 

Energy  Alternate Sources  0.4%

 

 

 

  CalEnergy Co., Inc., 7.630% Notes
    due October 15, 2007


$200,000


$   200,000


$   205,692

 

 

 

 

Finance Services 0.6%

 

 

 

  MBNA Corporation 7.50% Senior Notes due
    March 15, 2012

$250,000

$   268,125

$   269,845

 

 

 

 

Hotels and Motels  0.6%

 

 

 

  Marriott International 7.875% Notes Series C
    due September 15, 2009


$250,000


$   250,068


$   274,640

 

 

 

 

Medical Wholesale Drug Distribution 0.5%

 

 

 

  Cardinal Health, Inc. 6.75% Notes due
    February 15, 2011

$ 250,000

$   260,689

$   269,177

 

 

 

 

Retail Stores  Department  0.5%

 

 

 

  Dillard Department Stores, Inc., 7.850%
    Debentures, due October 1, 2012


$  150,000


$   151,347


$   142,599

 

 

 

 

  Sears Roebuck & Co., 9.375% Debentures
    due November 1, 2011


   100,000


$   106,399


    119,160

 

 

$   257,746

$   261,759

 

 

 

 

Telecommunications  0.3%

 

 

 

  Level 3 Communications, Inc., 9.125% Senior
    Notes due May 1, 2008

$  500,000

$   346,223

$   170,000

 

 

 

 

 

 

 

 

U.S. Government  3.7% 

 

 

 

  U.S. Treasury, 10.750% Bonds
    due February 15, 2003


$  200,000


    219,525


    211,156

 

 

 

 

  U.S. Treasury, 7.250% Notes,
    due May 15, 2004


   300,000


    303,245


    324,563

 

 

 

 

  U.S. Treasury, 7.500% Notes,
    due February 15, 2005


   300,000


    305,871


    332,484

 

 

 

 

  U.S. Treasury, 9.375% Bonds,
    due February 15, 2006


   200,000


    256,222

 
    238,563

 

 

 

 

  U.S. Treasury, 8.750% Bonds,
    due November 15, 2008


   200,000


    237,473


    216,813

 

 

 

 

  U.S. Treasury, 9.125% Bonds,
    due May 15, 2009


   200,000


    234,910


    222,906

 

 

 

 

 

------------------------------------------------------------------------------------

 

F 6


BRIDGES INVESTMENT FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)

JUNE 30, 2002
(Unaudited)


Title of Security

Number
of Shares


Cost

Market
Value

  U.S. Treasury, 9.125% Bonds,
    due May 15, 2009


   200,000


    234,910


    222,906

 

 

 

 

  U.S. Treasury, 7.500% Bonds,
    due November 15, 2016


   300,000


    308,539


    362,109

 

 

$ 1,865,785

$ 1,908,594

 

 

 

 

 

 

 

 

Commercial Paper  Short Term  17.0%

 

 

 

  General Electric Credit Corporation
    Commercial Paper Note 1.43%
    due July 2, 2002



 1,964,454



$ 1,964,454 



$ 1,964,454

 

 

 

 

  American Express Credit Corporation
    Commercial Paper Note 1.48%
    due July 5, 2002



 2,549,266



  2,549,266



  2,549,266

 

 

 

 

American International Group, Inc.
  Commerical Paper Note 1.43%
  due July 5, 2002

 

1,599,555

 

  1,599,555

 

  1,599,555

 

 

 

 

  Ford Motor Credit Corporation
    Commercial Paper Note 1.50%
    due July 5, 2002

 

 2,549,256

 

  2,549,256

 

  2,549,256

 

 

$ 8,662,531

$ 8,662,531

 

 

 

 

     TOTAL DEBT SECURITIES (Cost  $12,619,959) 

 

$12,619,959

$12,546,192

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS IN SECURITIES  (99.5%)

  (Cost  $48,623,346)


   

$48,623,346

$50,844,538

CASH AND RECEIVABLES
  LESS TOTAL LIABILITIES  (0.5%)


    

 


    240,387

NET ASSETS, June 30, 2002  (100.0%)

  

 

$51,084,925

 

 

 

 






The accompanying notes to financial statements
are an integral part of this schedule.

