-----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, LjFenbYLOKwX2q55Qqtjs6JMq3HmgfvtmNQMTxTKeM/VvfrvlsiAnTUB9WWcVjnQ /FXOjlJmaMU4+px+qP4DoA== 0000014170-99-000013.txt : 19991029 0000014170-99-000013.hdr.sgml : 19991029 ACCESSION NUMBER: 0000014170-99-000013 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991028 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: 99735886 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. THIRD QUARTER 1999 CONTENTS OF REPORT Pages 1 - 3 Shareholder Letter Exhibit 1 Portfolio Transactions from July 1, 1999, through September 30, 1999 Exhibit 2 Quarter-to-Quarter Changes in Financial Data Pages F1-F14 Unaudited Financial Statements for the Nine Months Ended September 30, 1999 This report has been prepared for the information of the shareholders of Bridges Investment Fund, Inc. and is under no circumstances to be construed as an offering of shares of the Fund. Such offering is made only by Prospectus, a copy of which may be obtained by inquiry to the Fund's office. BRIDGES INVESTMENT FUND, INC. 8401 WEST DODGE ROAD OMAHA, NEBRASKA 68114 TELEPHONE 402-397-4700 FACSIMILE 402-397-8617 DIRECTORS FREDERICK N. BACKER EDSON L. BRIDGES II EDSON L. BRIDGES III N. P. DODGE, JR. JOHN W. ESTABROOK JON D. HOFFMASTER JOHN J. KORALESKI ROGER A. KUPKA GARY L. PETERSEN JOHN T. REED ROY A. SMITH JANICE D. STONEY L.B. THOMAS JOHN K. WILSON OFFICERS EDSON L. BRIDGES II - CHAIRMAN AND CHIEF EXECUTIVE OFFICER EDSON L. BRIDGES III _ PRESIDENT AND CHIEF INVESTMENT OFFICER BRIAN M. KIRKPATRICK _ VICE PRESIDENT MARY ANN MASON - SECRETARY KATHLEEN J. STRANIK - ASSISTANT SECRETARY NANCY K. DODGE - TREASURER LINDA J. MORRIS _ ASSISTANT TREASURER AUDITOR KPMG LLP TWO CENTRAL PARK PLAZA SUITE 1501 OMAHA, NEBRASKA 68102-1617 CORPORATE COUNSEL BAIRD, HOLM, MCEACHEN, PEDERSEN, HAMANN & STRASHEIM 1500 WOODMEN TOWER OMAHA, NEBRASKA 68102 October 25, 1999 Dear Shareholder: Bridges Investment Fund, Inc. had a total return of -4.00% during the third quarter of 1999 based on a June 30, 1999, net asset value of $38.61 and a September 30, 1999, net asset value of $37.00. Included in the third quarter's total return is a dividend of $0.066 paid on July 26. On a calendar year-to- date basis, the Fund had a total return of 8.41% and had a total return of 28.9% for the 12-month period ending September 30. By comparison, the S&P 500 had total returns of -6.24% for the third quarter, 5.37% for the first nine months of the year, and 27.79% for the trailing 12 months ending September 30, 1999. During the quarter, the Fund's common stocks had a total return of -4.33%, which bettered the S&P 500's total return of -6.24% during the quarter. After underperforming the S&P 500 in the second quarter, the fund's equities turned in a better relative performance during the third quarter, even as market breadth, which improved in the second quarter, resumed a more negative trend during the third quarter. After peaking on July 16, equities prices generally fell through the end of the third quarter, such that by October 15, fully 65% of stocks on the New York Stock Exchange were down over 20% from their 52-week highs; on the NASDAQ, 73% of stocks were down in excess of 20% from their 52-week highs. However, the general markdown in equity prices during the third quarter did improve overall valuation levels, as corporate earnings reported in July and August for the second quarter were by and large strong in an absolute sense (S&P 500 stocks experienced year-over-year growth of 17.9% in the second quarter) and largely better than consensus expectations (85.7% of companies reporting had earnings which met or exceeded consensus earnings estimates). Notwithstanding the corrective action in the market during the third quarter, valuation levels remain high particularly for stocks which have relatively high earnings growth. On a year-over-year basis (September 30, 1998, through September 30, 1999), S&P 500 earnings are up approximately 20% while S&P 500 price performance is up 28% in the face of a significant rise in bond yields (from a low of 4.75% on October 8, 1998, to 6.40% at present). This set of variables is untenable going forward. For equities to do well, earnings growth needs to accelerate (unlikely given that earnings growth is currently robust -- we believe the odds of some slowdown over the next 12 months outweigh the possibilities of an uptick in earnings growth) or interest rates need to go lower or at least stop rising (a better bet given that the odds favor a slowing in economic growth over the next 12 months). The following table summarizes the ten largest equity holdings of the Fund as of September 30, 1999, and includes stock price performance and valuation data that we believe you will find of interest. Shareholder Letter 2 October 25, 1999
