-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WkNyLnvLtgwLLGr6/oS4LWy2VzqiWVcKbeO9NqqJU+R69fHKqJZ4kg4f4HLPefUb wnFPyDFdn772xbLbF19JBQ== 0000014170-98-000010.txt : 19980504 0000014170-98-000010.hdr.sgml : 19980504 ACCESSION NUMBER: 0000014170-98-000010 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980501 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIDGES INVESTMENT FUND INC CENTRAL INDEX KEY: 0000014170 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 476027880 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-01209 FILM NUMBER: 98608352 BUSINESS ADDRESS: STREET 1: 8401 W DODGE RD STREET 2: SUITE 256 CITY: OMAHA STATE: NE ZIP: 68114 BUSINESS PHONE: 4023974700 MAIL ADDRESS: STREET 1: 8401 WEST DODGE ROAD STREET 2: SUITE 256 CITY: OMAHA STATE: NE ZIP: 68114 N-30B-2 1 BRIDGES INVESTMENT FUND, INC. FIRST QUARTER 1998 CONTENTS OF REPORT Pages 1 - 5 Shareholder Letter Exhibit 1 Portfolio Transactions from January 1, 1998, through March 31, 1998 Exhibit 2 Quarter-to-Quarter Changes in Financial Data Exhibit 3 Reports to Stockholders of Management Companies Pages F1-F14 Unaudited Financial Statements for the Three Months Ended March 31, 1998 This report has been prepared for the information of the shareholders of Bridges Investment Fund, Inc. and is under no circumstances to be construed as an offering of shares of the Fund. Such offering is made only by Prospectus, a copy of which may be obtained by inquiry to the Fund's office. BRIDGES INVESTMENT FUND, INC. 8401 West Dodge Road Omaha, Nebraska 68114 Telephone 402-397-4700 Facsimile 402-397-8617 Directors Frederick N. Backer Edson L. Bridges II Edson L. Bridges III N. P. Dodge, Jr. John W. Estabrook Jon D. Hoffmaster John J. Koraleski Roger A. Kupka Gary L. Petersen Roy A. Smith L.B. Thomas Officers Edson L. Bridges II - Chairman and Chief Executive Officer Edson L. Bridges III - President Douglas P. Person - Vice President Rosemary M. Teckmeyer - Vice President Mary Ann Mason - Secretary Kathleen J. Stranik - Assistant Secretary Nancy K. Dodge - Treasurer Auditor Arthur Andersen LLP 1700 Farnam Street Omaha, Nebraska 68102 Corporate Counsel Baird, Holm, McEachen, Pedersen, Hamann & Strasheim 1500 Woodmen Tower Omaha, Nebraska 68102 APRIL 27, 1998 DEAR SHAREHOLDER: FIRST QUARTER REVIEW - -------------------- THE NET ASSET VALUE PER SHARE OF THE FUND WAS $32.27 ON MARCH 31, 1998. THIS PRICE WAS 11.2% HIGHER THAN THE $29.02 NET ASSET VALUE PER SHARE AT YEAR- END, 1997. THE $32.27 PRICE WAS THE HIGHEST QUARTER-END VALUATION ACHIEVED IN THE HISTORY OF THE FUND. THE $3.25 PER SHARE PRICE GAIN FROM $29.02 TO $32.27 RESULTED IN AN 11.2% TOTAL RETURN FOR THE FIRST QUARTER OF 1998. THE DOW JONES INDUSTRIALS AVERAGE AND THE STANDARD & POOR'S 500 COMPOSITE INDEX BOTH ADVANCED TO NEW ALL-TIME HIGH POINTS DURING THE FIRST QUARTER OF 1998 DUE TO A CONTINUED STRONG FLOW OF FUNDS INTO U.S. EQUITIES THAT RESULTED IN AN EXPANSION IN PRICE-TO-EARNINGS RATIOS TO A GREATER DEGREE THAN HAS GENERALLY BEEN THE CASE THROUGHOUT THE MARKET EXPERIENCE FOR THE 1990'S. OPERATIONS - ---------- THE NET ASSETS OF THE FUND WERE $41,413,655 ON MARCH 31, 1998, REPRESENTING THE HIGHEST VALUE FOR ANY CALENDAR QUARTER REPORTING DATE IN THE HISTORY OF THE FUND. NET ASSETS GREW $4,766,120 FROM THE 1997 YEAR ENDING TOTAL OF $36,647,535, AN INCREASE OF 13.0% FOR THE FIRST QUARTER OF 1998. THERE WERE 1,283,322 SHARES OF CAPITAL STOCK OUTSTANDING ON MARCH 31, 1998. THIS LEVEL OF SHARES OUTSTANDING REPRESENTED A RECORD HIGH FOR ANY THREE-MONTH ACCOUNTING STATEMENT PERIOD. THE NET GAIN IN SHARES OUTSTANDING FOR THE FIRST QUARTER OF 1998 WAS 20,504, WHICH CONSTITUTED A 1.6% ADVANCE OVER THE 1,262,818 SHARES OUTSTANDING AT THE END OF 1997. NET INVESTMENT INCOME WAS $179,338 FOR THE FIRST QUARTER OF 1998 COMPARED TO $163,218 FOR THE SAME PERIOD ONE YEAR AGO. NET REALIZED CAPITAL GAINS WERE $568,549 ON THE SECURITIES PORTFOLIO FOR THE FUND FOR THE QUARTER ENDING MARCH 31, 1998. THERE WERE $163,218 IN NET REALIZED CAPITAL GAINS IN THE FUND'S PORTFOLIO FOR THE COMPARABLE PERIOD IN 1997. THE FUND'S UNAUDITED FINANCIAL STATEMENTS, APPEARING ON PAGES F-1 THROUGH F-14, PROVIDE THE SCHEDULE OF PORTFOLIO INVESTMENTS, THE STATEMENT OF ASSETS AND LIABILITIES, THE STATEMENT OF OPERATIONS, AND THE NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1998. THESE DOCUMENTS COMPRISE OUR BASIC REPORT TO YOU. PLEASE REFER TO EXHIBITS 1 AND 2 FOR THE FUND'S PORTFOLIO TRANSACTIONS FOR THE CURRENT QUARTER AND FOR THE HISTORICAL INFORMATION ON OUR OPERATIONS WITH RESPECT TO NET ASSETS, SHARES OUTSTANDING, NET ASSET VALUE PER SHARE, DIVIDENDS, AND CAPITAL GAINS DISTRIBUTIONS. PORTFOLIO CHANGES DURING FIRST QUARTER, 1998 - -------------------------------------------- PORTFOLIO CHANGES DURING FIRST QUARTER, 1998, FOLLOWED TWO BROAD THEMES. FIRST, SALES