BRIDGES INVESTMENT FUND, INC.
THIRTY-SEVENTH
ANNUAL SHAREHOLDER REPORT
1999
CONTENTS OF REPORT
Pages 1 - 8 Shareholder Letter
Exhibit 1 Statement of Income and Expenses by
Page 9 Calendar Quarter for the Year Ended
December 31, 1999
Exhibit 2 Historical Financial Information
Pages 10 - 12
Exhibit 3 Portfolio Transactions During the Period From
Pages 13 - 14 October 1, 1999, through December 31, 1999
Exhibit 4 Reports to Stockholders of Management
Page 15 Companies
Page 16 Report of Independent Public Accountants
Pages 17 - 31 Audited Financial Statements for the
Year Ended December 31, 1999
MD&A 1 _ 5 Management Discussion and Analysis
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>
January 24, 2000
Dear Shareholder:
President's Report
In 1999, Bridges Investment Fund, Inc. had a total return of 38.5% based on
a year-end 1998 net asset value of $34.26 per share, a year-end 1999 net asset
value of $46.24 per share, net investment income of $0.30 per share during 1999,
and net capital gains of $.91087865 per share during 1999. Assuming a
shareholder owned the Fund for an entire year and reinvested dividends and
capital gain distributions on the payable dates, the compound total return for
the year was 38.9%.
Total returns for the Fund over the past five years are summarized in the
table which follows:
<TABLE>
Yr. Over Yr. Returns Yr. End Asset Allocation
<CAPTION>
<C> <C> <C> <C> <C> <C>
<S>
Salomon Bros
7-10 Yr.
Year BIF S&P 500 Corp. Index Year % %
Equities Fixed
1999 38.90 21.04 -3.02 1999 86.3 13.7
1998 27.48 28.58 9.14 1998 83.4 16.6
1997 22.33 33.35 9.71 1997 85.1 14.9
1996 18.06 22.94 2.84 1996 73.6 26.4
1995 30.96 37.54 21.53 1995 70.7 29.3
</TABLE>
Three year compound annual total return: 29.39
Five year compound annual total return: 27.34
The Fund's primary investment objectives are (1) long-term capital growth
and (2) the generation of a moderate amount of investment income. In 1999, we
generally focused more on the capital growth objective given the opportunities
that were available in certain parts of the equity market. The fixed income
market was characterized by rising interest rates throughout most of 1999;
therefore, the objective of generating a current return was relegated to a
secondary consideration. While our fixed income investments acted as a drag on
total portfolio performance because of the inhospitable fixed income environment
in 1999, it is likely we will look to increase exposure to bonds in the months
ahead once we feel bond yields have stabilized and bond valuations become more
attractive. The combination of continued strong price appreciation for the
portfolio's stocks in 1999 along with rising bond yields make it likely that
marginal returns from fixed income securities may approach or exceed returns
available in the equity market over the short run. However, longer term, we
believe it is likely that equities will outperform bonds although by not nearly
the magnitude that has been seen over the past several years.
The Fund's 38.9% total return during 1999 compared favorably with the
21.04% total return experienced by the S&P 500 during the year. Our continued
focus on technology and telecommunications companies was beneficial to returns
in the portfolio during 1999. The Fund's third area of significant equity
focus, financial services, was largely a drag on investment performance in 1999
because of the adverse interest rate environment.
Shareholder Letter 2 January 24, 2000
The following table summarizes the performance of the Fund's top ten common
stockholdings at year end 1999 and provides a comparison to the top ten holdings
at year end 1998:
<TABLE>
<CAPTION>
12/31/99 % % OF TOT.RTN. TOT. RTN
No. of Market of Tot. Net % Chg. % Chg.
Shares Company Value Equities Assets Qtr. 12 Mos.
