BRIDGES INVESTMENT FUND, INC.
SECOND QUARTER OR SEMI-ANNUAL
1998
CONTENTS OF REPORT
Pages 1 - 3 Shareholder Letter
Exhibit 1 Portfolio Transactions from April 1, 1998,
through June 30, 1998
Exhibit 2 Quarter-to-Quarter Changes in Financial Data
Pages F1-F13 Unaudited Financial Statements for the
Six Months Ended June 30, 1998
This report has been prepared for the information of the shareholders
of Bridges Investment Fund, Inc. and is under no circumstances to be
construed as an offering of shares of the Fund. Such offering is made only
by Prospectus, a copy of which may be obtained by inquiry to the Fund's
office.
BRIDGES INVESTMENT FUND, INC.
8401 West Dodge Road
Omaha, Nebraska 68114
Telephone 402-397-4700
Facsimile 402-397-8617
Directors
Frederick N. Backer
Edson L. Bridges II
Edson L. Bridges III
N. P. Dodge, Jr.
John W. Estabrook
Jon D. Hoffmaster
John J. Koraleski
Roger A. Kupka
Gary L. Petersen
Roy A. Smith
L.B. Thomas
Officers
Edson L. Bridges II - Chairman and
Chief Executive Officer
Edson L. Bridges III - President
Douglas P. Person - Vice President
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
<PAGE>
JULY 27, 1998
DEAR SHAREHOLDER:
SECOND QUARTER AND FIRST HALF, 1998 REVIEW
- ------------------------------------------
THE NET ASSET VALUE PER SHARE OF THE FUND WAS $33.58 ON JUNE 30, 1998.
THIS RECORD HIGH CALENDAR QUARTER PRICE WAS 4.1% ABOVE THE $32.27 NET ASSET
VALUE PER SHARE AT MARCH 31, 1998, AND UP 15.7% FROM THE YEAR-END, 1997
VALUATION OF $29.02. THE CASH AMOUNTS DISTRIBUTED FROM 1998 INVESTMENT INCOME
DURING THE SIX MONTHS OF THIS YEAR WERE $.135 PER SHARE. THUS, THE TOTAL VALUE
IMPROVEMENT WAS $4.695 PER SHARE THAT DEVELOPED FROM OPERATIONS IN THE FIRST
HALF OF 1998 BY COMBINING $4.56 PER SHARE IN PRICE APPRECIATION ($33.58 LESS
$29.02 EQUALS $4.56) WITH $.135 IN DIVIDEND INCOME. THIS $4.695 PER SHARE
INCREASE IN VALUE, WHEN COMPARED TO THE BEGINNING NET ASSET VALUE OF $29.02,
RESULTED IN A 16.2% TOTAL RETURN FOR THE FUND FOR THE FIRST SIX MONTHS OF 1998.
THE POWERFUL UPWARD MOVEMENT FOR COMMON STOCK PRICES THAT DEVELOPED EARLY
IN 1998 CONTINUED INTO THE SECOND QUARTER OF 1998, ALTHOUGH THE PACE OF THE
IMPROVEMENT SLOWED CONSIDERABLY IN THE APRIL TO JUNE PERIOD COMPARED TO THE
JANUARY TO MARCH INTERVAL.
FUND OPERATIONS
- ---------------
THE NET ASSETS OF THE FUND WERE $43,600,764 ON JUNE 30, 1998, REPRESENTING
THE HIGHEST VALUE FOR ANY CALENDAR QUARTER REPORTING DATE. NET ASSETS ADVANCED
$2,187,109 FROM THE MARCH 31, 1998 TOTAL OF $41,413,655, AN INCREASE OF 5.3% FOR
THE SECOND QUARTER OF 1998. FOR THE FIRST SIX MONTHS OF 1998, NET ASSETS WERE
UP $6,953,229 OR 19.0% FROM THE $36,647,535 LEVEL AT DECEMBER 31, 1997. ON A
TRAILING TWELVE MONTH BASIS (JUNE 30, 1997 TO JUNE 30, 1998) NET ASSETS GREW
FROM $34,567,535 TO $43,600,764, A 26.1% IMPROVEMENT.
THERE WERE 1,298,420 SHARES OF CAPITAL STOCK OUTSTANDING ON JUNE 30, 1998.
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 1998 WAS 35,602 UNITS, WHICH RESULTED IN
A 2.8% ADVANCE IN COMPARISON TO THE 1,262,818 UNITS OUTSTANDING AT THE END OF
1997.
NET INVESTMENT INCOME WAS $297,308 FOR THE FIRST SIX MONTHS OF 1998,
COMPARED TO $329,061 FOR THE SAME PERIOD IN 1997. NET REALIZED GAINS ON
INVESTMENTS FOR THE FIRST SIX MONTHS OF 1998 WERE $1,588,997 VERSUS $119,720 FOR
THE SAME TIME FRAME IN 1997. THE NET INCREASE IN UNREALIZED APPRECIATION ON
INVESTMENTS WAS $4,143,454 FOR THE FIRST SIX MONTHS OF 1998, COMPARED TO
$4,040,554 ACHIEVED DURING THE FIRST TWO CALENDAR QUARTERS OF 1997.
PLEASE REFER TO EXHIBITS 1 AND 2 AND PAGES F-1 THROUGH F-13 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, 1998.