WERE EFFECTED IN POSITIONS WHERE WE FELT GROWTH PROSPECTS WERE BELOW AVERAGE AND/OR WHERE VALUATIONS HAD RISEN TO RELATIVELY HIGH LEVELS. Shareholder Letter -2- April 27, 1998 STOCKS REDUCED OR ELIMINATED INCLUDE GENERAL ELECTRIC, GEORGIA PACIFIC, HEWLETT PACKARD, KIMBERLY CLARK, MONSANTO, SPRINT, TRICON GLOBAL RESTAURANTS, AND WEYERHAEUSER. SECOND, A NUMBER OF NEW POSITIONS WERE ESTABLISHED IN COMPANIES WHICH WE BELIEVE HAVE ABOVE AVERAGE LONG-TERM EARNINGS GROWTH PROSPECTS AND WHICH WE BELIEVE MIGHT BENEFIT FROM A SHIFT OVER TIME OF INVESTOR FOCUS FROM LARGE CAPITALIZATION COMPANIES TOWARD MEDIUM AND SMALLER CAPITALIZATION ISSUES. THE AVERAGE AND MEDIAN MARKET CAPITALIZATION OF THE 11 NEW STOCKS PURCHASED DURING THE FIRST QUARTER IS $4.1 BILLION AND $3.5 BILLION RESPECTIVELY ($3.1 AND $3.5 BILLION RESPECTIVELY EXCLUDING AMERICA ONLINE). BY CONTRAST, THE AVERAGE AND MEDIAN MARKET CAPITALIZATION FOR THE FUND'S REMAINING EQUITIES IS $44.3 BILLION AND $24.7 BILLION RESPECTIVELY. IT IS LIKELY THAT THE SMALLER MARKET CAPITALIZATION OF THESE NEW COMPANIES WILL RESULT IN SOMEWHAT GREATER PRICE VOLATILITY RELATIVE TO THE AVERAGE STOCK IN THE PORTFOLIO; WE WOULD LOOK TO INCREASE THE POSITIONS IN THESE COMPANIES DURING PERIODS OF WEAKNESS IN THESE STOCKS OVER THE REMAINDER OF 1998 AND BEYOND. THE NEW PURCHASES WERE CONCENTRATED IN FOUR INDUSTRY SECTORS: (1) BUSINESS SERVICES (CINTAS, SYLVAN LEARNING, ACCUSTAFF, AND SUNGARD DATA SYSTEMS); (2) TECHNOLOGY (SAVILLE SYSTEMS AND NETWORK ASSOCIATES); (3) HEALTH CARE (CONCENTRA, QUINTILES TRANSNATIONAL, AND STERIS); AND (4) MEDIA (AMERICA ONLINE AND OUTDOOR SYSTEMS). OUTLOOK - ------- THE STRONG RETURNS GENERATED BY COMMON STOCKS DURING THE FIRST QUARTER OF 1998 SURPRISED MANY INVESTORS, ESPECIALLY GIVEN THE EXTRAORDINARY EQUITY RETURNS EXPERIENCED DURING THE PRIOR THREE YEARS. IN CONTRAST WITH THE STRONG PRICE APPRECIATION OF THE 1995-1997 PERIOD, WHICH WAS LARGELY JUSTIFIED BY ABOVE- AVERAGE CORPORATE EARNINGS GROWTH AND A SIGNIFICANT DECLINE IN INTEREST RATES, THE STRONG PRICE GAINS REGISTERED DURING THE FIRST QUARTER OF 1998 WERE POSTED NOTWITHSTANDING SLOWING CORPORATE EARNINGS GROWTH AND THE INCREASING RISK OF A LESS HOSPITABLE INTEREST RATE ENVIRONMENT. EQUITY VALUATION LEVELS ARE AT HISTORIC HIGHS BASED ON MANY DIFFERENT VALUATION PARAMETERS. FURTHER, SIGNS OF SPECULATIVE EXCESS APPEAR TO BE INCREASING, PARTICULARLY IN THE FORM OF THE LARGE MARKET VALUES BEING ACCORDED A NUMBER OF INTERNET-RELATED STOCKS. AGAINST THIS BACKDROP, OUR INCLINATION WILL BE TO PROCEED SOMEWHAT CAUTIOUSLY THROUGHOUT THE REMAINDER OF 1998, LOOKING TO REALIZE GAINS WHERE VALUATIONS REACH EXTREME LEVELS AND REPOSITIONING MONEY DURING THE PERIODS OF INTERMITTENT BROAD MARKET WEAKNESS WHICH WE ANTICIPATE. WE CONTINUE TO BELIEVE THAT 1998 WILL BE CHARACTERIZED BY INCREASING SHARE PRICE VOLATILITY. WE WILL CONTINUE TO FOCUS ON THOSE COMPANIES WHICH WE BELIEVE OFFER THE BEST COMBINATION OF EXCELLENT LONG-TERM EARNINGS GROWTH POTENTIAL AND REASONABLE VALUATION CHARACTERISTICS IN AN ERA OF GENERALLY HIGH VALUATIONS FOR COMMON STOCKS. REQUIRED REPORTS - ---------------- RULE 30D-1(6) OF THE GENERAL RULES AND REGULATIONS UNDER THE INVESTMENT COMPANY ACT OF 1940, AS PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION, REQUIRED CERTAIN REPORTS TO STOCKHOLDERS WITH RESPECT TO ANY MATTER THAT WAS SUBMITTED TO A SHAREHOLDER VOTE DURING THE PERIOD COVERED BY THE SHAREHOLDER Shareholder Letter -3- April 27, 1998 REPORT. THE ANNUAL MEETING OF SHAREHOLDERS OF THE FUND WAS ON FEBRUARY 17, 1998. THE INFORMATION REQUIRED TO BE REPORTED WITH RESPECT TO THIS MEETING APPEARS IN EXHIBIT 3. A SIMILAR PRESENTATION WILL BE MADE EACH TIME THERE IS AN ANNUAL OR SPECIAL MEETING, AND IN THE INSTANCE OF THIS REPORT, THE SAME INFORMATION WILL BE PUBLISHED IN JANUARY, 1999, WITHIN THE ANNUAL SHAREHOLDER REPORT FOR 1998 TO FULFILL REQUIREMENTS IN CONNECTION WITH PROXY SOLICITATION FOR THE NEXT ANNUAL MEETING OF SHAREHOLDERS. CASH DISTRIBUTION - ----------------- ON APRIL 13, 1998, THE BOARD OF DIRECTORS DECLARED A $.135 PER SHARE DIVIDEND ON SHARES OF CAPITAL STOCK OUTSTANDING ON APRIL 13, 1998 -- THE RECORD DATE FOR THIS INCOME DISTRIBUTION. THE DIVIDEND AMOUNT WILL BE PAYABLE ON OR ABOUT APRIL 27, 1998. THIS DIVIDEND IS PAYABLE FROM NET INVESTMENT INCOME EARNED DURING THE JANUARY-MARCH, 1998, QUARTER. PROSPECTUS - ---------- THIS LETTER TRANSMITS THE 1998 EDITION OF THE FUND'S PROSPECTUS THAT WILL BECOME EFFECTIVE ON APRIL 28, 1998. THE PROSPECTUS IS PART A OF A THREE SEGMENT FILING WITH THE SECURITIES AND EXCHANGE COMMISSION IN WASHINGTON, D.C. PART B IS THE STATEMENT OF ADDITIONAL INFORMATION, AND PART C CONTAINS OTHER INFORMATION. THE FUND WILL MAIL PART A WITH THIS LETTER. PLEASE NOTIFY MRS. MARY ANN MASON, SECRETARY OF THE FUND, IF YOU WISH