BRIDGES INVESTMENT FUND, INC.
THIRD QUARTER SHAREHOLDER REPORT
1997
CONTENTS OF REPORT
Pages 1 - 3 Shareholder Letter
Exhibit 1 Portfolio Transactions from July 1, 1997,
through September 30, 1997
Exhibit 2 Quarter-to-Quarter Changes in Financial Data
Pages F1-F14 Unaudited Financial Statements for the
Nine Months Ended September 30, 1997
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
Shareholder Letter 1 October 27, 1997
October 27, 1997
Dear Shareholder:
Third Quarter and Nine Months, 1997 Review
- ------------------------------------------
The net asset value per share of the Fund was $29.37 on September 30, 1997.
This price represented a record high point for any calendar quarter reporting
date. The $29.37 net asset value per share was 4.5% above the $28.11 price for
June 30, 1997, and it was 19.6% up from the year-end, 1996 valuation of $24.56
per share. The cash amounts distributed from 1997 investment income during the
first nine months of the year were $.2875 per share. Thus, the total value
improvement that developed from the January 1 through September 30, 1997
operations for the Fund was $5.0775 per share. This number was derived by
combining $4.81 in price appreciation ($29.37 less $24.56 equals $3.55) with
$.2675 in dividend income distributions. When compared to the beginning net
asset value of $24.56, this $5.0775 per share increase in value resulted in a
20.7% total return for the Fund for the First Nine Months of 1997.
The upward trend for common stocks during the Third Quarter of 1997 and for
this year as a whole was fueled by strong corporate profits and favorable
interest rates for the economy.
Fund Operations
- ---------------
The net assets of the Fund were $36,500,979 on September 30, 1997, setting
the highest value for any financial statement in the history of the Fund. Net
assets advanced $1,933,588 from the June 30, 1997 total of $34,567,391, an
increase of 5.6% for the Third Quarter of 1997. For the First Nine Months of
1997, net assets were up $7,251,498, or 24.8% from the $29,249,481 level at
December 31, 1996. On a trailing twelve months basis (September 30, 1996 to
September 30, 1997), net assets grew from $27,451,784 to $36,500,979, a 33.0%
improvement.
Net investment income was $486,381 for the First Nine Months of 1997,
compared to $475,423 for the same period in 1996. Net realized gains on
investments for the First Nine Months of 1997 were $222,141, compared to $49,205
for the same time frame in 1996. The net increase in unrealized appreciation on
investments was $5,500,602 for the First Nine Months of 1997, compared to
$2,091,162 achieved during the first three calendar quarters of 1996.
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 dividends and capital gains distributions; and other financial
statement information as of September 30, 1997.
Shareholder Letter 2 October 27, 1997
Dividend
- --------
On October 14, 1997, the Board of Directors declared a $.1250 per share
dividend on the shares of capital stock outstanding on the October 14, 1997
record date with this income distribution amount to be payable on or about
October 27, 1997. This dividend is payable from the net investment income
earned during the July - September, 1997 quarter.
Recent Events
- -------------
The general level for stock prices, as measured by the Standard & Poor's
500 Composite Stock Index, moved up to a new all time high of $983.12 on October
10, 1997. The Fund's net asset value per share responded positively by rising
to $30.01 on the same date.
Some portions of the rest of October, 1997 have been less positive.
Adjusted for the $.125 per share dividend, the Fund's net asset value per share
has fallen 8.4% from the early October peak and 6.4% from the September 30, 1997
closing price of $29.37. Some investors have been making positive assessments
about corporate earnings that result in stock purchase decisions, while others
have developed negative attitudes concerning future rising wage rate based
inflation that will induce heavy stock sales and unanticipated large drops in
equity prices from time to time. One such event took place today that resulted
in a dividend reinvestment price of $27.36 per share.
