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BRIDGES INVESTMENT FUND, INC. 8401 West Dodge Road
256 Durham Plaza
(402) 397-4700
THIRD QUARTER
SHAREHOLDER REPORT
2004
Investment Results
Bridges Investment Fund, Inc. had a total return of -2.34% during the Third Quarter of 2004, versus a return of -1.88% for the S&P 500. For the first nine months of 2004, the Fund had a total return of -0.59%, versus 1.50% for the S&P 500. For the trailing 12 months as of September 30, 2004, the Fund had a total return of 10.69% versus 13.85% for the SPX. Since the market's bottom on March 11, 2003, Bridges Investment Fund, Inc. has advanced 38.68% versus 34.85% for the S&P 500. The Fund has had average annual total returns of -2.03% and 8.72%, respectively, for the five and ten year periods ended September 30, 2004.
Performance data stated above in the cover letter of this report represents past performance. Past performance does not guarantee future results. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance stated above. Performance data current to the most recent month end may be obtained by calling 866-934-4700.
IMPORTANT NOTICES
Opinions expressed herein are those of Edson L. Bridges III and Edson L. Bridges II and are subject to change. They are not guarantees and should not be considered investment advice.
The S&P 500 Index is a broadly based unmanaged composite of 500 stocks also referenced above which is widely recognized as representative of price changes for the equity market in general. You cannot invest directly in this specific index, however, you may invest in a number of open end investment companies organized and operated by other sponsors for the purpose of experiencing the investment results for the S&P 500. Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security. Please refer to the Schedule of Portfolio Investments for complete information on holdings in the Fund.
Mutual fund investing involves risk. Principal loss is possible. Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.
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.
This report must be preceded or accompanied by a prospectus.
Quasar Distributors, LLC, distributor (11/04)
Opinions expressed herein are those of Edson L. Bridges III and Edson L. Bridges II and are subject to change. They are not guarantees and should not be considered investment advice.
The S&P 500 Index is a broadly based unmanaged composite of 500 stocks also referenced above which is widely recognized as representative of price changes for the equity market in general. You cannot invest directly in this specific index, however, you may invest in a number of open end investment companies organized and operated by other sponsors for the purpose of experiencing the investment results for the S&P 500. Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security. Please refer to the Schedule of Portfolio Investments for complete information on holdings in the Fund.
Mutual fund investing involves risk. Principal loss is possible. Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.
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.
This report must be preceded or accompanied by a prospectus.
Quasar Distributors, LLC, distributor (11/04)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------
BRIDGES INVESTMENT FUND, INC.
Edson L. Bridges II |
Edson L. Bridges III |
N. P. Dodge, Jr. |
John W. Estabrook |
Jon D. Hoffmaster |
John J. Koraleski |
Gary L. Petersen |
John T. Reed |
Roy A. Smith |
Janice D. Stoney |
L.B. Thomas |
John K. Wilson |
Officers
Edson L. Bridges II |
Chairman |
Edson L. Bridges III |
President and Chief Executive |
and Investment Officer |
|
Randall D. Greer |
Vice President and |
Chief Compliance Officer |
|
Brian M. Kirkpatrick |
Vice President |
Mary Ann Mason |
Secretary |
Kathleen J. Stranik |
Assistant Secretary |
Susan T. Bailey |
Assistant Secretary |
Starr Frohlich |
Assistant Secretary |
Nancy K. Dodge |
Treasurer |
Linda J. Morris |
Assistant Treasurer |
Jason Hadler |
Assistant Treasurer |
Trinh Wu |
Controller |
Independent Auditors
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, Andrews & Ingersoll, LLP |
1225 Seventeenth Street, Suite 2300 |
Denver, Colorado 80202 |
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
October 25, 2004
Dear Shareholder:
Cover Page
The Cover Page for this Third Quarter, 2004 Shareholder Report carries four new cautionary statements that have been required by representatives of Quasar Distributors, LLC, a registered broker dealer engaged by the Fund to facilitate purchase and redemption of the Fund's shares. Quasar is a subsidiary of U.S. Bancorp of Milwaukee, Wisconsin. This company is an affiliate of U.S. Bancorp Fund Services, LLC, an organization that has been providing custodian of securities and transfer agency services to the Fund commencing in October, 2004. Quasar is a member of the National Association of Securities Dealers (NASD). This relationship, combined with the new appointment of a distributor, causes this Shareholder Report to be classified as sales literature under the rules of the NASD. Consequently, the Important Notices portion of the Cover Page was created for this publication to accommodate compliance with the additional tier of regulation by adding the four cautionary statements to the original one appearing at the bottom of the Cover Page that has been in place since April 24, 1964.
Expanded Capabilities and Core Competencies
The new relationships with U.S. Bancorp Fund Services, LLC were established to strengthen the Fund's ability to reach new investors through user friendly technology and communication channels that are competitive with other sponsors in the mutual fund industry. The appointment of Quasar as our distributor is a major component of that enhanced strategic positioning of the Fund for growth of our shareholder base.
