BRIDGES INVESTMENT FUND, INC.
THIRD QUARTER
1999
CONTENTS OF REPORT
Pages 1 - 3 Shareholder Letter
Exhibit 1 Portfolio Transactions from July 1, 1999,
through September 30, 1999
Exhibit 2 Quarter-to-Quarter Changes in Financial Data
Pages F1-F14 Unaudited Financial Statements for the
Nine Months Ended September 30, 1999
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.
<PAGE>
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
JOHN T. REED
ROY A. SMITH
JANICE D. STONEY
L.B. THOMAS
JOHN K. WILSON
OFFICERS
EDSON L. BRIDGES II - CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
EDSON L. BRIDGES III _ PRESIDENT AND
CHIEF INVESTMENT OFFICER
BRIAN M. KIRKPATRICK _ VICE PRESIDENT
MARY ANN MASON - SECRETARY
KATHLEEN J. STRANIK - ASSISTANT SECRETARY
NANCY K. DODGE - TREASURER
LINDA J. MORRIS _ ASSISTANT TREASURER
AUDITOR
KPMG LLP
TWO CENTRAL PARK PLAZA
SUITE 1501
OMAHA, NEBRASKA 68102-1617
CORPORATE COUNSEL
BAIRD, HOLM, MCEACHEN,
PEDERSEN, HAMANN & STRASHEIM
1500 WOODMEN TOWER
OMAHA, NEBRASKA 68102
<PAGE>
October 25, 1999
Dear Shareholder:
Bridges Investment Fund, Inc. had a total return of -4.00% during the third
quarter of 1999 based on a June 30, 1999, net asset value of $38.61 and a
September 30, 1999, net asset value of $37.00. Included in the third quarter's
total return is a dividend of $0.066 paid on July 26. On a calendar year-to-
date basis, the Fund had a total return of 8.41% and had a total return of 28.9%
for the 12-month period ending September 30. By comparison, the S&P 500 had
total returns of -6.24% for the third quarter, 5.37% for the first nine months
of the year, and 27.79% for the trailing 12 months ending September 30, 1999.
During the quarter, the Fund's common stocks had a total return of -4.33%,
which bettered the S&P 500's total return of -6.24% during the quarter. After
underperforming the S&P 500 in the second quarter, the fund's equities turned in
a better relative performance during the third quarter, even as market breadth,
which improved in the second quarter, resumed a more negative trend during the
third quarter.
After peaking on July 16, equities prices generally fell through the end of
the third quarter, such that by October 15, fully 65% of stocks on the New York
Stock Exchange were down over 20% from their 52-week highs; on the NASDAQ, 73%
of stocks were down in excess of 20% from their 52-week highs. However, the
general markdown in equity prices during the third quarter did improve overall
valuation levels, as corporate earnings reported in July and August for the
second quarter were by and large strong in an absolute sense (S&P 500 stocks
experienced year-over-year growth of 17.9% in the second quarter) and largely
better than consensus expectations (85.7% of companies reporting had earnings
which met or exceeded consensus earnings estimates).
Notwithstanding the corrective action in the market during the third
quarter, valuation levels remain high particularly for stocks which have
relatively high earnings growth. On a year-over-year basis (September 30, 1998,
through September 30, 1999), S&P 500 earnings are up approximately 20% while S&P
500 price performance is up 28% in the face of a significant rise in bond yields
(from a low of 4.75% on October 8, 1998, to 6.40% at present). This set of
variables is untenable going forward. For equities to do well, earnings growth
needs to accelerate (unlikely given that earnings growth is currently robust --
we believe the odds of some slowdown over the next 12 months outweigh the
possibilities of an uptick in earnings growth) or interest rates need to go
lower or at least stop rising (a better bet given that the odds favor a slowing
in economic growth over the next 12 months).
The following table summarizes the ten largest equity holdings of the Fund
as of September 30, 1999, and includes stock price performance and valuation
data that we believe you will find of interest.
