BRIDGES INVESTMENT FUND, INC.
8401 West Dodge Road, Suite 256
Omaha, Nebraska 68114
July 21, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Re: Bridges Investment Fund, Inc.
File Nos. 811-1209 and 2-21600
Pursuant to Rule 30b2-1 and Rule 30d-1 of the General Rules and
Regulations, Investment Company Act of 1940, four copies of Bridges Investment
Fund, Inc.' s Second Quarter Shareholder Report for the period ending June 30,
1997, are hereby filed with the Commission.
The Fund, as of this date, is mailing copies of the First Quarter Report to
its shareholders.
Very truly yours,
Edson L. Bridges II
Chairman
ELBII:elc
enc.
BRIDGES INVESTMENT FUND, INC.
SECOND QUARTER OR SEMI-ANNUAL
SHAREHOLDER REPORT
1997
CONTENTS OF REPORT
PAGES 1 - 3 SHAREHOLDER LETTER
EXHIBIT 1 PORTFOLIO TRANSACTIONS FROM APRIL 1, 1997,
THROUGH JUNE 30, 1997
EXHIBIT 2 QUARTER-TO-QUARTER CHANGES IN FINANCIAL DATA
PAGES F1-F14 UNAUDITED FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED JUNE 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
JULY 21, 1997
DEAR SHAREHOLDER:
SECOND QUARTER AND FIRST HALF, 1997 REVIEW
THE NET ASSET VALUE PER SHARE OF THE FUND WAS $28.11 ON JUNE 30, 1997.
THIS RECORD HIGH CALENDAR QUARTER PRICE WAS 12.5% ABOVE THE $24.99 NET ASSET
VALUE PER SHARE AT MARCH 31, 1997, AND UP 14.4% FROM THE YEAR-END, 1996
VALUATION OF $24.56. THE CASH AMOUNTS DISTRIBUTED FROM 1997 INVESTMENT INCOME
DURING THE SIX MONTHS OF THIS YEAR WERE $.1325 PER SHARE. THUS, THE TOTAL
VALUE IMPROVEMENT WAS $3.6825 PER SHARE THAT DEVELOPED FROM OPERATIONS IN THE
FIRST HALF OF 1997 BY COMBINING $3.55 PER SHARE IN PRICE APPRECIATION ($28.11
LESS $24.56 EQUALS $3.55) WITH $.1325 IN DIVIDEND INCOME. THIS $3.6825 PER
SHARE INCREASE IN VALUE, WHEN COMPARED TO THE BEGINNING NET ASSET VALUE OF
$24.56, RESULTED IN A 15.0% TOTAL RETURN FOR THE FUND FOR THE FIRST SIX MONTHS
OF 1997.
PRICE APPRECIATION FOR COMMON STOCKS IN THE SECOND QUARTER OF 1997 WAS
OUTSTANDING. THE IMPROVED LEVELS OF VALUE WERE SUSTAINED BY STRONG CORPORATE
EARNINGS AND STABLE INTEREST RATES.
FUND OPERATIONS
THE NET ASSETS OF THE FUND WERE $34,567,391 ON JUNE 30, 1997,
REPRESENTING THE HIGHEST VALUE FOR ANY CALENDAR QUARTER REPORTING DATE. NET
ASSETS ADVANCED $4,311,950 FROM THE MARCH 31, 1997 TOTAL OF $30,255,441, AN
INCREASE OF 14.2% FOR THE SECOND QUARTER OF 1997. FOR THE FIRST SIX MONTHS
OF 1997, NET ASSETS WERE UP $5,317,903 OR 18.2% FROM THE $29,249,481 LEVEL
AT DECEMBER 31, 1996. ON A TRAILING TWELVE MONTH BASIS (JUNE 30, 1996 TO
JUNE 30, 1997) NET ASSETS GREW FROM $27,108,210 TO $34,567,391, A 27.5%
IMPROVEMENT.