% EPS EPS Tot % 5Yr LT 9/30/99 % % Ret Tot Hist Ftr No. of Market of Tot 3rd Ret Gr P/E P/E Gr ShareS Company Value Equity Asst Qtr 12 Mo Rate 1999 2000 Rate 9,068 Vodafone 2,155,917 4.5 4.0 21.0 110.8 23 78.5 63.7 27 10,000 Qualcomm 1,891,880 3.9 3.5 31.8 689.3 69 79.5 50.0 35 20,000 Microsoft 1,811,260 3.7 3.3 0.4 64.6 45 64.9 58.1 25 50,000 Gap 1,600,000 3.3 3.0 -36.4 36.9 31 26.2 21.8 20 30,000 Freddie 1,560,000 3.2 2.9 -10.1 5.9 16 17.7 15.5 15 Mac 20,000 Intel 1,486,260 3.1 2.7 24.9 73.6 24 32.3 27.5 20 20,000 Home 1,372,500 2.8 2.5 6.6 74.1 26 47.0 38.1 24 Depot 35,000 Capital 1,365,000 2.8 2.5 -29.9 13.8 22 22.7 18.0 25 One 18,000 Cisco 1,234,134 2.5 2.3 6.4 121.8 38 91.4 70.0 30 Systems 16,000 EMC Corp. 1,142,000 2.4 2.1 29.8 148.8 28 68.0 51.7 30
We continue to anticipate that the equity market will remain volatile through the end of this year and into 2000. The volatility will be driven by continued concerns about inflation, potential Y2K problems, and current high equity valuation levels. Our approach will continue to be decidedly long term; as always, we will look to position capital in the Fund in those companies which we believe have the best long-term earnings growth prospects and which sell at reasonable valuations given those growth prospects. As always, we appreciate your patience and understanding during the inevitable periods of market turmoil which may lie ahead. We continue to remain very constructive on the long-term outlook for financial assets. Dividend On October 12, 1999, the Board of Directors declared a $.07 per share dividend on the shares of capital stock outstanding on the October 12, 1999, record date with this income distribution amount to be payable on or about October 25, 1999. This dividend is payable from the net investment income earned during the July _ September, 1999 Quarter. New Prospectus and Account Application Form A new Prospectus Part A that became effective today is enclosed with this report. A revised Account Application form is included with this Prospectus. There are several important objectives for the reissuance of the Prospectus and the Account Application form at this point in time. The Fund has undertaken preparations to make shares of capital stock available for purchase to residents of states other than Nebraska. A limitation on sales of stock to Nebraska residents only has been in effect since the inauguration of the public offering of shares on December 7, 1963. Thus, the change in the Fund's policy to offer shares to potential owners in states other than Nebraska is of considerable import. The Fund's management reviewed the operating characteristics and policies of 178 open-end investment companies that follow the growth and income objective to define the market place for appropriate, competitive service. The findings of our survey caused the following changes to Fund operations that are reflected in the new Prospectus language and the revised Account Application form. . The initial minimum investment is $1,000, up from $500 prior to today. . A subsequent investment by check is $250, up from $200. . The Scheduled Investment Plan has been replaced by an Automatic Investment Plan that permits a $100 minimum follow-on investment to the initial $1,000 commitment through the utilization of the ACH network with the shareholder's bank. Shareholder Letter 3 October 25, 1999 . There is a special minimum initial investment of $500 for IRA accounts. Our new Application Form is not utilized for IRA adoptions under Bridges Investment Fund, Inc. sponsored plans. The master plan adoption agreement is the effective instrument. . The Fund has waived all fees on shareholder accounts as of the close of business today. The reimbursement amounts that were previously paid from the