Shareholder Letter 2 October 25, 1999
<TABLE>
<CAPTION>
% EPS EPS
Tot % 5Yr LT
9/30/99 % % Ret Tot Hist Ftr
No. of Market of Tot 3rd Ret Gr P/E P/E Gr
ShareS Company Value Equity Asst Qtr 12 Mo Rate 1999 2000 Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9,068 Vodafone 2,155,917 4.5 4.0 21.0 110.8 23 78.5 63.7 27
10,000 Qualcomm 1,891,880 3.9 3.5 31.8 689.3 69 79.5 50.0 35
20,000 Microsoft 1,811,260 3.7 3.3 0.4 64.6 45 64.9 58.1 25
50,000 Gap 1,600,000 3.3 3.0 -36.4 36.9 31 26.2 21.8 20
30,000 Freddie 1,560,000 3.2 2.9 -10.1 5.9 16 17.7 15.5 15
Mac
20,000 Intel 1,486,260 3.1 2.7 24.9 73.6 24 32.3 27.5 20
20,000 Home 1,372,500 2.8 2.5 6.6 74.1 26 47.0 38.1 24
Depot
35,000 Capital 1,365,000 2.8 2.5 -29.9 13.8 22 22.7 18.0 25
One
18,000 Cisco 1,234,134 2.5 2.3 6.4 121.8 38 91.4 70.0 30
Systems
16,000 EMC Corp. 1,142,000 2.4 2.1 29.8 148.8 28 68.0 51.7 30
</TABLE>
We continue to anticipate that the equity market will remain volatile
through the end of this year and into 2000. The volatility will be driven by
continued concerns about inflation, potential Y2K problems, and current high
equity valuation levels. Our approach will continue to be decidedly long term;
as always, we will look to position capital in the Fund in those companies which
we believe have the best long-term earnings growth prospects and which sell at
reasonable valuations given those growth prospects. As always, we appreciate
your patience and understanding during the inevitable periods of market turmoil
which may lie ahead. We continue to remain very constructive on the long-term
outlook for financial assets.
Dividend
On October 12, 1999, the Board of Directors declared a $.07 per share
dividend on the shares of capital stock outstanding on the October 12, 1999,
record date with this income distribution amount to be payable on or about
October 25, 1999. This dividend is payable from the net investment income
earned during the July _ September, 1999 Quarter.
New Prospectus and Account Application Form
A new Prospectus Part A that became effective today is enclosed with this
report. A revised Account Application form is included with this Prospectus.
There are several important objectives for the reissuance of the Prospectus and
the Account Application form at this point in time.
The Fund has undertaken preparations to make shares of capital stock
available for purchase to residents of states other than Nebraska. A limitation
on sales of stock to Nebraska residents only has been in effect since the
inauguration of the public offering of shares on December 7, 1963. Thus, the
change in the Fund's policy to offer shares to potential owners in states other
than Nebraska is of considerable import.
The Fund's management reviewed the operating characteristics and policies
of 178 open-end investment companies that follow the growth and income objective
to define the market place for appropriate, competitive service. The findings
of our survey caused the following changes to Fund operations that are reflected
in the new Prospectus language and the revised Account Application form.
. The initial minimum investment is $1,000, up from $500 prior to today.
. A subsequent investment by check is $250, up from $200.
. The Scheduled Investment Plan has been replaced by an Automatic
Investment Plan that permits a $100 minimum follow-on investment to the
initial $1,000 commitment through the utilization of the ACH network
with the shareholder's bank.
Shareholder Letter 3 October 25, 1999
. There is a special minimum initial investment of $500 for IRA accounts.
Our new Application Form is not utilized for IRA adoptions under Bridges
Investment Fund, Inc. sponsored plans. The master plan adoption
agreement is the effective instrument.
