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BRIDGES INVESTMENT FUND, INC.
8401 West Dodge Road
256 Durham Plaza
Omaha, Nebraska 68114
(402) 397-4700
THIRD QUARTER
SHAREHOLDER REPORT
2003
Contents of Report
Pages 1 to 3 |
Shareholder Letter |
Exhibit 1 |
Portfolio Transactions from July 1, 2003, through September 30, 2003 |
Exhibit 2 |
Quarter to Quarter Changes in Financial Data |
Pages F1 to F14 |
Unaudited Financial Statements for the Nine Months EndedSeptember 30, 2003 |
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF THE SHAREHOLDERS OF BRIDGES INVESTMENT FUND, INC. AND IS UNDER NO CIRCUMSTANCES TO BE CONSTRUED AS AN OFFERING OF SHARES OF THE FUND. SUCH OFFERING IS MADE ONLY BY PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED BY INQUIRY TO THE FUND'S OFFICE.
---------------------------------------------------------------------------------------------------------------------------------------
BRIDGES INVESTMENT FUND, INC.
8401 West Dodge Road
Omaha, Nebraska 68114
Telephone 402-397-4700
Facsimile 402-397-8617
Directors
Frederick N. Backer |
Edson L. Bridges II |
Edson L. Bridges III |
N. P. Dodge, Jr. |
John W. Estabrook |
Jon D. Hoffmaster |
John J. Koraleski |
Roger A. Kupka |
Gary L. Petersen |
John T. Reed |
Roy A. Smith |
Janice D. Stoney |
L.B. Thomas |
John K. Wilson |
Edson L. Bridges II |
Chairman and |
Chief Executive Officer |
|
Edson L. Bridges III |
President and |
Chief Investment Officer |
|
Randall D. Greer |
Vice President |
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 |
Deloitte & Touche LLP |
First National Tower |
1601 Dodge Street, Suite 3100 |
Omaha, Nebraska 68102 |
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 |
Special Counsel |
Ballard Spahr Andrew & Ingersoll, LLP |
1225 Seventeenth Street, Suite 2300 |
Denver, Colorado 80202 |
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
October 20, 2003
Dear Shareholder:
Investment Results
Bridges Investment Fund, Inc. had a total return of 3.31% during the Third Quarter of 2003 based on a June 30, 2003, net asset value of $27.15 per share and a September 30, 2003, net asset value of $27.99 per share. On a calendar year-to-date basis for the period ending September 30, the Fund had a total return of 21.93%, and on a trailing 12-month basis for the period ending September 30, the Fund had a total return of 29.87%. By comparison, the S&P 500 had total returns of 2.65% for the Third Quarter, 14.71% for the first nine months of the calendar year, and 24.38% for the trailing 12-months' period ending September 30, 2003.
The following table summarizes the ten largest equity holdings in the Fund as of September 30, 2003:
09/30/03 |
% |
% of |
Price |
Price |
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 |
03 Vs 02 |
2003 |
2004 |
Gr Rate |
53,500 |
Capital One |
3,051,640 |
6.2% |
5.5% |
16.0% |
63.3% |
31% |
19% |
12.2 |
10.7 |
17% |
40,000 |
Altria |
1,752,000 |
3.6% |
3.2% |
-3.6% |
12.9% |
10% |
1% |
9.5 |
8.9 |
9% |
60,000 |
Alcoa |
1,569,600 |
3.2% |
2.8% |
2.6% |
35.5% |
-4% |
20% |
23.4 |
16.0 |
12% |
32,500 |
Best Buy |
1,544,400 |
3.1% |
2.8% |
8.2% |
113.0% |
24% |
7% |
24.9 |
19.7 |
15% |
45,000 |
MBNA |
1,026,000 |
2.1% |
1.8% |
9.4% |
24.0% |
22% |
18% |
13.2 |
11.8 |
14% |
20,000 |
Morgan Stanley |
1,009,200 |
2.1% |
1.8% |
18.0% |
48.9% |
-5% |
18% |
15.1 |
14.3 |
13% |
250 |
First Natl. of Nebraska |
981,250 |
2.0% |
1.8% |
-0.1% |
35.2% |
- |
11% |
- |
- |
- |
15,000 |
Amgen |
967,800 |
2.0% |
1.7% |
-2.2% |
54.7% |
14% |
39% |
33.4 |
27.3 |
21% |
30,000 |
Home Depot |
955,500 |
1.9% |
1.7% |
-3.8% |
22.0% |
18% |
13% |
18.1 |
16.2 |
13% |
22,000 |
Harrah's Entertainment |
926,420 |
1.9% |
1.7% |
4.6% |
-12.7% |
23% |
-3% |
14.5 |
13.8 |
13% |
13,783,810 |
28.1% |
24.8% |
|||||||||
Total Equities |
49,074,074 |
88.3% |
|||||||||
Total Assets |
55,560,048 |
The Third Quarter of 2003 saw a continuation of the stock price progress that was extended in the Second Quarter, albeit at a slower rate. During the Third Quarter, the S&P 500 had a total return of 2.65%; Bridges Investment Fund posted a total return of 3.31%.