shareholder accounts for dividend reinvestments and other services to Bridges Investor Services, Inc. as Dividend Disbursing and Transfer Agent have been estimated for the future. Such sums will be billed as a quarterly flat fee charged directly to the Fund. The increased expenses to be absorbed by the Fund in the transfer agency function are expected to be $8,400 per year or about 2% of the annualized total operating expenses of the Fund as measured by costs incurred during the first six months of 1999. Part of the new increased costs is related to raising the breadth and the depth of the commercial banking services for the cash receipts and disbursements, especially for intra-day transactions, so that the transfer agent can handle new stock subscriptions on an expeditious basis. A New Era Under terms of the Agreement reached in 1963, Bridges Investment Counsel, Inc. will be paying the costs of registering the shares of the Fund in states other than Nebraska as it does for the shares sold in Nebraska now. Our initial objective will be to register shares in 10-15 new states. The approximate Blue Sky cost to the investment manager will be about $18,000 per year. The manager intends to develop some promotional literature for the Fund to help stimulate sales in response to inquiries. The Fund will be prepared to register in all 50 states, and arrangements may be made to permit purchases and sales through broker sponsored services to clients for no-load mutual funds. Such services should be provided at no cost to the brokerage customer or the mutual fund. This potential network should facilitate participation by our Fund in the national market for fund shares, presuming that the Fund's management can continue to earn strong relative total returns. As a first step, the Fund will include only those states where it has some knowledge of potential subscriptions for new investors in order to gain experience with Blue Sky regulation and costs. The $18,000 annual expense pro forma will require $3,600,000 in new incremental sales of capital stock just to recover the "first step" costs from an annual investment management fee to be earned from the added investment capital that comes from other states. We will expand our coverages of various states when positive experiences warrant those decisions. Closing Comment Thank you for your ownership of shares in our Fund. Perhaps, you can think of someone living in states other than Nebraska who should become a shareholder. I would be glad to have that person's name and address, and we will follow-up. Sincerely, Edson L. Bridges III, CFA President Edson L. Bridges II, CFA ELBIII:ELBII:elc Chairman EXHIBIT 1 BRIDGES INVESTMENT FUND, INC. PORTFOLIO TRANSACTIONS DURING THE PERIOD FROM JULY 1, 1999, THROUGH SEPTEMBER 30, 1999
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 AES Corporation 1,000 3,000 Altera, Corporation 2,000 6,000 (1) American International Group 625 3,125 At Home Corporation 1,000 3,000 CSG Systems International, Inc. 3,000 18,000 Capital One Financial 2,000 35,000 Cardinal Health, Inc. 1,000 3,000 (2) Eagle USA 11,000 33,000 Finova 1,000 3,000 First Data Corporation 5,000 5,000 Gap, Inc. 5,000 50,000 Hewlett Packard 2,000 8,000 Home Depot, Inc. 2,000 20,000 (3) Interpublic Group 2,000 4,000 Lamar Advertising Co. 2,000 2,000 Lucent Technologies 3,000 3,000 Paychex, Inc. 3,500 5,000 Qualcomm, Inc. 1,000 10,000 Solectron Corporation 1,000 13,000 Sprint PCS Corporation 1,000 5,500 Sun Microsystems, Inc. 1,000 5,000 West Teleservices Corp. 8,200 58,200 Various Issues of Commercial Paper 18,970M 1,450M Notes Purchased during 3rd Quarter, 1999 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 Alcoa, Inc. 4,000 -- At Home Corporation 3,000 -- Cardinal Health, Inc. 3,000 -- DLJ Direct 500 -- Georgia Pacific Corporation 4,000 -- Gulfstream Aerospace Corporation 6,000 -- Hertz Corporation Class A 2,000 -- Outdoor Systems 19,050 -- Philip Morris Co., Inc. 5,000 15,000 Qualcomm, Inc. 2,000 10,000 Various Issues of Commercial 19,070M -- Paper Notes maturing during 3rd Qtr., 1999 (1) - Received 625 shares in a 5-for-4 stock split on August 2, 1999. (2) _ Received 11,000 shares in a 3-for-2 stock split on August 31, 1999. (3) _ Received 2,000 shares in a 2-for-1 stock split on July 16, 1999.