THERE WERE 1,229,643 SHARES OF CAPITAL STOCK OUTSTANDING ON JUNE 30,
1997. THIS NUMBER REPRESENTED A RECORD HIGH FOR SHARES OUTSTANDING FOR
ANY THREE MONTH ACCOUNTING STATEMENT PERIOD IN THE HISTORY OF THE FUND. THE
NET GAIN IN SHARES OUTSTANDING FOR THE FIRST SIX MONTHS OF 1997 WAS 38,812
UNITS, WHICH RESULTED IN A 3.3% ADVANCE IN COMPARISON TO THE 1,190,831 UNITS
OUTSTANDING AT THE END OF 1996.
NET INVESTMENT INCOME WAS $329,061 FOR THE FIRST SIX MONTHS OF 1997,
COMPARED TO $308,288 FOR THE SAME PERIOD IN 1996. NET REALIZED GAINS ON
INVESTMENTS FOR THE FIRST SIX MONTHS OF 1997 WERE $119,720 COMPARED TO $13,137
FOR THE SAME TIME FRAME IN 1996. THE NET INCREASE IN UNREALIZED APPRECIATION
ON INVESTMENTS WAS $4,040,554 FOR THE FIRST SIX MONTHS OF 1997, COMPARED TO
$1,986,619 ACHIEVED DURING THE FIRST TWO 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 JUNE 30, 1997.
DIVIDEND
ON JULY 8, 1997, THE BOARD OF DIRECTORS DECLARED A $.1350 PER SHARE
DIVIDEND ON THE SHARES OF CAPITAL STOCK OUTSTANDING ON THE JULY 8, 1997
RECORD DATE WITH THIS INCOME DISTRIBUTION AMOUNT TO BE PAYABLE ON OR ABOUT
JULY 21, 1997. THIS DIVIDEND IS PAYABLE FROM THE NET INVESTMENT INCOME EARNED
DURING THE APRIL - JUNE, 1997 QUARTER.
RECENT INVESTMENT CHANGES
DURING THE LAST QUARTER, WE PRUNED A NUMBER OF EQUITIES WHICH HAD BEEN
DISAPPOINTING PERFORMERS AND REPLACED THEM WITH INVESTMENTS IN COMPANIES WHICH
WE BELIEVE OFFER SUPERIOR LONG-TERM CAPITAL APPRECIATION PROSPECTS GOING
FORWARD. IN THE AGGREGATE, NET EQUITY PURCHASES DURING THE QUARTER
APPROXIMATED $800,000. A COMPLETE LIST OF PORTFOLIO TRANSACTIONS IS PROVIDED
IN EXHIBIT 1.
ESSENTIALLY, PURCHASES DURING THIS QUARTER WERE MADE TO INCREASE
POSITIONS IN COMPANIES WHICH WERE SOMEWHAT UNDERWEIGHTED IN THE PORTFOLIO BUT
WHICH WE BELIEVE SHOULD CONTINUE TO OFFER STRONG EARNINGS GROWTH OVER TIME,
AND NEW POSITIONS WERE ESTABLISHED IN COMPANIES WHICH OPERATE IN SECTORS IN
WHICH THE FUND HAD LITTLE OR NO PREVIOUS EXPOSURE.
WHILE ALL OF THE PURCHASES OF EQUITIES IN THE FUND DURING THE QUARTER
WERE MADE BASED ON THE LONG-TERM INVESTMENT MERITS AND FUNDAMENTALS OF THE
RESPECTIVE COMPANIES PURCHASED, IT IS GRATIFYING TO NOTE IN THE SHORT RUN
THAT THE PERFORMANCE OF THE RECENT PURCHASES WAS BOTH BETTER THAN THE S&P 500
AND THE POSITIONS WHICH WERE ELIMINATED FROM THE PORTFOLIO. SPECIFICALLY,
THE WEIGHTED AVERAGE PRICE INCREASE OF PURCHASES DURING THE QUARTER WAS 9.5%
VERSUS A 3.4% INCREASE IN THE S&P 500 AND A 1.3% WEIGHTED AVERAGE INCREASE
FOR THE SECURITIES WHICH WERE SOLD, MEASURING FROM THE DATE OF PURCHASE OR
SALE THROUGH THE END OF THE QUARTER.
