BRIDGES INVESTMENT FUND, INC.
FIRST QUARTER
1998
CONTENTS OF REPORT
Pages 1 - 5 Shareholder Letter
Exhibit 1 Portfolio Transactions from January 1, 1998,
through March 31, 1998
Exhibit 2 Quarter-to-Quarter Changes in Financial Data
Exhibit 3 Reports to Stockholders of Management Companies
Pages F1-F14 Unaudited Financial Statements for the
Three Months Ended March 31, 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
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
APRIL 27, 1998
DEAR SHAREHOLDER:
FIRST QUARTER REVIEW
- --------------------
THE NET ASSET VALUE PER SHARE OF THE FUND WAS $32.27 ON MARCH 31, 1998.
THIS PRICE WAS 11.2% HIGHER THAN THE $29.02 NET ASSET VALUE PER SHARE AT YEAR-
END, 1997. THE $32.27 PRICE WAS THE HIGHEST QUARTER-END VALUATION ACHIEVED IN
THE HISTORY OF THE FUND. THE $3.25 PER SHARE PRICE GAIN FROM $29.02 TO $32.27
RESULTED IN AN 11.2% TOTAL RETURN FOR THE FIRST QUARTER OF 1998.
THE DOW JONES INDUSTRIALS AVERAGE AND THE STANDARD & POOR'S 500 COMPOSITE
INDEX BOTH ADVANCED TO NEW ALL-TIME HIGH POINTS DURING THE FIRST QUARTER OF 1998
DUE TO A CONTINUED STRONG FLOW OF FUNDS INTO U.S. EQUITIES THAT RESULTED IN AN
EXPANSION IN PRICE-TO-EARNINGS RATIOS TO A GREATER DEGREE THAN HAS GENERALLY
BEEN THE CASE THROUGHOUT THE MARKET EXPERIENCE FOR THE 1990'S.
OPERATIONS
- ----------
THE NET ASSETS OF THE FUND WERE $41,413,655 ON MARCH 31, 1998, REPRESENTING
THE HIGHEST VALUE FOR ANY CALENDAR QUARTER REPORTING DATE IN THE HISTORY OF THE
FUND. NET ASSETS GREW $4,766,120 FROM THE 1997 YEAR ENDING TOTAL OF
$36,647,535, AN INCREASE OF 13.0% FOR THE FIRST QUARTER OF 1998.
THERE WERE 1,283,322 SHARES OF CAPITAL STOCK OUTSTANDING ON MARCH 31, 1998.
THIS LEVEL OF SHARES OUTSTANDING REPRESENTED A RECORD HIGH FOR ANY THREE-MONTH
ACCOUNTING STATEMENT PERIOD. THE NET GAIN IN SHARES OUTSTANDING FOR THE FIRST
QUARTER OF 1998 WAS 20,504, WHICH CONSTITUTED A 1.6% ADVANCE OVER THE 1,262,818
SHARES OUTSTANDING AT THE END OF 1997.
NET INVESTMENT INCOME WAS $179,338 FOR THE FIRST QUARTER OF 1998 COMPARED
TO $163,218 FOR THE SAME PERIOD ONE YEAR AGO. NET REALIZED CAPITAL GAINS WERE
$568,549 ON THE SECURITIES PORTFOLIO FOR THE FUND FOR THE QUARTER ENDING MARCH
31, 1998. THERE WERE $163,218 IN NET REALIZED CAPITAL GAINS IN THE FUND'S
PORTFOLIO FOR THE COMPARABLE PERIOD IN 1997.
THE FUND'S UNAUDITED FINANCIAL STATEMENTS, APPEARING ON PAGES F-1 THROUGH
F-14, PROVIDE THE SCHEDULE OF PORTFOLIO INVESTMENTS, THE STATEMENT OF ASSETS AND
LIABILITIES, THE STATEMENT OF OPERATIONS, AND THE NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 1998. THESE DOCUMENTS COMPRISE OUR BASIC REPORT TO YOU. PLEASE
REFER TO EXHIBITS 1 AND 2 FOR THE FUND'S PORTFOLIO TRANSACTIONS FOR THE CURRENT
QUARTER AND FOR THE HISTORICAL INFORMATION ON OUR OPERATIONS WITH RESPECT TO NET
ASSETS, SHARES OUTSTANDING, NET ASSET VALUE PER SHARE, DIVIDENDS, AND CAPITAL
GAINS DISTRIBUTIONS.
PORTFOLIO CHANGES DURING FIRST QUARTER, 1998
- --------------------------------------------
PORTFOLIO CHANGES DURING FIRST QUARTER, 1998, FOLLOWED TWO BROAD THEMES.
FIRST, SALES WERE EFFECTED IN POSITIONS WHERE WE FELT GROWTH PROSPECTS WERE
BELOW AVERAGE AND/OR WHERE VALUATIONS HAD RISEN TO RELATIVELY HIGH LEVELS.
Shareholder Letter -2- April 27, 1998
STOCKS REDUCED OR ELIMINATED INCLUDE GENERAL ELECTRIC, GEORGIA PACIFIC, HEWLETT
PACKARD, KIMBERLY CLARK, MONSANTO, SPRINT, TRICON GLOBAL RESTAURANTS, AND
WEYERHAEUSER.