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 - 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 - 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 - - 06-30-98 43,600,764 1,298,420 33.58 .135 - 09-30-98 40,423,166 1,308,173 30.90 .09 - 12-31-98 48,433,113 1,413,731 34.26 .215 2.11648 03-31-99 52,835,162 1,442,077 36.64 - - 06-30-99 56,490,020 1,463,133 38.61 .075 - 09-30-99 54,199,232 1,464,952 37.00 .066 -
F-1 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 1999 (Unaudited)
Number Market of Shares Cost Value Title of Security COMMON STOCKS - (87.6%) Advertising _ 0.5% Interpublic Group of Companies, Inc. (The) 4,000 $ 106,953 $ 164,500 Lamar Advertising Company* 2,000 92,125 99,000 $ 199,078 $ 263,500 Aircraft _ Manufacturing - 0.9% The Boeing Company 12,000 $ 278,135 $ 511,500 Amusements _ Recreation _ Sporting Goods _ 0.5% Nike, Inc. 5,000 $ 171,270 $ 284,375 Banking and Finance - 4.0% Chase Manhattan Corporation (The) 2,000 $ 86,650 $ 150,750 First National of Nebraska, Inc. 230 346,835 635,950 MBNA Corporation 15,000 234,825 342,195 State Street Corporation 8,000 66,525 517,000 U.S. Bancorp (New) 5,000 166,370 150,940 Wells Fargo & Co. (New) 10,000 138,173 396,250 $ 1,039,378 $ 2,193,085 Beverages - Soft Drinks - 1.3% PepsiCo, Inc. 24,000 $ 307,470 $ 732,000 Chemicals - 2.2% The Dow Chemical Company 6,000 $ 396,947 $ 681,750 Du Pont (E.I.) De Nemours & Company 8,000 273,935 484,000 $ 670,882 $ 1,165,750 Communications _ Radio and Television _ 1.5% Clear Channel Communications, Inc.* 10,000 $ 366,954 $ 798,750 Computers - Hardware and Software - 14.2% America Online, Inc.* 6,000 $ 529,237 $ 624,378 Cisco Systems, Inc.* 18,000 290,726 1,234,134 Dell Computer Corporation * 3,000 109,594 125,439 EMC Corporation* 16,000 358,855 1,142,000 HNC Software, Inc.* 16,000 495,325 635,008 Hewlett-Packard Co. 8,000 293,882 726,000 I2 Technologies, Inc.* 5,000 154,166 194,065 Microsoft Corporation* 20,000 93,361 1,811,260 Sun Microsystems, Inc.* 5,000 281,813 465,000 Transaction Systems Architects, Inc.* 27,000 961,181 727,326 $ 3,568,140 $ 7,684,610 *Nonincome-producing security F-2 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) SEPTEMBER 30, 1999 (Unaudited) Number Market Title of Security of Shares Cost Value COMMON STOCKS (Continued) Data Processing and Management _ 1.3% CSG Systems* 18,000 $ 509,169 $ 493,308 First Data Corporation 5,000 249,675 219,375 $ 758,844 $ 712,683 Diversified Operations _ 0.7% Berkshire Hathaway Inc., Class B * 210 $ 150,375 $ 389,760 Drugs - Medicines _ Cosmetics - 7.8% Abbott Laboratories 15,000 $ 169,395 $ 550,320 Amgen, Inc.* 6,000 248,687 489,000 Bristol-Myers Squibb Co. 8,000 141,675 540,000 Elan Corporation PLC ADR* 20,000 419,005 671,260 Johnson & Johnson 10,000 109,396 918,750 Merck & Co., Inc. 16,000 274,266 1,037,008 $ 1,362,424 $ 4,206,338 Electrical Equipment and Supplies - 1.7% General Electric Co. 8,000 $ 147,473 $ 948,504 Electronic Components _ Conductors _ 0.5% Altera Corporation* 6,000 $ 185,375 $ 260,250 Electronics - 4.5% Intel Corporation 20,000 $ 334,735 $ 1,486,260 Solectron Corporation * 13,000 301,136 933,569 $ 635,871 $ 2,419,829 Finance _ Credit Cards _ 1.1% American Express Company 2,000 $ 165,255 $ 270,000 Providian