<S> <C> <C> <C> <C> <C> <C>
26,000 Qualcomm 4,582,500 7.6% 6.6% 272.4% 2619.4%
20,000 Microsoft 2,335,000 3.9% 3.3% 28.9% 68.4%
50,000 Gap 2,300,000 3.8% 3.3% 43.8% 23.2%
12,000 Nokia 2,292,750 3.8% 3.3% 112.6% 219.0%
30,000 Home Depot 2,062,500 3.4% 3.0% 50.4% 68.8%
40,000 Vodafone 1,980,000 3.3% 2.8% 4.1% 54.4%
18,000 Cisco Systems 1,928,250 3.2% 2.8% 56.2% 130.8%
18,000 HNC Software 1,903,500 3.2% 2.7% 166.5% 161.5%
16,000 EMC Corp. 1,748,000 2.9% 2.5% 53.1% 157.1%
35,000 Capital One 1,686,563 2.8% 2.4% 23.6% 26.0%
22,819,063 37.9% 32.7%
Total Equities 60,166,326 86.3%
Total Net Assets 69,735,684
<CAPTION>
EPS EPS EPS LT
No. of 5 Yr. Hist % Chg P/E P/E Future
Shares Company Gr. Rate 99 vs 98 2000 2001 Gr. Rate
<S> <C> <C> <C> <C> <C> <C>
26,000 Qualcomm 95% 182% 173.0 133.0 40%
20,000 Microsoft 46% 57% 71.2 61.1 25%
50,000 Gap 33% 36% 30.3 25.1 20%
12,000 Nokia - 36% 67.5 54.4 25%
30,000 Home Depot 27% 39% 56.4 44.9 24%
40,000 Vodafone 26% 49% 69.7 46.7 25%
18,000 Cisco Systems 37% 29% 107.0 84.4 30%
18,000 HNC Software - -15% 91.2 66.1 40%
16,000 EMC Corp. 30% 40% 76.9 59.1 30%
35,000 Capital One 25% 31% 21.4 17.2 25%
<CAPTION>
12/31/98 1998 % of
No. of Market Total % of Total
Shares Company Value Return Equities Assets
<S> <C> <C> <C> <C> <C>
30,000 Freddie Mac 1,933,125 55.01 4.8 22.1
30,000 Gap Inc. 1,683,750 139.01 4.2 38.8
10,000 Microsoft 1,386,875 111.11 3.4 63.8
10,000 Intel 1,185,625 71.95 2.9 29.5
8,000 Merck 1,180,000 37.75 2.9 31.4
10,000 Capital One 1,150,000 153.61 2.8 26.4
18,000 Home Depot 1,101,375 118.77 2.7 46.2
20,000 Philip Morris 1,070,000 13.25 2.6 14.7
24,000 PepsiCo. 981,000 13.89 2.4 30.8
13,000 MCI WorldCom 932,750 137.19 2.3 50.3
Total 12,604,500 31.2
Tot.BIF
Equities 40,395,318
Tot.BIF
Assets 48,437,075
</TABLE>
As always, we will remain focused on owning companies which we believe will
provide us the best opportunity for capital appreciation over the long run given
the sustainability of those companies' strong financial performance and
competitive position in the areas in which they compete. We will continue to
attempt to balance each company's prospects for earnings and cash flow growth
over time against the current market valuation of its stocks. This balancing
act has become more and more difficult as valuation levels in the more growth-
oriented segments of the economy have risen appreciably over the past three to
four years.
Shareholder Letter 3 January 24, 2000
The Fund's common stocks in the aggregate generated a total return of
46.44% during 1999 versus a total return of 21.04% for the S&P 500; however, as
was the case in 1998, returns across the portfolio's common stocks were not
evenly distributed. The 15 stocks with the largest total returns in the
portfolio contributed 87% of the overall gain; the top 10 stocks contributed
76%, and the top five stocks contributed fully 49% of the total gain in common
stocks in the portfolio during 1999. Qualcomm, the portfolio's best performing
stock during the year, accounted for 13.75% of the portfolio's 46.44% return
from equities and 11.44% of the portfolio's overall total return of 38.90%.