The positive returns for equities in the Third Quarter were driven by generally good corporate earnings growth during the first two quarters of 2003 and an expectation that continued economic progress will unfold over the next 12 months, resulting in further improvements in corporate profitability.
------------------------------------------------------------------------------------------------------------------------------------------
Shareholder Letter 2 October 20, 2003
In the Second Quarter, we noted that the Fund's equities continued to offer good long-term capital appreciation potential in our view despite their strong recovery off the market lows reached in March. While the Fund's equities on balance performed well during the Third Quarter, we continue to believe that their current valuations should allow for good long-term investment performance over the next three-to-five years.
We continue to expect the equity market to be characterized by relatively high levels of volatility given the general level of uncertainty regarding prospects for the economy in the foreseeable future. Our approach remains committed to using periodic bouts of significant market weakness as opportunities to increase positions in companies which we believe have outstanding long-term business franchises and which sell at attractive valuation levels.
Financial Statements
The Fund's unaudited financial statements appear on pages F-1 through F-13. 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 are presented as of September 30, 2003. 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 Third Quarter of 2003 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 2002. Exhibit 2 also records quarterly information for the September 30, 2003, period compared to the September 30, 2002, results.
Cash Distributions
On October 7, 2003, the Board of Directors declared a $.06 per share dividend on the shares of capital stock that were outstanding as of the close of business om October 7, 2003, the record date for this income distribution. This dividend amount will be payable on or about October 20, 2003. This dividend is composed of net investment income earned during the July-September, 2003, Quarter.
Outlook
The U.S. economy is continuing to recover from the general business slowdown of the early years in this decade. Corporate earnings have rebounded off their recession-induced low points, but, in many cases, a recovery of former peak levels has yet to be attained, particularly for those companies where capital spending drives bottom line results. Job losses to countries outside America are likely to restrain dynamic progress toward a new cyclical expansion. However, common stock investors sense profit opportunities, and there can and should be optimism that the three-year bear market that began in March, 2000, has a strong probability to have ended in the First Quarter of 2003. Confidence in the future of equity investments in American companies should be building in the months and years ahead.
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Shareholder Letter 3 October 20, 2003
Closing Thoughts
Once again, the Board of Directors and the management of the Fund have the opportunity to thank the shareholders for their commitment to our Company. The comparative numbers in Exhibit 2, especially the current quarter of September 30, 2003, to the same period in 2002, demonstrate dramatic positive progress off the market cycle lows in 2002. We still have a long distance to travel to fully restore the former value in your shares, but these numbers tell us that this journey is well underway.