Financial Corporation 4,000 391,286 316,752 $ 556,541 $ 586,752 Finance _ Diversified _ 0.5% Morgan Stanley, Dean Witter, Discover & Co. 3,000 $ 202,960 $ 267,564 Finance _ Investment Banks _ 0.7% Goldman Sachs Group, Inc. 3,000 $ 202,843 $ 183,000 Merrill Lynch & Co., Inc. 3,000 168,586 202,125 $ 371,429 $ 385,125 Finance - Real Estate - 2.9% Freddie Mac 30,000 $ 470,320 $ 1,560,000 *Nonincome-producing security F-3 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) SEPTEMBER 30, 1999 (Unaudited) Number Market of Shares Cost Value Title of Security COMMON STOCKS (Continued) Finance _ Services - 3.2% Capital One Financial Corporation 35,000 $ 683,206 $ 1,365,000 E*Trade Group, Inc.* 4,000 98,188 94,000 FINOVA 3,000 132,073 109,500 Paychex, Inc. 5,000 154,125 170,625 $ 1,067,592 $ 1,739,125 Food _ Miscellaneous Products - 0.9% Philip Morris Companies, Inc. 15,000 $ 263,604 $ 512,820 Insurance _ Mortgage _ 0.4% MGIC Investment Corporation 4,000 $ 177,450 $ 191,000 Insurance _ Multiline - 0.5% American International Group, Inc. 3,125 $ 118,455 $ 271,681 Insurance _ Municipal Bond _ 0.7% MBIA, Inc. 8,000 $ 360,053 $ 373,000 Linen Supply and Related Products - 0.4% Cintas Corporation 4,000 $ 166,578 $ 231,252 Metal Products _ Miscellaneous - 0.5% Nucor Corporation 5,500 $ 122,061 $ 261,937 Motion Pictures and Theatres - 1.1% The Walt Disney Company* 22,000 $ 236,300 $ 572,000 Petroleum Producing - 5.5% Atlantic Richfield Company 4,000 $ 211,835 $ 354,500 BP Amoco PLC _ Spons. ADR 6,616 246,135 733,139 Chevron Corporation 10,000 340,535 887,500 Exxon Corporation 8,000 198,750 608,000 Mobil Corporation 4,000 127,075 403,000 $ 1,124,330 $ 2,986,139 Publishing _ Newspapers - 1.0% Gannett Co., Inc. 8,000 $ 179,310 $ 553,504 Publishing _ Electronic - 0.7% Reuters Group PLC, ADR Sponsored 5,199 $ 166,303 $ 358,081 *Nonincome-producing security F-4 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) SEPTEMBER 30, 1999 (Unaudited) Number Market Title of Security of Shares Cost Value COMMON STOCKS (Continued) Retail Stores _ Apparel and Clothing - 3.0% Gap, Inc. 50,000 $ 521,360 $ 1,600,000 Retail Stores _ Building Materials and Home Improvement _ 2.5% The Home Depot, Inc. 20,000 $ 587,115 $ 1,372,500 Retail Stores _ Department - 1.7% Dayton Hudson Corporation 15,000 $ 146,129 $ 900,945 Schools _ 0.3% Sylvan Learning System * 7,500 $ 200,089 $ 145,313 Telecommunications - 9.7% Level 3 Communications * 12,000 $ 483,300 $ 626,628 MCI WorldCom, Inc. * 13,000 466,188 934,375 Sprint Corporation 10,000 83,964 542,500 Sprint PCS Corporation * 5,500 188,878 410,097 Vodafone Airtouch PLC Sponsored ADR 9,068 986,754 2,155,917 West Teleservices Corporation* 58,200 780,844 603,825 $ 2,989,928 $ 5,273,342 Telecommunications _ Equipment _ 5.8% Lucent Technologies, Inc. 3,000 $ 214,841 $ 194,625 Nokia Corporation 12,000 492,858 1,078,500 Qualcomm Incorporated * 10,000 490,313 1,891,880 $ 1,198,012 $ 3,165,005 Television _ Cable _ 0.4% Comcast Corporation 6,000 $ 141,375 $ 239,250 Transportation _ Airfreight _ 1.8% Eagle USA Airfreight, Inc. * 33,000 $ 416,042 $ 987,954 Transportation _ Railroads - 0.4% Union Pacific Corporation 4,000 $ 148,580 $ 192,252 Utilities _ Electric _ 0.3% AES Corporation (The)* 3,000 $ 