TO RECEIVE PART B AND/OR PART C, AND SHE WILL MAIL COPIES OF THE 1998 REVISIONS IN THESE DOCUMENTS TO YOU. THE ANNUAL REPORT FOR 1997 IS AN INTEGRAL PART OF THE PROSPECTUS OFFERING FOR 1998. EACH SHAREHOLDER HAS BEEN MAILED OR PERSONALLY RECEIVED AN ANNUAL REPORT FOR 1997 WITH THEIR PROXY STATEMENT IN JANUARY, 1998, OR WHEN HE OR SHE MADE AN ORIGINAL PURCHASE TRANSACTION IN THE FUND SUBSEQUENT TO THE JANUARY 22, 1998, DATE OF ISSUANCE FOR THIS REPORT. ANY PERSON WHO DESIRES ANOTHER COPY OF THE ANNUAL REPORT FOR 1997 SHOULD REQUEST THAT DOCUMENT FROM MRS. MASON. NEW OPPORTUNITIES - ----------------- ON APRIL 28, 1998, THE FUND WILL COMMENCE OFFERING THE ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT PLANS AND THE EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT PLANS THAT WERE MADE POSSIBLE AS THE RESULT OF THE PASSAGE OF THE TAXPAYER RELIEF ACT OF 1997. THE PRINCIPAL ADVANTAGE OF THE ROTH IRA ACCOUNT WILL BE THE PROTECTION OF EARNINGS AND CAPITAL GAINS FROM TAX WHEN RETIREMENT DISTRIBUTIONS COMMENCE FROM THE ACCOUNTS. FURTHER, CAPITAL CONTRIBUTED TO THE ROTH IRA ACCOUNT MAY BE WITHDRAWN WITHOUT A PENALTY THAT APPLIES TO EARLY WITHDRAWALS FROM REGULAR OR "TRADITIONAL" IRA ACCOUNTS. THE EDUCATION IRA WILL PERMIT FUNDING AT THE RATE OF $500 PER YEAR FOR DESIGNATED BENEFICIARIES, MOST LIKELY TO BE CHILDREN AND GRANDCHILDREN, TO EXCLUSIVELY PAY FOR HIGHER EDUCATION EXPENSES WITHIN THE MEANING OF SECTION 530(B)2 OF THE INTERNAL REVENUE CODE. EARNINGS AND CAPITAL GAINS ACHIEVED IN THE EDUCATION IRA WILL BE TAX FREE UPON QUALIFYING WITHDRAWALS FROM THE ACCOUNT. ANNUAL CONTRIBUTIONS MAY ALSO BE TAKEN FROM THE EDUCATION IRA FREE OF INCOME TAXES. ASSETS OF THE EDUCATION IRA MAY BE HELD FOR UTILIZATION FOR EDUCATIONAL EXPENSES UP TO THE AGE OF 30. CONTRIBUTIONS FOR A DESIGNATED BENEFICIARY MUST STOP AFTER ATTAINMENT OF AGE 18. THE "RESPONSIBLE INDIVIDUAL" FOR THE DESIGNATED BENEFICIARY MAY ELECT TO CHANGE BENEFICIARIES TO ANOTHER FAMILY MEMBER IN THE EVENT THE ORIGINAL BENEFICIARY CANNOT USE THE FUND SET ASIDE FOR HIS OR HER NEEDS. Shareholder Letter -4- April 27, 1998 THE FUND'S MINIMUM SUBSCRIPTION AMOUNT WAS REDUCED FROM $800 TO $500 WITH THIS PROSPECTUS CHANGE IN ORDER TO ACCOMMODATE THE POTENTIAL INVESTORS IN THE EDUCATION IRA. SHAREHOLDERS AND PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE TAXPAYER RELIEF ACT OF 1997 OPENED UP OR BROADENED THE ABILITY OF INDIVIDUALS TO CONTRIBUTE TO THE TRADITIONAL IRA OR TO ROTH IRA ACCOUNTS. UNDER THE NEW LAW, INDIVIDUALS AND THEIR SPOUSES MAY CONTRIBUTE, REGARDLESS OF EMPLOYER RETIREMENT PLAN PARTICIPATION, THE SMALLER OF $2,000 OR 100% OF EARNED INCOME. AS AN EXAMPLE, AN INDIVIDUAL AND HIS OR HER SPOUSE COULD EACH CONTRIBUTE $2,000 TO A ROTH IRA, OR $4,000 IN THE AGGREGATE, AS LONG AS COMBINED EARNED INCOME IS AT LEAST $4,000. THIS ABILITY TO MAKE CONTRIBUTIONS BEGINS TO PHASE OUT WHEN MODIFIED ADJUSTED GROSS INCOME REACHES BETWEEN $150,000 - $160,000 FOR COUPLES FILING JOINT INCOME TAX RETURNS. FOR INDIVIDUALS FILING SINGLE RETURNS, THE PHASE OUT IS BETWEEN $95,000 - $110,000 OF ADJUSTED GROSS INCOME, AND FOR MARRIED COUPLES FILING SEPARATELY, THE PHASE OUT IS BETWEEN $0 - $15,000. SOME OWNERS OF TRADITIONAL IRA ACCOUNTS WHOSE ADJUSTED GROSS INCOME IS NOT MORE THAN $100,000 MAY WISH TO CONSIDER ROLLING A PORTION OR ALL OF THEIR PRESENT IRA ACCOUNT INTO A ROTH IRA ROLLOVER, TERMED A ROTH CONVERSION IRA ON OUR FUND'S MODEL ROTH IRA ACCOUNT FORM. IF SUCH A CONVERSION TAKES PLACE DURING 1998, THERE IS A SPECIAL FOUR-YEAR INCOME AVERAGING PROVISION PERMITTED TO THE TAXPAYER UNDER THE INTERNAL REVENUE CODE. YOU SHOULD CONSULT YOUR TAX CONSULTANT OR PREPARER AS TO THE ADVISABILITY OF CONVERTING FROM A TRADITIONAL TO A ROTH IRA. BRIAN M. KIRKPATRICK, A FINANCIAL ANALYST ON THE STAFF OF BRIDGES INVESTMENT COUNSEL, INC. WILL BE PLEASED TO HANDLE QUESTIONS FROM YOU ABOUT EDUCATION AND ROTH IRA ACCOUNTS IF YOU REQUIRE ASSISTANCE FROM OUR ORGANIZATION. IN SUM, A GREAT MANY NEW SAVINGS INITIATIVES ARE POSSIBLE FOR INVESTMENTS, THAT COMMENCED AS OF THE FIRST DAY OF 1998. WITH RESPECT TO THE EDUCATION IRA. IT WILL BE IMPORTANT FOR INVESTMENTS TO BE MADE AS EARLY AS POSSIBLE IN THE LIFE OF A CHILD. GRANDPARENTS WITH INCOME LEVELS TOO HIGH TO ALLOW CONTRIBUTIONS MAY WISH TO CONSIDER MAKING GIFTS TO THEIR CHILDREN OR OTHER PERSONS WITH INCOME LEVELS BENEATH THE PERMISSIBLE CONTRIBUTION CEILINGS FOR PERSONS TO MAKE WHO THEN BECOME "RESPONSIBLE INDIVIDUALS" TO ADOPT THE IRA. WITH RESPECT TO THE ROTH IRA, THE GENERAL RULE WILL BE THAT THE LONGER THE TIME FRAME BETWEEN THE ADOPTION DAY AND THE RETIREMENT DATE FOR THE "DEPOSITOR", THE GREATER THE ULTIMATE NET AFTER-TAX PAYMENTS BENEFIT SHOULD BECOME. OFFICER RETIREMENT - ------------------ ON APRIL 13, 1998, ROSEMARY M. TECKMEYER STEPPED DOWN AS VICE PRESIDENT OF