Sincerely yours,
Edson L. Bridges III, CFA
President
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
JULY 1, 2003, THROUGH SEPTEMBER 30, 2003
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 |
Apollo Group, Inc. |
3,000 |
3,000 |
Cardinal Health, Inc. |
4,000 |
7,000 |
(1) Cavco Industries, Inc. |
250 |
250 |
(2) Ebay, Inc. |
7,000 |
14,000 |
Electronic Data Systems Notes 7.125% due 10/15/09 |
250M |
250M |
Expeditors Int'l. Washington |
13,000 |
13,000 |
Kraft Foods, Inc. Notes 6.250% due 06/01/12 |
250M |
250M |
Lowes Companies |
5,000 |
5,000 |
Marsh & McLennan Cos. |
3,000 |
8,000 |
(3) Medco Health Solutions, Inc. |
1,206 |
1,206 |
Nucor Corporation |
3,000 |
8,000 |
Stryker Corporation |
3,000 |
3,000 |
Trinity Industries, Inc. |
5,000 |
20,000 |
Various Issues of Commercial Paper Notes Purchased during 3rd Quarter, 2003 |
19,131M |
1,010M |
Securities Common Stocks Unless Described Otherwise |
Sold or Exchanged $1,000 Par Value (M) or Shares |
Held After Transaction $1,000 Par Value (M) or Shares |
Cintas Corp |
10,000 |
-- |
Egl, Inc. |
35,000 |
-- |
Northern Trust Co. |
5,000 |
-- |
Paychex, Inc. |
10,000 |
-- |
WorldCom, Inc. GA New |
25,000 |
-- |
Yum! Brands, Inc. |
15,000 |
-- |
Various Issues of Commercial Paper Notes Maturing during 3rd Quarter, 2003 |
18,816M |
-- |
(1) Received 250 shares in a spin-off of Centex Corp. on July 1, 2003.
(2) Received 7,000 shares in a 2-for-1 stock split on August 29, 2003.
(3) Received 1,206 shares in a spin-off of Merck on August 20, 2003.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Exhibit 2
BRIDGES INVESTMENT FUND, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
- - - - - - - - - - - - -Year End Statistics - - - - - - - - - - - - -
Valuation |
Net |
Shares |
Net Asset |
Dividend/ |
Capital |
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 |
-- |
12-31-02 |
45,854,541 |
1,989,769 |
23.05 |
.20 |
-- |
- - - - Current Quarter Compared to Same Quarter in Prior Year - - - -
Valuation |
Net |
Shares |
Net Asset |
Dividend/ |
Capital |
09-30-02 |
43,299,139 |
1,992,957 |
21.73 |
.050 |
- |
09-30-03 |
55,560,048 |
1,985,237 |
27.99 |
.060 |
- |
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F 1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 2003
(Unaudited)
|
Number |
|
Fair |
COMMON STOCKS (88.3%) |
|||
Advertising 1.3% |
|||
Omnicom Group, Inc. |
10,000 |
$ 654,802 |
$ 718,500 |
Airfreight & Logistics 0.8% |
|||
Expeditors Int'l. Washington |
13,000 |
$ 479,994 |
$ 447,200 |
Aluminum 2.8% |
|||
Alcoa, Inc. |
60,000 |
$ 1,701,327 |
$ 1,569,600 |
Asset Management 1.2% |
|||
State Street |
15,000 |
$ 62,367 |
$ 675,000 |
Auto Parts & Equipment 0.9% |
|||
Johnson Controls |
5,000 |
$ 385,750 |
$ 473,000 |
Banks Diversified 1.4% |
|||
Wells Fargo |
15,000 |
$ 515,731 |
$ 772,500 |
Banks Regional 2.8% |
|||
Fifth Third Bancorp |
10,000 |
$ 486,522 |
$ 555,400 |
First National Bank Nebraska |
250 |
401,835 |
981,250 |
$ 888,357 |
$ 1,536,650 |
||
Biotechnology 1.7% |
|||
Amgen, Inc.* |
15,000 |
$ 463,500 |
$ 967,800 |
Broadcasting & Cable 0.6% |
|||
Comcast Corporation Special Class A |
12,000 |
$ 356,075 |
$ 355,680 |
Casinos & Gaming 1.7% |
|||
Harrah's Entertainment, Inc.* |
22,000 |