Shareholder Letter -2- July 27, 1998
DIVIDEND
- --------
ON JULY 14, 1998, THE BOARD OF DIRECTORS DECLARED A $.09 PER SHARE DIVIDEND
ON THE SHARES OF CAPITAL STOCK OUTSTANDING ON THE JULY 14, 1998 RECORD DATE WITH
THIS INCOME DISTRIBUTION AMOUNT TO BE PAYABLE ON OR ABOUT JULY 27, 1998. THIS
DIVIDEND IS PAYABLE FROM THE NET INVESTMENT INCOME EARNED DURING THE APRIL _
JUNE, 1998 QUARTER.
SECOND QUARTER CHANGES IN PORTFOLIO AND OTHER COMMENTS
- ------------------------------------------------------
DURING THE QUARTER ENDING JUNE 30, 1998, THE FUND REMOVED NINE COMPANIES
FROM THE PORTFOLIO THAT WERE DEEMED TO BE EITHER OVER-PRICED OR NO LONGER
FULFILLING OUR EXPECTATIONS FOR FUTURE GROWTH. THERE WERE SIX HOLDINGS WHERE
PARTIAL SALES WERE EFFECTED TO CAPTURE VALUES WHERE PRICES HAVE BEEN EXTENDED ON
THE UPSIDE.
PROCEEDS FROM SALES WERE MOVED INTO EXISTING COMPANY POSITIONS WITHIN THE
PORTFOLIO WHERE POTENTIAL GROWTH SEEMS TO BE OUTSTANDING.
THE SALES REFERENCED EARLIER ARE GENERATING SIGNIFICANT REALIZED CAPITAL
GAINS THAT MAY BECOME DISTRIBUTABLE IN DECEMBER, 1998 IF THE PORTFOLIO DOES NOT
DEVELOP CAPITAL LOSSES THAT BECOME REALIZED PRIOR TO OCTOBER 31, 1998. IF ALL
OF THE UNREALIZED LOSSES IN THE PORTFOLIO AT JUNE 30, 1998 WERE TAKEN THROUGH
SALES TO OFFSET THE NET GAINS ESTABLISHED BETWEEN NOVEMBER 1, 1997 AND JUNE 30,
1998, THE FUND WOULD HAVE $1,331,994 OR MORE THAN $1.00 IN GAINS PER CURRENTLY
OUTSTANDING SHARE TO DISTRIBUTE NEXT DECEMBER. THIS PRESENTLY DISTRIBUTABLE
AMOUNT WILL CHANGE UP OR DOWN AS NORMAL TRADES TAKE PLACE IN THE PORTFOLIO.
THUS, NO SHAREHOLDER SHOULD ANTICIPATE ANY CAPITAL GAINS DISTRIBUTION UNTIL ONE
ACTUALLY HAPPENS.
ON THE OTHER HAND, A LARGER THAN NORMAL ANNUAL CAPITAL GAINS DISTRIBUTION
MAY BE IN PROSPECT FOR 1998. TO SOME DEGREE, SUCH A PAYMENT WOULD OFFSET THE
DECLINE IN QUARTERLY DIVIDEND DISTRIBUTIONS THAT ARE A REFLECTION OF A MORE
AGGRESSIVE COMMON STOCK OWNERSHIP POLICY FOR THE FUND'S PORTFOLIO THAT HAS BEEN
IN PLACE SINCE THE SECOND QUARTER OF 1997. THE TOTAL MARKET VALUE FOR COMMON
STOCKS IN THE PORTFOLIO WAS $36,749,988 AT JUNE 30, 1998. THESE ASSETS
REPRESENTED 84.3% OF TOTAL MARKET VALUE FOR THE PORTFOLIO. THE CURRENT DIVIDEND
INCOME RETURN FROM THESE STOCKS WAS DOWN TO 1.0% AT THE END OF THE LAST QUARTER.
THUS, TO SOME DEGREE, SPENDABLE OR REINVESTIBLE CASH FLOW TO THE FUND'S
SHAREHOLDERS MAY HAVE TO FLOW FROM REALIZED CAPITAL GAINS _ AT LEAST IN THE
IMMEDIATE, FORESEEABLE FUTURE.
OUTLOOK
- -------
THE CURRENT STOCK MARKET ENVIRONMENT IN THE UNITED STATES IS UNLIKE ANY
OTHER WITNESSED IN THE LAST 100 OR MORE YEARS. THE BUYING POWER FOR EQUITIES
SEEMS WELL SUSTAINED FROM INSTITUTIONAL SOURCES, CONTRIBUTIONS TO 401(K) SAVERS,
FOREIGN INVESTORS WHO ARE AFRAID OF TROUBLES IN ASIA, AND OTHER FACTORS,
INCLUDING ENTHUSIASM AND OPTIMISM RELATED TO ECONOMIC GROWTH. THE POSITIONING
OF THE LONG TERM CAPITAL GAINS TAX RATE AT 20% FOR MOST INVESTORS AT A LEVEL
BELOW THE 28% LEVEL FOR ORDINARY INCOME, REPRESENTS A STRONG INCENTIVE TO BUY
AND HOLD COMMON STOCK, AND, EVENTUALLY, TO REALIZE LONG TERM CAPITAL GAINS AS A
SOURCE OF HOPED FOR REGULAR INCOME. AS A RESULT, A MAJOR, NEW PURCHASING POWER
SOURCE WAS SET IN PLACE IN THE SUMMER OF 1997.
Shareholder Letter -3- July 27, 1998
VALUATIONS, IN TERMS OF HIGH PRICE TO EARNINGS RATIONS, HAVE BECOME
SPECULATIVE IN COMPARISON TO NORMAL LEVELS THAT PREVAILED IN THE EARLY YEARS OF
THE 1990'S. THUS, THE GENERAL LEVEL OF STOCK PRICES SHOULD BE VULNERABLE TO
ADVERSE SURPRISES WHEN THEY OCCUR. YET, MANY COMPANIES IN THE FUND'S PORTFOLIO
ARE VALUED IN A MANNER THAT ENCOURAGES THE MANAGEMENT TO BE POSITIVE ABOUT THEIR
PROSPECTS. WE SHALL CONTINUE TO MAKE DECISIONS ON A COMPANY BY COMPANY BASIS.
