BRIDGES INVESTMENT FUND, INC.
THIRD QUARTER SHAREHOLDER REPORT
1996
CONTENTS OF REPORT
Pages 1 - 2 Shareholder Letter
Exhibit 1 Portfolio Transactions from July 1, 1996,
through September 30, 1996
Exhibit 2 Quarter-to-Quarter Changes in Financial Data
Pages F1-F14 Unaudited Financial Statements for the
Nine Months Ended September 30, 1996
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.
Shareholder Letter 1 October 21, 1996
October 21, 1996
Dear Shareholder:
Third Quarter and Nine Months, 1996 Review
- -------------------------------------------
The net asset value per share of the Fund was $23.55 on September 30, 1996.
This price was 0.6% higher than the $23.42 net asset value per share at June 30,
1996. The $23.55 price was up $2.01 or 9.3% from the $21.54 net asset value per
share at December 31, 1995. The cash amounts distributed from 1996 net
investment income were $.265 per share. Thus, the total value improvement from
the First Nine Months of 1996 operations was $2.275 per share determined by
adding $2.01 in price appreciation and $.265 in cash distributions. This $2.275
per share increase in value, when compared to the beginning net asset value of
$21.54, resulted in a 10.6% total return for the
Fund for the First Nine Months of 1996.
After a moderate downward price correction in July, 1996, common stocks
advanced in August and September, 1996 to new record high levels -- extending
their long uptrend. Bond prices were generally trendless during the Summer
Quarter, 1996, after declining on balance during the Winter and Spring Quarters
of 1996 in response to rising interest rates.
Fund Operations
- ---------------
The net assets of the Fund were $27,451,784 on September 30, 1996,
representing the highest value for any calendar quarter reporting date. Net
Shareholder Letter 2 October 21, 1996
assets advanced $343,574 from the June 30, 1996 total of $27,108,210, an
increase of 1.3% for the Third Quarter of 1996. For the First Nine Months of
1996, net assets were up $3,399,038 or 14.1% from the $24,052,746 value at
December 31, 1995. On a trailing twelve month basis (September 30, 1995 to
September 30, 1996) net assets grew from $22,527,409 to $27,451,784 --- a 21.9%
improvement.
There were 1,165,788 shares of capital stock outstanding on September 30,
1996. This level of shares outstanding represented a record high for the Fund
for any three months accounting statement period. The net gain in shares
outstanding for the First Nine Months of 1996 was 49,168 units, which resulted
in a 4.4% increase in comparison to the 1,116,620 shares outstanding at the end
of 1995.
Net investment income was $475,423 for the First Nine Months of 1996.
compared to $467,197 for the same period in 1995. Net realized gains on
investments for the First Nine Months of 1996 were $49,235 compared to $200,262
for the same time frame in 1995.
The net increase in unrealized appreciation for portfolio securities was
$2,091,162 for the Nine Months ending September 30, 1996. There was a
$3,612,519 gain in unrealized appreciation achieved for the first three calendar
quarters of 1995.
Please refer to Exhibits 1 and 2 and pages F-1 through F-14 for specific
details covering the Fund's recent portfolio transactions; the historical data
with respect to net assets, shares outstanding, net asset value per share,
dividends and capital gains distributions; and the various financial statements
and accompanying footnotes as of September 30, 1996.
Shareholder Letter 3 October 21, 1996
Dividend
- --------
On October 15, 1996, the Board of Directors declared a $.14 per share
dividend on shares of capital stock outstanding on the October 15, 1996 record
date with this income distribution amount to be payable on or about October 21,
1996. This dividend is payable from the net investment income earned during the
July - October, 1996 Quarter.
The Outlook
- -----------
The Dow Jones Industrial Average closed above $6,000 for the first time on
October 14, 1996 for a record high of $6,010. The Wall Street Journal reported
on that occasion that the price/earnings ratio for the Dow was 18.9 times
earnings. The same article indicated that the price/earnings ratio for the
"Dow" was 15.6 times earnings on February 23, 1995 when the popular index
crossed $4,000 for the first time to $4,003.33. There has been a more than 20%
increase in valuation multiples during the past twenty months that classifies
common stock prices as less cheap and vulnerable to profit taking now in
comparison to similar valuations in early 1995. Some versions of this same
observation have been made in past letters to you from time to time without an
apparent response from subsequent stock market trading.