$ 729,839 |
$ 926,420 |
Communications Equipment 2.5% |
|||
Cisco Systems, Inc.* |
40,000 |
$ 361,396 |
$ 783,600 |
Nokia ADR |
40,000 |
421,175 |
624,000 |
$ 782,571 |
$ 1,407,600 |
||
Computer Hardware 0.2% |
|||
Sun Microsystems, Inc.* |
30,000 |
$ 595,357 |
$ 99,300 |
Computer Storage/Peripherals 0.8% |
|||
EMC Corporation/MASS* |
35,000 |
$ 494,601 |
$ 442,050 |
Conglomerates Industrial 0.5% |
|||
General Electric |
10,000 |
$ 270,842 |
$ 298,100 |
Education Higher 0.4% |
|||
Apollo Group, Inc.* |
3,000 |
$ 193,740 |
$ 198,090 |
*Nonincome producing security
---------------------------------------------------------------------------------------
F 2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
Electronic Manufacturing Services 2.1% |
|||
Flextronics International* |
60,000 |
$ 1,175,477 |
$ 853,200 |
Solectron Corporation* |
50,000 |
595,457 |
292,500 |
$ 1,770,934 |
$ 1,145,700 |
||
Finance Consumer 7.3% |
|||
Capital One Financial |
53,500 |
$ 1,935,422 |
$ 3,051,640 |
MBNA Corporation |
45,000 |
921,634 |
1,026,000 |
$ 2,857,056 |
$ 4,077,640 |
||
Financial Services Diverse 0.8% |
|||
Citigroup |
9,999 |
$ 481,932 |
$ 455,054 |
Financing Thrifts & Mortgage 1.4% |
|||
Federal Home Loan |
15,000 |
$ 461,417 |
$ 785,250 |
Foods/Meats Packaged 0.4% |
|||
ConAgra Foods |
10,000 |
$ 217,874 |
$ 212,400 |
Health Care Distributors 0.8% |
|||
Cardinal Health |
7,000 |
$ 430,416 |
$ 408,730 |
Medco Health Solutions, Inc.* |
1,206 |
11,451 |
31,272 |
$ 441,867 |
$ 440,002 |
||
Homebuilding 1.9% |
|||
Cavco Industries, Inc. * |
250 |
$ 3,378 |
$ 5,358 |
Centex |
5,000 |
265,517 |
389,400 |
Horton (D.R.) |
20,000 |
407,704 |
654,000 |
$ 676,599 |
$ 1,048,758 |
||
Hotels/Resorts/Cruise Lines 0.6% |
|||
Carnival Corporation |
10,000 |
$ 253,072 |
$ 328,950 |
Hypermarkets & Supercenters 0.6% |
|||
Costco Wholesale |
10,000 |
$ 317,415 |
$ 311,500 |
Insurance Brokers 0.7% |
|||
Marsh & McLennan |
8,000 |
$ 412,655 |
$ 380,880 |
Insurance Multi Line 1.0% |
|||
American International Group |
10,000 |
$ 566,397 |
$ 577,000 |
Insurance Property/Casualty 1.6% |
|||
Berkshire Hathaway Class B* |
350 |
$ 492,609 |
$ 873,600 |
Internet Software & Services 1.2% |
|||
Retek* |
25,000 |
$ 369,992 |
$ 168,750 |
United Online* |
15,000 |
283,160 |
521,850 |
$ 653,152 |
$ 690,600 |
*Nonincome producing security
-------------------------------------------------------------------------------------
F 3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
|||
Investment Bank & Brokerage 3.0% |
|||
Goldman Sachs Group |
8,000 |
$ 694,445 |
$ 671,200 |
Morgan Stanley |
20,000 |
1,127,600 |
1,009,200 |
$ 1,822,045 |
$ 1,680,400 |
||
Machinery Construction/Farming 0.9% |
|||
Trinity Industries |
20,000 |
$ 386,383 |
$ 517,000 |
Medical Products 0.4% |
|||
Stryker Corporation |
3,000 |
$ 230,903 |
$ 225,930 |
Merchandise General 1.4% |
|||
Target Corporation |
20,000 |
$ 316,811 |
$ 752,600 |
Movies & Entertainment 0.7% |
|||
Viacom "B"* |
10,000 |
$ 397,500 |
$ 384,900 |
Oil & Gas Integrated 2.7% |
|||
BP PLC Sponsored ADR |
19,000 |
$ 443,238 |
$ 799,900 |
Chevron/Texaco |
10,000 |
340,535 |
714,500 |
$ 783,773 |
$ 1,514,400 |
||
Pharmaceuticals 4.9% |
|||
Abbott Laboratories |
15,000 |