Perspective
- -----------
The broad indexes for U.S. stock prices have extended upward trends to new
all time highs from low base points that began in 1974, 1982, 1988, 1991, and
1994. The low point for the most recent phase of the 23-year bull market was
$435.86 as recorded by the Standard & Poor's 500 Composite Index in 1994. The
extraordinary aspect of this last upward movement is the large percentage gain
achieved each year in comparison to the price level at the end of the prior
year's record high price level. A companion observation would be that the
buying power to purchase shares has not diminished as the prices rise. In fact,
greater buying capacity, in terms of volume of shares traded, seems to have
developed over this upward cycle. A review of chart books on stock prices that
cover trading back to 1896 would suggest that the years 1995 through 1997 are
and were the best three back to back investment periods in the last century.
Evaluation
- ----------
Based upon 1998 earnings estimates for the 72 common stocks held by our
Fund at this date, our analysis would indicate only five core holdings that are
selling now on a price/earnings basis that is 20% or more greater than the five
year average price/earnings ratio for those stocks. The majority of the Fund's
holdings are valued at a below the five-year average price/earnings ratios for
those companies. Thus, favorable earnings prospects are supporting the asset
value for the Fund's portfolio and, most likely, for the U.S. stock market taken
as a whole.
Shareholder Letter 3 October 27, 1997
In the event $983.12 on the S & P 500 Composite Index turns out to be the
market top, the normal subsequent market correction or sell off is usually one-
third of the previous market advance, which would represent a 180 - 200 point
decline in the S & P 500 Composite Index. Such a decline would take the Index
down to the 780 - 800 level, a drop of 18 - 20% from the peak. At that level,
we believe equity valuations would be very attractive, particularly from a three
to five year investment perspective.
Several Unusual Days
- --------------------
During the late evening of October 25 and the early morning of October 26,
the Omaha, Nebraska area experienced a very heavy snowfall. The unique twist to
this storm was that very few leaves had turned their fall colors and fallen off
their limbs. The snow clung to these leaves and tree branches, and the result
was the most comprehensive damage to trees and property this community may have
ever experienced. The electric power outage is pervasive, and our offices were
without power for computer and phone services. Nevertheless, our facility was
manned and open for business. Communication was possible through cellular
phones, and, in the event a future similar circumstance arises, you may reach
one or more of the officers on duty at one or more of the following numbers:
Edson L. Bridges II - 680-9214; Edson L. Bridges III - 681-5627; Nancy K. Dodge
- - 670-9273; and L. LaVerne Kelsay - 402-0506.
New Electronic Communications
- -----------------------------
At the October 14, 1997 meeting, the Board of Directors authorized two
related projects for improved dissemination of information: (1) the electronic
posting of the daily net asset value per share to major financial quote and news
services; and (2) the creation of a web site on the Internet. The Fund
management will be placing these improvements into service when the appropriate
vendors have been identified and when computer protocols and legal requirements
have been fulfilled.
With sincere appreciation for your continued investment in our Fund, we
are:
Sincerely yours,
Edson L. Bridges II
Chairman
Edson L. Bridges III
President
ELBII:ELBIII:elc
<TABLE>
EXHIBIT 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JULY 1, 1997, THROUGH SEPTEMBER 30, 1997
<CAPTION>
Bought or Held After
Received Transaction
$1,000 Par $1,000 Par
Securities
Value (M) Value (M)
Common Stocks Unless or Shares or Shares
Described Otherwise
<S> <C> <C>
(1)<F1> American International Group 500 1,500
(2)<F2> Caterpillar, Inc. 3,000 6,000
Compaq Computer Corporation 1,000 1,000
Dell Computer 1,000 1,000
EMC Corporation 1,000 1,000
Federal Express Corporation 1,000 1,000
Federal Home Loan Mortgage 4,000 30,000
First USA Paymentech 7,000 7,000
Gap, Inc. 1,000 15,000
(3)<F3> Guilford Mills 5,083 5,083
Home Depot 2,500 5,500
(4)<F4> Intel 4,000 8,000
MBIA 1,000 5,000
MGIC Investment Corp. 500 4,500
(5)<F5> Solectron Corporation 3,000 5,000
(6)<F6> Solutia 2,400 2,400
Transaction Systems Architects, 4,000 12,000
Inc. Class A
West Teleservices 5,000 40,000
Various Issues of Commercial Paper 31,425M 1,990M
Notes Purchased during 3rd, Qtr.,
1997
<CAPTION>
Sold or Held After
Exchanged Transaction
$1,000 Par $1,000 Par
Securities
Value (M) Value (M)
Common Stocks Unless or Shares or Shares
Described Otherwise
<S> <C> <C>
(7)<F7> Costco Wholesale Corporation 150M --
5.75% due 5/15/2002
(3)<F3> Guilford Mills Convertible Debs. 100M --
6% due 9/15/2012
Guilford Mills 5,083 --
Microsoft Corporation 500 7,500
Solutia, Inc. 2,400 --
Various Issues of Commercial Paper 31,830M --
Notes Sold or maturing during
3rd Qtr., 1997
<F1> (1) - Received 500 shares in a 2-for-1 stock split on July 28, 1997.