In 1998, we trimmed positions throughout the year in the portfolio's
strongest equity holdings, which had the effect of reducing the return for that
year somewhat. In 1999, the only stock of the top 10 contributors to overall
performance in which we took partial gains was Qualcomm, in response to the huge
run up in valuation it enjoyed over the course of the year. While we believe
Qualcomm continues to enjoy outstanding growth prospects, its current valuation
discounts those prospects to a significant degree, and it is likely we will
continue to look for opportunities this year to trim back on our Qualcomm
position, which was the largest in the portfolio at year end, comprising 7.6% of
the portfolio's equities and 6.6% of total portfolio assets.
In sum, 1999 proved to be a far more rewarding year than we expected. Many
of the concerns that we had at the beginning of 1999 remain at the outset of
this year, particularly in the area of equity valuations, which are very high in
the areas in which we have enjoyed considerable success in recent years --
namely, technology and communications. While we remain constructive on the
growth prospects for the companies we own in these sectors, we believe it will
be important to remain vigilant and flexible in the coming months. We will
continue to focus on owning a portfolio of companies with strong fundamental
outlooks and reasonable valuation characteristics. As always, we appreciate
your continued patience and support.
Sincerely,
Edson L. Bridges III, CFA
President
ELBIII:kjs
<PAGE>
Shareholder Letter -4- January 24, 2000
Chairman's Message
Dear Shareholder:
General Comments
Our Fund closed out the Twentieth Century with the highest net assets and
net asset value per share in our 37-year history! The 38.9% total return earned
for 1999 was the highest for any single year of operation. This achievement
surpassed the 38.5% total return set in 1975. The 1975 total return was aided
by the fact that the portfolio was bouncing back from all-time low prices set
during the 1974 "bear market", whereas the 1999 total return was a really
significant achievement because it commenced from the previous highest level set
for common stock prices.
The non-investment highlights for 1999 included the welcoming of three new
directors: Mr. Reed, Mrs. Stoney, and Mr. Wilson in April, 1999. Each
individual added considerably to the discussion and insights at our Board and
Committee meetings.
The Fund rewrote its Prospectus into "plain English" for the 1999 version.
In October, 1999, the Prospectus was amended to make changes to permit the sale
of our Fund's shares in states other than Nebraska. The first such sale was
achieved in California on December 20, 1999.
The excellent record for our Fund among those investment companies that
carry growth and income objectives has continued to generate favorable newspaper
and financial periodical coverage which, in turn, has stimulated inquiries about
our shares from all over the United States. The latest article appears in the
January 24, 2000 edition of Business Week that includes a distinctive picture of
Ted Bridges.
Highlights From Financial Statements
Details regarding the Fund's Audited Financial Statements will appear in
the Report of Independent Accountants, the Schedule of Portfolio Investments,
the Statement of Assets and Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, the Notes to Financial Statements, and the
Financial Highlights appear on pages 16 to 31 of this report. This information
is supplemented by special Exhibits 1 _ 4 that record quarterly income and
expenses for 1999, Historical Financial Information, Portfolio Transactions from
October 1, 1999 through December 31, 1999, and Reports to Shareholders of
Management Companies. I hope you will read and review all of these disclosures.
Shareholder Letter -5- January 24, 2000
However, an executive summary of the highlights or major points of interest
should be helpful to you:
1.The Fund reached almost $70 million in net assets at December 31, 1999.
The yearly improvements since year-end, 1995 have been:
<TABLE>
<CAPTION>
Dollar Year Over
Period Net Assets Increase Year % Gain
<S> <C> <C> <C>
12-31-1995 $24,052,746 $5,956,449 32.9
12-31-1996 29,249,488 5,196,742 21.6
12-31-1997 36,647,535 7,398,047 25.3
12-31-1998 48,433,113 11,785,578 32.2
12-31-1999 69,735,684 21,302,571 44.0
</TABLE>
The results for 1999 stand out as a truly majestic experience for the
management and the shareholders.