$ 169,395 |
$ 638,250 |
Elan ADS* |
15,000 |
371,827 |
79,350 |
Johnson & Johnson |
15,000 |
338,948 |
742,800 |
Merck & Co., Inc. |
10,000 |
197,534 |
506,200 |
Pfizer, Inc. |
25,000 |
787,050 |
759,500 |
$ 1,864,754 |
$ 2,726,100 |
||
Publishing 0.7% |
|||
Gannett Company |
5,000 |
$ 393,980 |
$ 387,800 |
Restaurants 1.0% |
|||
Outback Steakhouse* |
15,000 |
$ 509,594 |
$ 568,050 |
Retail Apparel 1.5% |
|||
Gap (The), Inc. |
50,000 |
$ 521,360 |
$ 856,000 |
Retail Computers & Electronics 2.8% |
|||
Best Buy* |
32,500 |
$ 739,697 |
$ 1,544,400 |
Retail Home Improvement 2.2% |
|||
Home Depot |
30,000 |
$ 672,737 |
$ 955,500 |
Lowes Companies |
5,000 |
276,237 |
259,500 |
$ 948,974 |
$ 1,215,000 |
*Nonincome producing security
-------------------------------------------------------------------------------------
F 4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
|||
Retail Internet 1.4% |
|||
EBAY, Inc.* |
14,000 |
$ 453,620 |
$ 750,960 |
Semiconductor Equipment 1.6% |
|||
Applied Materials* |
50,000 |
$ 911,013 |
$ 906,500 |
Semiconductors 3.9% |
|||
Altera* |
30,000 |
$ 901,102 |
$ 567,900 |
Analog Devices* |
20,000 |
753,090 |
760,400 |
Intel |
30,000 |
503,898 |
825,600 |
$ 2,158,090 |
$ 2,153,900 |
||
Services Data Processing 5.0% |
|||
Automatic Data Processing |
20,000 |
$ 919,731 |
$ 717,000 |
Concord EFS |
40,000 |
683,660 |
546,800 |
Electronic Data Systems |
10,000 |
230,136 |
202,000 |
First Data |
15,000 |
490,500 |
599,400 |
Fiserv, Inc.* |
20,000 |
664,527 |
725,800 |
$ 2,988,554 |
$ 2,791,000 |
||
Services Diversified/Commercial 1.5% |
|||
West Corporation* |
35,000 |
$ 687,401 |
$ 836,500 |
Soft Drinks 1.2% |
|||
PepsiCo. |
15,000 |
$ 192,169 |
$ 687,450 |
Software Application 1.3% |
|||
Fair Isaac and Company, Inc. |
12,000 |
$ 234,627 |
$ 707,520 |
Software Systems 1.5% |
|||
Microsoft |
30,000 |
$ 266,000 |
$ 834,000 |
Steel 0.7% |
|||
Nucor |
8,000 |
$ 392,304 |
$ 367,040 |
Telecommunications Services Integrated 1.6% |
|||
Level 3 Communications* |
165,000 |
$ 1,362,169 |
$ 894,300 |
Telecommunications Services Wireless 1.4% |
|||
Sprint PCS Group * |
30,000 |
$ 629,783 |
$ 171,900 |
Vodafone Group ADR |
30,000 |
772,993 |
607,500 |
$ 1,402,776 |
$ 779,400 |
||
Tobacco 3.2% |
|||
Altria Group |
40,000 |
$ 1,621,692 |
$ 1,752,000 |
*Nonincome producing security
---------------------------------------------------------------------------------------------------------------------------------------
F 5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
Title of Security |
Shares or Principal |
Cost |
Fair |
Utilities Multi 1.8% |
|||
AES Corporation* |
70,000 |
$ 844,949 |
$ 519,400 |
MDU Resources Group |
15,000 |
351,556 |
506,700 |
$ 1,196,505 |
$ 1,026,100 |
||
TOTAL COMMON STOCKS |
$40,960,526 |
$49,074,074 |
|
PREFERRED STOCKS (1.4%) |
|||
Banking and Finance 0.7% |
|||
Harris Preferred Capital Corp. |
10,000 |
$ 250,000 |
$ 250,700 |
Silicon Valley Bancshares |
5,000 |
125,000 |
125,305 |
$ 375,000 |
$ 376,005 |
||
Financial Reits 0.5% |
|||
Equity Office Properties Trust 7.75% Series G Preferred |
5,000 |
$ 134,766 |
$ 133,500 |
Public Storage 8.00% Series R Preferred |
5,000 |
133,250 |
133,700 |
$ 268,016 |
$ 267,200 |
||