The distribution and transfer agent activities are not core competencies of Bridges Investment Management, Inc. (BIM) and Bridges Investor Services, Inc. in comparison to our new vendors, whose representatives conduct these services on a full time basis. A significant factor in the decision to appoint USBFS and Quasar relates to the opportunity to reassign BIM staff personnel and investment professionals away from Fund administrative tasks and towards a greater focus on security research, investment management, and business development.
Feedback
Shortly after the issuance of the September 1, 2004 letter to you that announced the change in service providers from First National Bank of Omaha and Bridges Investor Services, Inc. to the USBFS companies, there were a few shareholders who contacted the
- ---------------------------------------------------------------------------------------------------------------------------------------
Shareholder Letter 2 October 25, 2004
Fund's management to express concern that the Fund had been sold and who feared that the Bridges personnel were no longer involved. Our officers who visited with these callers and visitors provided assurance that everyone here is still very involved with the Fund's management. The officers appreciated the fact that concerned persons expressed their feelings, and we are interested in hearing from you about any service quality disruptions or possible uncertainties in your mind that may have arisen due to the recent changeover to USBFS. On the other hand, if you appreciate positive aspects of and results for the new service initiative, the Fund's management would always be glad to receive those words of encouragement.
Ten Largest Holdings
The following table summarizes the 10 largest equity holdings in the Fund as of September 30, 2004.
09/30/04 |
% |
% 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 |
04 Vs. 03 |
2004 |
2005 |
Gr. Rate |
53,500 |
Capital One |
3,953,650 |
6.8% |
5.8% |
8.1% |
29.6% |
30% |
22% |
12.4 |
11.0 |
15% |
50,000 |
First Data |
2,175,000 |
3.8% |
3.2% |
-2.3% |
8.9% |
20% |
14% |
20.2 |
17.6 |
15% |
45,000 |
Altria |
2,116,800 |
3.7% |
3.1% |
-6.0% |
7.4% |
8% |
3% |
9.9 |
9.1 |
9% |
30,000 |
Best Buy |
1,627,200 |
2.8% |
2.4% |
6.9% |
14.1% |
22% |
28% |
22.2 |
18.4 |
15% |
14,000 |
Ebay |
1,287,160 |
2.2% |
1.9% |
0.0% |
71.4% |
119% |
53% |
76.6 |
57.5 |
37% |
50,000 |
MBNA |
1,260,000 |
2.2% |
1.9% |
-2.3% |
10.5% |
20% |
15% |
12.3 |
10.9 |
13% |
30,000 |
Home Depot |
1,176,000 |
2.0% |
1.7% |
11.4% |
23.1% |
17% |
18% |
17.7 |
15.6 |
13% |
20,000 |
Johnson & Johnson |
1,126,600 |
1.9% |
1.7% |
1.1% |
13.8% |
16% |
14% |
18.6 |
17.1 |
13% |
20,000 |
Chevron Texaco |
1,072,800 |
1.9% |
1.6% |
14.0% |
50.1% |
8% |
49% |
10.0 |
13.1 |
6% |
20,000 |
Harrah's Entertainment |
1,059,600 |
1.8% |
1.6% |
-2.1% |
25.8% |
20% |
12% |
16.3 |
14.8 |
12% |
16,854,810 |
29.1% |
24.9% |
|||||||||
Total Equities |
57,894,755 |
|
85.6% |
||||||||
Total Assets |
67,617,717 |
The broad equity market continued to move sideways in the third quarter, even as second quarter corporate earnings results were very strong. For the first nine months of the year, the economy and corporate financial performance have been very good, but equity returns have been flattish, suggesting that investors are focused on factors other than corporate profitability. Investors seem to be worried about the effect of higher energy prices
on the economy, the threat of inflation, the intractability of the situation in Iraq, the ongoing threat of terrorism, and uncertainty surrounding the upcoming Presidential election.
While these risks are material, the generally sideways performance of equities against the backdrop of solid earnings growth over the past nine months indicates that stocks are reasonably if not attractively valued, especially in view of continued low interest rates. While we expect that the rate of corporate earnings growth will slow on balance over
-------------------------------------------------------------------------------------------------------------------------------------
Shareholder
Letter
3
October 25, 2004
the next 12 months, we believe that stocks at current levels offer superior intermediate and longer term returns for investors than bonds.
Our focus remains on owning strong companies with growing franchises and attractive valuations; we expect to continue to increase our weighting of consistent growth companies over time (and reduce allocations to cyclical growth names) as the economy slows into 2005.
Exhibits
Please refer to Exhibit 1 for information about the Fund's portfolio transactions for the Third Quarter of 2004. The Fund's annual historical information with respect to net assets, shares outstanding, net asset value per share, dividends, and capital gains distributions from 1963 through 2003 appears as Exhibit 2. Exhibit 2 also records quarterly information for the September 30, 2004 period compared to the September 30, 2003 results.