OUTLOOK
THE 17.45% TOTAL RETURN FOR THE S&P 500 FOR THE SECOND QUARTER OF 1997
REPRESENTED THE LARGEST ONE QUARTER TOTAL RETURN FOR THE MARKET AS REPRESENTED
BY THAT INDEX SINCE THE FIRST QUARTER OF 1991, WHEN THE S&P 500 HAD A TOTAL
RETURN OF 14.45%. WHAT MAKES THE STRONG PERFORMANCE OF EQUITIES DURING THE
SECOND QUARTER ALL THE MORE AMAZING IS THAT THIS LARGE ABSOLUTE RETURN CAME
ON TOP OF THE ALREADY STRONG RESULTS OF THE PRIOR NINE QUARTERS. DURING THE
DECEMBER 9, 1994, TO JUNE 30, 1997, TIME FRAME, THE S&P 500 HAD A TOTAL
RETURN OF 110%.
IN THE SECOND QUARTER, AS OVER THE PAST 2 1/2 YEARS, STOCK PRICES HAVE
BEEN PROPELLED BY STRONG CORPORATE EARNINGS, A GENERALLY FAVORABLE INTEREST
RATE ENVIRONMENT, AND LARGE NET INFLOWS INTO EQUITY MUTUAL FUNDS. WHILE WE
REMAIN CONSTRUCTIVE ON THE LONG-TERM OUTLOOK FOR EQUITIES, PARTICULARLY THOSE
HELD IN THE PORTFOLIO, OUR ENTHUSIASM IS TEMPERED BY THE REALIZATION THAT
PERIODIC DECLINES IN STOCK PRICES ARE INEVITABLE, AND OUR SENSE IS THAT THE
STRONG, ALMOST UNBROKEN TREND IN STOCK PRICES OF THE PAST TWO YEARS INCREASES
THE ODDS OF SOME TYPE OF MEANINGFUL CORRECTION OVER THE NEAR TO INTERMEDIATE
TERM. WE WILL SEEK TO USE INTERMEDIATE PERIODS OF EQUITY PRICE WEAKNESS AS
AN OPPORTUNITY TO ADD TO OUR POSITIONS IN EQUITIES IN THE FUND. THE FUND'S
CONTINUED ABOVE-AVERAGE CASH POSITION REFLECTS OUR SENSE THAT EQUITY MARKET
RISK IS ABOVE AVERAGE IN THE SHORT RUN.
CONCLUDING THOUGHTS
ALL ENTERPRISES THAT PERFORM WELL ARE A POSITIVE REFLECTION OF THEIR
CONSTITUENCY. OUR FUND IS BLESSED WITH STABLE AND LOYAL SHAREHOLDERS, AND
THE BOARD OF DIRECTORS AND MANAGEMENT OF THE FUND ARE TRULY GRATEFUL FOR EACH
OF YOU.