TED BRIDGES IS OUT OF TOWN ON A WELL-EARNED VACATION. CONSEQUENTLY, I AM
SIGNING THIS COMMUNICATION ON BEHALF OF BOTH OF US. WE BOTH JOIN THE OTHER
MEMBERS OF THE BOARD OF DIRECTORS IN THANKING YOU FOR YOUR CONTINUED INVESTMENT
IN OUR FUND.
SINCERELY YOURS,
EDSON L. BRIDGES II
CHAIRMAN
ELBII:ELC
<PAGE>
<TABLE>
EXHIBIT 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
APRIL 1, 1998, THROUGH JUNE 30, 1998
<CAPTION>
BOUGHT OR HELD AFTER
RECEIVED TRANSACTION
SECURITIES $1,000 PAR $1,000 PAR
COMMON STOCKS UNLESS VALUE (M) VALUE (M)
DESCRIBED OTHERWISE OR SHARES OR SHARES
<S> <C> <C>
(1)<F1> ABBOTT LABORATORIES 8,000 16,000
ACCUSTAFF 2,000 7,000
AIRTOUCH COMMUNICATIONS 2,000 7,000
(2)<F2> AMOCO 5,000 10,000
CALENERGY, INC. 2,000 8,000
CENDANT CORP. 7.50% CONV. PFD. 3,000 3,000
SERIES I
CISCO SYSTEMS, INC. 2,000 5,000
COMPAQ COMPUTER CORP. 3,000 5,000
(3)<F3> DAYTON HUDSON 10,000 20,000
DELL COMPUTER 3,000 5,000
EMC CORPORATION 3,000 5,000
ELAN PLC ADR 4,000 10,000
(4)<F4> ERICSSON L.M. TELEPHONE CO. 20,000 20,000
CLASS B ADR
HEALTHSOUTH CORP. 5,000 10,000
HOME DEPOT, INC. 2,500 8,000
(5)<F5> NETWORK ASSOCIATES 1,500 4,500
(6)<F6> OUTDOOR SYSTEMS, INC. 6,350 19,050
SCHLUMBERGER LTD. 1,000 2,000
SILICON VALLEY BANCSHARES 5,000 5,000
8.25% PFD.
(7)<F7> SYLVAN LEARNING SYSTEMS 2,500 7,500
TENNESSEE VALLEY AUTHORITY 10,000 10,000
6.75% PFD. SERIES D
VARIOUS ISSUES OF COMMERCIAL 12,345M 1,515M
PAPER NOTES PURCHASED DURING
2ND QTR., 1998
<F1>(1) - RECEIVED 8,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON JUNE 1, 1998.
<F2>(2) - RECEIVED 5,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON APRIL 29, 1998.
<F3>(3) - RECEIVED 10,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 1, 1998.
<F4>(4) - RECEIVED 10,000 SHARES IN A 2-FOR-1 STOCK SPLIT ON MAY 22, 1998.
<F5>(5) - RECEIVED 1,500 SHARES IN A 3-FOR-2 STOCK SPLIT ON JUNE 1, 1998.
<F6>(6) - RECEIVED 6,350 SHARES IN A 3-FOR-2 STOCK SPLIT ON JUNE 1, 1998.
<F7>(7) - RECEIVED 2,500 SHARES IN A 3-FOR-2 STOCK SPLIT ON MAY 26, 1998.
-2-
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
APRIL 1, 1998 THROUGH JUNE 30, 1998
(CONTINUED)
<CAPTION>
SOLD OR HELD AFTER
EXCHANGED TRANSACION
SECURITIES $1,000 PAR $1,000 PAR
COMMON STOCKS UNLESS VALUE (M) VALUE (M)
DESCRIBED OTHERWISE OR SHARES OR SHARES
<S> <C> <C>
ALBERTSONS, INC. 1,500 5,000
AMGEN 2,000 --
BRISTOL MYERS SQUIBB 1,000 5,000
CAPITAL ONE FINANCIAL 2,000 8,000
CONCENTRA MANAGED CARE, INC. 3,000 --
DAYTON HUDSON CORP. 500 20,000
FIRST DATA CORP. 6,000 --
GAP, INC. 2,500 20,000
INTERNATIONAL BUSINESS MACHINES 2,000 --
MOTOROLA 8,000 --
NATIONSBANK CORP. 6,000 --
PAYMENTECH, INC. 7,000 --
PHILIP MORRIS COMPANIES, INC. 10,000 20,000
SAVILLE SYSTEMS IRELAND PLC ADR 2,000 --
SCHWAB, CHARLES CORP. 1,000 --
UNION PACIFIC CORP. 6% 150M --
DUE 9/01/2003
(8)<F8> UNITED STATES TREASURY NOTES 200M --
9% DUE 5/15/1998
VARIOUS ISSUES OF COMMERCIAL 11,345M --
PAPER NOTES MATURING DURING
2ND QTR., 1998
<F8>(8) _ MATURED 200M PAR VALUE ON MAY 15, 1998.