OUR FUND. ROSEMARY WAS THE SECOND PERSON TO BECOME RESPONSIBLE FOR THE DAILY ACCOUNTING OF THE FUND'S ACTIVITIES, A POSITION THAT SHE HELD FROM THE LATE 1960'S INTO THE EARLY 1980'S BEFORE TURNING THE TREASURER'S POSITION OVER TO NANCY K. DODGE. OUR SHAREHOLDERS HAVE BEEN BLESSED WITH HER ACUMEN ABOUT AND DEDICATION TO THE FUND'S OPERATION. FOR MORE THAN A QUARTER CENTURY, SHE HAS GATHERED THE INFORMATION FOR THE CHAIRMAN TO ANNUALLY MAKE THE NECESSARY DISCLOSURES FOR THE ANNUAL PROXY, THE SHAREHOLDER PRESENTATION STATEMENT, AND THE PROSPECTUS STATEMENTS. HER WORK HAS BEEN INVALUABLE TO OUR ORGANIZATION. Shareholder Letter -5- April 27, 1998 A REMARKABLE TIME - ----------------- THE CONFIRMATION STATEMENTS FOR SHAREHOLDER ACCOUNTS WITH DIVIDEND REINVESTMENT NOTICES WILL GO FORTH TODAY WITH A MESSAGE ABOUT AN ALL-TIME HIGH PRICE OF $32.97 PER SHARE SET ON APRIL 22, 1998. THIS MOMENT IN TIME IS SPECIAL IN THE SENSE THAT SO MUCH CAPITAL HAS BEEN CREATED IN SUCH A SHORT PERIOD -- AN APPROXIMATE DOUBLING OF MARKET VALUE FOR FUND NET ASSETS IN JUST THREE SHORT YEARS. WE GIVE THANKS FOR THE PERSISTENCY OF OUR SHAREHOLDER BASE, AND WE ARE GRATEFUL FOR THE STABLE GENERAL BUSINESS ENVIRONMENT AND THE POSITIVE INVESTOR ATTITUDES THAT HAVE MADE THESE ACHIEVEMENTS POSSIBLE. THE INCREASED DEPTH OF SECURITY RESEARCH SKILLS, THE CONTINUOUS IMPROVEMENT OF OUR INVESTMENT MANAGEMENT PROCESS, AND THE STRONG ADHERENCE TO THE DIRECTIONS FIXED FROM SOUND INVESTMENT OBJECTIVES ARE ALSO IMPORTANT FACTORS IN THE OVERALL RESULTS FOR OUR FUND'S PORTFOLIO. THE UPWARD MARKET TREND HAS BEEN SO REMARKABLE IN THE LATE 1990'S THAT IT WOULD BE POSSIBLE TO BECOME COMPLACENT ON THE ONE HAND OR OVER CONFIDENT ON THE OTHER ABOUT OUR CONTRIBUTIONS THAT HAVE BEEN MADE TO THE END RESULTS. NEITHER OF THESE DESCRIPTIONS WOULD BE APT FOR THIS MANAGEMENT. INSTEAD, WE FEEL INCREASINGLY VIGILANT AND MOTIVATED TO RISE TO HIGHER PROFESSIONAL STANDARDS. ABOVE ALL, WE BELIEVE WE ARE BLESSED WITH THE OPPORTUNITY TO HAVE YOU AS A SHAREHOLDER, AND WE FEEL STRENGTHENED BY MANY WONDERFUL EMPLOYEES IN OUR ORGANIZATION WHO ARE IN A POSITION TO SERVE YOU WELL. THESE ARE ATTRIBUTES THAT WILL SUSTAIN OUR FUND AS WE MOVE INTO THE FUTURE. MEANTIME, LET'S ALL PAUSE TO ENJOY AND CELEBRATE THESE SPECIAL DAYS IN OUR FUND'S HISTORY. SINCERELY YOURS, EDSON L. BRIDGES II, CFA CHAIRMAN EDSON L. BRIDGES III, CFA PRESIDENT ELBII:ELBIII:KJS Exhibit 1 BRIDGES INVESTMENT FUND, INC. PORTFOLIO TRANSACTIONS DURING THE PERIOD FROM JANUARY 1, 1998, THROUGH MARCH 31, 1998
Bought or Held After Securities Received Transaction Common Stocks Unless $1,000 Par $1,000 Par Described Otherwise Value (M) Value (M) or Shares or Shares Accustaff, Inc. 5,000 5,000 (1) America On Line, Inc. 3,000 3,000 Cintas Corporation 4,000 4,000 (2) Compaq Computer 1,000 2,000 Concentra Managed Care, Inc. 3,000 3,000 (3) Dell Computer 1,000 2,000 Eagle USA 3,000 23,000 HNC Software, Inc. 4,000 10,000 Harris Preferred Capital Corp. 10,000 10,000 7.375% Series A (4) Microsoft 7,500 15,000 Network Associates, Inc. 3,000 3,000 (5) Outdoor Systems 9,700 12,700 Quintiles Transnational Corp. 3,000 3,000 (6) Reuters Group PLC ADR 5,199 5,199 (7) SLM Holding Corporation 5,000 7,000 Saville Systems Ireland PLC ADR 2,000 2,000 Steris Corporation 3,000 3,000 Sungard Data Systems 3,200 3,200 Sylvan Learning System 5,000 5,000 Various issues of Commercial 12,835M 515M Paper Notes Purchased during 1st Qtr., 1998 Refer to Notes (1) through (7) on the next page. Exhibit 1 BRIDGES INVESTMENT FUND, INC. PORTFOLIO TRANSACTIONS DURING THE PERIOD FROM JANUARY 1, 1998 THROUGH MARCH 31, 1998 (Continued) Sold or Held After Securities Exchanged Transacion Common Stocks Unless $1,000 Par $1,000 Par Described Otherwise Value (M) Value (M) or Shares or Shares First Data Corporation 2,000 6,000 General Electric Co. 2,000 10,000 Georgia Pacific Corporation 3,000 -- Georgia Pacific (Timber Group) Corp. 3,000 -- Hewlett Packard Co. 2,000 10,000 Kimberly Clark Corporation 6,000 -- Monsanto Co. 2,000 10,000 (6) Reuters Holdings PLC ADR 6,000 -- Sprint Corporation 3,000 5,000 Tricon Global Restaurants, Inc. 2,400 -- Weyerhaeuser Co. 5,000 -- Various issues of Commercial 13,005M -- Paper Notes maturing during 1st Qtr., 1998 (1) - Received 1,500 shares in a 2-for-1 stock split on March 17, 1998. (2) - Received 1,000 shares in a 2-for-1 stock split on January 21, 1998. (3) - Received 1,000 shares in a 2-for-1 stock split on March 7, 1998. (4) - Received 7,500 shares in a 2-for-1 stock split on February 23, 1998. (5) - Received 1,500 shares in a 3-for-2 stock split on January 2, 1998. (6) - Received 5,199 shares of Reuters Group PLC ADR as a result of the recapitalization of Reuters Holdings PLC ADR on March 1, 1998. (7) - Received 5,000 shares in a 7-for-2 stock split on January 5, 1998.