SINCERELY YOURS,
EDSON L. BRIDGES II, CFA
CHAIRMAN
EDSON L. BRIDGES III, CFA
PRESIDENT
ELBII:ELC
<TABLE>
EXHIBIT 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
APRIL 1, 1997, THROUGH JUNE 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>
AMGEN, INC. 1,000 2,000
(1)<F1> AUTOLIV, INC. 1,705 1,705
(2)<F2> ATLANTIC RICHFIELD 2,000 4,000
(3)<F3> BOEING 6,000 12,000
CFC CAPITAL TRUST PREFERRED 5,000 5,000
9.375% SERIES B
CALENERGY, INC. 5,000 5,000
CAPITAL ONE FINANCIAL 5,000 10,000
CLEAR CHANNEL COMMUNICATIONS 2,000 2,000
(4)<F4> DUPONT, E.I. DENEMOURS 4,000 8,000
EAGLE USA 20,000 20,000
ELAN PLC ADR 2,000 6,000
(5)<F5> EXXON 4,000 8,000
FEDERAL HOME LOAN MORTGAGE CORP. 2,000 26,000
FIRST DATA CORP. 7,000 7,000
(6)<F6> GENERAL ELECTRIC 6,000 12,000
HNC SOFTWARE 3,000 5,000
HEALTHSOUTH CORP. 5,000 5,000
(7)<F7> INTERNATIONAL BUSINESS MACHINES 1,000 2,000
(8)<F8> KIMBERLY CLARK 3,000 6,000
MBIA, INC. 1,000 4,000
MBNA CORP. 5,000 5,000
(9)<F9> MGIC INVESTMENT CORP. 4,000 4,000
(10)<F10> MOBIL CORP. 2,000 4,000
(11)<F11> MORTON INTERNATIONAL, INC. 5,000 5,000
(NEW)
NIKE, INC. CLASS B 1,000 5,000
(12)<F12> PHILIP MORRIS 20,000 30,000
SOLECTRON CORP. 2,000 2,000
(13)<F13> STATE STREET CORP. 4,000 8,000
SUN MICROSYSTEMS, INC. 2,000 4,000
TRANSACTION SYSTEMS ARCHITECTS, 1,500 8,000
INC. CLASS A
WEST TELESERVICES 22,000 35,000
VARIOUS ISSUES OF COMMERCIAL PAPER 40,215M 2,395M
NOTES PURCHASED DURING 2ND, QTR.,
1997
<FN>REFER TO NOTES (1) THROUGH (13) ON THE NEXT PAGE.
-2-
EXHIBIT 1
<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>
A T & T CORP. 5,000 --
APPLE SOUTH, INC. 3,500 --
AUTOLIV, INC. 1,705 --
DELUXE CORP. 5,000 --
ELECTRONIC DATA SYSTEMS CORP. 4,223 --
LUCENT TECHNOLOGIES 1,620 --
MEMBERWORKS, INC. 2,000 --
MORTON INTERNATIONAL, INC. (NEW) 5,000 --
NCR CORPORATION 312 --
U.S. WEST, INC. COMMUNICATIONS 4,000 --
GROUP
UNION PACIFIC RESOURCES GROUP 3,387 --
WASTE MANAGEMENT, INC. 5,500 --
VARIOUS ISSUES OF COMMERCIAL PAPER 41,090M --
NOTES SOLD OR MATURING DURING
2ND QTR., 1997
<F1>(1) - RECEIVED 1,705 SHARES IN A MERGER WITH MORTON INTERNATIONAL, INC.
(OLD) ON MAY 5, 1997.
<F2>(2) - RECEIVED 2,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 16, 1997.
<F3>(3) - RECEIVED 6,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 9, 1997.
<F4>(4) - RECEIVED 4,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 13, 1997.
<F5>(5) - RECEIVED 4,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON APRIL 14, 1997.
<F6>(6) - RECEIVED 6,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 12, 1997.
<F7>(7) - RECEIVED 1,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 28, 1997.
<F8>(8) - RECEIVED 3,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON APRIL 3, 1997.
<F9>(9) - RECEIVED 2,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 3, 1997.
<F10>(10) - RECEIVED 2,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 25, 1997.
<F11>(11) - RECEIVED 5,000 SHARES IN A MERGER WITH MORTON INTERNATIONAL, INC.
(OLD) ON MAY 5, 1997.
<F12>(12) - RECEIVED 20,000 SHARES IN A 3-FOR-1 STOCK SPLIT ON APRIL 11,
1997.