</TABLE>
<PAGE>
<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 -
09-30-97 36,500,979 1,242,731 29.37 .135 -
12-31-97 36,647,535 1,262,818 29.02 .24 0.30571
03-31-98 41,413,655 1,283,322 32.27 - -
06-30-98 43,600,764 1,298,420 33.58 .135 -
</TABLE>
<PAGE>
<TABLE>F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
TITLE OF SECURITY
<S> <C> <C>
COMMON STOCKS - (84.3%)
ADVERTISING - 1.2%
OUTDOOR SYSTEMS, INC.*<FN> 19,050 $ 533,400
AIRCRAFT - MANUFACTURING - 1.2%
THE BOEING COMPANY 12,000 $ 534,750
AMUSEMENTS - RECREATION - SPORTING GOODS - 0.7%
NIKE, INC. 6,000 $ 292,125
BANKING AND FINANCE - 5.9%
FIRST NATIONAL OF NEBRASKA, INC. 230 $ 908,500
MBNA CORPORATION 10,000 330,625
NORWEST CORPORATION 12,000 450,000
SLM HOLDING CORPORATION 7,000 343,000
STATE STREET CORPORATION 8,000 556,000
$ 2,588,125
BEVERAGES - SOFT DRINKS - 2.3%
PEPSICO, INC. 24,000 $ 988,500
BUSINESS SERVICES - HUMAN RESOURCES - 0.5%
ACCUSTAFF INCORPORATED*<FN> 7,000 $ 218,750
CHEMICALS - 4.2%
THE DOW CHEMICAL COMPANY 7,000 $ 676,812
DU PONT (E.I.) DE NEMOURS & COMPANY 8,000 597,500
MONSANTO COMPANY 10,000 558,750
$ 1,833,062
COMMUNICATIONS - RADIO AND TELEVISION - 0.6%
CLEAR CHANNEL COMMUNICATIONS, INC.*<FN> 2,500 $ 272,813
COMPUTERS - HARDWARE AND SOFTWARE - 12.0%
AMERICA ONLINE, INC.*<FN> 3,000 $ 315,375
CISCO SYSTEMS, INC.*<FN> 5,000 460,312
COMPAQ COMPUTER CORPORATION 5,000 141,875
DELL COMPUTER CORPORATION *<FN> 5,000 464,062
EMC CORPORATION*<FN> 5,000 224,063
HNC SOFTWARE, INC.*<FN> 10,000 408,125
HEWLETT-PACKARD CO. 10,000 598,750
MICROSOFT CORPORATION*<FN> 15,000 1,625,625
NETWORK ASSOCIATES, INC. *<FN> 4,500 215,437
SUN MICROSYSTEMS, INC.*<FN> 4,000 173,750
SUNGARD DATA SYSTEMS, INC. *<FN> 3,200 122,800
TRANSACTION SYSTEMS ARCHITECTS, INC.*<FN> 13,000 500,500
$ 5,250,674
<FN>*NONINCOME-PRODUCING SECURITY
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
TITLE OF SECURITY
<S> <C> <C>
COMMON STOCKS (CONTINUED)
DRUGS - MEDICINES - COSMETICS - 9.1%
ABBOTT LABORATORIES 16,000 $ 656,000
BRISTOL-MYERS SQUIBB CO. 5,000 574,687
ELAN CORPORATION PLC ADR*<FN> 10,000 643,125
JOHNSON & JOHNSON 10,000 740,000
MERCK & CO., INC. 10,000 1,337,500
$ 3,951,312
ELECTRICAL EQUIPMENT AND SUPPLIES - 2.1%
GENERAL ELECTRIC CO. 10,000 $ 908,750
ELECTRONICS - 1.8%
INTEL CORPORATION 8,000 $ 593,000
SOLECTRON CORPORATION *<FN> 5,000 210,313
$ 803,313
ENERGY - ALTERNATE SOURCES - 0.6%
CALENERGY CO., INC. *<FN> 8,000 $ 240,500
FINANCE - REAL ESTATE - 3.2%
FREDDIE MAC 30,000 $ 1,411,875
FINANCE - SERVICES - 2.3%
CAPITAL ONE FINANCIAL CORPORATION 8,000 $ 993,500
FOOD - MISCELLANEOUS PRODUCTS - 1.8%
PHILIP MORRIS COMPANIES, INC. 20,000 $ 787,500
HEALTHCARE - COMMERCIAL SERVICES - 0.3%
QUINTILES TRANSNATIONAL CORP.*<FN> 3,000 $ 147,563
INSURANCE - MORTGAGE - 0.7%
MGIC INVESTMENT CORPORATION 5,000 $ 285,313
INSURANCE - MULTILINE - 1.7%
AMERICAN INTERNATIONAL GROUP, INC. 1,500 $ 219,000
GENERAL RE CORP. 2,000 507,000
$ 726,000
INSURANCE - MUNICIPAL BOND - 1.7%
MBIA, INC. 10,000 $ 748,750
LINEN SUPPLY - UNIFORM RENTAL & SALES - 0.5%
CINTAS CORPORATION 4,000 $ 204,000
<FN>*NONINCOME-PRODUCING SECURITY
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
JUNE 30, 1998
<CAPTION> (UNAUDITED)
NUMBER MARKET
TITLE OF SECURITY OF SHARES VALUE
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MACHINERY - CONSTRUCTION & MINING - 0.7%
CATERPILLAR INC. 6,000 $ 317,438
MEDICAL - SERVICES _ 1.1%
HEALTHSOUTH CORPORATION *<FN> 10,000 $ 266,875
STERIS CORPORATION *<FN> 3,000 190,781
$ 457,656
METAL PRODUCTS - MISCELLANEOUS - 0.6%
NUCOR CORPORATION 5,500 $ 253,000
MOTION PICTURES AND THEATRES - 1.7%
THE WALT DISNEY COMPANY 7,000 $ 735,438
OIL SERVICES _ 0.3%
SCHLUMBERGER, LTD. 2,000 $ 136,625
PETROLEUM PRODUCING - 5.6%
AMOCO CORPORATION 10,000 $ 417,500
ATLANTIC RICHFIELD COMPANY 4,000 312,500
CHEVRON CORPORATION 10,000 837,500
EXXON CORPORATION 8,000 571,000
MOBIL CORPORATION 4,000 306,500
$ 2,445,000
PUBLISHING - NEWSPAPERS - 1.3%