-6- Exhibit 2 --------- BRIDGES INVESTMENT FUND, INC. ----------------------------- HISTORICAL FINANCIAL INFORMATION
Valuation Net Shares Net Asset Dividend/ Capital Date Assets Outstanding Value/Share Share Gains/Share - --------- ------ ----------- ----------- -------- ----------- 07-01-63 $ 109,000 10,900 $10.00 $ - $ - 09-30-63 109,764 10,900 10.07 - - 12-31-63 159,187 15,510 10.13 .07 - 03-31-64 202,354 19,105 10.59 .07 - 06-30-64 253,932 23,438 10.83 .07 - 09-30-64 310,307 28,286 10.97 .07 - 12-31-64 369,149 33,643 10.97 .07 - 03-31-65 434,523 38,531 11.28 .075 .028 06-30-65 491,068 44,667 10.99 .07 - 09-30-65 558,913 47,710 11.71 .07 - 12-31-65 621,241 51,607 12.04 .07 - 03-31-66 661,711 55,652 11.89 .085 - 06-30-66 643,920 57,716 11.16 .07 - 09-30-66 592,628 58,610 10.11 .07 - 12-31-66 651,282 59,365 10.97 .07 - 03-31-67 728,115 60,181 12.10 .085 - 06-30-67 753,075 61,364 12.27 .07 - 09-30-67 823,967 62,810 13.12 .07 - 12-31-67 850,119 64,427 13.20 .07 - 03-31-68 812,416 65,607 12.38 .105 - 06-30-68 1,013,629 72,214 14.04 .07 - 09-30-68 1,046,852 72,633 14.41 .07 - 12-31-68 1,103,734 74,502 14.81 .07 - 03-31-69 1,083,278 77,393 14.00 .15 - 06-30-69 1,030,784 79,169 13.02 .07 - 09-30-69 1,063,290 83,291 12.77 .07 - 12-31-69 1,085,186 84,807 12.80 .07 - 03-31-70 1,061,534 87,349 12.15 .16 - 06-30-70 843,133 88,367 9.54 .07 - 09-30-70 959,114 89,417 10.73 .07 - 12-31-70 1,054,162 90,941 11.59 .07 - 03-31-71 1,168,919 91,819 12.73 .16 - 06-30-71 1,198,777 92,573 12.94 .07 - 09-30-71 1,200,753 92,723 12.95 .07 - 12-31-71 1,236,601 93,285 13.26 .07 - 03-31-72 1,285,684 93,661 13.73 .14 .08 06-30-72 1,228,951 93,834 13.10 .07 - 09-30-72 1,208,454 92,258 13.10 .07 - 12-31-72 1,272,570 93,673 13.59 .07 - 03-31-73 1,152,089 96,695 11.91 .13 .07 06-30-73 1,073,939 97,943 10.96 .07 - 09-30-73 1,131,789 99,353 11.39 .07 - 12-31-73 1,025,521 100,282 10.23 .07 - -7- EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION Valuation Net Shares Net Asset Dividend/ Capital Date Assets Outstanding Value/Share Share Gains/Share - --------- ------ ----------- ----------- -------- ------------ 03-31-74 988,697 101,763 9.72 .14 - 06-30-74 863,820 101,578 8.50 .07 - 09-30-74 667,051 101,292 6.59 .07 - 12-31-74 757,545 106,909 7.09 .07 - 03-31-75 909,125 106,162 8.56 .14 - 06-30-75 1,028,687 106,517 9.66 .07 - 09-30-75 954,187 107,651 8.86 .07 - 12-31-75 1,056,439 111,619 9.46 .07 - 03-31-76 1,230,953 115,167 10.69 .16 - 06-30-76 1,265,767 117,506 10.77 .07 - 09-30-76 1,313,363 121,229 10.83 .07 - 12-31-76 1,402,661 124,264 11.29 .08 - 03-31-77 1,335,592 126,714 10.54 .188 .062 06-30-77 1,456,451 134,575 10.82 .08 - 09-30-77 1,450,573 139,402 10.41 .08 - 12-31-77 1,505,147 145,252 10.36 .08 - 03-31-78 1,418,417 146,380 9.69 .211 .049 06-30-78 1,523,758 145,470 10.47 .09 - 09-30-78 1,672,364 150,729 11.10 .09 - 12-31-78 1,574,097 153,728 10.24 .09 - 03-31-79 1,724,695 162,627 10.61 .204 .051 06-30-79 1,773,427 163,640 10.84 .09 - 09-30-79 1,913,242 167,426 11.43 .09 - 12-31-79 1,872,059 165,806 11.29 .09 - 03-31-80 1,769,935 170,882 10.36 .25 .0525 06-30-80 1,974,288 169,675 11.64 .10 - 09-30-80 2,204,689 173,549 12.70 .10 - 12-31-80 2,416,997 177,025 13.65 .10 - 03-31-81 2,424,976 184,148 13.17 .29 .0868 06-30-81 2,356,007 186,307 12.65 .11 - 09-30-81 2,128,956 183,447 11.61 .11 - 12-31-81 2,315,441 185,009 12.52 .12 - 03-31-82 2,165,531 194,140 11.15 .39 .19123 06-30-82 2,074,816 190,067 10.92 .13 - 09-30-82 2,262,073 189,837 11.92 .13 - 12-31-82 2,593,411 195,469 13.27 .13 - 03-31-83 2,815,081 209,390 13.44 .40 .2500 06-30-83 3,030,744 212,068 14.29 .15 - 09-30-83 3,210,564 223,059 14.39 .15 - 12-31-83 3,345,988 229,238 14.60 .15 - 03-31-84 3,279,542 247,700 13.24 .32 .5000 06-30-84 3,322,155 262,695 12.65 .16 - 09-30-84 3,554,876 263,783 13.48 .16 - 12-31-84 3,727,899 278,241 13.40 .16 - 03-31-85 4,058,327 300,068 13.52 .22 .6800 06-30-85 4,351,707 305,496 14.24 .16 - 09-30-85 4,260,686 310,379 13.73 .16 - 12-31-85 4,962,325 318,589 15.58 .16 - 03-31-86 5,663,449 347,479 16.30 .208 .86227 06-30-86 6,174,120 365,531 16.89 .16 - -8- EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION Valuation Net Shares Net Asset Dividend/ Capital Date Assets Outstanding Value/Share Share Gains/Share - --------- ------ ----------- ----------- -------- ----------- 09-30-86 6,392,215 399,871 15.99 ,16 - 12-31-86 6,701,786 407,265 16.46 .16 - 03-31-87 8,766,205 491,228 17.85 .196 .79447 06-30-87 9,214,305 509,569 18.08 .16 - 09-30-87 9,921,139 530,566 18.70 .16 - 12-31-87 7,876,275 525,238 15.00 .14 .24513 03-31-88 8,649,901 565,608 15.29 .16 - 06-30-88 9,027,829 574,563 15.71 .15 - 09-30-88 8,986,977 575,956 15.60 .16 - 12-31-88 8,592,807 610,504 14.07 .38 1.10967 03-31-89 9,103,009 618,331 14.72 - - 06-30-89 9,531,124 614,861 15.50 .16 - 09-30-89 10,815,006 652,207 16.58 .16 - 12-31-89 10,895,182 682,321 15.97 .35 0.53769 03-31-90 11,000,740 695,558 15.82 - - 06-30-90 11,521,748 696,414 16.54 .16 0.02646 09-30-90 10,534,037 706,268 14.92 .16 - 12-31-90 11,283,448 744,734 15.15 .35 0.40297 03-31-91 12,685,391 759,477 16.70 - - 06-30-91 12,485,281 766,387 16.29 .16 - 09-30-91 13,225,379 780,213 16.95 .16 - 12-31-91 14,374,679 831,027 17.30 .34 0.29292 03-31-92 14,428,305 851,349 16.95 - - 06-30-92 14,691,191 863,019 17.02 .15 - 09-30-92 15,940,013 910,936 17.50 .16 - 12-31-92 17,006,789 971,502 17.51 .325 0.15944 03-31-93 18,071,613 1,008,275 17.92 - - 06-30-93 17,621,101 992,755 17.75 .15 - 09-30-93 17,949,559 999,163 17.96 .15 - 12-31-93 17,990,556 1,010,692 17.80 .3125 0.17075 03-31-94 17,777,177 1,021,219 17.41 - - 06-30-94 17,953,364 1,033,984 17.36 .14 - 09-30-94 18,472,176 1,036,473 17.82 .15 - 12-31-94 18,096,297 1,058,427 17.10 .30 0.17874 03-31-95 19,835,494 1,072,309 18.50 - - 06-30-95 21,416,325 1,076,463 19.90 .14 - 09-30-95 22,527,409 1,082,829 20.80 .14 - 12-31-95 24,052,746 1,116,620 21.54 .295 0.19289 03-31-96 26,025,304 1,148,429 22.66 - - 06-30-96 27,108,210 1,157,425 23.42 .1325 - 09-30-96 27,451,784 1,165,788 23.55 .1325 - 12-31-96 29,249,488 1,190,831 24.56 .285 0.25730 03-31-97 30,255,441 1,210,627 24.99 - - 06-30-97 34,567,391 1,229,643 28.11 .1325 - 09-30-97 36,500,979 1,242,731 29.37 .135 - 12-31-97 36,647,535 1,262,818 29.02 .24 0.30571 03-31-98 41,413,655 1,283,322 32.27 - -