<F13>(13) - RECEIVED 4,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 29, 1997.
</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 -
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 -
</TABLE>
<TABLE>
F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS - (78.8%)
Aircraft - Manufacturing - 1.8%
The Boeing Co. 12,000 $ 636,750
Amusements - Recreation - Sporting Goods 0.8%
NIKE, Inc. 5,000 $ 291,875
Banking and Finance - 6.3%
First National of Nebraska, Inc. 230 $ 897,000
MBNA Corporation 5,000 183,125
NationsBank Corporation 6,000 387,375
Norwest Corporation 6,000 337,500
State Street Boston Corp. 8,000 370,000
-----------
$ 2,175,000
-----------
Beverages - Soft Drinks - 2.6%
PepsiCo, Inc. 24,000 $ 901,500
Building Materials - Forest Products - 0.7%
Georgia Pacific Corp. 3,000 $ 256,125
Chemicals - 6.3%
The Dow Chemical Company 7,000 $ 608,125
Du Pont (E.I.) De Nemours & Company 8,000 503,000
Eastman Kodak Company 7,000 537,250
Monsanto Company 12,000 516,750
-----------
$ 2,165,125
-----------
Communications - Radio and Television - 0.4%
Clear Channel Communications, Inc.*<FN> 2,000 $ 123,000
Computers - Hardware and Software - 7.6%
Cisco Systems, Inc.*<FN> 2,000 $ 134,250
HNC Software, Inc.*<FN> 5,000 190,625
Hewlett-Packard Co. 12,000 672,000
International Business Machines Corporation 2,000 180,500
Microsoft Corporation*<FN> 8,000 1,011,000
Sun Microsystems, Inc.*<FN> 4,000 148,875
Transaction System Architects*<FN> 8,000 276,000
-----------
$ 2,613,250
-----------
<FN>* Nonincome-producing security
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Drugs - Medicines - Cosmetics - 8.9%
Abbott Laboratories 8,000 $ 534,000
Amgen, Inc.*<FN> 2,000 116,250
Bristol-Myers Squibb Co. 6,000 486,000
Elan Corporation PLC ADR*<FN> 6,000 271,500
Johnson & Johnson 10,000 643,750
Merck & Co., Inc. 10,000 1,023,125
-----------
$ 3,074,625
-----------
Electrical Equipment and Supplies - 2.3%
General Electric Co. 12,000 $ 780,000
Electronics - 3.8%
Intel Corporation 4,000 $ 567,250
Motorola, Inc. 8,000 609,000
Solectron Corporation *<FN> 2,000 140,125
-----------
$ 1,316,375
-----------
Energy - Alternate Sources - 0.5%
CalEnergy Co., Inc. *<FN> 5,000 $ 190,000
Finance - Real Estate - 2.6%
Federal Home Loan Mortgage Corporation 26,000 $ 910,000
Finance - Services - 2.0%
Capital One Financial Corporation 10,000 $ 377,500
First Data Corporation 7,000 307,562
-----------
$ 685,062
-----------
Food - Miscellaneous Products - 3.8%
Philip Morris Companies, Inc. 30,000 $ 1,327,500
Forest Products & Paper - 0.9%
Kimberly-Clark Corporation 6,000 $ 298,500
Insurance - Multiline - 1.5%
American International Group, Inc. 1,000 $ 149,375
General Re Corp. 2,000 364,000
-----------
$ 513,375
-----------
<FN>* Nonincome-producing security
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Value
<S> <C> <C>
COMMON STOCKS (Continued)
Insurance - Mortgage - 0.6%
MGIC Investment Corporation 4,000 $ 191,750
Insurance - Municipal Bond - 1.3%
MBIA, Inc. 4,000 $ 451,250
Lumber and Wood Products - 0.8%
Weyerhaeuser Company 5,000 $ 260,000
Machinery - Construction & Mining - 0.9%
Caterpillar, Inc. 3,000 $ 322,125
Medical - Services - 0.4%
HealthSouth Corporation *<FN> 5,000 $ 124,688
Metal Products - Miscellaneous - 0.9%
Nucor Corporation 5,500 $ 310,750
Motion Pictures and Theatres - 1.6%
Walt Disney Co. 7,000 $ 561,750
Petroleum Producing - 6.4%
Amoco Corporation 5,000 $ 434,687