The reasons for the dominant upward trend in stock prices in the mid-1990's
are: (1) strong and rising corporate earnings per share; (2) reasonable
interest rates; and (3) below average bond yields in comparison to returns that
were available in the 1980's and early 1990's. The potential annual long term
returns favored common stocks. As we conclude 1996 and move towards 1997, the
Fund's management expects that there will be growth in corporate profits after
taxes for the U.S. economy in comparison to 1996 levels, but the rate of
Shareholder Letter 4 October 21, 1996
improvement is likely to be quite modest in comparison to the growth in profits
for the 1991 - 1996 time frame.
The Fund's management assesses the annual consumer inflation rate for 1997
as likely to be higher (more than 3%) than the very favorable less than 3%
annual rates for recent years. Costs for energy, food and labor are likely to
tilt the indexes higher. As a result of upward price inflation and a reasonably
strong economy, the Fund's management anticipates somewhat higher interest rates
than present levels. This forecast should mean a drop for price/earnings
ratios. The management views the environment ahead as less positive than in
recent years, but still productive on balance, particularly for consistent
earnings growth companies that are emphasized in the Fund's portfolio.
Cordially,
Edson L. Bridges II
President
ELBII:elc
<TABLE>
Exhibit 1
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JULY 1, 1996, THROUGH SEPTEMBER 30, 1996
<CAPTION>
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
<S> <C> <C>
(1)<F1> Dayton Hudson Corporation 7,000 10,500
(2)<F2> Elan Corporation 2,000 4,000
First National of Nebraska 5 230
(3)<F3> Hewlett-Packard 6,000 12,000
Home Depot, Inc. 3,000 3,000
Various issues of Commercial 37,748M 2,885M
Paper Notes Purchased during
3rd Qtr., 1996
<CAPTION>
Sold or Held After
Exchanged Transaction
Securities
$1,000 Par $1,000 Par
Common Stocks Unless Value (M) Value (M)
Described Otherwise or Shares or Shares
<S> <C> <C>
Delta Air Lines $3.50 Series C 3,000 --
Convertible Preferred
Various issues of Commercial Paper 37,548M --
Notes maturing during
3rd Qtr., 1996
<F1>(1) - Received 7,000 shares in a 3-for-1 stock split on July 18, 1996.
<F2>(2) - Received 2,000 shares in a 2-for-1 stock split on August 22, 1996.
<F3>(3) - Received 6,000 shares in a 2-for-1 stock split on July 16, 1996.
</TABLE>
EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION
<TABLE>
Exhibit 2
BRIDGES INVESTMENT FUND, INC.
HISTORICAL FINANCIAL INFORMATION
<CAPTION>
Net Shares Net Asset Dividend/ Capital
Valuation Assets Outstanding Value/Share Share Gains/Share
Date
<S> <C> <C> <C> <C> <C>
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 -
EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION
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 -
EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION
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 -
09-30-86 6,392,215 399,871 15.99 .16 -
Valuation Net Shares Net Asset Dividend/ Capital
Date Assets Outstanding Value/Share Share Gains/Share
EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION
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 -
EXHIBIT 2 - HISTORICAL FINANCIAL INFORMATION
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 -
</TABLE>
<TABLE>F
-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Number Market
of Shares Value
(Note 1)
Title of Security
<S> <C> <C>
COMMON STOCKS (74.0%)
Aircraft - Manufacturing (2.1%) -
The Boeing Co. 6,000 $ 567,000
------------
Amusements - Recreation - Sporting Goods (0.9%)
NIKE, Inc. 2,000 $ 243,500
------------
Banking and Finance (5.5%) -
First National of Nebraska, Inc. 230 $ 782,000
NationsBank Corporation 3,000 260,625
Norwest Corporation 6,000 244,500
State Street Boston Corp. 4,000 229,500