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, 2004.
Cash Distributions
On October 12, 2004, our Board of Directors declared a $.0575 per share dividend on the units of capital stock that were outstanding on October 12, 2004 -- the record date for the income distribution. This dividend amount will be payable on or about October 25, 2004. This dividend is distributed from net investment income earned during the July - September, 2004 Quarter.
Board Meeting
On October 12, 2004, the Board of Directors of the Fund approved the election of Susan T. Bailey as Assistant Secretary of the Fund. Susan has been an employee of Bridges Investment Counsel, Inc. since February 24, 2003. She is currently Executive
Assistant for Edson L. Bridges II and Randall D. Greer, and she handles administrative matters for the various businesses operated by the Firm, including the Fund. Susan holds a Series 7 securities licenses and a Nebraska insurance license. Her principal occupation has
----------------------------------------------------------------------------------------------------------------------------------
Shareholder Letter 4 October 25, 2004
been working as a sales assistant for several securities brokerage firms, beginning with Piper Jaffray in September 1992.
The Directors also were presented with a report by the Fund's independent examiner, Roman H. Uhing, regarding the Fund's compliance with the regulations promulgated under the USA Patriot Act. Mr. Uhing stated that, in his opinion, the Fund's policies and procedures cover all the essential requirements of the Act, and the Fund's personnel were in full compliance with the Fund's policies and procedures for the period October 1, 2003 through September 28, 2004.
New 24-Hour Voice Response Telephone Service
The Fund has installed a new service that enables shareholders to obtain information on their Fund account 24 hours a day; seven days a week by calling toll free 1-866-934-4700. By using the phone keypad, a shareholder can obtain the latest daily price of the Fund, the share balance and dollar value of their account(s), and the details of the last dividend paid and last transaction with the Fund. In addition, shareholders can order Fund literature and obtain the Fund's mailing address and wiring instructions. Finally, after year-end, a shareholder can obtain year-end balance and tax information, and order replacement tax forms. If you would rather talk to a person, all you need to do is dial '0' anytime (from 8:00 am to 7:00 pm central time, Mondays through Fridays) during the call and you will be transferred to a Customer Service Representative employed by US Bancorp Fund Services LLC in Milwaukee, Wisconsin.
The Fund's Main Office
The Fund's principal business activities continue to be conducted from our main office at 256 Durham Plaza, 8401 West Dodge Road, Omaha, Nebraska. All of the officers and staff persons who have been historically available for services to our shareholders are still accessible to you at this location. We can be reached by phone at 402-397-4700 or 1-800-939-8401. Personal contacts with you are welcomed in person or by phone.
Outlook
The political rhetoric has reached a crescendo in recent months as Election Day approaches. The negative attacks and the media's desire to stir up controversy have, in our
opinion, contributed to the decline in consumer confidence and uncertainty among investors. However, based on third quarter earnings reported thus far and our contacts with corporate managements, the Nation's business activity currently appears to be growing nicely. We'll give you just one example that is very telling. Omaha-based Union Pacific Corporation recently reported that third quarter revenues achieved an all-time record. Revenues from transporting industrial products increased 9% over the third quarter of 2003, chemicals increased 8%, intermodal increased 7% and automotive increased 4%. Dick
------------------------------------------------------------------------------------------------------------------------------------
Shareholder Letter 5 October 25, 2004
Davidson, the CEO stated "One fact that stood out clearly this quarter is that Union Pacific, and the entire rail industry, is experiencing unprecedented levels of demand". In fact the railroad had to turn away business during the third quarter because it didn't have enough people, locomotives and railcars to keep up with the demand. We believe that railroad activity is a good barometer for overall economic activity because of the broad array of products transported by rail. Maybe, just maybe, the U.S. economy isn't in as dire straits as the political candidates and the media would have you believe.
We are optimistic that once the election has passed and there isn't the constant drumbeat of negative campaigning, consumers and investors will be able to focus on the fact that the economy is actually in relatively good shape and that corporations are still growing their revenues and earnings at respectable growth rates. Increases in revenues and earnings usually increases a company's intrinsic value, and history has shown that over the long term, increases in intrinsic value have been eventually followed by increases in stock market value.