Atlantic Richfield Company 4,000 282,000
Chevron Corporation 10,000 739,375
Exxon Corporation 8,000 490,000
Mobil Corporation 4,000 279,500
-----------
$ 2,225,562
-----------
Publishing - Newspapers - 1.1%
Gannett Co., Inc. 4,000 $ 395,000
Publishing - Electronic - 1.1%
Reuters Holdings PLC 6,000 $ 378,000
Retail Stores - Apparel and Clothing - 1.6%
Gap, Inc. 14,000 $ 544,250
Retail Stores - Building Materials and Home
Improvement - 0.6%
Home Depot, Inc. 3,000 $ 207,000
<FN>* Nonincome-producing security
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Value
<S> <C> <C>
COMMON STOCKS (Continued)
Retail Stores - Department - 1.6%
Dayton Hudson Corporation 10,500 $ 558,469
Retail Stores - Variety - 0.7%
Albertson's Inc. 6,500 $ 237,250
Telecommunications - 4.0%
GTE Corporation 10,000 438,750
Sprint Corporation 8,000 418,000
West Teleservices Corporation*<FN> 35,000 516,250
-----------
$ 1,373,000
-----------
Transportation - Airfreight - 1.6%
Eagle USA Airfreight, Inc. *<FN> 20,000 $ 542,500
Transportation - Railroads - 0.8%
Union Pacific Corporation 4,000 $ 279,250
TOTAL COMMON STOCKS (Cost - $12,910,179) $27,220,656
PREFERRED STOCKS (0.8%)
Banking and Finance - 0.4%
CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 130,625
Telecommunications - 0.4%
AirTouch Communications, Inc. 4.25% Series C 3,000 $ 144,000
Convertible Preferred
Total Preferred Stocks (Cost - $262,925) $ 274,625
Total Stocks (Cost - $13,173,104) $27,495,281
<FN>*Nonincome-producing security
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Value
<S> <C> <C>
DEBT SECURITIES (19.9%)
Broadcast - Radio and Television - 0.2%
Comcast Corporation 3.375% Step-Up
Convertible Subordinated Debentures
due September 9, 2005 $ 50,000 $ 52,375
Food - Miscellaneous Products - 0.3%
Super Valu Stores, Inc. 8.875%
Promissory Notes, due June 15, 1999 $100,000 $ 104,344
U.S. Government - 10.0%
U.S. Treasury, 8.875% Notes,
due November 15, 1997 200,000 202,375
U.S. Treasury, 9.000% Notes,
due May 15, 1998 200,000 205,437
U.S. Treasury, 9.125% Notes,
due May 15, 1999 200,000 210,625
U.S. Treasury, 8.750% Notes,
due August 15, 2000 200,000 213,875
U.S. Treasury, 8.000% Notes,
due May 15, 2001 200,000 211,313
U.S. Treasury, 7.500% Notes,
due May 15, 2002 200,000 209,250
U.S. Treasury, 10.750% Bonds
due February 15, 2003 200,000 240,250
U.S. Treasury, 7.250% Notes,
due May 15, 2004 300,000 312,656
U.S. Treasury, 7.50% Notes,
due February 15, 2005 300,000 317,437
U.S. Treasury, 9.375% Bonds,
due February 15, 2006 200,000 237,063
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Value
<S> <C> <C>
DEBT SECURITIES (Continued)
U.S. Government - (Continued)
U.S. Treasury, 7.625% Bonds,
due February 15, 2007 300,000 312,000
U.S. Treasury, 8.75% Bonds,
due November 15, 2008 200,000 221,750
U.S. Treasury, 9.125% Bonds,
due May 15, 2009 200,000 227,125
U.S. Treasury, 7.500% Bonds,
due November 15, 2016 300,000 320,625
-----------
$ 3,441,781
-----------
Household Appliances and Utensils - 0.3%
Maytag Corp., 9.75% Notes,
due May 15, 2002 $100,000 $ 111,531
Office Equipment and Supplies - 0.3%
Xerox Corporation, 9.750%
Notes, due March 15, 2000 $100,000 $ 107,906
Retail Stores - Broad Line Chains - 0.4%
Costco Wholesale Corporation 5.750%
Convertible Subordinated Debentures,
due May 15, 2002 $150,000 $ 150,937
Retail Stores - Department - 0.8%
Dillard Department Stores, Inc. 7.850%
Debentures, due October 1, 2012 $150,000 $ 158,953
Sears Roebuck & Co.