SECOND, A NUMBER OF NEW POSITIONS WERE ESTABLISHED IN COMPANIES WHICH WE
BELIEVE HAVE ABOVE AVERAGE LONG-TERM EARNINGS GROWTH PROSPECTS AND WHICH WE
BELIEVE MIGHT BENEFIT FROM A SHIFT OVER TIME OF INVESTOR FOCUS FROM LARGE
CAPITALIZATION COMPANIES TOWARD MEDIUM AND SMALLER CAPITALIZATION ISSUES. THE
AVERAGE AND MEDIAN MARKET CAPITALIZATION OF THE 11 NEW STOCKS PURCHASED DURING
THE FIRST QUARTER IS $4.1 BILLION AND $3.5 BILLION RESPECTIVELY ($3.1 AND $3.5
BILLION RESPECTIVELY EXCLUDING AMERICA ONLINE). BY CONTRAST, THE AVERAGE AND
MEDIAN MARKET CAPITALIZATION FOR THE FUND'S REMAINING EQUITIES IS $44.3 BILLION
AND $24.7 BILLION RESPECTIVELY. IT IS LIKELY THAT THE SMALLER MARKET
CAPITALIZATION OF THESE NEW COMPANIES WILL RESULT IN SOMEWHAT GREATER PRICE
VOLATILITY RELATIVE TO THE AVERAGE STOCK IN THE PORTFOLIO; WE WOULD LOOK TO
INCREASE THE POSITIONS IN THESE COMPANIES DURING PERIODS OF WEAKNESS IN THESE
STOCKS OVER THE REMAINDER OF 1998 AND BEYOND.
THE NEW PURCHASES WERE CONCENTRATED IN FOUR INDUSTRY SECTORS: (1) BUSINESS
SERVICES (CINTAS, SYLVAN LEARNING, ACCUSTAFF, AND SUNGARD DATA SYSTEMS); (2)
TECHNOLOGY (SAVILLE SYSTEMS AND NETWORK ASSOCIATES); (3) HEALTH CARE (CONCENTRA,
QUINTILES TRANSNATIONAL, AND STERIS); AND (4) MEDIA (AMERICA ONLINE AND OUTDOOR
SYSTEMS).
OUTLOOK
- -------
THE STRONG RETURNS GENERATED BY COMMON STOCKS DURING THE FIRST QUARTER OF
1998 SURPRISED MANY INVESTORS, ESPECIALLY GIVEN THE EXTRAORDINARY EQUITY RETURNS
EXPERIENCED DURING THE PRIOR THREE YEARS. IN CONTRAST WITH THE STRONG PRICE
APPRECIATION OF THE 1995-1997 PERIOD, WHICH WAS LARGELY JUSTIFIED BY ABOVE-
AVERAGE CORPORATE EARNINGS GROWTH AND A SIGNIFICANT DECLINE IN INTEREST RATES,
THE STRONG PRICE GAINS REGISTERED DURING THE FIRST QUARTER OF 1998 WERE POSTED
NOTWITHSTANDING SLOWING CORPORATE EARNINGS GROWTH AND THE INCREASING RISK OF A
LESS HOSPITABLE INTEREST RATE ENVIRONMENT.
EQUITY VALUATION LEVELS ARE AT HISTORIC HIGHS BASED ON MANY DIFFERENT
VALUATION PARAMETERS. FURTHER, SIGNS OF SPECULATIVE EXCESS APPEAR TO BE
INCREASING, PARTICULARLY IN THE FORM OF THE LARGE MARKET VALUES BEING ACCORDED A
NUMBER OF INTERNET-RELATED STOCKS.
AGAINST THIS BACKDROP, OUR INCLINATION WILL BE TO PROCEED SOMEWHAT
CAUTIOUSLY THROUGHOUT THE REMAINDER OF 1998, LOOKING TO REALIZE GAINS WHERE
VALUATIONS REACH EXTREME LEVELS AND REPOSITIONING MONEY DURING THE PERIODS OF
INTERMITTENT BROAD MARKET WEAKNESS WHICH WE ANTICIPATE.
WE CONTINUE TO BELIEVE THAT 1998 WILL BE CHARACTERIZED BY INCREASING SHARE
PRICE VOLATILITY. WE WILL CONTINUE TO FOCUS ON THOSE COMPANIES WHICH WE BELIEVE
OFFER THE BEST COMBINATION OF EXCELLENT LONG-TERM EARNINGS GROWTH POTENTIAL AND
REASONABLE VALUATION CHARACTERISTICS IN AN ERA OF GENERALLY HIGH VALUATIONS FOR
COMMON STOCKS.
REQUIRED REPORTS
- ----------------
RULE 30D-1(6) OF THE GENERAL RULES AND REGULATIONS UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION,
REQUIRED CERTAIN REPORTS TO STOCKHOLDERS WITH RESPECT TO ANY MATTER THAT WAS
SUBMITTED TO A SHAREHOLDER VOTE DURING THE PERIOD COVERED BY THE SHAREHOLDER
Shareholder Letter -3- April 27, 1998
REPORT. THE ANNUAL MEETING OF SHAREHOLDERS OF THE FUND WAS ON FEBRUARY 17,
1998. THE INFORMATION REQUIRED TO BE REPORTED WITH RESPECT TO THIS MEETING
APPEARS IN EXHIBIT 3. A SIMILAR PRESENTATION WILL BE MADE EACH TIME THERE IS AN
ANNUAL OR SPECIAL MEETING, AND IN THE INSTANCE OF THIS REPORT, THE SAME
INFORMATION WILL BE PUBLISHED IN JANUARY, 1999, WITHIN THE ANNUAL SHAREHOLDER
REPORT FOR 1998 TO FULFILL REQUIREMENTS IN CONNECTION WITH PROXY SOLICITATION
FOR THE NEXT ANNUAL MEETING OF SHAREHOLDERS.
CASH DISTRIBUTION
- -----------------
ON APRIL 13, 1998, THE BOARD OF DIRECTORS DECLARED A $.135 PER SHARE
DIVIDEND ON SHARES OF CAPITAL STOCK OUTSTANDING ON APRIL 13, 1998 -- THE RECORD
DATE FOR THIS INCOME DISTRIBUTION. THE DIVIDEND AMOUNT WILL BE PAYABLE ON OR
ABOUT APRIL 27, 1998. THIS DIVIDEND IS PAYABLE FROM NET INVESTMENT INCOME
EARNED DURING THE JANUARY-MARCH, 1998, QUARTER.