------------
$ 1,516,625
------------
Beverages - Soft Drinks (2.5%) -
PepsiCo, Inc. 24,000 $ 678,000
------------
Building Materials - Forest Products (0.9%) -
Georgia Pacific Corp. 3,000 $ 237,375
------------
Chemicals (8.4%) -
The Dow Chemical Company 7,000 $ 561,750
Du Pont (E.I.) De Nemours & Company 4,000 352,500
Eastman Kodak Company 7,000 549,500
Monsanto Company 17,500 638,750
Morton International, Inc. 5,000 198,750
-----------
$ 2,301,250
------------
Computers - Hardware and Software (6.4%) -
Cisco Systems, Inc.*<FN> $ 124,126
2,000
Electronic Data Systems Corp. 4,223 259,187
HNC Software, Inc.*<FN> 80,000
2,000
Hewlett-Packard Co. 12,000 585,000
International Business Machines Corporation 1,000 124,500
Microsoft Corporation*<FN> 527,500
4,000
Sun Microsystems, Inc.*<FN> 62,125
1,000
-------------
$ 1,762,438
-----------
<FN>*
Nonincome-producing security
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
(Note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Drugs - Medicines - Cosmetics (7.7%) -
Abbott Laboratories 8,000 $ 394,000
Amgen, Inc.*<FN> 63,125
1,000
Bristol-Myers Squibb Co. 3,000 289,125
Elan Corporation PLC ADR*<FN> 119,500
4,000
Johnson & Johnson 10,000 512,500
Merck & Co., Inc. 10,000 703,750
Perrigo Company*<FN> 29,625
3,000
-----------
$ 2,111,625
------------
Electrical Equipment and Supplies (2.1%) -
General Electric Co. 6,000 $ 546,000
Linear Technology Corporation 1,000 36,875
----------
$ 582,875
-----------
Electronics (2.9%) -
Intel Corporation 4,000 $ 381,752
Motorola, Inc. 8,000 412,000
----------
$ 793,752
------------
Finance - Real Estate (2.1%) -
Federal Home Loan Mortgage Corporation 6,000 $ 585,750
------------
Finance - Services (0.4%) -
First USA, Inc. 2,000 $ 110,750
------------
Food - Miscellaneous Products (3.3%) -
Philip Morris Companies, Inc. 10,000 $ 897,500
------------
Forest Products & Paper (1.0%)
Kimberly-Clark Corporation 3,000 $ 264,375
------------
Insurance - Multiline (1.4%) -
American International Group, Inc. 1,000 $ 100,750
General Re Corp. 2,000 283,500
-----------
$ 384,250
------------
Insurance - Municipal Bond (0.9%) -
MBIA, Inc. 3,000 $ 257,250
------------
<FN>*
Nonincome-producing security
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
(Note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Lumber and Wood Products (0.8%) -
Weyerhaeuser Company 5,000 $ 230,625
------------
Machinery - Construction & Mining (0.8%) -
Caterpillar, Inc. 3,000 $ 226,125
------------
Metal Products - Miscellaneous (1.0%) -
Nucor Corporation 5,500 $ 279,125
------------
Motion Pictures and Theatres (1.6%) -
Walt Disney Co. 7,000 $ 442,750
------------
Petroleum Producing (6.5%) -
Amoco Corporation 5,000 $ 352,500
Atlantic Richfield Company 2,000 255,000
Chevron Corporation 10,000 626,250
Exxon Corporation 4,000 333,000
Mobil Corporation 2,000 231,500
-----------
$ 1,798,250
------------
Printing and Engraving (0.7%) -
Deluxe Corp. 5,000 $ 188,750
-----------
Publishing - Newspapers (1.0%) -
Gannett Co., Inc. 4,000 $ 281,500
------------
Publishing - Electronic (1.5%) -
Reuters Holdings PLC 6,000 $ 415,500
------------
Restaurants - Food Service (0.4%) -
Apple South, Inc. 3,500 $ 46,813
Brinker International, Inc.*<FN> 51,000
------------
3,000
$ 97,813
------------
Retail Stores - Apparel and Clothing (1.5%) -
Gap, Inc. 14,000 $ 404,250
------------
Retail Stores - Building Materials and Home
Improvement (0.6%)
Home Depot, Inc. 3,000 $ 170,625
------------
<FN>*
Nonincome-producing security
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
(Note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Retail Stores - Department (2.2%) -
Dayton Hudson Corporation 10,500 $ 346,500
Wal-Mart Stores, Inc. 10,000 263,750
------------
$ 610,250
------------
Retail Stores - Variety (1.0%) -
Albertson's Inc. 6,500 $ 273,812
------------