<F2>(2) - Received 3,000 shares in a 2-for-1 stock split on July 14, 1997.
<F3>(3) - Converted 100M Guilford Mills 6% Convertible Debs. - due
9/15/2012 into 5,083 shares of common stock on July 21, 1997.
<F4>(4) - Received 4,000 shares in a 2-for-1 stock split on July 14, 1997.
<F5>(5) - Received 2,000 shares in a 2-for-1 stock split on August 5, 1997.
<F6>(6) - Received 2,400 shares in a 1-for-5 spin-off from Monsanto.
<F7>(7) - Bonds called on August 21, 1997 @ 102.56.
</TABLE>
<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 -
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 -
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 -
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 .1350 -
</TABLE>
<TABLE>
F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS - (81.4%)
Aircraft - Manufacturing - 1.8%
The Boeing Co. 12,000 $ 653,250
Amusements - Recreation - Sporting Goods 0.7%
NIKE, Inc. 5,000 $ 265,000
Banking and Finance - 6.6%
First National of Nebraska, Inc. 230 $ 966,000
MBNA Corporation 5,000 202,500
NationsBank Corporation 6,000 371,250
Norwest Corporation 6,000 367,500
State Street Boston Corp. 8,000 487,500
-----------
$ 2,394,750
-----------
Beverages - Soft Drinks - 2.7%
PepsiCo, Inc. 24,000 $ 973,500
Building Materials - Forest Products - 0.9%
Georgia Pacific Corp. 3,000 $ 313,125
Chemicals - 5.6%
The Dow Chemical Company 7,000 $ 634,812
Du Pont (E.I.) De Nemours & Company 8,000 492,500
Eastman Kodak Company 7,000 454,563
Monsanto Company 12,000 468,000
-----------
$ 2,049,875
-----------
Communications - Radio and Television - 0.4%
Clear Channel Communications, Inc.* 2,000 $ 129,750
Computers - Hardware and Software - 9.0%
Cisco Systems, Inc.* 2,000 $ 146,125
Compaq Computer Corporation * 1,000 74,750
Dell Computer Corporation * 1,000 96,875
EMC Corporation* 1,000 58,375
HNC Software, Inc.* 5,000 198,750
Hewlett-Packard Co. 12,000 834,750
International Business Machines Corporation 2,000 212,000
Microsoft Corporation* 7,500 992,344
Sun Microsystems, Inc.* 4,000 187,250
Transaction System Architects* 12,000 487,500
-------------
$ 3,288,719
------------
<FN>* Nonincome-producing security
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Drugs - Medicines - Cosmetics - 8.2%
Abbott Laboratories 8,000 $ 511,500
Amgen, Inc.* 2,000 95,875
Bristol-Myers Squibb Co. 6,000 496,500
Elan Corporation PLC ADR* 6,000 300,375
Johnson & Johnson 10,000 576,875
Merck & Co., Inc. 10,000 999,375
-----------
$ 2,980,500
-----------
Electrical Equipment and Supplies - 2.2%
General Electric Co. 12,000 $ 816,750
Electronics - 4.2%
Intel Corporation 8,000 $ 738,500
Motorola, Inc. 8,000 575,000
Solectron Corporation * 5,000 222,500
-----------
$ 1,536,000
-----------
Energy - Alternate Sources - 0.5%
CalEnergy Co., Inc. * 5,000 $ 166,250
Finance - Real Estate - 2.9%
Freddie Mac 30,000 $ 1,057,500
Finance - Services - 2.3%
Capital One Financial Corporation 10,000 $ 457,500
First Data Corporation 7,000 262,937
First USA Paymentech, Inc. * 7,000 114,625
-----------
$ 835,062
-----------
Food - Miscellaneous Products - 3.4%
Philip Morris Companies, Inc. 30,000 $ 1,246,875