Sincerely yours,
/s/ Edson L. Bridges III
Edson L. Bridges III
President
/s/ Edson L. Bridges II
Edson L. Bridges II
Chairman
ELBIII:RDG:elc:kjs
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Exhibit 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JULY 1, 2004, THROUGH SEPTEMBER 30, 2004
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 |
|
||
Allergan, Inc. |
2,000 |
5,000 |
Altria Group, Inc. |
5,000 |
50,000 |
(1) Bank of America Corporation |
15,000 |
25,000 |
(2) ChevronTexaco Corp. |
10,000 |
20,000 |
Colgate Palmolive Co. |
3,000 |
15,000 |
H & R Block, Inc. |
3,000 |
10,000 |
Lowes Companies |
3,000 |
13,000 |
Medtronic, Inc. |
10,000 |
10,000 |
Omnicare |
5,000 |
15,000 |
Pepsico, Inc. |
5,000 |
25,000 |
(3) Qualcomm, Inc. |
7,500 |
10,000 |
Sysco Corp. |
10,000 |
10,000 |
Tyco International |
3,000 |
15,000 |
Wells Fargo & Co. |
5,000 |
20,000 |
Various Issues of Commercial Paper Notes purchased during 3rd Quarter, 2004 |
36,110M |
4,524M |
(1) Received 10,000 shares in a 2-for-1 stock split on August 30, 2004.
(2) Received 10,000 shares in a 2-for-1 stock split on September 13, 2004.
(3) Received 2,500 shares in a 2-for-1 stock split on August 16, 2004.
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 |
Cardinal Health, Inc. |
15,000 |
-- |
First National of Nebraska, Inc. |
25 |
225 |
Gap, Inc. |
5,000 |
30,000 |
General Mills, Inc. |
10,000 |
-- |
Hospira, Inc. |
1,500 |
-- |
Merck & Co. |
10,000 |
-- |
United Online, Inc. |
30,000 |
-- |
Various Issues of Commercial Paper Notes Maturing during 3rd Quarter, 2004 |
33,803M |
-- |
------------------------------------------------------------------------------------
Exhibit 2
BRIDGES INVESTMENT FUND, INC.
SELECTED HISTORICAL FINANCIAL INFORMATIO
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 |
- |
12-31-03 |
62,586,435 |
2,016,560 |
31.04 |
.24 |
- |
Current Quarter Compared to Same Quarter in Prior Year
Valuation |
Net |
Shares |
Net Asset |
Dividend/ |
Capital |
09-30-03 |
55,560,048 |
1,985,237 |
27.99 |
.060 |
- |
09-30-04 |
67,620,066 |
2,200,256 |
30.73 |
.070 |
- |
------------------------------------------------------------------------------------------------------------------------------
F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 2004
(unaudited)
|
Number |
|
Fair |
COMMON STOCKS (86.8%) |
|||
Advertising 1.1% |
|||
Omnicom Group, Inc. |
10,000 |
$ 654,802 |
$ 730,600 |
Airfreight & Logistics 2.4% |
|||
Expeditors International Washington |
15,000 |
$ 553,554 |
$ 775,500 |
Fedex Corporation |
10,000 |
688,396 |
856,900 |
$ 1,241,950 |
$ 1,632,400 |
||
Auto Parts & Equipment 0.8% |
|||
Johnson Controls |
10,000 |
$ 385,750 |
$ 568,100 |
Banking and Finance 6.5% |
|||
Bank of America Corporation |
25,000 |
$ 1,007,674 |
$ 1,083,250 |
Fifth Third Bancorp |
10,000 |
486,523 |
492,200 |
First National of Nebraska, Inc. |
225 |
387,969 |
973,125 |
State Street Corporation |
15,000 |
62,367 |
640,650 |
Wells Fargo & Co. |
20,000 |
812,137 |
1,192,600 |
$ 2,756,670 |
$ 4,381,825 |
||
Beverages Soft Drinks 1.8% |
|||
PepsiCo, Inc. |
25,000 |
$ 698,139 |
$ 1,216,250 |
Building Residential/Commercial 2.2% |
|||
Centex Corporation |
10,000 |
$ 238,696 |
$ 504,600 |
D. R. Horton, Inc. |
30,000 |
407,704 |
993,300 |
$ 646,400 |
$ 1,497,900 |
||
Casino Hotels 1.6% |
|||
Harrah's Entertainment, Inc. |
20,000 |
$ 656,022 |
$ 1,059,600 |
Computers Hardware and Software 2.3% |
|||
Cisco Systems, Inc.* |
40,000 |
$ 361,396 |
$ 724,000 |
Microsoft Corporation |
30,000 |
266,000 |
829,500 |
$ 627,396 |
$ 1,553,500 |
||
Conglomerates Industrial 0.5% |
|||
General Electric |
10,000 |
$ 270,842 |
$ 335,800 |
Data Processing and Management 5.7% |
|||
Automatic Data Processing |
10,000 |
$ 398,716 |
$ 413,200 |
Fair Isaac and Company, Incorporated |
18,000 |
234,627 |
525,600 |
First Data Corporation |
50,000 |
1,952,060 |
2,175,000 |
Fiserv, Inc.* |
20,000 |
664,527 |
697,200 |
$ 3,249,930 |
$ 3,811,000 |
||