9.375% Debentures, due
November 1, 2011 100,000 118,750
-----------
$ 277,703
-----------
Textiles - Miscellaneous - 0.3%
Guilford Mills, Inc. 6.000%
Convertible Subordinated Debentures
due September 15, 2012 $100,000 $ 102,000
F-7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
JUNE 30, 1997
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Value
<S> <C> <C>
DEBT SECURITIES (Continued)
Transportation - Railroads - 0.4%
Union Pacific Corporation 6.00%
Notes, due September 1, 2003 $ 150,000 $ 142,360
Commercial Paper - Short Term - 6.9%
American Express Credit Corp.
Commercial Paper Note 5.30%
due July 1, 1997 $ 675,000 $ 675,000
Ford Motor Credit Corp.
Commercial Paper Note 5.5%
due July 1, 1997 $1,720,000 $ 1,720,000
-----------
$ 2,395,000
-----------
TOTAL DEBT SECURITIES (Cost - $6,827,768) $ 6,885,937
TOTAL INVESTMENTS IN SECURITIES
(Cost - $20,000,872) (99.5%) $34,381,218
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (0.5%) 186,173
NET ASSETS, June 30, 1997 (100.0%) $34,567,391
<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
JUNE 30, 1997
(Unaudited)
<CAPTION>
AMOUNT
<S> <C>
ASSETS
Investments, at market value
Common and preferred stocks $27,495,281
(cost $13,173,104)
Debt securities (cost $6,827,768) 6,885,937
-----------
Total Investments $34,381,218
-----------
Cash 121,259
Receivables
Dividends and interest 116,747
Subscriptions to capital stock 12,893
-----------
TOTAL ASSETS $34,632,117
===========
LIABILITIES
Accrued operating expenses 64,726
-----------
TOTAL LIABILITIES $ 64,726
-----------
NET ASSETS
Capital stock, $1 par value - Authorized
3,000,000 shares, less 721,289 shares
redeemed; 1,950,932 shares issued;
1,229,643 shares outstanding $ 1,229,643
Paid-in surplus -
Excess over par value of amounts received
from sale of 1,950,932 shares, less amounts
paid out in redeeming 721,289 shares 18,665,629
------------
Net capital paid in on shares $19,895,272
Accumulated undistributed net investment income 168,682
Accumulated net realized gain on investment
transactions 116,810
Net unrealized appreciation on investments 14,380,347
Accumulated undistributed equilization amount 6,280
------------
TOTAL NET ASSETS $34,567,391
===========
NET ASSET VALUE PER SHARE $28.11
OFFERING PRICE PER SHARE $28.11
REDEMPTION PRICE PER SHARE $28.11
</TABLE>
[FN]The accompanying notes to financial statements
are an integral part of this statement.