Telecommunications (3.7%) -
A T & T Corp. 5,000 $ 261,250
GTE Corporation 10,000 385,000
Sprint Corporation 8,000 311,000
360 Communications Company*<FN> 62,651
2,666
-----------
$ 1,019,901
------------
Transportation - Railroads (1.1%) -
Union Pacific Corporation 4,000 $ 293,000
------------
Utilities - Telecommunications (0.4%) -
U S West Communications Group 4,000 $ 119,500
------------
Waste Management (0.7%) -
WMX Technologies, Inc. 5,500 $ 180,812
------------
TOTAL COMMON STOCKS (Cost - $11,433,885) $20,326,903
------------
<FN>*
Nonincome-producing security
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
(Note 1)
<S> <C> <C>
DEBT SECURITIES (25.3%)
Broadcast - Radio and Television (0.2%)-
Comcast Corporation 3.375% Step-Up
Convertible Subordinated Debentures
due September 9, 2005 $ 50,000 $ 43,000
------------
Food - Miscellaneous Products (0.4%) -
Super Valu Stores, Inc. 8.875%
Promissory Notes, due June 15, 1999 $100,000 $ 105,439
-----------
U.S. Government (11.0%) -
U.S. Treasury, 8.875% Notes,
due November 15, 1997 200,000 206,437
U.S. Treasury, 9.000% Notes,
due May 15, 1998 200,000 209,063
U.S. Treasury, 9.125% Notes,
due May 15, 1999 200,000 213,687
U.S. Treasury, 8.750% Notes,
due August 15, 2000 200,000 215,813
U.S. Treasury, 8.000% Notes,
due May 15, 2001 200,000 212,187
U.S. Treasury, 7.500% Notes,
due May 15, 2002 200,000 209,375
U.S. Treasury, 10.750% Bonds
due February 15, 2003 200,000 242,750
U.S. Treasury, 7.250% Notes,
due May 15, 2004 200,000 207,125
U.S. Treasury, 7.50% Notes,
due February 15, 2005 200,000 210,375
U.S. Treasury, 9.375% Bonds,
due February 15, 2006 200,000 236,813
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
(Note 1)
<S> <C> <C>
DEBT SECURITIES (Continued)
U.S. Government - (Continued)
U.S. Treasury, 7.625% Bonds,
due February 15, 2007 200,000 207,250
U.S. Treasury, 8.75% Bonds,
due November 15, 2008 200,000 221,625
U.S. Treasury, 9.125% Bonds,
due May 15, 2009 200,000 227,187
U.S. Treasury, 7.500% Bonds,
due November 15, 2016 200,000 209,500
------------
$ 3,029,187
------------
Household Appliances and Utensils (0.4%) -
Maytag Corp., 9.75% Notes,
due May 15, 2002 $100,000 $ 112,478
------------
Office Equipment and Supplies (0.4%) -
Xerox Corporation, 9.750%
Notes, due March 15, 2000 $100,000 $ 109,235
------------
Retail Stores - Broad Line Chains (0.5%) -
Costco Wholesale Corporation 5.750%
Convertible Subordinated Debentures,
due May 15, 2002 $150,000 $ 139,500
------------
Retail Stores - Department (1.0%) -
Dillard Department Stores, Inc. 7.850%
Debentures, due October 1, 2012 $150,000 $ 153,651
Sears Roebuck & Co.
9.375% Debentures, due
November 1, 2011 100,000 116,969
-----------
$ 270,620
------------
Textiles - Miscellaneous (0.4%) -
Guilford Mills, Inc. 6.000%
Convertible Subordinated Debentures
due September 15, 2012 $100,000 $ 96,000
------------
F-7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
(Note 1)
<S> <C> <C>
DEBT SECURITIES (Continued)
Transportation - Railroads (0.5%) -
Union Pacific Corporation 6.00%
Notes, due September 1, 2003 $ 150,000 $ 140,051
-----------
Commercial Paper - Short Term (10.5%) -
American Express Credit Corp.
Commercial Paper Note 5.35%
due October 1, 1996 $1,360,000 $ 1,360,000
Ford Motor Credit Corp.
Commercial Paper Note 5.38%
due October 1, 1996 $ 700,000 $ 700,000
General Electric Capital Corp.
Commercial Paper Note 5.41%
due October 1, 1996 $ 825,000 825,000
-------------
$ 2,885,000
-------------
TOTAL DEBT SECURITIES (Cost - $6,895,518) $ 6,930,510
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost - $18,329,403) (99.3%) $27,257,413
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (0.7%) 194,371
------------
NET ASSETS, September 30, 1996 (100.0%) $27,451,784
============
<FN>T
he accompanying notes to financial statements
are an integral part of this schedule.