Diversified Operations 2.2% |
|||
Berkshire Hathaway Inc., Class B * |
350 |
$ 492,609 |
$ 1,004,850 |
Tyco International LTD |
15,000 |
449,686 |
459,900 |
$ 942,295 |
1,464,750 |
*Nonincome producing security
----------------------------------------------------------------------------------------------
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2004
(unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
|||
Drugs Medicines Cosmetics 4.0% |
|||
Abbott Laboratories |
15,000 |
$ 158,465 |
$ 635,400 |
Amgen, Inc.* |
17,000 |
581,020 |
965,770 |
Johnson & Johnson |
20,000 |
603,498 |
1,126,600 |
$ 1,342,983 |
$ 2,727,770 |
||
E Commerce 1.9% |
|||
Ebay, Inc.* |
14,000 |
$ 453,620 |
$ 1,287,160 |
Education Higher 0.3% |
|||
Apollo Group, Inc.* |
3,000 |
$ 193,740 |
$ 220,110 |
Electric Generation 0.7% |
|||
AES Corporation* |
50,000 |
$ 273,270 |
$ 499,500 |
Electronic Components Conductors 3.2% |
|||
Altera Corporation* |
20,000 |
$ 460,228 |
$ 391,400 |
Analog Devices, Inc. |
15,000 |
539,290 |
581,700 |
Applied Materials, Inc.* |
40,000 |
662,576 |
659,600 |
Intel Corporation |
25,000 |
483,548 |
501,500 |
$ 2,145,642 |
$ 2,134,200 |
||
Electronics 1.0% |
|||
Flextronics International Ltd.* |
50,000 |
$ 865,950 |
$ 662,500 |
Energy Oil & Gas Exploration and Production 1.0% |
|||
Anadarko Petroleum Corporation |
10,000 |
$ 526,200 |
$ 663,600 |
Finance Diversified 1.9% |
|||
Citigroup, Inc. |
12,000 |
$ 581,682 |
$ 529,440 |
Morgan Stanley Dean Witter & Co. |
15,000 |
750,012 |
739,500 |
$ 1,331,694 |
$ 1,268,940 |
||
Finance Investment Banks 1.1% |
|||
Goldman Sachs Group, Inc. |
8,000 |
$ 694,445 |
$ 745,920 |
Finance Real Estate 1.5% |
|||
Freddie Mac |
15,000 |
$ 461,417 |
$ 978,600 |
Finance Services 10.1% |
|||
Capital One Financial Corporation |
53,500 |
$ 1,935,422 |
$ 3,953,650 |
H & R Block, Inc. |
10,000 |
487,926 |
494,200 |
MBNA Corporation |
50,000 |
1,061,832 |
1,260,000 |
Nelnet, Inc., Class A* |
30,000 |
600,289 |
671,400 |
Paychex, Inc. |
15,000 |
536,898 |
452,250 |
$ 4,622,367 |
$ 6,831,500 |
||
*Nonincome producing security
-------------------------------------------------------------------------------------------
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2004
(unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
|||
Food Distributors 0.4% |
|||
Sysco Corporation |
10,000 |
$ 307,318 |
$ 299,200 |
Foods/Meats Packaged 0.4% |
|||
ConAgra Foods, Inc. |
10,000 |
$ 276,407 |
$ 257,100 |
Hotels/Resorts/Cruise Lines 0.7% |
|||
Carnival Corporation, Class A |
10,000 |
$ 253,072 |
$ 472,900 |
Insurance Brokers 1.4% |
|||
Marsh & McLennan Cos., Inc. |
20,000 |
$ 974,019 |
$ 915,200 |
Insurance Multiline 1.0% |
|||
American International Group, Inc. |
10,000 |
$ 566,397 |
$ 679,900 |
Insurance Property/Casualty 0.6% |
|||
Progressive Corporation |
5,000 |
$ 368,147 |
$ 423,750 |
Machinery Construction/Farming 0.9% |
|||
Trinity Industries, Inc. |
20,000 |
$ 386,383 |
$ 623,400 |
Medical Dental Services 0.6% |
|||
Omnicare, Inc. |
15,000 |
$ 590,135 |
$ 425,400 |
Medical Drugs 1.1% |
|||
Pfizer, Inc. |
25,000 |
$ 787,050 |
$ 765,000 |
Medical Instruments 0.8% |
|||
Medtronic, Inc. |
10,000 |
$ 494,436 |
$ 519,000 |
Medical Products 0.4% |
|||
Stryker Corporation |
6,000 |
$ 230,903 |
$ 288,480 |
Medical Wholesale Drug Distribution 0.5% |
|||
Allergan, Inc. |
5,000 |
$ 408,154 |
$ 362,750 |
Metal Aluminum 1.5% |
|||
Alcoa, Inc. |
30,000 |
$ 685,675 |
$ 1,007,700 |
Personal & Household Products 1.0% |
|||
Colgate Palmolive Company |
15,000 |
$ 757,468 |
$ 677,700 |
Petroleum Producing 2.9% |
|||
BP PLC Sponsored ADR |
15,000 |
$ 368,832 |
$ 862,950 |
ChevronTexaco Corporation |
20,000 |
340,535 |
1,072,800 |
$ 709,367 |
$ 1,935,750 |
||
*Nonincome producing security
-----------------------------------------------------------------------------------------
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2004
(unaudited)
|
Number |
|
Fair |
COMMON STOCKS (Continued) |