<TABLE>
F-9
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<CAPTION>
<S> AMOUNT AMOUNT
INVESTMENT INCOME <C> <C>
Interest $249,266
Dividends 214,605
--------
Total Investment Income $463,871
EXPENSES
Management fees $ 79,864
Custodian fees 20,816
Professional services 5,450
Insurance 5,065
Bookkeeping services 8,085
Printing and supplies 6,483
Dividend disbursing and transfer
agent fees 5,280
Computer programming 2,250
Taxes and licenses 532
Foreign Taxes Paid 985
--------
Total Expenses $ 134,810
---------
NET INVESTMENT INCOME $ 329,061
---------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS, NET
Net realized gain on transactions in
investment securities $ 119,720
Net increase in unrealized
appreciation on investments 4,040,554
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $4,160,274
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,489,335
==========
<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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS -
NET INVESTMENT INCOME $ 329,061 $ 308,288
NET REALIZED GAIN/(LOSS) ON
TRANSACTIONS IN INVESTMENT
SECURITIES 119,720 13,137
NET INCREASE IN UNREALIZED
APPRECIATION OF INVESTMENTS 4,040,554 1,986,619
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 4,489,335 $2,308,044
NET EQUALIZATION CREDITS 1,548 1,779
DISTRIBUTIONS TO SHAREHOLDERS FROM -
NET INVESTMENT INCOME (160,379) (152,756)
NET REALIZED GAIN FROM INVESTMENT
TRANSACTIONS - -
EQUALIZATION - -
NET CAPITAL SHARE TRANSACTIONS 987,399 898,397
TOTAL INCREASE IN NET ASSETS $ 5,317,903 $3,055,464
NET ASSETS:
BEGINNING OF YEAR 29,249,488 24,052,746
END OF YEAR (INCLUDING ACCUMULATED
UNDISTRIBUTED NET INVESTMENT INCOME
OF $174,962 AND $161,511 RESPECTIVELY) $34,567,391 $27,108,210
<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
JUNE 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
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 $14,513,051 $9,032,573
AGGREGATE GROSS UNREALIZED
DEPRECIATION ON SECURITIES (132,704) (209,105)
NET $14,380,347 $8,823,468 $5,556,879
</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 JUNE 30, WAS:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS $ - $ 493,695
OTHER SECURITIES 3,033,013 890,290
TOTAL COST $3,033,013 $1,383,985
</TABLE>
NET PROCEEDS FROM SALES OF LONG-TERM INVESTMENTS DURING THE FIRST
SIX MONTHS ENDED JUNE 30, WERE:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS $ - $ 423,527
OTHER SECURITIES 1,518,313 695,583
TOTAL NET PROCEEDS $1,518,313 $1,119,110
TOTAL COST BASIS OF
SECURITIES SOLD $1,398,593 $1,105,973
</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 62,142 53,861
SHARES ISSUED TO SHAREHOLDERS IN
REINVESTMENT OF NET INVESTMENT
INCOME AND REALIZED GAIN FROM
SECURITY TRANSACTIONS 11,268 12,389
73,410 66,250
SHARES REDEEMED 34,598 25,445
NET INCREASE 38,812 40,805
</TABLE>
VALUE OF CAPITAL STOCK ISSUED AND REDEEMED IS AS FOLLOWS:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
SHARES SOLD $1,586,209 $1,172,684
SHARES ISSUED TO SHAREHOLDERS IN
REINVESTMENT OF NET INVESTMENT
INCOME AND REALIZED GAIN FROM
SECURITY TRANSACTIONS 284,687 302,602
$1,870,896 1,475,286
SHARES REDEEMED 883,497 576,889
NET INCREASE $ 987,399 $ 898,397
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
ON JULY 8, 1997 A DISTRIBUTION OF $.1350 PER SHARE AGGREGATING
$166,006.06 WAS DECLARED TO SHAREHOLDERS OF RECORD ON JULY 8, 1997, TO BE
PAYABLE ON JULY 21, 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.