162,678 $ 177,000 TOTAL COMMON STOCKS (Cost - $21,936,263) $21,936,263 $47,474,475 *Nonincome-producing security F-5 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) SEPTEMBER 30, 1999 (Unaudited) Number Market Title of Security of Shares Cost Value PREFERRED STOCKS (1.7%) Banking and Finance _ 1.1% CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 125,000 $ 125,000 CFB Capital II 8.20% Cumulative Preferred 5,000 125,000 118,750 Harris Preferred Capital Corp., 10,000 250,000 223,750 7.375%, Series A Silicon Valley Bancshares Capital 5,000 125,000 111,250 8.25% Preferred Series I $ 625,000 $ 578,750 Petroleum Producing _ 0.2% Canadian Occidental Petroleum Ltd. 5,000 $ 125,000 $ 121,875 9.375% Preferred _ Series 1 Utilities _ Electric _ 0.4% Tennessee Valley Authority 6.75% 10,000 $ 250,000 $ 231,250 Variable Preferred Series D Total Preferred Stocks (Cost - $1,000,000) $ 1,000,000 $ 931,875 Total Stocks (Cost - $22,936,263) $22,936,263 $48,406,350 DEBT SECURITIES (9.5%) Energy _ Alternate Sources - 0.3% CalEnergy Co., Inc., 7.63% Notes due October 15, 2007 $200,000 $ 200,000 $ 198,460 Household Appliances and Utensils - 0.2% Maytag Corp., 9.75% Notes, due May 15, 2002 $100,000 $ 102,200 $ 107,500 Office Equipment and Supplies - 0.2% Xerox Corporation, 9.750% Notes due March 15, 2000 $100,000 $ 100,025 $ 101,800 Retail Stores _ Department - 0.5% Dillard Department Stores, Inc., 7.850% Debentures, due October 1, 2012 $150,000 $ 151,348 $ 149,640 Sears Roebuck & Co., 9.375% Debentures due November 1, 2011 100,000 $ 106,399 113,072 $ 257,747 $ 262,712 *Nonincome-producing security F-6 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS (Continued) SEPTEMBER 30, 1999 (Unaudited) Principal Market Title of Security Amount Cost Value DEBT SECURITIES (Continued) Telecommunications _ 0.4% Level 3 Communications, Inc., 9.125% Senior $250,000 $ 241,937 $ 226,575 Notes due May 1, 2008 U.S. Government _ 5.2% U.S. Treasury, 8.750% Notes, due August 15, 2000 200,000 $ 211,900 $ 205,688 U.S. Treasury, 8.000% Notes, due May 15, 2001 200,000 199,052 207,313 U.S. Treasury, 7.500% Notes, due May 15, 2002 200,000 214,097 208,563 U.S. Treasury, 10.750% Bonds due February 15, 2003 200,000 219,525 229,406 U.S. Treasury, 7.250% Notes, due May 15, 2004 300,000 303,245 316,407 U.S. Treasury, 7.500% Notes, due February 15, 2005 300,000 305,871 320,719 U.S. Treasury, 9.375% Bonds, due February 15, 2006 200,000 256,223 234,813 U.S. Treasury, 7.625% Bonds, due February 15, 2007 300,000 307,910 310,407 U.S. Treasury, 8.750% Bonds, due November 15, 2008 200,000 237,473 218,813 U.S. Treasury, 9.125% Bonds, due May 15, 2009 200,000 $ 234,910 $ 223,938 U.S. Treasury, 7.500% Bonds, due November 15, 2016 300,000 308,539 332,250 $ 2,798,745 $ 2,808,317 F-7 BRIDGES INVESTMENT FUND, INC. SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 1999 (Unaudited) Principal Title of Security Amount Cost Valuet DEBT SECURITIES (Continued) Commercial Paper _ Short Term _ 2.7% Ford Motor Credit Corporation Commercial Paper Note 5.35% due October 5, 1999 500,000 $ 500,000 500,000 American Express Credit Corporation Commercial Paper Note 5.26% due October 1, 1999 950,000 950,000 950,000 $ 1,450,000 $ 1,450,000 TOTAL DEBT SECURITIES (Cost - $5,150,654) $ 5,150,654 $ 5,155,364 TOTAL INVESTMENTS IN SECURITIES (Cost - $28,086,917) (98.8%) $28,086,917 $53,561,714 CASH AND RECEIVABLES LESS TOTAL LIABILITIES (1.2%) 637,518 NET ASSETS, September 30, 1999 (100.0%) $54,199,232 The accompanying notes to financial statements are an integral part of this schedule.