. The Fund has waived all fees on shareholder accounts as of the close of
business today. The reimbursement amounts that were previously paid
from the shareholder accounts for dividend reinvestments and other
services to Bridges Investor Services, Inc. as Dividend Disbursing and
Transfer Agent have been estimated for the future. Such sums will be
billed as a quarterly flat fee charged directly to the Fund.
The increased expenses to be absorbed by the Fund in the transfer agency
function are expected to be $8,400 per year or about 2% of the annualized total
operating expenses of the Fund as measured by costs incurred during the first
six months of 1999. Part of the new increased costs is related to raising the
breadth and the depth of the commercial banking services for the cash receipts
and disbursements, especially for intra-day transactions, so that the transfer
agent can handle new stock subscriptions on an expeditious basis.
A New Era
Under terms of the Agreement reached in 1963, Bridges Investment Counsel,
Inc. will be paying the costs of registering the shares of the Fund in states
other than Nebraska as it does for the shares sold in Nebraska now. Our initial
objective will be to register shares in 10-15 new states. The approximate Blue
Sky cost to the investment manager will be about $18,000 per year. The manager
intends to develop some promotional literature for the Fund to help stimulate
sales in response to inquiries. The Fund will be prepared to register in all 50
states, and arrangements may be made to permit purchases and sales through
broker sponsored services to clients for no-load mutual funds. Such services
should be provided at no cost to the brokerage customer or the mutual fund.
This potential network should facilitate participation by our Fund in the
national market for fund shares, presuming that the Fund's management can
continue to earn strong relative total returns.
As a first step, the Fund will include only those states where it has some
knowledge of potential subscriptions for new investors in order to gain
experience with Blue Sky regulation and costs. The $18,000 annual expense pro
forma will require $3,600,000 in new incremental sales of capital stock just to
recover the "first step" costs from an annual investment management fee to be
earned from the added investment capital that comes from other states. We will
expand our coverages of various states when positive experiences warrant those
decisions.
Closing Comment
Thank you for your ownership of shares in our Fund. Perhaps, you can think
of someone living in states other than Nebraska who should become a shareholder.
I would be glad to have that person's name and address, and we will follow-up.
Sincerely,
Edson L. Bridges III, CFA
President
Edson L. Bridges II, CFA
ELBIII:ELBII:elc Chairman
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 1
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
JULY 1, 1999, THROUGH SEPTEMBER 30, 1999
<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>
AES Corporation 1,000 3,000
Altera, Corporation 2,000 6,000
(1)<F1> American International Group 625 3,125
At Home Corporation 1,000 3,000
CSG Systems International, Inc. 3,000 18,000
Capital One Financial 2,000 35,000
Cardinal Health, Inc. 1,000 3,000
(2)<F2> Eagle USA 11,000 33,000
Finova 1,000 3,000
First Data Corporation 5,000 5,000
Gap, Inc. 5,000 50,000
Hewlett Packard 2,000 8,000
Home Depot, Inc. 2,000 20,000
(3)<F3> Interpublic Group 2,000 4,000
Lamar Advertising Co. 2,000 2,000
Lucent Technologies 3,000 3,000
Paychex, Inc. 3,500 5,000
Qualcomm, Inc. 1,000 10,000
Solectron Corporation 1,000 13,000
Sprint PCS Corporation 1,000 5,500
Sun Microsystems, Inc. 1,000 5,000
West Teleservices Corp. 8,200 58,200
Various Issues of Commercial Paper 18,970M 1,450M
Notes Purchased during
3rd Quarter, 1999
<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>
Alcoa, Inc. 4,000 --
At Home Corporation 3,000 --
Cardinal Health, Inc. 3,000 --
DLJ Direct 500 --
Georgia Pacific Corporation 4,000 --
Gulfstream Aerospace Corporation 6,000 --
Hertz Corporation Class A 2,000 --
Outdoor Systems 19,050 --
Philip Morris Co., Inc. 5,000 15,000
Qualcomm, Inc. 2,000 10,000
Various Issues of Commercial 19,070M --
Paper Notes maturing during
3rd Qtr., 1999
<F1>(1) - Received 625 shares in a 5-for-4 stock split on August 2, 1999.