Publishing 1.2% |
|||
Gannett, Inc. |
10,000 |
$ 799,707 |
$ 837,600 |
Retail Restaurants 0.9% |
|||
Outback Steakhouse, Inc. |
15,000 |
$ 509,594 |
$ 622,950 |
Retail Stores Apparel and Clothing 0.8% |
|||
Gap, Inc. |
30,000 |
$ 147,698 |
$ 559,500 |
Retail Stores Building Materials and Home Improvement 2.8% |
|||
The Home Depot, Inc. |
30,000 |
$ 672,737 |
$ 1,176,000 |
Lowes Companies |
13,000 |
709,202 |
706,550 |
$ 1,381,939 |
$ 1,882,550 |
||
Retail Stores Consumer Electronics 2.4% |
|||
Best Buy Company, Inc. |
30,000 |
$ 687,851 |
$ 1,627,200 |
Retail Stores Department 1.3% |
|||
Target Corporation |
20,000 |
$ 316,811 |
$ 905,000 |
Steel 0.7% |
|||
Nucor Corporation |
5,000 |
$ 242,803 |
$ 456,850 |
Telecommunications 3.8% |
|||
Level 3 Communications * |
157,000 |
$ 1,119,225 |
$ 406,630 |
Qualcomm, Inc. |
10,000 |
363,732 |
390,400 |
Vodafone Group PLC |
30,000 |
772,993 |
723,300 |
West Corporation * |
35,000 |
687,401 |
1,019,550 |
$ 2,943,351 |
$ 2,539,880 |
||
Telecommunications Equipment 0.6% |
|||
Nokia Corporation Sponsored ADR |
30,000 |
$ 328,513 |
$ 411,600 |
Television Cable 0.8% |
|||
Comcast Corporation Special Class A * |
20,000 |
$ 601,925 |
$ 558,400 |
Tobacco 3.5% |
|||
Altria Group, Inc. |
50,000 |
$ 2,147,714 |
$ 2,352,000 |
TOTAL COMMON STOCKS (Cost $42,944,361) |
$42,944,361 |
$58,678,285 |
|
PREFERRED STOCKS (1.2%) |
|||
Banking and Finance 0.4% |
|||
Harris Preferred Capital Corp., |
10,000 |
$ 250,000 |
$ 252,300 |
*Nonincome producing security
------------------------------------------------------------------------------------------
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2004
(unaudited)
|
Number |
|
Fair |
PREFERRED STOCKS (Continued) |
|||
Financial REITS 0.8% |
|||
Equity Office Properties Trust, 7.75% Series G |
10,000 |
$ 272,179 |
$ 267,300 |
Public Storage, 8.00% Series R |
10,000 |
270,038 |
264,100 |
$ 542,217 |
$ 531,400 |
||
TOTAL PREFERRED STOCKS (Cost $792,217) |
$ 792,217 |
$ 783,700 |
|
TOTAL PREFERRED AND COMMON STOCKS |
$43,736,578 |
$59,461,985 |
|
DEBT SECURITIES (12.5%) |
|||
Electronic Components Conductors 0.4% |
|||
Applied Materials, Inc. 7.125% Senior Notes due October 15, 2017 |
$250,000 |
$ 256,149 |
$ 289,490 |
Energy Alternate Sources 0.3% |
|||
CalEnergy Co., Inc., 7.630% Notes |
|
|
|
Finance Services 7.5% |
|||
General Electric Credit Corp. Commercial Paper Note 1.500% due October 1, 2004** |
$1,885,000 |
$ 1,884,764 |
$ 1,884,764 |
Prudential Funding Corp. Commercial Paper Note 1.530% due October 1, 2004** |
$2,640,000 |
2,639,215 |
2,639,215 |
Duke Capital Corporation 8% Senior Notes due October 1, 2019 |
$ 250,000 |
275,868 |
298,143 |
MBNA Corporation 7.50% Senior Notes due March 15, 2012 |
$ 250,000 |
266,766 |
287,267 |
$ 5,066,613 |
$ 5,109,389 |
||
Food Packaged 0.4% |
|||
Kraft Foods, Inc. 6.250% Notes due June 1, 2012 |
$ 250,000 |
$ 262,716 |
$ 273,051 |
Hotels and Motels 0.4% |
|||
Marriott International 7.875% Notes Series C |
$ 250,000 |
$ 250,062 |
$ 289,092 |
Medical Wholesale Drug Distribution 0.4% |
|||
Cardinal Health, Inc. 6.75% Notes due February 15, 2011 |
$ 250,000 |
$ 259,798 |
$ 269,667 |
*Nonincome producing security
------------------------------------------------------------------------------------------
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 2004
(unaudited)
|
Principal |
|
Fair |
DEBT SECURITIES (Continued) |
|||
Retail Stores Department 0.6% |
|||
Dillard Department Stores, Inc., 7.850% |
|
|
|
Penney (J.C.) Co., Inc. 7.40% Notes due April 1, 2037 |
|
|
|
$ 414,744 |
$ 426,655 |
||
Services Data Processing 0.4% |
|||
Electronic Data Systems 7.125% Notes due October 15, 2009 |
$ 250,000 |
$ 262,031 |
$ 267,952 |
Telecommunications 0.8% |
|||
Level 3 Communications, Inc., 9.125% Senior |
$ 700,000 |
$ 544,861 |
$ 521,500 |
Tobacco 0.4% |
|||
R.J. Reynolds Holding 7.250% Notes due June 1, 2012 |
$ 250,000 |
$ 260,152 |
$ 243,125 |
U.S. Government 0.9% |