F-8 BRIDGES INVESTMENT FUND, INC. STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 (Unaudited)
ASSETS AMOUNT Investments, at market value Common and preferred stocks (cost $22,936,263) $48,406,350 Debt securities (cost $5,150,654) 5,155,364 Total Investments $53,561,714 Cash 500,353 Receivables Dividends and interest 115,082 Subscriptions to capital stock 116,076 TOTAL ASSETS $54,293,225 LIABILITIES Investment advisor, management and service fees payable $ 67,918 Accrued operating expenses 26,075 TOTAL LIABILITIES $ 93,993 NET ASSETS Capital stock, $1 par value - Authorized 3,000,000 shares, 1,464,952 shares outstanding $ 1,464,952 Paid-in surplus - 26,013,074 Net capital paid in on shares $27,478,026 Accumulated net realized gain on investment transactions 1,132,419 Net unrealized appreciation on investments 25,474,797 Accumulated undistributed net investment income 113,990 TOTAL NET ASSETS $54,199,232 NET ASSET VALUE PER SHARE $37.00 OFFERING PRICE PER SHARE $37.00 REDEMPTION PRICE PER SHARE $37.00 The accompanying notes to financial statements are an integral part of this statement.
F-9 BRIDGES INVESTMENT FUND, INC. STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (Unaudited)
AMOUNT AMOUNT INVESTMENT INCOME Interest $277,181 Dividends (Net of foreign withholding taxes of $2,372) 329,271 Total Investment Income $ 606,452 EXPENSES Management fees $ 199,971 Custodian fees 26,672 Insurance and Other Administrative Fees 19,974 Bookkeeping services 14,192 Printing and supplies 10,801 Professional services 7,875 Dividend disbursing and transfer agent fees 10,016 Computer programming 3,750 Taxes and licenses 799 Total Expenses $ 294,050 NET INVESTMENT INCOME $ 312,402 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on transactions in investment securities $1,132,418 Net increase in unrealized appreciation of investments 2,704,786 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 3,837,204 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,149,606 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 NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited)
1999 1998 INCREASE IN NET ASSETS Operations - Net investment income $ 312,402 $ 442,586 Net realized gain on transactions in investment securities 1,132,418 2,592,856 Net increase/(decrease) in unrealized appreciation of investments 2,704,786 (390,200) Net increase in net assets resulting from operations $ 4,149,606 $2,645,242 Net equalization credits 852 1,357 Distributions to shareholders from - Net investment income (204,282) (290,078) Net realized gain from investment transactions -- -- Return of capital -- -- Net capital share transactions 1,819,943 1,419,110 Total Increase in Net Assets $ 5,766,119 $3,775,631 NET ASSETS: Beginning of year $ 48,433,113 $36,647,535 End of nine months $ 54,199,232 $40,423,166 The accompanying notes to financial statements are an integral part of these statements.