PROSPECTUS
- ----------
THIS LETTER TRANSMITS THE 1998 EDITION OF THE FUND'S PROSPECTUS THAT WILL
BECOME EFFECTIVE ON APRIL 28, 1998. THE PROSPECTUS IS PART A OF A THREE SEGMENT
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION IN WASHINGTON, D.C. PART B
IS THE STATEMENT OF ADDITIONAL INFORMATION, AND PART C CONTAINS OTHER
INFORMATION. THE FUND WILL MAIL PART A WITH THIS LETTER. PLEASE NOTIFY MRS.
MARY ANN MASON, SECRETARY OF THE FUND, IF YOU WISH TO RECEIVE PART B AND/OR PART
C, AND SHE WILL MAIL COPIES OF THE 1998 REVISIONS IN THESE DOCUMENTS TO YOU.
THE ANNUAL REPORT FOR 1997 IS AN INTEGRAL PART OF THE PROSPECTUS OFFERING FOR
1998. EACH SHAREHOLDER HAS BEEN MAILED OR PERSONALLY RECEIVED AN ANNUAL REPORT
FOR 1997 WITH THEIR PROXY STATEMENT IN JANUARY, 1998, OR WHEN HE OR SHE MADE AN
ORIGINAL PURCHASE TRANSACTION IN THE FUND SUBSEQUENT TO THE JANUARY 22, 1998,
DATE OF ISSUANCE FOR THIS REPORT. ANY PERSON WHO DESIRES ANOTHER COPY OF THE
ANNUAL REPORT FOR 1997 SHOULD REQUEST THAT DOCUMENT FROM MRS. MASON.
NEW OPPORTUNITIES
- -----------------
ON APRIL 28, 1998, THE FUND WILL COMMENCE OFFERING THE ROTH INDIVIDUAL
RETIREMENT CUSTODIAL ACCOUNT PLANS AND THE EDUCATION INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT PLANS THAT WERE MADE POSSIBLE AS THE RESULT OF THE PASSAGE OF
THE TAXPAYER RELIEF ACT OF 1997. THE PRINCIPAL ADVANTAGE OF THE ROTH IRA
ACCOUNT WILL BE THE PROTECTION OF EARNINGS AND CAPITAL GAINS FROM TAX WHEN
RETIREMENT DISTRIBUTIONS COMMENCE FROM THE ACCOUNTS. FURTHER, CAPITAL
CONTRIBUTED TO THE ROTH IRA ACCOUNT MAY BE WITHDRAWN WITHOUT A PENALTY THAT
APPLIES TO EARLY WITHDRAWALS FROM REGULAR OR "TRADITIONAL" IRA ACCOUNTS.
THE EDUCATION IRA WILL PERMIT FUNDING AT THE RATE OF $500 PER YEAR FOR
DESIGNATED BENEFICIARIES, MOST LIKELY TO BE CHILDREN AND GRANDCHILDREN, TO
EXCLUSIVELY PAY FOR HIGHER EDUCATION EXPENSES WITHIN THE MEANING OF SECTION
530(B)2 OF THE INTERNAL REVENUE CODE. EARNINGS AND CAPITAL GAINS ACHIEVED IN
THE EDUCATION IRA WILL BE TAX FREE UPON QUALIFYING WITHDRAWALS FROM THE ACCOUNT.
ANNUAL CONTRIBUTIONS MAY ALSO BE TAKEN FROM THE EDUCATION IRA FREE OF INCOME
TAXES. ASSETS OF THE EDUCATION IRA MAY BE HELD FOR UTILIZATION FOR EDUCATIONAL
EXPENSES UP TO THE AGE OF 30. CONTRIBUTIONS FOR A DESIGNATED BENEFICIARY MUST
STOP AFTER ATTAINMENT OF AGE 18. THE "RESPONSIBLE INDIVIDUAL" FOR THE
DESIGNATED BENEFICIARY MAY ELECT TO CHANGE BENEFICIARIES TO ANOTHER FAMILY
MEMBER IN THE EVENT THE ORIGINAL BENEFICIARY CANNOT USE THE FUND SET ASIDE FOR
HIS OR HER NEEDS.
Shareholder Letter -4- April 27, 1998
THE FUND'S MINIMUM SUBSCRIPTION AMOUNT WAS REDUCED FROM $800 TO $500 WITH
THIS PROSPECTUS CHANGE IN ORDER TO ACCOMMODATE THE POTENTIAL INVESTORS IN THE
EDUCATION IRA.
SHAREHOLDERS AND PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE TAXPAYER
RELIEF ACT OF 1997 OPENED UP OR BROADENED THE ABILITY OF INDIVIDUALS TO
CONTRIBUTE TO THE TRADITIONAL IRA OR TO ROTH IRA ACCOUNTS.
UNDER THE NEW LAW, INDIVIDUALS AND THEIR SPOUSES MAY CONTRIBUTE, REGARDLESS
OF EMPLOYER RETIREMENT PLAN PARTICIPATION, THE SMALLER OF $2,000 OR 100% OF
EARNED INCOME. AS AN EXAMPLE, AN INDIVIDUAL AND HIS OR HER SPOUSE COULD EACH
CONTRIBUTE $2,000 TO A ROTH IRA, OR $4,000 IN THE AGGREGATE, AS LONG AS COMBINED
EARNED INCOME IS AT LEAST $4,000. THIS ABILITY TO MAKE CONTRIBUTIONS BEGINS TO
PHASE OUT WHEN MODIFIED ADJUSTED GROSS INCOME REACHES BETWEEN $150,000 -
$160,000 FOR COUPLES FILING JOINT INCOME TAX RETURNS. FOR INDIVIDUALS FILING
SINGLE RETURNS, THE PHASE OUT IS BETWEEN $95,000 - $110,000 OF ADJUSTED GROSS
INCOME, AND FOR MARRIED COUPLES FILING SEPARATELY, THE PHASE OUT IS BETWEEN $0 -
$15,000.