EXHIBIT 3 BRIDGES INVESTMENT FUND, INC. REPORTS TO STOCKHOLDERS OF MANAGEMENT COMPANIES IN ACCORDANCE WITH RULE 30D-1(B) OF THE GENERAL RULES AND REGULATIONS PROMULGATED UNDER THE INVESTMENT COMPANY ACT OF 1940 AS AMENDED "IF ANY MATTER WAS SUBMITTED DURING THE PERIOD COVERED BY THE SHAREHOLDER REPORT TO A VOTE OF THE SHAREHOLDERS, THROUGH THE SOLICITATION OF PROXIES OR OTHERWISE, FURNISH THE FOLLOWING INFORMATION:" (1) ANNUAL MEETING HELD ON FEBRUARY 17, 1998, AT 11:00 A.M. (2) ELECTION OF DIRECTORS FOR ONE YEAR TERMS (ALL DIRECTORS STAND FOR ANNUAL ELECTION):
- - - - - -VOTES CAST - - - - - - WITHHOLD FOR ALL AUTHORITY NAMES OF DIRECTORS NOMINEES TO VOTE FOR ELECTED AT MEETING EXCEPT ALL NOMINEES FOR FREDERICK N. BACKER 1,053,500 NONE 515 EDSON L. BRIDGES II 1,053,500 NONE 515 EDSON L. BRIDGES III 1,053,500 NONE 515 N. P. DODGE, JR. 1,053,500 NONE 515 JOHN W. ESTABROOK 1,053,500 NONE 515 JON D. HOFFMASTER 1,053,500 NONE 515 JOHN J. KORALESKI 1,053,500 NONE 515 ROGER D. KUPKA 1,053,500 NONE 515 GARY L. PETERSEN 1,053,500 NONE 515 ROY A. SMITH 1,053,500 NONE 515 L.B. THOMAS 1,053,500 NONE 515
(3) A BRIEF DESCRIPTION FOR EACH MATTER VOTED UPON AT THE MEETING:
MATTERS VOTED UPON FOR AGAINST ABSTAIN (A) FOR A PROPOSED INVESTMENT 1,053,500 NONE 515 ADVISORY CONTRACT WHICH CONTINUES THE EMPLOYMENT OF BRIDGES INVESTMENT COUNSEL, INC. AS INVESTMENT ADVISER TO THE FUND FOR THE PERIOD FROM APRIL 17, 1998 THROUGH APRIL 17, 1999 (B) FOR THE RATIFICATION OF THE 1,052,210 NONE 1,805 SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE FUND FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998
F-1 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS MARCH 31, 1998 (Unaudited)
Number Market Title of Security of Shares Value COMMON STOCKS - (86.2%) Advertising - 1.1% Outdoor Systems, Inc.* 12,700 $ 445,294 Aircraft - Manufacturing - 1.5% The Boeing Company 12,000 $ 625,500 Amusements - Recreation - Sporting Goods - 0.6% Nike, Inc. 6,000 $ 265,500 Banking and Finance - 7.4% First National of Nebraska, Inc. 230 $ 897,000 MBNA Corporation 10,000 358,125 NationsBank Corporation 6,000 437,625 Norwest Corporation 12,000 498,750 The Charles Schwab Corporation 1,000 38,000 SLM Holding Corporation 7,000 305,375 State Street Corporation 8,000 544,500 $ 3,079,375 Beverages - Soft Drinks - 2.5% PepsiCo, Inc. 24,000 $ 1,024,500 Business Services - Human Resources - 0.4% AccuStaff Incorporated* 5,000 $ 172,500 Chemicals - 4.2% The Dow Chemical Company 7,000 $ 680,750 Du Pont (E.I.) De Nemours & Company 8,000 544,000 Monsanto Company 10,000 520,000 $ 1,744,750 Communications - Radio and Television - 0.6% Clear Channel Communications, Inc.* 2,500 $ 245,000 *Nonincome-producing security F-2 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Number Market of Shares Value Title of Security COMMON STOCKS (Continued) Computers - Hardware and Software - 10.4% America Online, Inc.* 3,000 $ 204,938 Cisco Systems, Inc.* 3,000 205,125 Compaq Computer Corporation 2,000 51,750 Dell Computer Corporation * 2,000 135,500 EMC Corporation* 2,000 75,625 HNC Software, Inc.* 10,000 376,250 Hewlett-Packard Co. 10,000 633,750 International Business Machines Corporation 2,000 207,750 Microsoft Corporation* 15,000 1,342,500 Network Associates, Inc. * 3,000 198,750 Saville Systems PLC Ireland Sponsored ADR * 2,000 102,500 Sun Microsystems, Inc.* 4,000 166,875 SunGard Data Systems, Inc. * 3,200 117,800 Transaction Systems Architects, Inc.* 13,000 505,375 $ 4,324,488 Drugs - Medicines - Cosmetics - 9.1% Abbott Laboratories 8,000 $ 602,500 Amgen, Inc.* 2,000 121,750 Bristol-Myers Squibb Co. 6,000 625,875 Elan Corporation PLC ADR* 6,000 387,750 Johnson & Johnson 10,000 734,375 Merck & Co., Inc. 10,000 1,281,875 $ 3,754,125 Electrical Equipment and Supplies - 2.1% General Electric Co. 10,000 $ 861,875 Electronics - 3.2% Intel Corporation 8,000 $ 624,500 Motorola, Inc. 8,000 486,000 Solectron Corporation * 5,000 211,250 $ 1,321,750 Energy - Alternate Sources - 0.4% CalEnergy Co., Inc. * 6,000 $ 169,500 Finance - Real Estate - 3.4% Freddie Mac 30,000 $ 1,423,125 *Nonincome-producing security F-3 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Number Market of Shares Value Title of Security COMMON STOCKS (Continued) Finance - Services - 2.7% Capital One Financial Corporation 10,000 $ 788,750 First Data Corporation 6,000 195,000 Paymentech, Inc. * 7,000 136,062 $ 1,119,812 Food - Miscellaneous Products - 3.0% Philip Morris Companies, Inc. 30,000 $ 1,250,625 Healthcare - Commercial Services - 0.4% Quintiles Transnational Corp.* 3,000 $ 144,563 Healthcare - Cost Containment - 0.2% Concentra Managed Care, Inc. * 3,000 $ 92,250 Insurance - Mortgage - 0.8% MGIC Investment Corporation 5,000 $ 328,438 Insurance - Multiline - 1.5% American International Group, Inc. 1,500 $ 188,906 General Re Corp. 2,000 441,250 $ 630,156 Insurance - Municipal Bond - 1.9% MBIA, Inc. 10,000 $ 775,000 Linen Supply - Uniform Rental & Sales - 0.5% Cintas Corporation 4,000 $ 207,000 Machinery - Construction & Mining - 0.8% Caterpillar Inc. 6,000 $ 330,375 Medical - Services - 0.7% HealthSouth Corporation * 5,000 $ 140,313 Steris Corporation * 3,000 162,000 $ 302,313 Metal Products - Miscellaneous - 0.7% Nucor Corporation 5,500 $ 299,406 Motion Pictures and Theatres - 1.8% The Walt Disney Company 7,000 $ 747,250 *Nonincome-producing security F-4 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Number Market of Shares Value Title of Security COMMON STOCKS (Continued) Oil Services - 0.2% Schlumberger, Ltd. 1,000 $ 75,750 Petroleum Producing - 5.8% Amoco Corporation 5,000 $ 431,875 Atlantic Richfield Company 4,000 314,500 Chevron Corporation 10,000 803,125 Exxon Corporation 8,000 541,000 Mobil Corporation 4,000 306,500 $ 2,397,000 Publishing - Newspapers - 1.4% Gannett Co., Inc. 8,000 $ 575,000 Publishing - Electronic - 0.8% Reuters Group PLC, ADR Sponsored 5,199 $ 335,660 Retail Stores - Apparel and Clothing - 2.5% Gap, Inc. 22,500 $ 1,012,500 Retail Stores - Building Materials and Home Improvement - 0.9% The Home Depot, Inc. 5,500 $ 371,937 Retail Stores - Department - 2.2% Dayton Hudson Corporation 10,500 $ 924,000 Retail Stores - Variety - 0.8% Albertson's Inc. 6,500 $ 342,875 Schools - Educational Services - 0.6% Sylvan Learning Systems, Inc. * 5,000 $ 235,625 Telecommunications - 6.0% AirTouch Communications, Inc.