<F2>(2) _ Received 11,000 shares in a 3-for-2 stock split on August 31, 1999.
<F3>(3) _ Received 2,000 shares in a 2-for-1 stock split on July 16, 1999.
</TABLE>
<PAGE>
<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 -
EXHIBIT 2 - 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>
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
<CAPTION>
Valuation Net Shares Net Asset Dividend/ Capital
Date Assets Outstanding Value/Share Share Gains/Share
<S> <C> <C> <C> <C> <C>
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 -
09-30-98 40,423,166 1,308,173 30.90 .09 -
12-31-98 48,433,113 1,413,731 34.26 .215 2.11648
03-31-99 52,835,162 1,442,077 36.64 - -
06-30-99 56,490,020 1,463,133 38.61 .075 -
09-30-99 54,199,232 1,464,952 37.00 .066 -
</TABLE>
<PAGE>
<TABLE>
F-1
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Number Market
of Shares Cost Value
Title of Security
<S> <C> <C> <C>
COMMON STOCKS - (87.6%)
Advertising _ 0.5%
Interpublic Group of Companies, Inc. (The) 4,000 $ 106,953 $ 164,500
Lamar Advertising Company*<FN> 2,000 92,125 99,000
$ 199,078 $ 263,500
Aircraft _ Manufacturing - 0.9%
The Boeing Company 12,000 $ 278,135 $ 511,500
Amusements _ Recreation _ Sporting Goods _ 0.5%
Nike, Inc. 5,000 $ 171,270 $ 284,375
Banking and Finance - 4.0%
Chase Manhattan Corporation (The) 2,000 $ 86,650 $ 150,750
First National of Nebraska, Inc. 230 346,835 635,950
MBNA Corporation 15,000 234,825 342,195
State Street Corporation 8,000 66,525 517,000
U.S. Bancorp (New) 5,000 166,370 150,940
Wells Fargo & Co. (New) 10,000 138,173 396,250
$ 1,039,378 $ 2,193,085
Beverages - Soft Drinks - 1.3%
PepsiCo, Inc. 24,000 $ 307,470 $ 732,000
Chemicals - 2.2%
The Dow Chemical Company 6,000 $ 396,947 $ 681,750
Du Pont (E.I.) De Nemours & Company 8,000 273,935 484,000
$ 670,882 $ 1,165,750
Communications _ Radio and Television _ 1.5%
Clear Channel Communications, Inc.*<FN> 10,000 $ 366,954 $ 798,750
Computers - Hardware and Software - 14.2%
America Online, Inc.*<FN> 6,000 $ 529,237 $ 624,378
Cisco Systems, Inc.*<FN> 18,000 290,726 1,234,134
Dell Computer Corporation *<FN> 3,000 109,594 125,439
EMC Corporation*<FN> 16,000 358,855 1,142,000
HNC Software, Inc.*<FN> 16,000 495,325 635,008
Hewlett-Packard Co. 8,000 293,882 726,000
I2 Technologies, Inc.*<FN> 5,000 154,166 194,065
Microsoft Corporation*<FN> 20,000 93,361 1,811,260
Sun Microsystems, Inc.*<FN> 5,000 281,813 465,000
Transaction Systems Architects, Inc.*<FN> 27,000 961,181 727,326
$ 3,568,140 $ 7,684,610
<FN>*Nonincome-producing security
F-2
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Cost Value
<S> <C> <C> <C>
COMMON STOCKS (Continued)
Data Processing and Management _ 1.3%
CSG Systems*<FN> 18,000 $ 509,169 $ 493,308
First Data Corporation 5,000 249,675 219,375
$ 758,844 $ 712,683
Diversified Operations _ 0.7%
Berkshire Hathaway Inc., Class B *<FN> 210 $ 150,375 $ 389,760
Drugs - Medicines _ Cosmetics - 7.8%
Abbott Laboratories 15,000 $ 169,395 $ 550,320
Amgen, Inc.*<FN> 6,000 248,687 489,000
Bristol-Myers Squibb Co. 8,000 141,675 540,000
Elan Corporation PLC ADR*<FN> 20,000 419,005 671,260