 

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------

 

F-7


BRIDGES INVESTMENT FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

JUNE 30, 2002
(Unaudited)

ASSETS

  

  Investments, at market value 

  

    Common and preferred stocks (cost $36,003,387)

$38,298,346

    Debt securities (cost $12,619,959)

 12,546,192

        Total investments

$50,844,538
   

  Cash

    108,832

  Receivables

  

    Dividends and interest

    115,576

    Subscriptions to capital stock

     7,970

    Securities Sold

   114,900
   

TOTAL ASSETS

$51,191,816
 

===========

LIABILITIES

  

  Redemption of capital stock

$       165

  Investment advisor, management and

  

    service fees payable

     68,117

  Accrued operating expenses

     38,609

TOTAL LIABILITIES

$   106,891
   

NET ASSETS

  

  Capital stock, $1 par value 

  Authorized 6,000,000 shares, 1,997,604 shares
    outstanding


$ 1,997,604
   

  Paid-in surplus 

 47,095,628

        Net capital paid in on shares

$49,093,232
   
   
   

  Net unrealized appreciation on investments

  2,221,191

  Accumulated undistributed net realized loss

  (334,623)

  Accumulated undistributed net investment income 

    105,125

TOTAL NET ASSETS

$51,084,925
 

===========
   

NET ASSET VALUE PER SHARE 

$25.57
 

======
   

OFFERING PRICE PER SHARE 

$25.57
 

======
   

REDEMPTION PRICE PER SHARE 

$25.57
 

======



The accompanying notes to financial statements
are an integral part of this statement.

 

-----------------------------------------------------------------------------------

 

F-8



BRIDGES INVESTMENT FUND, INC.

STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2002
(Unaudited0

INVESTMENT INCOME 

    

  Interest

$   199,386

  

  Dividends  (Net of foreign withholding taxes

    

              of $3,683)

    214,245

  
     

      Total Investment Income

  

$    413,631
     

EXPENSES

    

  Management fees

    139,938

  

  Custodian fees

     18,994

  

  Insurance and Other Administrative Fees

     14,698

  

  Bookkeeping services

     11,506

  

  Printing and supplies

     12,277

  

  Professional services

      8,961

  

  Dividend disbursing and transfer

    

     agent fees

     14,822

  

  Computer programming

      4,500

  

  Taxes and licenses

       533

  

  Independent Directors Expense & Fees

      6,771

  

   

    

   

    

       Total Expenses

  

$    233,000

          NET INVESTMENT INCOME

  

$    180,631
     
     

NET REALIZED AND UNREALIZED

    

   GAIN ON INVESTMENTS 

    
     

   Net realized LOSS on transactions in

    

       investment securities

$   (19,378)

  
     

   Net decrease in unrealized

    

       appreciation of investments

(10,920,202)

  
     

       NET REALIZED AND UNREALIZED LOSS

    

         ON INVESTMENTS

  

$(10,939,580)
     
     

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS

  

$(10,758,949)
   

=============





The accompanying notes to financial statements
are an integral part of this statement.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------

 

F-9



BRIDGES INVESTMENT FUND, INC.


STATEMENTS OF CHANGES IN NET ASSETS

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
 

    2002 

     2001 

INCREASE IN NET ASSETS

    

  Operations 

    

    Net investment income

$    180,631

   $   292,098

    Net realized (loss)/gain on

    

      transactions in investment securities 

     (19,378) 

    (1,266,819)

    Net decrease in unrealized

    

      appreciation of investments 

 (10,920,202)

    (7,966,221)

        Net decrease in net assets

    

        resulting from operations

$(10,758,949)

  $ (8,940,942)
     

  Net equalization credits 

       1,098

         1,711

 

    

  Distributions to shareholders from 

    

    Net investment income 

     (79,153)

      (161,779)

    Net realized gain/(loss) from investment

    

      transactions

       --

     --

  Return of capital

       --

        --

  Net capital share transactions

   1,677,017

     2,858,368
     

     Total (decrease)/increase in Net Assets

$ (9,159,987) 

   $(6,242,642)
     
     

NET ASSETS:

    

  Beginning of year

$ 60,244,912 

   $71,411,520
     
     

  End of six months

$ 51,084,925 

   $65,168,878
 

=============

   =============









The accompanying notes to financial statements 
are an integral part of these statements.