SOME OWNERS OF TRADITIONAL IRA ACCOUNTS WHOSE ADJUSTED GROSS INCOME IS NOT
MORE THAN $100,000 MAY WISH TO CONSIDER ROLLING A PORTION OR ALL OF THEIR
PRESENT IRA ACCOUNT INTO A ROTH IRA ROLLOVER, TERMED A ROTH CONVERSION IRA ON
OUR FUND'S MODEL ROTH IRA ACCOUNT FORM. IF SUCH A CONVERSION TAKES PLACE DURING
1998, THERE IS A SPECIAL FOUR-YEAR INCOME AVERAGING PROVISION PERMITTED TO THE
TAXPAYER UNDER THE INTERNAL REVENUE CODE. YOU SHOULD CONSULT YOUR TAX
CONSULTANT OR PREPARER AS TO THE ADVISABILITY OF CONVERTING FROM A TRADITIONAL
TO A ROTH IRA. BRIAN M. KIRKPATRICK, A FINANCIAL ANALYST ON THE STAFF OF
BRIDGES INVESTMENT COUNSEL, INC. WILL BE PLEASED TO HANDLE QUESTIONS FROM YOU
ABOUT EDUCATION AND ROTH IRA ACCOUNTS IF YOU REQUIRE ASSISTANCE FROM OUR
ORGANIZATION.
IN SUM, A GREAT MANY NEW SAVINGS INITIATIVES ARE POSSIBLE FOR INVESTMENTS,
THAT COMMENCED AS OF THE FIRST DAY OF 1998. WITH RESPECT TO THE EDUCATION IRA.
IT WILL BE IMPORTANT FOR INVESTMENTS TO BE MADE AS EARLY AS POSSIBLE IN THE LIFE
OF A CHILD. GRANDPARENTS WITH INCOME LEVELS TOO HIGH TO ALLOW CONTRIBUTIONS MAY
WISH TO CONSIDER MAKING GIFTS TO THEIR CHILDREN OR OTHER PERSONS WITH INCOME
LEVELS BENEATH THE PERMISSIBLE CONTRIBUTION CEILINGS FOR PERSONS TO MAKE WHO
THEN BECOME "RESPONSIBLE INDIVIDUALS" TO ADOPT THE IRA. WITH RESPECT TO THE
ROTH IRA, THE GENERAL RULE WILL BE THAT THE LONGER THE TIME FRAME BETWEEN THE
ADOPTION DAY AND THE RETIREMENT DATE FOR THE "DEPOSITOR", THE GREATER THE
ULTIMATE NET AFTER-TAX PAYMENTS BENEFIT SHOULD BECOME.
OFFICER RETIREMENT
- ------------------
ON APRIL 13, 1998, ROSEMARY M. TECKMEYER STEPPED DOWN AS VICE PRESIDENT OF
OUR FUND. ROSEMARY WAS THE SECOND PERSON TO BECOME RESPONSIBLE FOR THE DAILY
ACCOUNTING OF THE FUND'S ACTIVITIES, A POSITION THAT SHE HELD FROM THE LATE
1960'S INTO THE EARLY 1980'S BEFORE TURNING THE TREASURER'S POSITION OVER TO
NANCY K. DODGE. OUR SHAREHOLDERS HAVE BEEN BLESSED WITH HER ACUMEN ABOUT AND
DEDICATION TO THE FUND'S OPERATION. FOR MORE THAN A QUARTER CENTURY, SHE HAS
GATHERED THE INFORMATION FOR THE CHAIRMAN TO ANNUALLY MAKE THE NECESSARY
DISCLOSURES FOR THE ANNUAL PROXY, THE SHAREHOLDER PRESENTATION STATEMENT, AND
THE PROSPECTUS STATEMENTS. HER WORK HAS BEEN INVALUABLE TO OUR ORGANIZATION.
Shareholder Letter -5- April 27, 1998
A REMARKABLE TIME
- -----------------
THE CONFIRMATION STATEMENTS FOR SHAREHOLDER ACCOUNTS WITH DIVIDEND
REINVESTMENT NOTICES WILL GO FORTH TODAY WITH A MESSAGE ABOUT AN ALL-TIME HIGH
PRICE OF $32.97 PER SHARE SET ON APRIL 22, 1998. THIS MOMENT IN TIME IS SPECIAL
IN THE SENSE THAT SO MUCH CAPITAL HAS BEEN CREATED IN SUCH A SHORT PERIOD -- AN
APPROXIMATE DOUBLING OF MARKET VALUE FOR FUND NET ASSETS IN JUST THREE SHORT
YEARS. WE GIVE THANKS FOR THE PERSISTENCY OF OUR SHAREHOLDER BASE, AND WE ARE
GRATEFUL FOR THE STABLE GENERAL BUSINESS ENVIRONMENT AND THE POSITIVE INVESTOR
ATTITUDES THAT HAVE MADE THESE ACHIEVEMENTS POSSIBLE.
THE INCREASED DEPTH OF SECURITY RESEARCH SKILLS, THE CONTINUOUS IMPROVEMENT
OF OUR INVESTMENT MANAGEMENT PROCESS, AND THE STRONG ADHERENCE TO THE DIRECTIONS
FIXED FROM SOUND INVESTMENT OBJECTIVES ARE ALSO IMPORTANT FACTORS IN THE OVERALL
RESULTS FOR OUR FUND'S PORTFOLIO. THE UPWARD MARKET TREND HAS BEEN SO
REMARKABLE IN THE LATE 1990'S THAT IT WOULD BE POSSIBLE TO BECOME COMPLACENT ON
THE ONE HAND OR OVER CONFIDENT ON THE OTHER ABOUT OUR CONTRIBUTIONS THAT HAVE
BEEN MADE TO THE END RESULTS. NEITHER OF THESE DESCRIPTIONS WOULD BE APT FOR
THIS MANAGEMENT. INSTEAD, WE FEEL INCREASINGLY VIGILANT AND MOTIVATED TO RISE
TO HIGHER PROFESSIONAL STANDARDS. ABOVE ALL, WE BELIEVE WE ARE BLESSED WITH THE
OPPORTUNITY TO HAVE YOU AS A SHAREHOLDER, AND WE FEEL STRENGTHENED BY MANY
WONDERFUL EMPLOYEES IN OUR ORGANIZATION WHO ARE IN A POSITION TO SERVE YOU WELL.