Forest Products & Paper - 0.8%
Kimberly-Clark Corporation 6,000 $ 293,625
Insurance - Multiline - 1.5%
American International Group, Inc. 1,500 $ 154,781
General Re Corp. 2,000 397,000
-----------
$ 551,781
-----------
<FN>* Nonincome-producing security
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Insurance - Mortgage - 0.7%
MGIC Investment Corporation 4,500 $ 257,906
Insurance - Municipal Bond - 1.7%
MBIA, Inc. 5,000 $ 627,188
Lumber and Wood Products - 0.8%
Weyerhaeuser Company 5,000 $ 297,500
Machinery - Construction & Mining - 0.9%
Caterpillar, Inc. 6,000 $ 323,625
Medical - Services - 0.4%
HealthSouth Corporation * 5,000 $ 133,438
Metal Products - Miscellaneous - 0.8%
Nucor Corporation 5,500 $ 289,781
Motion Pictures and Theatres - 1.5%
Walt Disney Co. 7,000 $ 564,375
Petroleum Producing - 6.7%
Amoco Corporation 5,000 $ 481,875
Atlantic Richfield Company 4,000 341,750
Chevron Corporation 10,000 830,625
Exxon Corporation 8,000 512,500
Mobil Corporation 4,000 296,000
-----------
$ 2,462,750
-----------
Publishing - Newspapers - 1.2%
Gannett Co., Inc. 4,000 $ 431,750
Publishing - Electronic - 1.2%
Reuters Holdings PLC 6,000 $ 427,500
Retail Stores - Apparel and Clothing - 2.0%
Gap, Inc. 15,000 $ 750,000
Retail Stores - Building Materials and Home
Improvement - 0.8%
Home Depot, Inc. 5,500 $ 286,687
<FN>* Nonincome-producing security
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Retail Stores - Department - 1.7%
Dayton Hudson Corporation 10,500 $ 632,625
Retail Stores - Variety - 0.6%
Albertson's Inc. 6,500 $ 226,688
Telecommunications - 4.0%
GTE Corporation 10,000 453,750
Sprint Corporation 8,000 400,000
West Teleservices Corporation* 40,000 600,000
-----------
$ 1,453,750
-----------
Transportation - Airfreight - 2.0%
Eagle USA Airfreight, Inc. * 20,000 $ 670,000
Federal Express Corporation * 1,000 80,000
-----------
$ 750,000
-----------
Transportation - Railroads - 0.7%
Union Pacific Corporation 4,000 $ 250,500
TOTAL COMMON STOCKS (Cost - $14,034,774) $29,718,375
PREFERRED STOCKS (0.8%)
Banking and Finance - 0.4%
CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 133,125
Telecommunications - 0.4%
AirTouch Communications, Inc. 4.25% Series C 3,000 $ 169,313
Convertible Preferred
Total Preferred Stocks (Cost - $262,925) $ 302,438
Total Stocks (Cost - $14,297,699) $30,020,813
<FN>*Nonincome-producing security
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
<S> <C> <C>
DEBT SECURITIES (17.3%)
Broadcast - Radio and Television - 0.1%
Comcast Corporation 3.375% Step-Up
Convertible Subordinated Debentures
due September 9, 2005 $ 50,000 $ 53,250
Food - Miscellaneous Products - 0.3%
Super Valu Stores, Inc. 8.875%
Promissory Notes, due June 15, 1999 $100,000 $ 104,321
Household Appliances and Utensils - 0.3%
Maytag Corp., 9.75% Notes,
due May 15, 2002 $100,000 $ 112,923
Office Equipment and Supplies - 0.3%
Xerox Corporation, 9.750%
Notes, due March 15, 2000 $100,000 $ 107,979
Retail Stores - Department - 0.8%
Dillard Department Stores, Inc. 7.850%
Debentures, due October 1, 2012 $150,000 $ 163,756
Sears Roebuck & Co.