|||
U.S. Treasury, 9.375% Bonds, |
|
|
|
U.S. Treasury, 7.500% Bonds, |
|
|
|
$ 560,238 |
$ 604,688 |
||
TOTAL DEBT SECURITIES (Cost $8,337,364) |
$ 8,337,364 |
$ 8,516,401 |
|
TOTAL INVESTMENTS IN SECURITIES (100.5%) |
|
$52,073,942 |
$67,978,386 |
CASH AND RECEIVABLES |
|
|
|
NET ASSETS, September 30, 2004 (100.0%) |
|
$67,620,066 |
|
** Commercial Paper is purchased at a discount and redeemed at par.
The accompanying notes to financial statements
are an integral part of this schedule.
----------------------------------------------------------------------------------------------------
F-7
ASSETS |
|
Investments, at fair value |
|
Common and preferred stocks (cost $43,736,578) |
$59,461,985 |
Debt securities (cost $8,337,364) |
8,516,401 |
Total investments |
$67,978,386 |
Cash |
138,010 |
Receivables |
|
Dividends and interest |
164,915 |
Subscriptions to capital stock |
247,468 |
Securities Sold |
1,066,980 |
TOTAL ASSETS |
$69,595,759 |
LIABILITIES |
|
Purchase of Securities |
$ 1,847,166 |
Investment advisor, management and |
|
service fees payable |
81,942 |
Accrued operating expenses |
46,585 |
TOTAL LIABILITIES |
$ 1,975,693 |
NET ASSETS |
|
Capital stock, $1 par value - Authorized 6,000,000 shares, 2,200,256 shares |
|
Paid-in surplus - |
53,081,400 |
Net capital |
$55,281,656 |
Net unrealized appreciation on investments |
15,904,445 |
Accumulated undistributed net realized loss |
( 3,728,306) |
Accumulated undistributed net investment income |
162,271 |
TOTAL NET ASSETS |
$67,620,066 |
=========== |
|
NET ASSET VALUE PER SHARE |
$30.73 |
====== |
|
OFFERING PRICE PER SHARE |
$30.73 |
====== |
|
REDEMPTION PRICE PER SHARE |
$30.73 |
====== |
The accompanying notes are an integral
part of these financial statements.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
F-8
INVESTMENT INCOME |
||
Interest |
$ 249,728 |
|
Dividends (Net of foreign withholding taxes |
||
of $2, 825) |
588,205 |
|
Total Investment Income |
$ 837,933 |
|
EXPENSES |
||
Management fees |
246,695 |
|
Custodian fees |
32,919 |
|
Insurance and other administrative fees |
24,278 |
|
Bookkeeping services |
17,575 |
|
Printing and supplies |
18,571 |
|
Professional services |
32,275 |
|
Dividend disbursing and transfer |
||
agent fees |
24,254 |
|
Computer programming |
6,750 |
|
Taxes and licenses |
1,099 |
|
Independent directors expense and fees |
14,784 |
|
|
||
|
||
Total Expenses |
$ 419,200 |
|
NET INVESTMENT INCOME |
$ 418,733 |
|
NET REALIZED AND UNREALIZED |
||
LOSS ON INVESTMENTS |
||
Net realized loss on transactions in |
||
investments |
$(1,783,073) |
|
Net increase in unrealized appreciation |
||
of investments |
967,950 |
|
NET REALIZED AND UNREALIZED GAIN |
||
ON INVESTMENTS |
$ (815,123) |
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ (396,390) |
|
=========== |
The accompanying notes are an integral
part of these financial statements.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
F-9
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(Unaudited)
2004 |
2003 |
|
INCREASE IN NET ASSETS |
||
Operations - |
||
Net investment income |
$ 418,733 |
$ 353,875 |
Net realized loss on |
||
transactions in investments |
(1,783,073) |
(1,101,434) |
Net increase/(decrease) in unrealized |
||
appreciation of investments |
967,950 |
10,965,779 |
Net decrease in net assets |
||
resulting from operations |
$ (396,390) |
$ 10,218,220 |
Net equalization debits/credits |
6,826 |
(1,053) |
|
||
Distributions to shareholders from - |
||
Net investment income |
(263,186) |
(228,173) |
Net realized gain from investments |
-- |
-- |
Return of capital |
-- |
-- |
Net capital share transactions |
5,686,381 |
(283,487) |
Total increase/(decrease) in net assets |
$ 5,033,631 |
$ 9,705,507 |
NET ASSETS: |
||
Beginning of year |
$ 62,586,435 |
$ 45,854,541 |
End of nine months |
$ 67,620,066 ============ |
$ 55,560,048 ============ |
The accompanying notes are an integral
part of these financial statements.