THESE ARE ATTRIBUTES THAT WILL SUSTAIN OUR FUND AS WE MOVE INTO THE FUTURE.
MEANTIME, LET'S ALL PAUSE TO ENJOY AND CELEBRATE THESE SPECIAL DAYS IN OUR
FUND'S HISTORY.
SINCERELY YOURS,
EDSON L. BRIDGES II, CFA
CHAIRMAN
EDSON L. BRIDGES III, CFA
PRESIDENT
ELBII:ELBIII:KJS
<TABLE>
Exhibit 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JANUARY 1, 1998, THROUGH MARCH 31, 1998
<CAPTION>
Bought or Held After
Securities Received Transaction
Common Stocks Unless $1,000 Par $1,000 Par
Described Otherwise Value (M) Value (M)
or Shares or Shares
<S> <C> <C>
Accustaff, Inc. 5,000 5,000
(1)<F1> America On Line, Inc. 3,000 3,000
Cintas Corporation 4,000 4,000
(2)<F2> Compaq Computer 1,000 2,000
Concentra Managed Care, Inc. 3,000 3,000
(3)<F3> Dell Computer 1,000 2,000
Eagle USA 3,000 23,000
HNC Software, Inc. 4,000 10,000
Harris Preferred Capital Corp. 10,000 10,000
7.375% Series A
(4)<F4> Microsoft 7,500 15,000
Network Associates, Inc. 3,000 3,000
(5)<F5> Outdoor Systems 9,700 12,700
Quintiles Transnational Corp. 3,000 3,000
(6)<F6> Reuters Group PLC ADR 5,199 5,199
(7)<F7> SLM Holding Corporation 5,000 7,000
Saville Systems Ireland PLC ADR 2,000 2,000
Steris Corporation 3,000 3,000
Sungard Data Systems 3,200 3,200
Sylvan Learning System 5,000 5,000
Various issues of Commercial 12,835M 515M
Paper Notes Purchased during
1st Qtr., 1998
<FN>Refer to Notes (1) through (7) on the next page.
Exhibit 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JANUARY 1, 1998 THROUGH MARCH 31, 1998
(Continued)
<CAPTION>
Sold or Held After
Securities Exchanged Transacion
Common Stocks Unless $1,000 Par $1,000 Par
Described Otherwise Value (M) Value (M)
or Shares or Shares
<S> <C> <C>
First Data Corporation 2,000 6,000
General Electric Co. 2,000 10,000
Georgia Pacific Corporation 3,000 --
Georgia Pacific (Timber Group) Corp. 3,000 --
Hewlett Packard Co. 2,000 10,000
Kimberly Clark Corporation 6,000 --
Monsanto Co. 2,000 10,000
(6)<F6> Reuters Holdings PLC ADR 6,000 --
Sprint Corporation 3,000 5,000
Tricon Global Restaurants, Inc. 2,400 --
Weyerhaeuser Co. 5,000 --
Various issues of Commercial 13,005M --
Paper Notes maturing during
1st Qtr., 1998
<F1>(1) - Received 1,500 shares in a 2-for-1 stock split on March 17, 1998.
<F2>(2) - Received 1,000 shares in a 2-for-1 stock split on January 21, 1998.
<F3>(3) - Received 1,000 shares in a 2-for-1 stock split on March 7, 1998.
<F4>(4) - Received 7,500 shares in a 2-for-1 stock split on February 23, 1998.
<F5>(5) - Received 1,500 shares in a 3-for-2 stock split on January 2, 1998.
<F6>(6) - Received 5,199 shares of Reuters Group PLC ADR as a result of the
recapitalization of Reuters Holdings PLC ADR on March 1, 1998.
<F7>(7) - Received 5,000 shares in a 7-for-2 stock split on January 5, 1998.
</TABLE>
-6-
<TABLE>
Exhibit 2
---------
BRIDGES INVESTMENT FUND, INC.
-----------------------------
HISTORICAL FINANCIAL INFORMATION
<CAPTION>
Valuation Net Shares Net Asset Dividend/ Capital
Date Assets Outstanding Value/Share Share Gains/Share
- --------- ------ ----------- ----------- -------- -----------
<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 -
-7-
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 -
-8-
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 - -
</TABLE>
EXHIBIT 3
BRIDGES INVESTMENT FUND, INC.
REPORTS TO STOCKHOLDERS OF MANAGEMENT COMPANIES
IN ACCORDANCE WITH
RULE 30D-1(B) OF THE GENERAL RULES AND REGULATIONS PROMULGATED UNDER
THE INVESTMENT COMPANY ACT OF 1940 AS AMENDED
"IF ANY MATTER WAS SUBMITTED DURING THE PERIOD COVERED BY THE SHAREHOLDER
REPORT TO A VOTE OF THE SHAREHOLDERS, THROUGH THE SOLICITATION OF PROXIES
OR OTHERWISE, FURNISH THE FOLLOWING INFORMATION:"
(1) ANNUAL MEETING HELD ON FEBRUARY 17, 1998, AT 11:00 A.M.