Oil Companies Exploration and Production 0.2%
Production 0.2% |
|||
Nexen, Inc. 9.275% Preferred Series I |
5,000 |
$ 125,000 |
$ 127,300 |
Total Preferred Stocks |
$ 768,016 |
$ 770,505 |
|
Total Stocks |
$41,728,542 |
$49,844,579 |
|
DEBT SECURITIES (9.7%) |
|||
Auto Cars/Light Trucks 0.5% |
|||
General Motors Corporation 7.700% Debentures |
|
|
|
Electronic Components Conductors 0.5% |
|||
Applied Materials, Inc. 7.125% Senior Notes due October 15, 2017 |
$250,000 |
$ 256,472 |
$ 290,725 |
Energy Alternate Sources 0.4% |
|||
CalEnergy Co., Inc. 7.630% Notes |
|
|
|
---------------------------------------------------------------------------------------------------------------------------------------
F 6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
|
Principal |
|
Fair |
Finance Services 0.5% |
|||
MBNA Corporation 7.50% Senior Notes due March 15, 2012 |
$250,000 |
$ 268,125 |
$ 287,900 |
Foods Packaged 0.5% |
|||
Kraft Foods, Inc. Notes 6.250% due 06/01/12 |
$250,000 |
$ 263,873 |
$ 274,675 |
Hotels and Motels 0.5% |
|||
Marriott International 7.875% Notes Series C |
|
|
|
Medical Wholesale Drug Distribution 0.5% |
|||
Cardinal Health, Inc. 6.75% Notes due February 15, 2011 |
$250,000 |
|
|
Retail Stores Department 0.9% |
|||
Dillard Department Stores, Inc. 7.850% |
|
|
|
Penney, (J.C.) Co., Inc. 7.40% due April 1, 2037 |
$250,000 |
263,750 |
260,000 |
|
|||
Sears Roebuck & Co. 9.375% Debentures |
|
|
|
$ 521,496 |
$ 513,695 |
||
Services Data Processing 0.5% |
|||
Electronic Data Systems Notes 7.125% due 10/15/09 |
$250,000 |
$ 263,750 |
$ 263,625 |
Telecommunications 0.8% |
|||
Level 3 Communications, Inc. 9.125% Senior |
$500,000 |
$ 346,223 |
$ 423,750 |
Tobacco 0.4% |
|||
R.J. Reynolds Holding 7.250% Notes due |
$250,000 |
$ 260,975 |
$ 230,200 |
U.S. Government 1.9% |
|||
U.S. Treasury, 9.375% Bonds, |
|
|
|
U.S. Treasury, 8.750% Bonds, |
|
|
|
U.S. Treasury, 9.125% Bonds, |
|
|
|
----------------------------------------------------------------------------------------------------------------------------------------
F 7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2003
(Unaudited)
|
Principal |
|
Fair |
U.S. Treasury, 7.500% Bonds, |
|
|
|
$ 1,037,144 |
$ 1,040,110 |
||
Commercial Paper Short Term 1.8% |
|||
American Express Credit Corporation Commercial Paper Note 0.770% due October 10, 2003 |
474,929 |
$ 474,929 |
$ 474,929 |
American Express Credit Corporation Commercial Paper Note 0.870% due October 17, 2003 |
534,909 |
534,909 |
534,909 |
$ 1,009,838 |
$ 1,009,838 |
||
TOTAL DEBT SECURITIES |
$ 5,190,973 |
$ 5,411,388 |
|
TOTAL INVESTMENTS IN SECURITIES (99.4%) |
|
$46,919,515 |
$55,255,967 |
CASH AND RECEIVABLES |
|
|
|
NET ASSETS, September 30, 2003 (100.0%) |
|
$55,560,048 |
|
-----------------------------------------------------------------------------------------------------------------------------------------
F-8
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2003
(Unaudited)
ASSETS |
|
Investments, at fair value |
|
Common and preferred stocks (cost $41,728,542) |
$49,844,579 |
Debt securities (cost $5,190,973) |
5,411,388 |
Total investments |
$55,255,967 |
Cash |
64,111 |
Receivables |
|
Dividends and interest |
165,075 |