----------------------------------------------------------------------------------------------------------------
F-10
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(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.
2004 |
2003 |
Net Change |
|
Net unrealized appreciation |
|
|
|
Aggregate gross unrealized |
$ 17,617,978 |
$ 12,738,692 |
|
Aggregate gross unrealized |
(1,713,533) |
(4,402,241) |
|
Net |
$ 15,904,445 |
$ 8,336,451 |
$ 7,567,994 |
=========== |
=========== |
=========== |
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.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends, and capital gains at various rates.
----------------------------------------------------------------------
F-11
C. Distributions to Shareholders
The Fund accrues income dividends to shareholders on a quarterly basis as of 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 Management, 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.
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, 2003.
(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.
- ---------------------------------------------------------------------------------
F-12
(4) SECURITY TRANSACTIONS
The cost of long-term investment purchases during the nine months ended
September 30, was:
|
2004 |
2003 |
Other Securities |
$ 9,590,123 |
$ 8,526,556 |
=========== |
=========== |
Net proceeds from sales of long-term investments during the nine months
ended September 30, were:
2004 |
2003 |
|
United States government obligations |
$ 202,875 |
$ 653,485 |
Other Securities |
6,702,092 |
9,253,920 |
Total Net Proceeds |
$ 6,904,967 |
$ 9,907,405 |
=========== |
=========== |
|
Total Cost Basis of Securities Sold |
$ 8,688,040 |
$11,008,854 |
=========== |
=========== |
(5) NET ASSET VALUE
The net asset value per share represents the effective price for all
subscriptions and redemptions.
2004 |
2003 |
|
Shares sold |
229,395 |
121,156 |
Shares issued to shareholders in |
||
reinvestment of net investment |
||
income and realized gain from |
||
security transactions |
10,440 |
11,201 |
239,835 |
132,357 |
|
Shares redeemed |
56,138 |
136,889 |
Net increase |
183,697 |
(4,532) |
======= |
======= |
Value of capital stock issued and redeemed is as follows:
2004 |
2003 |
|
Shares sold |
$ 7,101,160 |
$ 3,067,288 |
Shares issued to shareholders in |
||
reinvestment of net investment |
||
income and realized gain from |
||
security transactions |
323,604 |
278,944 |
$ 7,424,764 |
$ 3,346,232 |
|
Shares redeemed |
1,738,383 |
3,629,719 |
Net increase |
$ 5,686,381 |
$ (283,487) |
=========== |
============ |
---------------------------------------------------------------------------------------
F-13
(7) DISTRIBUTIONS TO SHAREHOLDERS
On October 12, 2004, a cash distribution was declared from net investment
income accrued through September 30, 2004. This distribution was calculated
as $.0575 per share. The dividend will be paid on October 25, 2004, to
shareholders of record on October 12, 2004.
(8) FEDERAL INCOME TAX INFORMATION
Distributions paid during the years ended December 31, 2003 and 2002, totaled $477,290 and $409,023 and were characterized as ordinary income for tax purposes.
The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the dissimilar character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of December 31, 2003 (date of the latest tax return filed), the components of the tax basis cost of investments and net unrealized appreciation were as follows:
Federal tax cost of investments |
$ 47,614,095 |
Unrealized appreciation |
$ 17,568,249 |
Unrealized depreciation |
$( 2,631,754 ) |
Net unrealized appreciation |
$ 14,936,495 |
As of December 31, 2003 (date of the latest tax return filed), the components of distributable earnings on a tax basis were as follows:
Net unrealized appreciation |
$ 14,936,495 |
Undistributed ordinary income |
$ 6,274 |
Accumulated capital losses |
$( 1,928,636 ) |
The difference between accumulated net realized capital losses and accumulated capital losses for tax purposes is attributable to the deferral of capital losses occurring subsequent to October 31, 2003, of $16,598 for tax purposes. For tax purposes, such losses will be realized in the year ending December 31, 2004. The accumulated capital losses of $1,928,636 represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: $1,600 in 2008, $353,438 in 2009, and $1,573,598 in 2010.
-----END PRIVACY-ENHANCED MESSAGE-----