(2) ELECTION OF DIRECTORS FOR ONE YEAR TERMS (ALL DIRECTORS STAND FOR
ANNUAL ELECTION):
<TABLE>
<CAPTION>
- - - - - -VOTES CAST - - - - - -
WITHHOLD
FOR ALL AUTHORITY
NAMES OF DIRECTORS NOMINEES TO VOTE FOR
ELECTED AT MEETING EXCEPT ALL NOMINEES
FOR
<S> <C> <C> <C>
FREDERICK N. BACKER 1,053,500 NONE 515
EDSON L. BRIDGES II 1,053,500 NONE 515
EDSON L. BRIDGES III 1,053,500 NONE 515
N. P. DODGE, JR. 1,053,500 NONE 515
JOHN W. ESTABROOK 1,053,500 NONE 515
JON D. HOFFMASTER 1,053,500 NONE 515
JOHN J. KORALESKI 1,053,500 NONE 515
ROGER D. KUPKA 1,053,500 NONE 515
GARY L. PETERSEN 1,053,500 NONE 515
ROY A. SMITH 1,053,500 NONE 515
L.B. THOMAS 1,053,500 NONE 515
</TABLE>
(3) A BRIEF DESCRIPTION FOR EACH MATTER VOTED UPON AT THE MEETING:
<TABLE>
<CAPTION>
MATTERS VOTED UPON FOR AGAINST ABSTAIN
<S> <C> <C> <C>
(A) FOR A PROPOSED INVESTMENT 1,053,500 NONE 515
ADVISORY CONTRACT WHICH CONTINUES
THE EMPLOYMENT OF BRIDGES
INVESTMENT COUNSEL, INC. AS
INVESTMENT ADVISER TO THE FUND
FOR THE PERIOD FROM APRIL 17,
1998 THROUGH APRIL 17, 1999
(B) FOR THE RATIFICATION OF THE 1,052,210 NONE 1,805
SELECTION OF ARTHUR ANDERSEN
LLP AS INDEPENDENT AUDITORS
OF THE FUND FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998
</TABLE>
<TABLE>F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1998
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Value
<S> <C> <C>
COMMON STOCKS - (86.2%)
Advertising - 1.1%
Outdoor Systems, Inc.*<FN> 12,700 $ 445,294
Aircraft - Manufacturing - 1.5%
The Boeing Company 12,000 $ 625,500
Amusements - Recreation - Sporting Goods - 0.6%
Nike, Inc. 6,000 $ 265,500
Banking and Finance - 7.4%
First National of Nebraska, Inc. 230 $ 897,000
MBNA Corporation 10,000 358,125
NationsBank Corporation 6,000 437,625
Norwest Corporation 12,000 498,750
The Charles Schwab Corporation 1,000 38,000
SLM Holding Corporation 7,000 305,375
State Street Corporation 8,000 544,500
$ 3,079,375
Beverages - Soft Drinks - 2.5%
PepsiCo, Inc. 24,000 $ 1,024,500
Business Services - Human Resources - 0.4%
AccuStaff Incorporated*<FN> 5,000 $ 172,500
Chemicals - 4.2%
The Dow Chemical Company 7,000 $ 680,750
Du Pont (E.I.) De Nemours & Company 8,000 544,000
Monsanto Company 10,000 520,000
$ 1,744,750
Communications - Radio and Television - 0.6%
Clear Channel Communications, Inc.*<FN> 2,500 $ 245,000
<FN>*Nonincome-producing security
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Computers - Hardware and Software - 10.4%
America Online, Inc.*<FN> 3,000 $ 204,938
Cisco Systems, Inc.*<FN> 3,000 205,125
Compaq Computer Corporation 2,000 51,750
Dell Computer Corporation *<FN> 2,000 135,500
EMC Corporation*<FN> 2,000 75,625
HNC Software, Inc.*<FN> 10,000 376,250
Hewlett-Packard Co. 10,000 633,750
International Business Machines Corporation 2,000 207,750
Microsoft Corporation*<FN> 15,000 1,342,500
Network Associates, Inc. *<FN> 3,000 198,750
Saville Systems PLC Ireland Sponsored ADR *<FN> 2,000 102,500
Sun Microsystems, Inc.*<FN> 4,000 166,875
SunGard Data Systems, Inc. *<FN> 3,200 117,800
Transaction Systems Architects, Inc.*<FN> 13,000 505,375
$ 4,324,488
Drugs - Medicines - Cosmetics - 9.1%
Abbott Laboratories 8,000 $ 602,500
Amgen, Inc.*<FN> 2,000 121,750
Bristol-Myers Squibb Co. 6,000 625,875
Elan Corporation PLC ADR*<FN> 6,000 387,750
Johnson & Johnson 10,000 734,375
Merck & Co., Inc. 10,000 1,281,875
$ 3,754,125
Electrical Equipment and Supplies - 2.1%
General Electric Co. 10,000 $ 861,875
Electronics - 3.2%
Intel Corporation 8,000 $ 624,500
Motorola, Inc. 8,000 486,000
Solectron Corporation *<FN> 5,000 211,250
$ 1,321,750
Energy - Alternate Sources - 0.4%
CalEnergy Co., Inc. *<FN> 6,000 $ 169,500
Finance - Real Estate - 3.4%
Freddie Mac 30,000 $ 1,423,125
<FN>*Nonincome-producing security
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Finance - Services - 2.7%
Capital One Financial Corporation 10,000 $ 788,750
First Data Corporation 6,000 195,000
Paymentech, Inc. *<FN> 7,000 136,062
$ 1,119,812
Food - Miscellaneous Products - 3.0%
Philip Morris Companies, Inc. 30,000 $ 1,250,625
Healthcare - Commercial Services - 0.4%
Quintiles Transnational Corp.*<FN> 3,000 $ 144,563
Healthcare - Cost Containment - 0.2%
Concentra Managed Care, Inc. *<FN> 3,000 $ 92,250
Insurance - Mortgage - 0.8%
MGIC Investment Corporation 5,000 $ 328,438
Insurance - Multiline - 1.5%
American International Group, Inc. 1,500 $ 188,906
General Re Corp. 2,000 441,250
$ 630,156
Insurance - Municipal Bond - 1.9%
MBIA, Inc. 10,000 $ 775,000
Linen Supply - Uniform Rental & Sales - 0.5%