Johnson & Johnson 10,000 109,396 918,750
Merck & Co., Inc. 16,000 274,266 1,037,008
$ 1,362,424 $ 4,206,338
Electrical Equipment and Supplies - 1.7%
General Electric Co. 8,000 $ 147,473 $ 948,504
Electronic Components _ Conductors _ 0.5%
Altera Corporation*<FN> 6,000 $ 185,375 $ 260,250
Electronics - 4.5%
Intel Corporation 20,000 $ 334,735 $ 1,486,260
Solectron Corporation *<FN> 13,000 301,136 933,569
$ 635,871 $ 2,419,829
Finance _ Credit Cards _ 1.1%
American Express Company 2,000 $ 165,255 $ 270,000
Providian Financial Corporation 4,000 391,286 316,752
$ 556,541 $ 586,752
Finance _ Diversified _ 0.5%
Morgan Stanley, Dean Witter, Discover & Co. 3,000 $ 202,960 $ 267,564
Finance _ Investment Banks _ 0.7%
Goldman Sachs Group, Inc. 3,000 $ 202,843 $ 183,000
Merrill Lynch & Co., Inc. 3,000 168,586 202,125
$ 371,429 $ 385,125
Finance - Real Estate - 2.9%
Freddie Mac 30,000 $ 470,320 $ 1,560,000
<FN>*Nonincome-producing security
<PAGE>
F-3
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Number Market
of Shares Cost Value
Title of Security
<S> <C> <C> <C>
COMMON STOCKS (Continued)
Finance _ Services - 3.2%
Capital One Financial Corporation 35,000 $ 683,206 $ 1,365,000
E*Trade Group, Inc.*<FN> 4,000 98,188 94,000
FINOVA 3,000 132,073 109,500
Paychex, Inc. 5,000 154,125 170,625
$ 1,067,592 $ 1,739,125
Food _ Miscellaneous Products - 0.9%
Philip Morris Companies, Inc. 15,000 $ 263,604 $ 512,820
Insurance _ Mortgage _ 0.4%
MGIC Investment Corporation 4,000 $ 177,450 $ 191,000
Insurance _ Multiline - 0.5%
American International Group, Inc. 3,125 $ 118,455 $ 271,681
Insurance _ Municipal Bond _ 0.7%
MBIA, Inc. 8,000 $ 360,053 $ 373,000
Linen Supply and Related Products - 0.4%
Cintas Corporation 4,000 $ 166,578 $ 231,252
Metal Products _ Miscellaneous - 0.5%
Nucor Corporation 5,500 $ 122,061 $ 261,937
Motion Pictures and Theatres - 1.1%
The Walt Disney Company*<FN> 22,000 $ 236,300 $ 572,000
Petroleum Producing - 5.5%
Atlantic Richfield Company 4,000 $ 211,835 $ 354,500
BP Amoco PLC _ Spons. ADR 6,616 246,135 733,139
Chevron Corporation 10,000 340,535 887,500
Exxon Corporation 8,000 198,750 608,000
Mobil Corporation 4,000 127,075 403,000
$ 1,124,330 $ 2,986,139
Publishing _ Newspapers - 1.0%
Gannett Co., Inc. 8,000 $ 179,310 $ 553,504
Publishing _ Electronic - 0.7%
Reuters Group PLC, ADR Sponsored 5,199 $ 166,303 $ 358,081
<FN>*Nonincome-producing security
<PAGE>
F-4
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Cost Value
<S> <C> <C> <C>
COMMON STOCKS (Continued)
Retail Stores _ Apparel and Clothing - 3.0%
Gap, Inc. 50,000 $ 521,360 $ 1,600,000
Retail Stores _ Building Materials and Home
Improvement _ 2.5%
The Home Depot, Inc. 20,000 $ 587,115 $ 1,372,500
Retail Stores _ Department - 1.7%
Dayton Hudson Corporation 15,000 $ 146,129 $ 900,945
Schools _ 0.3%
Sylvan Learning System *<FN> 7,500 $ 200,089 $ 145,313
Telecommunications - 9.7%
Level 3 Communications *<FN> 12,000 $ 483,300 $ 626,628
MCI WorldCom, Inc. *<FN> 13,000 466,188 934,375
Sprint Corporation 10,000 83,964 542,500
Sprint PCS Corporation *<FN> 5,500 188,878 410,097
Vodafone Airtouch PLC Sponsored ADR 9,068 986,754 2,155,917