* 5,000 $ 244,687 GTE Corporation 10,000 598,750 Sprint Corporation 5,000 338,438 West Teleservices Corporation* 43,000 720,250 WorldCom, Inc.* 13,000 559,812 $ 2,461,937 *Nonincome-producing security F-5 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Number of Shares or Principal Market Title of Security Amount Value Transportation - Airfreight - 2.5% Eagle USA Airfreight, Inc. * 23,000 $ 621,000 FDX Corporation * 6,000 426,750 $ 1,047,750 Transportation - Railroads - 0.6% Union Pacific Corporation 4,000 $ 225,250 TOTAL COMMON STOCKS (Cost - $16,730,309) $35,689,754 PREFERRED STOCKS (1.7%) Banking and Finance - 1.2% CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 132,500 CFB Capital II 8.20% Cumulative Preferred 5,000 130,625 Harris Preferred Capital Corp., 10,000 249,375 7.375%, Series A $ 512,500 Telecommunications - 0.5% AirTouch Communications, Inc. 4.25% Series C 3,000 $ 213,000 Convertible Preferred Total Preferred Stocks (Cost - $637,925) $ 725,500 Total Stocks (Cost - $17,368,234) $36,415,254 DEBT SECURITIES (11.6%) Energy - Alternate Sources - 0.5% CalEnergy Co., Inc., 7.63% Notes due October 15, 2007 $200,000 $ 200,894 Food - Miscellaneous Products - 0.2% Super Valu Stores, Inc., 8.875% Promissory Notes, due June 15, 1999 $100,000 $ 103,251 Household Appliances and Utensils - 0.3% Maytag Corp., 9.75% Notes, due May 15, 2002 $100,000 $ 112,454 *Nonincome-producing security. F-6 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Principal Market Title of Security Amount Value DEBT SECURITIES (Continued) Office Equipment and Supplies - 0.3% Xerox Corporation, 9.750% Notes due March 15, 2000 $100,000 $ 106,808 Retail Stores - Department - 0.7% Dillard Department Stores, Inc., 7.850% Debentures, due October 1, 2012 $150,000 $ 167,689 Sears Roebuck & Co., 9.375% Debentures due November 1, 2011 100,000 123,346 $ 291,035 Transportation - Railroads - 0.4% Union Pacific Corporation 6.00% Notes, due September 1, 2003 $150,000 $ 145,677 U.S. Government - 8.0% U.S. Treasury, 9.000% Notes, due May 15, 1998 $200,000 $ 200,844 U.S. Treasury, 9.125% Notes, due May 15, 1999 200,000 207,562 U.S. Treasury, 8.750% Notes, due August 15, 2000 200,000 213,844 U.S. Treasury, 8.000% Notes, due May 15, 2001 200,000 213,375 U.S. Treasury, 7.500% Notes, due May 15, 2002 200,000 213,375 U.S. Treasury, 10.750% Bonds due February 15, 2003 200,000 242,719 U.S. Treasury, 7.250% Notes, due May 15, 2004 300,000 324,141 U.S. Treasury, 7.500% Notes, due February 15, 2005 300,000 330,234 U.S. Treasury, 9.375% Bonds, due February 15, 2006 200,000 245,719 F-7 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) MARCH 31, 1998 (Unaudited) Principal Market Title of Security Amount Value DEBT SECURITIES (Continued) U.S. Treasury, 7.625% Bonds, due February 15, 2007 300,000 318,703 U.S. Treasury, 8.750% Bonds, due November 15, 2008 200,000 227,875 U.S. Treasury, 9.125% Bonds, due May 15, 2009 200,000 233,688 U.S. Treasury, 7.500% Bonds, due November 15, 2016 300,000 350,109 $ 3,322,188 Commercial Paper - Short Term - 1.2% General Electric Credit Corp. Commercial Paper Note 5.65% due April 7, 1998 $ 290,000 $ 290,000 Prudential Funding Corp. Commercial Paper Note 5.58% due April 3, 1998 225,000 225,000 $ 515,000 TOTAL DEBT SECURITIES (Cost - $4,642,041) $ 4,797,307 TOTAL INVESTMENTS IN SECURITIES (Cost - $22,010,275) (99.5%) $41,212,561 CASH AND RECEIVABLES LESS TOTAL LIABILITIES (0.5%) 201,094 NET ASSETS, March 31, 1998 (100.0%) $41,413,655 The accompanying notes to financial statements are an integral part of this schedule.
F-8 BRIDGES INVESTMENT FUND, INC. STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1998 (Unaudited)
ASSETS AMOUNT Investments, at market value Common and preferred stocks $36,415,254 (cost $17.368,234) Debt securities (cost $4,642,041) 4,797,307 ----------- Total Investments $41,212,561 Cash 121,481 Receivables Dividends and interest 137,505 Subscriptions to capital stock 19,668 ----------- TOTAL ASSETS $41,491,215 =========== LIABILITIES Redemptions of Capital Stock $ 2,000 Investment advisor, management and service fees 49,597 Accrued operating expenses 25,963 ----------- TOTAL LIABILITIES $ 77,560 ----------- NET ASSETS Capital stock, $1 par value - Authorized 3,000,000 shares, less 751,419 shares redeemed; 2,034,741 shares issued; 1,283,322 shares outstanding $ 1,283,322 Paid-in surplus - Excess over par value of amounts received from sale of 2,034,741 shares, less amounts paid out in redeeming 751,419 shares 20,180,855 ----------- Net capital paid in on shares $21,464,177 Accumulated net realized gain on investment transactions 562,087 Net unrealized appreciation on investments 19,202,286 Accumulated undistributed net investment income income 185,105 ----------- TOTAL NET ASSETS $41,413,655 =========== NET ASSET VALUE PER SHARE $32.27 ====== OFFERING PRICE PER SHARE $32.27 ====== REDEMPTION PRICE PER SHARE $32.27 ====== The accompanying notes to financial statements are an integral part of this statement.