Cintas Corporation 4,000 $ 207,000
Machinery - Construction & Mining - 0.8%
Caterpillar Inc. 6,000 $ 330,375
Medical - Services - 0.7%
HealthSouth Corporation *<FN> 5,000 $ 140,313
Steris Corporation *<FN> 3,000 162,000
$ 302,313
Metal Products - Miscellaneous - 0.7%
Nucor Corporation 5,500 $ 299,406
Motion Pictures and Theatres - 1.8%
The Walt Disney Company 7,000 $ 747,250
<FN>*Nonincome-producing security
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Number Market
of Shares Value
Title of Security
<S> <C> <C>
COMMON STOCKS (Continued)
Oil Services - 0.2%
Schlumberger, Ltd. 1,000 $ 75,750
Petroleum Producing - 5.8%
Amoco Corporation 5,000 $ 431,875
Atlantic Richfield Company 4,000 314,500
Chevron Corporation 10,000 803,125
Exxon Corporation 8,000 541,000
Mobil Corporation 4,000 306,500
$ 2,397,000
Publishing - Newspapers - 1.4%
Gannett Co., Inc. 8,000 $ 575,000
Publishing - Electronic - 0.8%
Reuters Group PLC, ADR Sponsored 5,199 $ 335,660
Retail Stores - Apparel and Clothing - 2.5%
Gap, Inc. 22,500 $ 1,012,500
Retail Stores - Building Materials and Home
Improvement - 0.9%
The Home Depot, Inc. 5,500 $ 371,937
Retail Stores - Department - 2.2%
Dayton Hudson Corporation 10,500 $ 924,000
Retail Stores - Variety - 0.8%
Albertson's Inc. 6,500 $ 342,875
Schools - Educational Services - 0.6%
Sylvan Learning Systems, Inc. *<FN> 5,000 $ 235,625
Telecommunications - 6.0%
AirTouch Communications, Inc.*<FN> 5,000 $ 244,687
GTE Corporation 10,000 598,750
Sprint Corporation 5,000 338,438
West Teleservices Corporation*<FN> 43,000 720,250
WorldCom, Inc.*<FN> 13,000 559,812
$ 2,461,937
<FN>*Nonincome-producing security
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Number of
Shares or
Principal Market
Title of Security Amount Value
<S> <C> <C>
Transportation - Airfreight - 2.5%
Eagle USA Airfreight, Inc. *<FN> 23,000 $ 621,000
FDX Corporation *<FN> 6,000 426,750
$ 1,047,750
Transportation - Railroads - 0.6%
Union Pacific Corporation 4,000 $ 225,250
TOTAL COMMON STOCKS (Cost - $16,730,309) $35,689,754
PREFERRED STOCKS (1.7%)
Banking and Finance - 1.2%
CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 132,500
CFB Capital II 8.20% Cumulative Preferred 5,000 130,625
Harris Preferred Capital Corp., 10,000 249,375
7.375%, Series A
$ 512,500
Telecommunications - 0.5%
AirTouch Communications, Inc. 4.25% Series C 3,000 $ 213,000
Convertible Preferred
Total Preferred Stocks (Cost - $637,925) $ 725,500
Total Stocks (Cost - $17,368,234) $36,415,254
DEBT SECURITIES (11.6%)
Energy - Alternate Sources - 0.5%
CalEnergy Co., Inc., 7.63% Notes
due October 15, 2007 $200,000
$ 200,894
Food - Miscellaneous Products - 0.2%
Super Valu Stores, Inc., 8.875%
Promissory Notes, due June 15, 1999 $100,000
$ 103,251
Household Appliances and Utensils - 0.3%
Maytag Corp., 9.75% Notes,
due May 15, 2002 $100,000
$ 112,454
<FN>*Nonincome-producing security.
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Value
<S> <C> <C>
DEBT SECURITIES (Continued)
Office Equipment and Supplies - 0.3%
Xerox Corporation, 9.750% Notes
due March 15, 2000 $100,000
$ 106,808
Retail Stores - Department - 0.7%
Dillard Department Stores, Inc., 7.850%
Debentures, due October 1, 2012 $150,000 $ 167,689
Sears Roebuck & Co., 9.375% Debentures
due November 1, 2011 100,000
123,346
$ 291,035
Transportation - Railroads - 0.4%
Union Pacific Corporation 6.00%
Notes, due September 1, 2003 $150,000
$ 145,677
U.S. Government - 8.0%
U.S. Treasury, 9.000% Notes,
due May 15, 1998 $200,000 $ 200,844
U.S. Treasury, 9.125% Notes,
due May 15, 1999 200,000 207,562
U.S. Treasury, 8.750% Notes,
due August 15, 2000 200,000 213,844
U.S. Treasury, 8.000% Notes,
due May 15, 2001 200,000 213,375
U.S. Treasury, 7.500% Notes,
due May 15, 2002 200,000 213,375
U.S. Treasury, 10.750% Bonds
due February 15, 2003 200,000 242,719
U.S. Treasury, 7.250% Notes,
due May 15, 2004 300,000 324,141
U.S. Treasury, 7.500% Notes,
due February 15, 2005 300,000 330,234
U.S. Treasury, 9.375% Bonds,
due February 15, 2006 200,000 245,719
F-7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
MARCH 31, 1998
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Value
<S> <C> <C>
DEBT SECURITIES (Continued)
U.S. Treasury, 7.625% Bonds,
due February 15, 2007 300,000 318,703
U.S. Treasury, 8.750% Bonds,
due November 15, 2008 200,000 227,875
U.S. Treasury, 9.125% Bonds,
due May 15, 2009 200,000 233,688
U.S. Treasury, 7.500% Bonds,
due November 15, 2016 300,000
350,109
$ 3,322,188
Commercial Paper - Short Term - 1.2%
General Electric Credit Corp.