West Teleservices Corporation*<FN> 58,200 780,844 603,825
$ 2,989,928 $ 5,273,342
Telecommunications _ Equipment _ 5.8%
Lucent Technologies, Inc. 3,000 $ 214,841 $ 194,625
Nokia Corporation 12,000 492,858 1,078,500
Qualcomm Incorporated *<FN> 10,000 490,313 1,891,880
$ 1,198,012 $ 3,165,005
Television _ Cable _ 0.4%
Comcast Corporation 6,000 $ 141,375 $ 239,250
Transportation _ Airfreight _ 1.8%
Eagle USA Airfreight, Inc. *<FN> 33,000 $ 416,042 $ 987,954
Transportation _ Railroads - 0.4%
Union Pacific Corporation 4,000 $ 148,580 $ 192,252
Utilities _ Electric _ 0.3%
AES Corporation (The)*<FN> 3,000 $ 162,678 $ 177,000
TOTAL COMMON STOCKS (Cost - $21,936,263) $21,936,263 $47,474,475
<FN>*Nonincome-producing security
<PAGE>
F-5
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Number Market
Title of Security of Shares Cost Value
<S> <C> <C> <C>
PREFERRED STOCKS (1.7%)
Banking and Finance _ 1.1%
CFC Capital Trust 9.375% Preferred, Series B 5,000 $ 125,000 $ 125,000
CFB Capital II 8.20% Cumulative Preferred 5,000 125,000 118,750
Harris Preferred Capital Corp., 10,000 250,000 223,750
7.375%, Series A
Silicon Valley Bancshares Capital 5,000 125,000 111,250
8.25% Preferred Series I
$ 625,000 $ 578,750
Petroleum Producing _ 0.2%
Canadian Occidental Petroleum Ltd. 5,000 $ 125,000 $ 121,875
9.375% Preferred _ Series 1
Utilities _ Electric _ 0.4%
Tennessee Valley Authority 6.75% 10,000 $ 250,000 $ 231,250
Variable Preferred Series D
Total Preferred Stocks (Cost - $1,000,000) $ 1,000,000 $ 931,875
Total Stocks (Cost - $22,936,263) $22,936,263 $48,406,350
DEBT SECURITIES (9.5%)
Energy _ Alternate Sources - 0.3%
CalEnergy Co., Inc., 7.63% Notes
due October 15, 2007 $200,000 $ 200,000 $ 198,460
Household Appliances and Utensils - 0.2%
Maytag Corp., 9.75% Notes,
due May 15, 2002 $100,000 $ 102,200 $ 107,500
Office Equipment and Supplies - 0.2%
Xerox Corporation, 9.750% Notes
due March 15, 2000 $100,000 $ 100,025 $ 101,800
Retail Stores _ Department - 0.5%
Dillard Department Stores, Inc., 7.850%
Debentures, due October 1, 2012 $150,000 $ 151,348 $ 149,640
Sears Roebuck & Co., 9.375% Debentures
due November 1, 2011 100,000 $ 106,399 113,072
$ 257,747 $ 262,712
<FN>*Nonincome-producing security
F-6
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(Continued)
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Principal Market
Title of Security Amount Cost Value
<S> <C> <C> <C>
DEBT SECURITIES (Continued)
Telecommunications _ 0.4%
Level 3 Communications, Inc., 9.125% Senior $250,000 $ 241,937 $ 226,575
Notes due May 1, 2008
U.S. Government _ 5.2%
U.S. Treasury, 8.750% Notes,
due August 15, 2000 200,000 $ 211,900 $ 205,688
U.S. Treasury, 8.000% Notes,
due May 15, 2001 200,000 199,052 207,313
U.S. Treasury, 7.500% Notes,
due May 15, 2002 200,000 214,097 208,563
U.S. Treasury, 10.750% Bonds
due February 15, 2003 200,000 219,525 229,406
U.S. Treasury, 7.250% Notes,
due May 15, 2004 300,000 303,245 316,407
U.S. Treasury, 7.500% Notes,
due February 15, 2005 300,000 305,871 320,719
U.S. Treasury, 9.375% Bonds,
due February 15, 2006 200,000 256,223 234,813
U.S. Treasury, 7.625% Bonds,