Subscriptions to capital stock |
189,688 |
TOTAL ASSETS |
$55,674,841 |
LIABILITIES |
|
Investment advisor, management and |
|
service fees payable |
$ 68,872 |
Accrued operating expenses |
45,921 |
TOTAL LIABILITIES |
$ 114,793 |
NET ASSETS |
|
Capital stock, $1 par value Authorized 6,000,000 shares, 1,985,237 shares |
|
Paid-in surplus |
46,667,810 |
Net capital |
$48,653,047 |
Net unrealized appreciation on investments |
8,336,451 |
Accumulated undistributed net realized loss |
(1,555,292) |
Accumulated undistributed net investment income |
125,842 |
TOTAL NET ASSETS |
$55,560,048 |
=========== |
|
NET ASSET VALUE PER SHARE |
$27.99 |
====== |
|
OFFERING PRICE PER SHARE |
$27.99 |
====== |
|
REDEMPTION PRICE PER SHARE |
$27.99 |
====== |
The accompanying notes are an integral
part of these financial statements.
--------------------------------------------------------------------------------------
F 9
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited)
INVESTMENT INCOME |
|
|
Interest |
$ 229,817 |
|
Dividends (Net of foreign withholding taxes |
|
|
of $4,731) |
467,658 |
|
|
|
|
Total Investment Income |
|
$ 697,475 |
|
|
|
EXPENSES |
|
|
Management fees |
190,665 |
|
Custodian fees |
26,816 |
|
Insurance and other administrative fees |
23,019 |
|
Bookkeeping services |
16,701 |
|
Printing and supplies |
16,262 |
|
Professional services |
28,448 |
|
Dividend disbursing and transfer |
|
|
agent fees |
21,327 |
|
Computer programming |
6,750 |
|
Taxes and licenses |
799 |
|
Independent directors expense and fees |
12,813 |
|
|
|
|
|
|
|
Total Expenses |
|
$ 343,600 |
NET INVESTMENT INCOME |
|
$ 353,875 |
|
|
|
|
|
|
NET REALIZED AND UNREALIZED |
|
|
LOSS ON INVESTMENTS |
|
|
|
|
|
Net realized loss on transactions in |
|
|
investments |
$ (1,101,434) |
|
|
|
|
Net increase in unrealized appreciation/ |
|
|
(depreciation) of investments |
10,965,779 |
|
|
|
|
NET REALIZED AND UNREALIZED GAIN |
|
|
ON INVESTMENTS |
|
$ 9,864,345 |
|
|
|
|
|
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ 10,218,220 |
|
|
============= |
The accompanying notes are an integral
part of these financial statements.
-------------------------------------------------------------------------------------
F 10
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 |
2002 |
|
INCREASE IN NET ASSETS |
||
Operations |
||
Net investment income |
$ 353,875 |
$ 301,989 |
Net realized loss on |
||
transactions in investments |
(1,101,434) |
(731,535) |
Net increase/decrease in unrealized |
||
appreciation of investments |
10,965,779 |
(17,954,547) |
Net increase/decrease in net assets |
||
resulting from operations |
$ 10,218,220 |
$(18,384,093) |
Net equalization debits/credits |
(1,053) |
(432) |
|
||
Distributions to shareholders from |
||
Net investment income |
(228,173) |
(179,162) |
Net realized gain from investments |
-- |
-- |
Return of capital |
-- |
-- |
Net capital share transactions |
(283,487) |
1,617,914 |
Total increase/decrease in net assets |
$ 9,705,507 |
$(16,945,773) |
NET ASSETS: |
||
Beginning of year |
$ 45,854,541 |
$ 60,244,912 |
End of nine months |
$ 55,560,048 ============ |
$ 43,299,139 ============ |
The accompanying notes are an integral
part of these financial statements.