Commercial Paper Note 5.65%
due April 7, 1998 $ 290,000 $ 290,000
Prudential Funding Corp.
Commercial Paper Note 5.58%
due April 3, 1998 225,000
225,000
$ 515,000
TOTAL DEBT SECURITIES (Cost - $4,642,041) $ 4,797,307
TOTAL INVESTMENTS IN SECURITIES
(Cost - $22,010,275) (99.5%) $41,212,561
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (0.5%)
201,094
NET ASSETS, March 31, 1998 (100.0%) $41,413,655
<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
MARCH 31, 1998
(Unaudited)
<CAPTION>
ASSETS AMOUNT
<S> <C>
Investments, at market value
Common and preferred stocks $36,415,254
(cost $17.368,234)
Debt securities (cost $4,642,041) 4,797,307
-----------
Total Investments $41,212,561
Cash 121,481
Receivables
Dividends and interest 137,505
Subscriptions to capital stock 19,668
-----------
TOTAL ASSETS $41,491,215
===========
LIABILITIES
Redemptions of Capital Stock $ 2,000
Investment advisor, management and
service fees 49,597
Accrued operating expenses 25,963
-----------
TOTAL LIABILITIES $ 77,560
-----------
NET ASSETS
Capital stock, $1 par value - Authorized
3,000,000 shares, less 751,419 shares
redeemed; 2,034,741 shares issued;
1,283,322 shares outstanding $ 1,283,322
Paid-in surplus -
Excess over par value of amounts received
from sale of 2,034,741 shares, less
amounts paid out in redeeming
751,419 shares 20,180,855
-----------
Net capital paid in on shares $21,464,177
Accumulated net realized gain on investment
transactions 562,087
Net unrealized appreciation on investments 19,202,286
Accumulated undistributed net investment income
income 185,105
-----------
TOTAL NET ASSETS $41,413,655
===========
NET ASSET VALUE PER SHARE $32.27
======
OFFERING PRICE PER SHARE $32.27
======
REDEMPTION PRICE PER SHARE $32.27
======
<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 THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<CAPTION>
INVESTMENT INCOME AMOUNT AMOUNT
<S> <C> <C>
INTEREST $ 95,276
DIVIDENDS 163,162
--------
TOTAL INVESTMENT INCOME $258,438
EXPENSES
MANAGEMENT FEES $ 49,597
CUSTODIAN FEES 6,885
INSURANCE AND OTHER ADMINISTRATIVE FEES 5,623
BOOKKEEPING SERVICES 4,327
PRINTING AND SUPPLIES 4,987
PROFESSIONAL SERVICES 2,725
DIVIDEND DISBURSING AND TRANSFER
AGENT FEES 3,440
COMPUTER PROGRAMMING 1,250
TAXES AND LICENSES 266
--------
TOTAL EXPENSES $ 79,100
NET INVESTMENT INCOME $ 179,338
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
NET REALIZED GAIN ON TRANSACTIONS IN
INVESTMENT SECURITIES $ 568,549
NET INCREASE IN UNREALIZED
APPRECIATION OF INVESTMENTS 3,405,722
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $3,974,271
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,153,609
<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 THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS -
NET INVESTMENT INCOME $ 179,338 $ 163,218
NET REALIZED GAIN ON TRANSACTIONS IN
INVESTMENT SECURITIES 568,549 107,499
NET INCREASE IN UNREALIZED
APPRECIATION OF INVESTMENTS 3,405,722 227,369
------------ -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 4,153,609 $ 498,086
NET EQUALIZATION CREDITS 531 1,252
DISTRIBUTIONS TO SHAREHOLDERS FROM -
NET INVESTMENT INCOME - -
NET REALIZED GAIN FROM INVESTMENT
TRANSACTIONS - -
EQUALIZATION - -
NET CAPITAL SHARE TRANSACTIONS 611,980 506,615
---------- ---------
TOTAL INCREASE IN NET ASSETS $ 4,766,120 $1,005,953
NET ASSETS:
BEGINNING OF YEAR 36,647,535 29,249,488
------------ -----------
END OF YEAR (INCLUDING ACCUMULATED
UNDISTRIBUTED NET INVESTMENT INCOME
OF $185,105 AND $169,202,
RESPECTIVELY) $ 41,413,655 $30,255,441
============ ===========
<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
MARCH 31, 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 appreciatiion
(depreciation):
Aggregate gross unrealized
appreciation on securities $19,425,849 $10,868,820
Aggregate gross unrealized
depreciation on securities (223,563) (301,658)
Net $19,202,286 $10,567,162 $8,635,124
</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 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-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 three months
ended March 31, was:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
United States government obligations $ -- $ --
Other Securities 2,144,818 310,716
Total Cost $2,144,818 $ 310,716
</TABLE>
Net proceeds from sales of long-term investments during the three
months ended March 31, were:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
United States government obligations $ -- $ --
Other Securities 1,341,699 211,481
Total Net Proceeds $1,341,699 $ 211,481
Total Cost Basis of
Securities Sold $ 773,150 $ 103,982
</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>
1998 1997
<S> <C> <C>
Shares sold 25,050 36,077
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 4,237 5,782
29,287 41,859
Shares redeemed 8,783 22,063
Net increase 20,504 19,796
</TABLE>
Value of capital stock issued and redeemed is as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Shares sold $ 754,163 $ 918,980
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 123,123 147,024
$ 877,286 $1,066,004
Shares redeemed 265,306 559,389
Net increase $ 611,980 $ 506,615
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On April 13, 1998 a distribution of $.1350 per share aggregating
$173,183 was declared to shareholders of record on April 13, 1998, to be
payable on April 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.