due February 15, 2007 300,000 307,910 310,407
U.S. Treasury, 8.750% Bonds,
due November 15, 2008 200,000 237,473 218,813
U.S. Treasury, 9.125% Bonds,
due May 15, 2009 200,000 $ 234,910 $ 223,938
U.S. Treasury, 7.500% Bonds,
due November 15, 2016 300,000 308,539 332,250
$ 2,798,745 $ 2,808,317
F-7
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
Principal
Title of Security Amount Cost Valuet
<S> <C> <C> <C>
DEBT SECURITIES (Continued)
Commercial Paper _ Short Term _ 2.7%
Ford Motor Credit Corporation
Commercial Paper Note 5.35%
due October 5, 1999 500,000 $ 500,000 500,000
American Express Credit Corporation
Commercial Paper Note 5.26%
due October 1, 1999 950,000 950,000 950,000
$ 1,450,000 $ 1,450,000
TOTAL DEBT SECURITIES (Cost - $5,150,654) $ 5,150,654 $ 5,155,364
TOTAL INVESTMENTS IN SECURITIES
(Cost - $28,086,917) (98.8%) $28,086,917 $53,561,714
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES (1.2%) 637,518
NET ASSETS, September 30, 1999 (100.0%) $54,199,232
<FN>The accompanying notes to financial statements
are an integral part of this schedule.
</TABLE>
<PAGE>
<TABLE>
F-8
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
ASSETS AMOUNT
<S> <C>
Investments, at market value
Common and preferred stocks
(cost $22,936,263) $48,406,350
Debt securities (cost $5,150,654) 5,155,364
Total Investments $53,561,714
Cash 500,353
Receivables
Dividends and interest 115,082
Subscriptions to capital stock 116,076
TOTAL ASSETS $54,293,225
LIABILITIES
Investment advisor, management and
service fees payable $ 67,918
Accrued operating expenses 26,075
TOTAL LIABILITIES $ 93,993
NET ASSETS
Capital stock, $1 par value -
Authorized 3,000,000 shares,
1,464,952 shares outstanding $ 1,464,952
Paid-in surplus - 26,013,074
Net capital paid in on shares $27,478,026
Accumulated net realized gain on
investment transactions 1,132,419
Net unrealized appreciation on investments 25,474,797
Accumulated undistributed net investment
income 113,990
TOTAL NET ASSETS $54,199,232
NET ASSET VALUE PER SHARE $37.00
OFFERING PRICE PER SHARE $37.00
REDEMPTION PRICE PER SHARE $37.00
<FN>The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
F-9
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
<CAPTION>
AMOUNT AMOUNT
<S> <C> <C>
INVESTMENT INCOME
Interest $277,181
Dividends (Net of foreign withholding taxes
of $2,372) 329,271
Total Investment Income $ 606,452
EXPENSES
Management fees $ 199,971
Custodian fees 26,672
Insurance and Other Administrative Fees 19,974
Bookkeeping services 14,192
Printing and supplies 10,801
Professional services 7,875
Dividend disbursing and transfer
agent fees 10,016
Computer programming 3,750
Taxes and licenses 799
Total Expenses $ 294,050
NET INVESTMENT INCOME $ 312,402
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on transactions in
investment securities $1,132,418
Net increase in unrealized
appreciation of investments 2,704,786
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 3,837,204
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,149,606
<FN>The accompanying notes to financial statements
are an integral part of this statement.