9.375% Debentures, due
November 1, 2011 100,000 121,938
-----------
$ 285,694
-----------
Transportation - Railroads - 0.4%
Union Pacific Corporation 6.00%
Notes, due September 1, 2003 $150,000 $ 145,199
U.S. Government - 9.6%
U.S. Treasury, 8.875% Notes,
due November 15, 1997 $200,000 200,812
U.S. Treasury, 9.000% Notes,
due May 15, 1998 200,000 204,188
U.S. Treasury, 9.125% Notes,
due May 15, 1999 200,000 210,250
U.S. Treasury, 8.750% Notes,
due August 15, 2000 200,000 215,062
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
<S> <C> <C>
DEBT SECURITIES (Continued)
U.S. Government - (Continued)
U.S. Treasury, 8.000% Notes,
due May 15, 2001 200,000 213,094
U.S. Treasury, 7.500% Notes,
due May 15, 2002 200,000 212,125
U.S. Treasury, 10.750% Bonds
due February 15, 2003 200,000 242,750
U.S. Treasury, 7.250% Notes,
due May 15, 2004 300,000 319,031
U.S. Treasury, 7.50% Notes,
due February 15, 2005 300,000 324,188
U.S. Treasury, 9.375% Bonds,
due February 15, 2006 200,000 242,094
U.S. Treasury, 7.625% Bonds,
due February 15, 2007 300,000 316,453
U.S. Treasury, 8.75% Bonds,
due November 15, 2008 200,000 225,406
U.S. Treasury, 9.125% Bonds,
due May 15, 2009 200,000 231,156
U.S. Treasury, 7.500% Bonds,
due November 15, 2016 300,000 334,032
-----------
$ 3,490,641
-----------
Commercial Paper - Short Term - 5.5%
General Electric Credit Corp. Commerical
Paper Note 5.65% due October 7, 1997 $ 810,000 $ 810,000
F-7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Amount Value
Title of Security
<S> <C> <C>
DEBT SECURITIES (Continued)
Prudential Funding Corp. Commercial
Paper Note 5.62% due October 3, 1997 1,180,000 $ 1,180,000
-----------
$ 1,990,000
-----------
TOTAL DEBT SECURITIES (Cost - $6,172,726) $ 6,290,007
TOTAL INVESTMENTS IN SECURITIES
(Cost - $20,470,425) (99.5%) $36,310,820
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (0.5%) 190,159
-----------
NET ASSETS, September 30, 1997 (100.0%) $36,500,979
===========
<FN>The 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, 1997
(Unaudited)
<CAPTION>
AMOUNT
<S> <C>
ASSETS
Investments, at market value
Common and preferred stocks (cost $14,297,699) $30,020,813
Debt securities (cost $6,172,726) 6,290,007
Total Investments $36,310,820
Cash 103,241
Receivables
Dividends and interest 140,662
Subscriptions to capital stock 15,348
-----------
TOTAL ASSETS $36,570,071
===========
LIABILITIES
Accrued operating expenses 68,092
Redemption of Capital Stock 1,000
-----------
TOTAL LIABILITIES $ 69,092
-----------
NET ASSETS
Capital stock, $1 par value - Authorized
3,000,000 shares,less 726,920 shares redeemed;
1,969,651 shares issued;1,242,731 shares
outstanding $ 1,242,731
Paid-in surplus -
Excess over par value of amounts received
from sale of 1,969,651 shares, less
amounts paid out in redeeming
726,920 shares 19,028,828
-----------
Net capital paid in on shares $20,271,559
-----------
Accumulated undistributed net investment income 159,996
Accumulated net realized gain on investment
transactions 222,141
Net unrealized appreciation on investments 15,840,395
Accumulated undistributed equilization amount 6,888
----------
TOTAL NET ASSETS $36,500,979
===========
NET ASSET VALUE PER SHARE $29.37
======
OFFERING PRICE PER SHARE $29.37
======
REDEMPTION PRICE PER SHARE $29.37
======
<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, 1997
(Unaudited)
<CAPTION>
AMOUNT AMOUNT
<S>
INVESTMENT INCOME <C> <C>
Interest $363,936
Dividends 328,686
--------
Total Investment Income $692,622
EXPENSES
Management fees $124,888
Custodian fees 27,244
Professional services 8,175
Insurance 12,780
Bookkeeping services 11,519