GANNETT CO., INC. 8,000 $ 568,500
PUBLISHING - ELECTRONIC - 0.8%
REUTERS GROUP PLC, ADR SPONSORED 5,199 $ 356,131
RETAIL STORES - APPAREL AND CLOTHING - 2.8%
GAP, INC. 20,000 $ 1,228,750
RETAIL STORES - BUILDING MATERIALS AND HOME
IMPROVEMENT _ 1.5%
THE HOME DEPOT, INC. 8,000 $ 664,500
RETAIL STORES - DEPARTMENT - 2.2%
DAYTON HUDSON CORPORATION 20,000 $ 970,000
RETAIL STORES - VARIETY - 0.6%
ALBERTSON'S INC. 5,000 $ 259,063
SCHOOLS - EDUCATIONAL SERVICES - 0.6%
SYLVAN LEARNING SYSTEMS, INC. *<FN> 7,500 $ 245,625
<FN>*NONINCOME-PRODUCING SECURITY
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
JUNE 30, 1998
<CAPTION> (UNAUDITED)
NUMBER MARKET
TITLE OF SECURITY OF SHARES VALUE
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS - 5.7%
AIRTOUCH COMMUNICATIONS, INC.*<FN> 7,000 $ 409,062
GTE CORPORATION 10,000 556,250
SPRINT CORPORATION 5,000 352,500
WEST TELESERVICES CORPORATION*<FN> 43,000 521,375
WORLDCOM, INC.*<FN> 13,000 629,688
$ 2,468,875
TELECOMMUNICATIONS _ EQUIPMENT _ 1.3%
ERICSSON (L.M.) TELEPHONE SP ADR 20,000 $ 572,500
TRANSPORTATION _ AIRFREIGHT _ 2.7%
EAGLE USA AIRFREIGHT, INC. *<FN> 23,000 $ 797,812
FDX CORPORATION *<FN> 6,000 376,500
$ 1,174,312
TRANSPORTATION - RAILROADS - 0.4%
UNION PACIFIC CORPORATION 4,000 $ 176,000
TOTAL COMMON STOCKS (COST - $17,102,427) $36,749,988
PREFERRED STOCKS (2.9%)
BANKING AND FINANCE - 1.4%
CFC CAPITAL TRUST 9.375% PREFERRED, SERIES B 5,000 $ 130,937
CFB CAPITAL II 8.20% CUMULATIVE PREFERRED 5,000 128,750
HARRIS PREFERRED CAPITAL CORP., 10,000 250,000
7.375%, SERIES A
SILICON VALLEY BANCSHARES CAPITAL 5,000 125,000
8.25% PREFERRED SERIES I
$ 634,687
COMMERCIAL SERVICES _ 0.3%
CENDANT CORPORATION 7.50% CONVERTIBLE 3,000 $ 112,313
PREFERRED _ SERIES I
TELECOMMUNICATIONS - 0.6%
AIRTOUCH COMMUNICATIONS, INC. 4.25% SERIES C 3,000 $ 247,500
CONVERTIBLE PREFERRED
UTILITIES _ ELECTRIC _ 0.6%
TENNESSEE VALLEY AUTHORITY 6.75% 10,000 $ 252,500
VARIABLE PREFERRED SERIES D
TOTAL PREFERRED STOCKS (COST - $1,129,227) $ 1,247,000
TOTAL STOCKS (COST - $18,231,654) $37,996,988
<FN>*NONINCOME-PRODUCING SECURITY
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
JUNE 30, 1998
<CAPTION> (UNAUDITED)
NUMBER OF
SHARES OR
PRINCIPAL MARKET
TITLE OF SECURITY AMOUNT VALUE
<S> <C> <C>
DEBT SECURITIES (12.5%)
ENERGY - ALTERNATE SOURCES - 0.5%
CALENERGY CO., INC., 7.63% NOTES
DUE OCTOBER 15, 2007 $200,000 $ 202,317
FOOD - MISCELLANEOUS PRODUCTS - 0.2%
SUPER VALU STORES, INC., 8.875%
PROMISSORY NOTES, DUE JUNE 15, 1999 $100,000 $ 102,649
HOUSEHOLD APPLIANCES AND UTENSILS - 0.2%
MAYTAG CORP., 9.75% NOTES,
DUE MAY 15, 2002 $100,000 $ 112,291
OFFICE EQUIPMENT AND SUPPLIES - 0.2%
XEROX CORPORATION, 9.750% NOTES
DUE MARCH 15, 2000 $100,000 $ 106,123
RETAIL STORES - DEPARTMENT - 0.7%
DILLARD DEPARTMENT STORES, INC., 7.850%
DEBENTURES, DUE OCTOBER 1, 2012 $150,000 $ 166,679
SEARS ROEBUCK & CO., 9.375% DEBENTURES
DUE NOVEMBER 1, 2011 100,000 125,883
$ 292,562
U.S. GOVERNMENT _ 7.2%
U.S. TREASURY, 9.125% NOTES,
DUE MAY 15, 1999 200,000 206,094
U.S. TREASURY, 8.750% NOTES,
DUE AUGUST 15, 2000 200,000 212,781
U.S. TREASURY, 8.000% NOTES,
DUE MAY 15, 2001 200,000 212,906
U.S. TREASURY, 7.500% NOTES,
DUE MAY 15, 2002 200,000 213,500
U.S. TREASURY, 10.750% BONDS
DUE FEBRUARY 15, 2003 200,000 241,750
U.S. TREASURY, 7.250% NOTES,
DUE MAY 15, 2004 300,000 325,594
U.S. TREASURY, 7.500% NOTES,
DUE FEBRUARY 15, 2005 300,000 332,203
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
TITLE OF SECURITY
<S> <C> <C>
DEBT SECURITIES (CONTINUED)
U.S. TREASURY, 9.375% BONDS,
DUE FEBRUARY 15, 2006 200,000 247,000
U.S. TREASURY, 7.625% BONDS,
DUE FEBRUARY 15, 2007 300,000 319,406
U.S. TREASURY, 8.750% BONDS,
DUE NOVEMBER 15, 2008 200,000 228,344
U.S. TREASURY, 9.125% BONDS,
DUE MAY 15, 2009 200,000 234,375
U.S. TREASURY, 7.500% BONDS,
DUE NOVEMBER 15, 2016 300,000 360,094
$ 3,134,047
COMMERCIAL PAPER - SHORT TERM _ 3.5%
FORD MOTOR CREDIT CORP.