<PAGE>
</TABLE>
<PAGE>
<TABLE>
F-10
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
INCREASE IN NET ASSETS
Operations -
Net investment income $ 312,402 $ 442,586
Net realized gain on transactions in
investment securities 1,132,418 2,592,856
Net increase/(decrease) in unrealized
appreciation of investments 2,704,786 (390,200)
Net increase in net assets
resulting from operations $ 4,149,606 $2,645,242
Net equalization credits 852 1,357
Distributions to shareholders from -
Net investment income (204,282) (290,078)
Net realized gain from investment
transactions -- --
Return of capital -- --
Net capital share transactions 1,819,943 1,419,110
Total Increase in Net Assets $ 5,766,119 $3,775,631
NET ASSETS:
Beginning of year $ 48,433,113 $36,647,535
End of nine months $ 54,199,232 $40,423,166
<FN>The accompanying notes to financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
F-11
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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>
Net unrealized appreciation
(depreciation): 1999 1998 Net Change
<S> <C> <C> <C>
Aggregate gross unrealized
appreciation
on securities $26,292,916 $16,198,740
Aggregate gross unrealized
depreciation
on securities (818,119) (792,377)
Net $25,474,797 $15,406,363 $10,068,434
</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.
<PAGE>
F-12
B. Federal Taxes -
The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and not be
subject to federal income tax. Therefore, no income tax provision is
required. The Fund also intends to distribute its taxable net
investment income and realized gains, if any, to avoid the payment of
any federal excise taxes.
The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. In addition, due to
the timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized
gains or losses were recorded by the Fund.
C. Distribution To Shareholders -
The Fund accrues income dividends to shareholders on a quarterly
basis as of the ex-dividend date. Distributions of net realized gains
are made on an annual basis to shareholders as of 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.
F-13
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. There were no amounts
reimbursed in the six months ended June 30, 1999.
(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 nine months
ended September 30, was:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
United States government obligations $ -- $ --
Other Securities 7,636,919 5,801,152
Total Cost $7,636,919 $5,801,152
</TABLE>
Net proceeds from sales of long-term investments during the nine
months ended September 30, were:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
United States government obligations $ 200,500 $ 200,000
Other Securities 5,023,750 7,486,804
Total Net Proceeds $5,224,250 $7,686,804
Total Cost Basis of
Securities Sold $4,091,831 $5,093,948
<PAGE>
</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>
1999 1998
<S> <C> <C>
Shares sold 79,128 60,837
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 8,000 11,706
87,128 72,543
Shares redeemed 35,908 27,188
Net increase 51,220 45,355
</TABLE>
Value of capital stock issued and redeemed is as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Shares sold $2,876,124 $1,907,202
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 286,633 366,608
$3,162,757 $2,273,810
Shares redeemed 1,342,814 854,700
Net increase $1,819,943 $1,419,110
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On October 12, 1999 a cash distribution of $.07 per share
aggregating $102,704.34 was declared to shareholders of record on October
12, 1999, to be payable on October 25, 1999.
<PAGE>