--------------------------------------------------------------------------------------
F-11
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(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 accounting principles generally accepted in the United States of America.
A. Investments
Security transactions are recorded on trade date. Dividend income
is recognized on the ex-divided 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 fair
value based on quoted market prices. Quoted market prices represent
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 price 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 fair value of securities is reflected separately as
unrealized appreciation (depreciation) as applicable.
2003 |
2002 |
Net Change |
|
Net unrealized appreciation |
|
|
|
Aggregate gross unrealized |
$ 12,738,692 |
$ 8,297,843 |
|
Aggregate gross unrealized |
(4,402,241) |
|
|
Net |
$ 8,336,451 |
$ (4,813,153) |
$ 13,149,604 |
============ |
============ |
============= |
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.
--------------------------------------------------------------------------------------
F-12
B. Federal Income 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 $355,038 at December 31, 2002, which if not offset by subsequent capital gains
will expire in 2009. Also for federal income tax purposes, the Fund deferred the
recognition of net capital losses incurred subsequent to October 31, 2002 ("Post
October Losses") of $98,819. These losses will be realized on January 1,
2003.
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 accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations 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,
-----------------------------------------------------------------------------------------
F-13
equivalent to 1/2 of 1% per annum. Certain officers and directors of the Fund
are also officers and directors of the Investment Adviser. These officers do
not receive any compensation from the Fund other than that which is received
indirectly through the Investment Adviser.
The contract between the Fund and the Investment Adviser provides that total
expenses of the Fund in any year, exclusive of stamp and other taxes, but including
fees paid to the Investment Adviser, shall not exceed, in total, a maximum of 1 and
1/2% of the average month end net asset value of the Fund for the year. Amounts,
if any, expended in excess of this limitation are reimbursed by the Investment
Adviser as specifically identified in the Investment Advisory Contract. There
were no amounts reimbursed during the year ended December 31, 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 nine months ended
September 30, was:
|
2003 |
2002 |
Other Securities |
$ 8,526,556 |
$12,032,991 |
=========== |
=========== |
Net proceeds from sales of long-term investments during the nine months
ended September 30, were:
2003 |
2002 |
|
United States government obligations |
$ 653,485 |
$ 500,000 |
Other Securities |
9,253,920 |
7,606,424 |
Total Net Proceeds |
$ 9,907,405 |
$ 8,106,424 |
=========== |
=========== |
|
Total Cost Basis of Securities Sold |
$11,008,854 |
$ 8,839,686 |
=========== |
=========== |
(5) NET ASSET VALUE
The net asset value per share represents the effective price for all
subscriptions and redemptions.
--------------------------------------------------------------------------------------
F-14
(6) CAPITAL STOCK
Shares of capital stock issued and redeemed are as follows:
2003 |
2002 |
|
Shares sold |
121,156 |
155,464 |
Shares issued to shareholders in |
||
reinvestment of net investment |
||
income and realized gain from |
||
security transactions |
11,201 |
8,361 |
132,357 |
163,825 |
|
Shares redeemed |
136,889 |
111,363 |
Net increase/(decrease) |
(4,532) |
52,462 |
======== |
======== |
Value of capital stock issued and redeemed is as follows:
2003 |
2002 |
|
Shares sold |
$ 3,067,288 |
$ 4,114,701 |
Shares issued to shareholders in |
||
reinvestment of net investment |
||
income and realized gain from |
||
security transactions |
278,944 |
223,471 |
$ 3,346,232 |
$ 4,338,172 |
|
Shares redeemed |
3,629,719 |
2,720,258 |
Net increase/(decrease) |
$ (283,487) |
$ 1,617,914 |
============ |
============ |
(7) DISTRIBUTIONS TO SHAREHOLDERS
On October 7, 2003, a cash distribution was declared from net investment
income accrued through September 30, 2003. This distribution was calculated
as $.06 per share. The dividend will be paid on October 20, 2003 to
shareholders of record on October 7, 2003.
-----END PRIVACY-ENHANCED MESSAGE-----