COMMERCIAL PAPER NOTE 5.61%
DUE JULY 7, 1998 $ 790,000 $ 790,000
PRUDENTIAL FUNDING CORP.
COMMERCIAL PAPER NOTE 5.70%
DUE JULY 2, 1998 725,000 725,000
$ 1,515,000
TOTAL DEBT SECURITIES (COST - $5,290,305) $ 5,464,989
TOTAL INVESTMENTS IN SECURITIES
(COST - $23,521,959) (99.7%) $43,461,977
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (0.3%) 138,787
NET ASSETS, JUNE 30, 1998 (100.0%) $43,600,764
<FN>THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
ARE AN INTEGRAL PART OF THIS SCHEDULE.
</TABLE>
<PAGE>
<TABLE> F-7
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<CAPTION>
ASSETS AMOUNT
<S> <C>
INVESTMENTS, AT MARKET VALUE
COMMON AND PREFERRED STOCKS (COST $18,231,654) $37,996,988
DEBT SECURITIES (COST $5,290,305) 5,464,989
TOTAL INVESTMENTS $43,461,977
CASH 93,422
RECEIVABLES
DIVIDENDS AND INTEREST 104,941
SUBSCRIPTIONS TO CAPITAL STOCK 16,650
TOTAL ASSETS $43,676,990
LIABILITIES
INVESTMENT ADVISOR, MANAGEMENT AND
SERVICE FEES $ 52,829
ACCRUED OPERATING EXPENSES 23,397
TOTAL LIABILITIES $ 76,226
NET ASSETS
CAPITAL STOCK, $1 PAR VALUE - AUTHORIZED 3,000,000 SHARES,
LESS 763,869 SHARES REDEEMED; 2,062,289 SHARES ISSUED;
1,298,420 SHARES OUTSTANDING $ 1,298,420
PAID-IN SURPLUS -
EXCESS OVER PAR VALUE OF AMOUNTS RECEIVED FROM SALE
OF 2,062,289 SHARES, LESS AMOUNTS PAID OUT IN REDEEMING
763,869 SHARES 20,649,352
NET CAPITAL PAID IN ON SHARES $21,947,772
ACCUMULATED NET REALIZED GAIN ON INVESTMENT
TRANSACTIONS 1,582,534
NET UNREALIZED APPRECIATION ON INVESTMENTS 19,940,017
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME 130,441
TOTAL NET ASSETS $43,600,764
NET ASSET VALUE PER SHARE $33.58
OFFERING PRICE PER SHARE $33.58
REDEMPTION PRICE PER SHARE $33.58
<FN>THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
ARE AN INTEGRAL PART OF THIS STATEMENT.
</TABLE>
<PAGE>
<TABLE>
F-8
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
<CAPTION>
<S> AMOUNT AMOUNT
INVESTMENT INCOME <C> <C>
Interest $187,111
Dividends 269,760
Total Investment Income $456,871
EXPENSES
MANAGEMENT FEES $ 102,426
Custodian fees 14,243
Insurance and Other Administrative Fees 11,488
Bookkeeping services 8,520
Printing and supplies 7,322
Professional services 5,450
Dividend disbursing and transfer
agent fees 6,118
Computer programming 2,500
Taxes and licenses 533
Foreign Taxes Paid 963
Total Expenses $ 159,563
NET INVESTMENT INCOME $ 297,308
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on transactions in
investment securities $1,588,997
Net increase in unrealized
appreciation of investments 4,143,454
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $5,732,451
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,029,759
<FN>The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<TABLE>F-9
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS -
NET INVESTMENT INCOME $ 297,308 $ 329,061
NET REALIZED GAIN ON TRANSACTIONS IN
INVESTMENT SECURITIES 1,588,997 119,720
NET INCREASE IN UNREALIZED
APPRECIATION OF INVESTMENTS 4,143,454 4,040,554
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,029,759 $4,489,335
NET EQUALIZATION CREDITS 1,079 1,548
DISTRIBUTIONS TO SHAREHOLDERS FROM -
NET INVESTMENT INCOME (173,183) (160,379)
NET REALIZED GAIN FROM INVESTMENT
TRANSACTIONS - -
EQUALIZATION - -
NET CAPITAL SHARE TRANSACTIONS 1,095,574 987,399
TOTAL INCREASE IN NET ASSETS $ 6,953,229 $5,317,903
NET ASSETS:
BEGINNING OF YEAR 36,647,535 29,249,488
END OF YEAR (INCLUDING ACCUMULATED
UNDISTRIBUTED NET INVESTMENT INCOME
OF $130,441 AND $174,962, RESPECTIVELY) $ 43,600,764 $34,567,391
<FN>THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
<PAGE>
F-10
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BRIDGES INVESTMENT FUND, INC. (FUND) IS REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940 AS A DIVERSIFIED, OPEN-END MANAGEMENT
INVESTMENT COMPANY. THE PRIMARY INVESTMENT OBJECTIVE OF THE FUND IS LONG-
TERM CAPITAL APPRECIATION. IN PURSUIT OF THAT OBJECTIVE, THE FUND INVESTS
PRIMARILY IN COMMON STOCKS. THE FOLLOWING IS A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES CONSISTENTLY FOLLOWED BY THE FUND IN THE PREPARATION OF
ITS FINANCIAL STATEMENTS. THE POLICIES ARE IN CONFORMITY WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES.