 

 

 

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F-10

BRIDGES INVESTMENT FUND, INC.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2002

(Unaudited)

 


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Bridges Investment Fund, Inc. (Fund) is registered under the Investment Company
    Act of 1940 as a diversified, open-end management investment company.  The primary
    investment objective of the Fund is long-term capital appreciation.  In pursuit of
    that objective, the Fund invests primarily in common stocks.  The following is a
    summary of significant accounting policies consistently followed by the Fund in
    the preparation of its financial statements.  The policies are in conformity
    with generally accepted accounting principles.

    A.  Investments

              Security transactions are recorded on the trade date at purchase
        cost or sales proceeds.  Dividend income is recognized on the ex-dividend
        date, and interest income is recognized on an accrual basis.

              Securities owned are reflected in the accompanying statement of
        assets and liabilities and the schedule of portfolio investments at 
        quoted market value.  Quoted market value represents the last recorded
        sales price on the last business day of the calendar quarter 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 approximately
        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.

Net unrealized appreciation
 (depreciation):

    2002

    2001 

 Net Change
       

Aggregate gross unrealized
 appreciation on securities


 $12,134,099 

 $23,562,831

  
       

Aggregate gross unrealized 
 depreciation on securities


  (9,912,908)


   (4,203,170)

  
       

             Net

 $ 2,221,191 

 $19,359,661 

$(17,138,470)
 

============

============

=============




        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.  

 

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F-11




   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.

          For federal income tax purposes, the Fund has a capital loss carryover
      of $1,600 at December 31, 2001, which if not offset by subsequent capital gains
       will expire in 2009.

   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 in the United States of America requires 
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period.  Actual
      results could differ from those estimates.



(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 management 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.

 

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F-12





      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 six months ended June 30, 2002.





(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 six months ended
    June 30, was:

 

  2002

   2001
     

Other Securities

$5,689,890

$5,818,644
 

===========

===========



      Net proceeds from sales of long-term investments during the six months
    ended June 30, were:

 

   2002

   2001
     

United States government obligations

$   500,000

$   200,000

Other Securities

  6,563,262

  1,931,769

               Total Net Proceeds

$ 7,063,262

$ 2,131,769
 

===========

===========

Total Cost Basis of

Securities Sold

$ 7,084,367

$ 3,147,895
 

===========

===========


(5) NET ASSET VALUE

      The net asset value per share represents the effective price for all
    subscriptions and redemptions.

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F-13




(6) CAPITAL STOCK

      Shares of capital stock issued and redeemed are as follows:

 

   2002

   2001
     

Shares sold

     84,030

   109,951

Shares issued to shareholders in

    

  reinvestment of net investment

    

  income and realized gain from

    

  security transactions

      4,781

     7,332
 

     88,811

   117,283

Shares redeemed

     31,702

    40,507

  Net increase

     57,109

    76,776
 

         =======

     =======



      Value of capital stock issued and redeemed is as follows:

 

   2002

    2001
     

Shares sold

$ 2,459,345

$ 3,990,384

Shares issued to shareholders in

    

  reinvestment of net investment 

    

  income and realized gain from

    

  security transactions

    142,468

   272,810
 

$ 2,601,813

$ 4,263,194
     

Shares redeemed

   924,796

  1,404,826

  Net increase

$ 1,677,017

$ 2,858,368
 

===========

==========





(7) DISTRIBUTIONS TO SHAREHOLDERS

      On July 9, 2002, a cash distribution of $.05 per share was declared from net

investment income accrued and earned through June 30, 2002. The total amount

of the dividend to be paid is $100,009. The dividend will be paid on July 22,

2002 to shareholders of record on July 9, 2002.

 

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