Printing and supplies 8,611
Dividend disbursing and transfer
agent fees 7,534
Computer programming 3,375
Taxes and licenses 799
Foreign Taxes Paid 1,316
--------
Total Expenses $ 206,241
--------
NET INVESTMENT INCOME $ 486,381
--------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS, NET
Net realized gain on transactions in
investment securities $ 225,051
Net increase in unrealized
appreciation on investments 5,500,602
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $5,725,653
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,212,034
==========
<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, 1997 AND 1996
(Unaudited)
<CAPTION>
1997 1996
<S> <C> <C>
INCREASE IN NET ASSETS
Operations -
Net investment income $ 486,381 $ 475,423
Net realized gain/(loss) on
transactions in investment
securities 225,051 49,235
Net increase in unrealized
appreciation of investments 5,500,602 2,091,162
---------- ---------
Net increase in net assets
resulting from operations $ 6,212,034 $2,615,820
Net equalization credits 2,157 2,399
Distributions to shareholders from -
Net investment income (326,386) (306,632)
Net realized gain from investment
transactions - -
Equalization - -
Net capital share transactions 1,363,686 1,087,451
--------- ---------
Total Increase in Net Assets $ 7,251,491 $3,399,038
NET ASSETS:
Beginning of year 29,249,488 24,052,746
---------- ----------
End of year (including accumulated
undistributed net investment income
of $166,884 and $175,389
respectively) $36,500,979 $27,451,784
=========== ============
<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, 1997
(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 a
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>
1997 1996 Net
Change
<S> <C> <C> <C>
Net unrealized appreciation
(depreciation):
Aggregate gross unrealized
appreciation on securities $16,077,365 $9,166,947
Aggregate gross unrealized
depreciation on securities (236,970) (238,936)
Net $15,840,395 $8,928,011 $6,912,384
</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. 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 received from the sale of capital shares and
the amounts paid for the 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 first six months
ended September 30, was:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
United States government obligations $ - $ 493,695
Other Securities 4,180,769 1,068,905
Total Cost $4,180,769 $1,562,600
</TABLE>
Net proceeds from sales of long-term investments during the first
six months ended September 30, were:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
United States government obligations $ - $ 423,527
Other Securities 1,896,848 882,326
Total Net Proceeds $1,896,848 $1,305,853
Total Cost Basis of
Securities Sold $1,671,797 $1,256,618
</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>
1997 1996
<S> <C> <C>
Shares sold 75,896 68,242
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 16,233 18,250
92,129 86,492
Shares redeemed 40,229 37,323
Net increase 51,900 49,169
</TABLE>
Value of capital stock issued and redeemed is as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Shares sold $1,982,095 $1,504,226
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 425,686 433,606
$2,407,781 1,937,832
Shares redeemed 1,044,095 850,381
Net increase $1,363,686 $1,087,451
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On October 14, 1997 a distribution of $.1250 per share aggregating
$155,503 was declared to shareholders of record on October 14, 1997, to be
payable on October 27, 1997.
(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.