</TABLE>
<TABLE>F
-8
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
ASSETS AMOUNT
<S> <C>
Investments, at market value (Note 1)
Common stocks (cost $11,433,885) $20,326,903
Debt securities (cost $6,895,518) 6,930,510
-----------
Total Investments $27,257,413
Cash 112,426
Receivables
Dividends and interest 136,021
Subscriptions to capital stock 297
--------
TOTAL ASSETS $27,506,157
==========
LIABILITIES
Accrued operating expenses 54,373
------
TOTAL LIABILITIES $ 54,373
------
NET ASSETS
Capital stock, $1 par value - Authorized 3,000,000 shares,
less 674,940 shares redeemed; 1,840,728 shares issued;
1,165,788 shares outstanding (Note 6) $ 1,165,788
Paid-in surplus -
Excess over par value of amounts received from sale
of 1,840,728 shares, less amounts paid out in redeeming
674,940 shares (Note 6) 17,142,423
-----------
Net capital paid in on shares $18,308,211
Accumulated undistributed net investment income 168,791
Accumulated net realized gain on investment
transactions 40,173
Net unrealized appreciation on investments
(Note 1) 8,928,011
Accumulated undistributed equilization amount (Note 1) 6,598
---------
TOTAL NET ASSETS $27,451,784
==========
TOTAL LIABILITIES AND NET ASSETS $27,506,157
==========
NET ASSET VALUE PER SHARE (Note 5) $23.55
=====
OFFERING PRICE PER SHARE (Note 5) $23.55
=====
REDEMPTION PRICE PER SHARE (Note 5) $23.55
=====
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<TABLE>
F-9
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
AMOUNT AMOUNT
<S> <C> <C>
INVESTMENT INCOME (Note 1)
Interest $339,028
Dividends 309,364
--------
Total Investment Income $648,392
EXPENSES
Management fees (Note 2) $ 99,206
Custodian fees 26,076
Professional services 8,175
Insurance 8,046
Bookkeeping services 8,243
Printing and supplies 10,184
Dividend disbursing and transfer
agent fees (Note 3) 7,286
Computer programming 3,900
Taxes and licenses 799
Foreign Taxes Paid 1,054
-------
Total Expenses $ 172,969
----------
NET INVESTMENT INCOME $ 475,423
----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS, NET (Note 1)
Net realized gain on transactions in
investment securities $ 49,235
Net increase in unrealized
appreciation of investments 2,091,162
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $2,140,397
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,615,820
==========
<FN>The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<TABLE>
F-10
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Operations -
Net investment income $ 475,423 $ 467,197
Net realized gain on transactions in
investment securities (Note 1) 49,235 200,262
Net increase in unrealized appreciation
of investments (Note 1) 2,091,162 3,612,519
---------- -----------
Net increase in net assets
resulting from operations $ 2,615,820 $ 4,279,978
Net equalization credits (Note 1) 2,399 (2,031)
Distributions to shareholders from -
Net investment income (Note 7) (306,632) (297,921)
Net realized gain from investment
transactions - -
Equalization (Note 1) - -
Net capital share transactions
(Note 6) 1,087,451 451,086
---------- ----------
Total Increase in Net Assets $ 3,399,038 $ 4,431,112
NET ASSETS:
Beginning of year 24,052,746 18,096,297
---------- -----------
End of year (including accumulated
undistributed net investment income
of $175,389 and $169,276, respectively) $27,451,784 $22,527,409
=========== ===========
<FN>The accompanying notes to financial statements
are an integral part of these statements.
</TABLE>
F-11
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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.
<TABLE>
<CAPTION>
1996 1995 Net Change
<S> <C> <C> <C>
Net unrealized appreciation
(depreciation):
Aggregate gross unrealized
appreciationon securities $9,166,947 $5,908,291
Aggregate gross unrealized
depreciation on securities (238,936) (208,966)
----------- ------------
Net $8,928,011 $5,699,325 $3,228,686
=========== ========== ==========
</TABLE>
The net realized gain (loss) from the sales of securities is
determined for income tax and accounting purposes on the basis of the cost
of specific securities.
F-12
B. Federal Income Taxes -
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.
(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 is 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 first nine
months ended September 30, was:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
United States government obligations $ 493,695 $ 199,496
Other Securities 1,068,905 478,262
----------- -----------
Total Cost $1,562,600 $ 677,758
========== ==========
</TABLE>
Net proceeds from sales of long term investments during the first
nine months ended September 30, were:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
United States government obligations $ 423,527 $ 200,000
Other Securities 882,326 806,019
---------- -----------
Total Net Proceeds $1,305,853 $1,006,019
========== ==========
Total Cost Basis of
Securities Sold $1,256,618 $ 805,757
========== ==========
</TABLE>
(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:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Shares sold 68,242 51,815
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 18,250 21,932
-------- --------
86,492 73,747
Shares redeemed 37,323 49,345
------- -------
Net increase 49,169 24,402
======= ========
</TABLE>
Value of capital stock issued and redeemed is as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Shares sold $1,504,226 $ 963,601
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 433,606 406,593
------------ -----------
$1,937,832 $1,370,194
Shares redeemed 850,381 919,108
---------- -----------
Net increase $1,087,451 $ 451,086
========== ===========
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On October 15, 1996 a distribution of $.14 per share aggregating
$164,056.75 was declared to shareholders of record on October 15, 1996, to
be payable on October 21, 1996.
(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.
However, the Fund has never entered into a covered call option under those
circumstances.