A. INVESTMENTS -
SECURITY TRANSACTIONS ARE RECORDED ON THE TRADE DATE AT PURCHASE
COST OR SALES PROCEEDS. DIVIDEND INCOME IS RECOGNIZED ON THE EX-
DIVIDEND DATE, AND INTEREST INCOME IS RECOGNIZED ON AN ACCRUAL BASIS.
SECURITIES OWNED ARE REFLECTED IN THE ACCOMPANYING STATEMENT OF
ASSETS AND LIABILITIES AND THE SCHEDULE OF PORTFOLIO INVESTMENTS AT
QUOTED MARKET VALUE. QUOTED MARKET VALUE REPRESENTS THE LAST RECORDED
SALES PRICE ON THE LAST BUSINESS DAY OF THE CALENDAR YEAR FOR
SECURITIES TRADED ON A NATIONAL SECURITIES EXCHANGE. IF NO SALES WERE
REPORTED ON THAT DAY, QUOTED MARKET VALUE REPRESENTS THE CLOSING BID
PRICE. THE COST OF INVESTMENTS REFLECTED IN THE STATEMENT OF ASSETS
AND LIABILITIES AND THE SCHEDULE OF PORTFOLIO INVESTMENTS IS THE SAME
AS THE BASIS USED FOR FEDERAL INCOME TAX PURPOSES. THE DIFFERENCE
BETWEEN COST AND QUOTED MARKET VALUE OF SECURITIES IS REFLECTED
SEPARATELY AS UNREALIZED APPRECIATION (DEPRECIATION) AS APPLICABLE.
<TABLE>
<CAPTION>
1998 1997 NET CHANGE
<S> <C> <C> <C>
NET UNREALIZED APPRECIATION
(DEPRECIATION):
AGGREGATE GROSS UNREALIZED
APPRECIATION ON SECURITIES $20,246,329 $14,513,051
AGGREGATE GROSS UNREALIZED
DEPRECIATION ON SECURITIES (306,312) (132,704)
NET $19,940,017 $14,380,347 $5,559,670
</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-11
B. FEDERAL INCOME TAXES -
IT IS THE FUND'S POLICY TO COMPLY WITH THE REQUIREMENTS OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, APPLICABLE TO REGULATED
INVESTMENT COMPANIES, INCLUDING THE DISTRIBUTION OF SUBSTANTIALLY ALL
TAXABLE INCOME INCLUDING NET REALIZED GAINS ON SALES OF INVESTMENTS.
THEREFORE, NO PROVISION IS MADE FOR FEDERAL INCOME TAXES.
C. DISTRIBUTION TO SHAREHOLDERS -
THE FUND ACCRUES DIVIDENDS TO SHAREHOLDERS ON THE EX-DIVIDEND
DATE.
D. EQUALIZATION -
THE FUND USES THE ACCOUNTING PRACTICE OF EQUALIZATION BY WHICH A
PORTION OF THE PROCEEDS FROM SALES AND COSTS OF REDEMPTION OF CAPITAL
SHARES, EQUIVALENT ON A PER SHARE BASIS TO THE AMOUNT OF UNDISTRIBUTED
NET INVESTMENT INCOME ON THE DATE OF THE TRANSACTIONS, IS CREDITED OR
CHARGED TO UNDISTRIBUTED INCOME. AS A RESULT, UNDISTRIBUTED NET
INVESTMENT INCOME PER SHARE IS UNAFFECTED BY SALES OR REDEMPTION OF
CAPITAL SHARES.
E. USE OF ESTIMATES
THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRES MANAGEMENT TO MAKE
ESTIMATES AND ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNTS OF ASSETS
AND LIABILITIES AND DISCLOSURE OF CONTINGENT ASSETS AND LIABILITIES AT
THE DATE OF THE FINANCIAL STATEMENTS AND THE REPORTED AMOUNTS OF
REVENUES AND EXPENSES DURING THE REPORTING PERIOD. ACTUAL RESULTS
COULD DIFFER FROM THOSE ESTIMATES.
(2) INVESTMENT ADVISORY CONTRACT
UNDER AN INVESTMENT ADVISORY CONTRACT, BRIDGES INVESTMENT COUNSEL,INC.