F-11 BRIDGES INVESTMENT FUND, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (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.
Net unrealized appreciation (depreciation): 1999 1998 Net Change Aggregate gross unrealized appreciation on securities $26,292,916 $16,198,740 Aggregate gross unrealized depreciation on securities (818,119) (792,377) Net $25,474,797 $15,406,363 $10,068,434
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 Taxes - The Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and not be subject to federal income tax. Therefore, no income tax provision is required. The Fund also intends to distribute its taxable net investment income and realized gains, if any, to avoid the payment of any federal excise taxes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains or losses were recorded by the Fund. C. Distribution To Shareholders - The Fund accrues income dividends to shareholders on a quarterly basis as of the ex-dividend date. Distributions of net realized gains are made on an annual basis to shareholders as of the ex-dividend date. D. Equalization - The Fund uses the accounting practice of equalization by which a portion of the proceeds from sales and costs of redemption of capital shares, equivalent on a per share basis to the amount of undistributed net investment income on the date of the transactions, is credited or charged to undistributed income. As a result, undistributed net investment income per share is unaffected by sales or redemption of capital shares. E. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) INVESTMENT ADVISORY CONTRACT Under an Investment Advisory Contract, Bridges Investment Counsel, Inc. (Investment Adviser) furnishes investment advisory services and performs certain administrative functions for the Fund. In return, the Fund has agreed to pay the Investment Adviser a fee computed on a quarterly basis at the rate of 1/8 of 1% of the average net asset value of the Fund during the quarter, equivalent to 1/2 of 1% per annum. Certain officers and directors of the Fund are also officers and directors of the Investment Adviser. These officers do not receive any compensation from the Fund other than that which is received indirectly through the Investment Adviser. F-13 The contract between the Fund and the Investment Adviser provides that total expenses of the Fund in any year, exclusive of stamp and other taxes, but including fees paid to the Investment Adviser, shall not exceed, in total, a maximum of 1 and 1/2% of the average month end net asset value of the Fund for the year. Amounts, if any, expended in excess of this limitation are reimbursed by the Investment Adviser as specifically identified in the Investment Advisory Contract. There were no amounts reimbursed in the six months ended June 30, 1999. (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 nine months ended September 30, was:
1999 1998 United States government obligations $ -- $ -- Other Securities 7,636,919 5,801,152 Total Cost $7,636,919 $5,801,152
Net proceeds from sales of long-term investments during the nine months ended September 30, were:
1999 1998 United States government obligations $ 200,500 $ 200,000 Other Securities 5,023,750 7,486,804 Total Net Proceeds $5,224,250 $7,686,804 Total Cost Basis of Securities Sold $4,091,831 $5,093,948
(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:
1999 1998 Shares sold 79,128 60,837 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 8,000 11,706 87,128 72,543 Shares redeemed 35,908 27,188 Net increase 51,220 45,355
Value of capital stock issued and redeemed is as follows:
1999 1998 Shares sold $2,876,124 $1,907,202 Shares issued to shareholders in reinvestment of net investment income and realized gain from security transactions 286,633 366,608 $3,162,757 $2,273,810 Shares redeemed 1,342,814 854,700 Net increase $1,819,943 $1,419,110
(7) DISTRIBUTION TO SHAREHOLDERS On October 12, 1999 a cash distribution of $.07 per share aggregating $102,704.34 was declared to shareholders of record on October 12, 1999, to be payable on October 25, 1999. -----END PRIVACY-ENHANCED MESSAGE-----