F-9 BRIDGES INVESTMENT FUND, INC. STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
INVESTMENT INCOME AMOUNT AMOUNT INTEREST $ 95,276 DIVIDENDS 163,162 -------- TOTAL INVESTMENT INCOME $258,438 EXPENSES MANAGEMENT FEES $ 49,597 CUSTODIAN FEES 6,885 INSURANCE AND OTHER ADMINISTRATIVE FEES 5,623 BOOKKEEPING SERVICES 4,327 PRINTING AND SUPPLIES 4,987 PROFESSIONAL SERVICES 2,725 DIVIDEND DISBURSING AND TRANSFER AGENT FEES 3,440 COMPUTER PROGRAMMING 1,250 TAXES AND LICENSES 266 -------- TOTAL EXPENSES $ 79,100 NET INVESTMENT INCOME $ 179,338 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS NET REALIZED GAIN ON TRANSACTIONS IN INVESTMENT SECURITIES $ 568,549 NET INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS 3,405,722 --------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $3,974,271 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,153,609 THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT.
F-10 BRIDGES INVESTMENT FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (Unaudited)
1998 1997 INCREASE IN NET ASSETS OPERATIONS - NET INVESTMENT INCOME $ 179,338 $ 163,218 NET REALIZED GAIN ON TRANSACTIONS IN INVESTMENT SECURITIES 568,549 107,499 NET INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS 3,405,722 227,369 ------------ ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,153,609 $ 498,086 NET EQUALIZATION CREDITS 531 1,252 DISTRIBUTIONS TO SHAREHOLDERS FROM - NET INVESTMENT INCOME - - NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS - - EQUALIZATION - - NET CAPITAL SHARE TRANSACTIONS 611,980 506,615 ---------- --------- TOTAL INCREASE IN NET ASSETS $ 4,766,120 $1,005,953 NET ASSETS: BEGINNING OF YEAR 36,647,535 29,249,488 ------------ ----------- END OF YEAR (INCLUDING ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME OF $185,105 AND $169,202, RESPECTIVELY) $ 41,413,655 $30,255,441 ============ =========== THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-11 BRIDGES INVESTMENT FUND, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1998 (Unaudited) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bridges Investment Fund, Inc. (Fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The primary investment objective of the Fund is long- term capital appreciation. In pursuit of that objective, the Fund invests primarily in common stocks. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A. Investments - Security transactions are recorded on the trade date at purchase cost or sales proceeds. Dividend income is recognized on the ex- dividend date, and interest income is recognized on an accrual basis. Securities owned are reflected in the accompanying statement of assets and liabilities and the schedule of portfolio investments at quoted market value. Quoted market value represents the last recorded sales price on the last business day of the calendar year for securities traded on a national securities exchange. If no sales were reported on that day, quoted market value represents the closing bid price. The cost of investments reflected in the statement of assets and liabilities and the schedule of portfolio investments is the same as the basis used for Federal income tax purposes. The difference between cost and quoted market value of securities is reflected separately as unrealized appreciation (depreciation) as applicable.
1998 1997 Net Change Net unrealized appreciatiion (depreciation): Aggregate gross unrealized appreciation on securities $19,425,849 $10,868,820 Aggregate gross unrealized depreciation on securities (223,563) (301,658) Net $19,202,286 $10,567,162 $8,635,124
The net realized gain (loss) from the sales of securities is determined for income tax and accounting purposes on the basis of the cost of specific securities. The gain computed on the basis of average cost would have been substantially the same as that reflected in the accompanying statement of operations. F-12 B. Federal Income Taxes - It is the Fund's policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, including the distribution of substantially all taxable income including net realized gains on sales of investments. Therefore, no provision is made for Federal income taxes. C. Distribution To Shareholders - The Fund accrues dividends to shareholders on the ex-dividend date. D. Equalization - The Fund uses the accounting practice of equalization by which a portion of the proceeds from sales and costs of redemption of capital shares, equivalent on a per share basis to the amount of undistributed net investment income on the date of the transactions, is credited or charged to undistributed income. As a result, undistributed net investment income per share is unaffected by sales or redemption of capital shares. E. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) INVESTMENT ADVISORY CONTRACT Under an Investment Advisory Contract, Bridges Investment Counsel, Inc. (Investment Adviser) furnishes investment advisory services and performs certain administrative functions for the Fund. In return, the Fund has agreed to pay the Investment Adviser a fee computed on a quarterly basis at the rate of 1/8 of 1% of the average net asset value of the Fund during the quarter, equivalent to 1/2 of 1% per annum. Certain officers and directors of the Fund are also officers and directors of the Investment Adviser. These officers do not receive any compensation from the Fund other than that which is received indirectly through the Investment Adviser. The contract between the Fund and the Investment Adviser provides that total expenses of the Fund in any year, exclusive of stamp and other taxes, but including fees paid to the Investment Adviser, shall not exceed, in total, a maximum of 1 and 1/2% of the average month end net asset value of the Fund for the year. Amounts, if any, expended in excess of this limitation are reimbursed by the Investment Adviser as specifically identified in the Investment Advisory Contract. F-13 (3) DIVIDEND DISBURSING AND TRANSFER AGENT Effective October 1, 1987, dividend disbursing and transfer agent services are provided by Bridges Investor Services, Inc. (Transfer Agent). The fees paid to the Transfer Agent are intended to approximate the cost to the Transfer Agent for providing such services. Certain officers and directors of the Fund are also officers and directors of the Transfer Agent. (4) SECURITY TRANSACTIONS The cost of long-term investment purchases during the three months ended March 31, was:
1998 1997 United States government obligations $ -- $ -- Other Securities 2,144,818 310,716 Total Cost $2,144,818 $ 310,716
Net proceeds from sales of long-term investments during the three months ended March 31, were:
1998 1997 United States government obligations $ -- $ -- Other Securities 1,341,699 211,481 Total Net Proceeds $1,341,699 $ 211,481 Total Cost Basis of Securities Sold $ 773,150 $ 103,982
(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:
1998 1997 Shares sold 25,050 36,077 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 4,237 5,782 29,287 41,859 Shares redeemed 8,783 22,063 Net increase 20,504 19,796
Value of capital stock issued and redeemed is as follows:
1998 1997 Shares sold $ 754,163 $ 918,980 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 123,123 147,024 $ 877,286 $1,066,004 Shares redeemed 265,306 559,389 Net increase $ 611,980 $ 506,615
(7) DISTRIBUTION TO SHAREHOLDERS On April 13, 1998 a distribution of $.1350 per share aggregating $173,183 was declared to shareholders of record on April 13, 1998, to be payable on April 27, 1998. (8) DERIVATIVE FINANCIAL INSTRUMENTS In October, 1994, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 119, Disclosure about Derivative Financial Investments and Fair Value of Financial Instruments. The Fund has not entered into any such investment or investment contracts. A covered call option contract is a form of a financial derivative instrument. The Fund's investment and policy restrictions do permit the Fund to sell or write covered call option contracts under certain circumstances and limitations as set forth in the Fund's prospectus. -----END PRIVACY-ENHANCED MESSAGE-----