(INVESTMENT ADVISER) FURNISHES INVESTMENT ADVISORY SERVICES AND PERFORMS
CERTAIN ADMINISTRATIVE FUNCTIONS FOR THE FUND. IN RETURN, THE FUND HAS
AGREED TO PAY THE INVESTMENT ADVISER A FEE COMPUTED ON A QUARTERLY BASIS AT
THE RATE OF 1/8 OF 1% OF THE AVERAGE NET ASSET VALUE OF THE FUND DURING THE
QUARTER, EQUIVALENT TO 1/2 OF 1% PER ANNUM. CERTAIN OFFICERS AND DIRECTORS
OF THE FUND ARE ALSO OFFICERS AND DIRECTORS OF THE INVESTMENT ADVISER.
THESE OFFICERS DO NOT RECEIVE ANY COMPENSATION FROM THE FUND OTHER THAN
THAT WHICH IS RECEIVED INDIRECTLY THROUGH THE INVESTMENT ADVISER.
THE CONTRACT BETWEEN THE FUND AND THE INVESTMENT ADVISER PROVIDES THAT
TOTAL EXPENSES OF THE FUND IN ANY YEAR, EXCLUSIVE OF STAMP AND OTHER TAXES,
BUT INCLUDING FEES PAID TO THE INVESTMENT ADVISER, SHALL NOT EXCEED, IN
TOTAL, A MAXIMUM OF 1 AND 1/2% OF THE AVERAGE MONTH END NET ASSET VALUE OF
THE FUND FOR THE YEAR. AMOUNTS, IF ANY, EXPENDED IN EXCESS OF THIS
LIMITATION ARE REIMBURSED BY THE INVESTMENT ADVISER AS SPECIFICALLY
IDENTIFIED IN THE INVESTMENT ADVISORY CONTRACT.
F-12
(3) DIVIDEND DISBURSING AND TRANSFER AGENT
EFFECTIVE OCTOBER 1, 1987, DIVIDEND DISBURSING AND TRANSFER AGENT
SERVICES ARE PROVIDED BY BRIDGES INVESTOR SERVICES, INC. (TRANSFER AGENT).
THE FEES PAID TO THE TRANSFER AGENT ARE INTENDED TO APPROXIMATE THE COST TO
THE TRANSFER AGENT FOR PROVIDING SUCH SERVICES. CERTAIN OFFICERS AND
DIRECTORS OF THE FUND ARE ALSO OFFICERS AND DIRECTORS OF THE TRANSFER
AGENT.
(4) SECURITY TRANSACTIONS
THE COST OF LONG-TERM INVESTMENT PURCHASES DURING THE THREE MONTHS
ENDED JUNE 30, WAS:
<TABLE>
<CAPTION> 1998 1997
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS $ -- $ --
OTHER SECURITIES 4,562,421 3,033,013
TOTAL COST $4,562,421 $3,033,013
</TABLE>
NET PROCEEDS FROM SALES OF LONG-TERM INVESTMENTS DURING THE THREE
MONTHS ENDED JUNE 30, WERE:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS $ 200,000 $ --
OTHER SECURITIES 4,068,066 1,518,313
TOTAL NET PROCEEDS $4,268,066 $1,518.313
TOTAL COST BASIS OF
SECURITIES SOLD $2,679,069 $1,398,593
</TABLE>
(5) NET ASSET VALUE
THE NET ASSET VALUE PER SHARE REPRESENTS THE EFFECTIVE PRICE FOR ALL
SUBSCRIPTIONS AND REDEMPTIONS.
F-13
(6) CAPITAL STOCK
SHARES OF CAPITAL STOCK ISSUED AND REDEEMED ARE AS FOLLOWS:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
SHARES SOLD 48,035 62,142
SHARES ISSUED TO SHAREHOLDERS IN
REINVESTMENT OF NET INVESTMENT
INCOME AND REALIZED GAIN FROM
SECURITY TRANSACTIONS 8,800 11,268
56,835 73,410
SHARES REDEEMED 21,233 34,598
NET INCREASE 35,602 38,812
</TABLE>
VALUE OF CAPITAL STOCK ISSUED AND REDEEMED IS AS FOLLOWS:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
SHARES SOLD $1,494,288 $1,586,209
SHARES ISSUED TO SHAREHOLDERS IN
REINVESTMENT OF NET INVESTMENT
INCOME AND REALIZED GAIN FROM
SECURITY TRANSACTIONS 268,623 284,687
$1,762,911 $1,870,896
SHARES REDEEMED 667,337 883,497
NET INCREASE $1,095,574 $ 987,399
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
ON JULY 14, 1998 A DISTRIBUTION OF $.09 PER SHARE AGGREGATING
$116,894.84 WAS DECLARED TO SHAREHOLDERS OF RECORD ON JULY 14, 1998, TO BE
PAYABLE ON JULY 27, 1998.
(8) DERIVATIVE FINANCIAL INSTRUMENTS
IN OCTOBER, 1994, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 119, DISCLOSURE ABOUT
DERIVATIVE FINANCIAL INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS.
THE FUND HAS NOT ENTERED INTO ANY SUCH INVESTMENT OR INVESTMENT CONTRACTS.
A COVERED CALL OPTION CONTRACT IS A FORM OF A FINANCIAL DERIVATIVE
INSTRUMENT. THE FUND'S INVESTMENT AND POLICY RESTRICTIONS DO PERMIT THE
FUND TO SELL OR WRITE COVERED CALL OPTION CONTRACTS UNDER CERTAIN
CIRCUMSTANCES AND LIMITATIONS AS SET FORTH IN THE FUND'S PROSPECTUS.
<PAGE>