2.The Fund continued to operate on a cost efficient basis. Rates of
expenses to Average Net Assets decreased to a new all time low of 0.73%
during 1999.
3.However, ratio of Net Investment Income to Average Net Assets also set
an all time low of only 0.78%. This number is down from 3.80% in 1995.
The low quarterly dividend payments in 1999 relative to other years
reflect the impact of this trend.
As stated in Ted Bridges' letter, the capital growth objective was
emphasized over the secondary goal of developing investment income
opportunities.
4.Our portfolio turnover was only 16% in 1999, down from 24% in 1998. The
highly positive and effective investment results for growth were
achieved through securities selections that were made over a number of
years in the past. This observation is indicative of our portfolio
manager's investment process and strategy to make strong fundamental
choices that should yield benefits to shareholders well into the future.
Dividend
On December 7, 1999, the Board of Directors declared a regular quarterly
dividend and a year-end extra dividend from the net investment income earned
during the October _ December Quarter of 1999 and from any undistributed net
investment income that was earned earlier in 1999. This dividend was made
payable on January 24, 2000, from net income that was received through December
31, 1999, to shareholders of record on the same date.
The exact amount of this dividend was delegated to the Chairman and the
Treasurer of the Fund after the precise net income of the Fund was established
on the record date. These two officers were ceded the authority to classify the
income payments between a regular quarterly amount and the year-end extra
amount.
The Chairman and the Treasurer determined the ordinary income regular
dividend to be $0.07 per share and the year-end extra amount to be $.019 per
share, for a total of $.089 per share to be paid out under the December 7, 1999
resolution adopted by the Board of Directors. This payment, in addition to the
$.07 per share previously paid and declared in October, 1999, brought the total
distributions paid or payable from ordinary income earned during the Fourth
Quarter of 1999 and earlier in 1999 to $.159 per share. The $.07 per share
Shareholder Letter -6- January 24, 2000
regular dividend and $0.019 extra dividend amounts were confirmed and ratified
by the Board of Directors at their most recent regular meeting that was held
on January 11, 2000.
Tax Information
A letter of explanation regarding the taxability of the dividend and
capital gains payment made by the Fund during 1999 will accompany this letter to
you. You should provide a copy of this letter dated January 24, 2000, to your
tax preparer or consultant. This letter specifies the information that is
necessary for the preparation of a federal income tax return.
Form 1099-DIV
Bridges Investor Services, Inc. has prepared and will issue a Form 1099 DIV
for 1999 for your shareholder account on or about January 31, 2000.
Market Value Information
Investors who own Individual Retirement Act and Standard Retirement Plan
accounts in the Fund will receive a special message on the enclosed dividend
reinvestment confirmation statement to disclose the market value of your account
as of December 31, 1999. This information will be utilized in the filing of the
Form 5498 and the Form 5500 EZ reports to the appropriate federal authorities by
our personnel later on in the year 2000.
Capital Gain Distribution
For the period from November 1, 1999 through December 31, 1999, the Fund
recorded $1,058,779.09 in realized capital gains. This sum must be paid prior
to the filing of the Federal Income Tax for the Fund for 1999. Consequently, on
January 11, 2000, the Board of Directors declared a capital gains cash
distribution of $0.6910571 per share to the 1,532,155.169 shares outstanding on
January 14, 2000 _ the record date that was established for this distribution.
This capital gains distribution was made payable on April 24, 2000. You will
receive further notification about this capital gains distribution at that time.
Business Plans
A change of 25% or more in the ownership of the capital stock of Bridges
Investment Counsel, Inc. could cause the present management Agreement between
the Fund and the Counsel Firm to be terminated. This 25% change could take
place as the result of my death, my disability, my retirement, or some other
business events or transactions. Prudence to prepare for such possible
eventualities caused the formation of Bridges Investment Management, Inc. as a
successor advisory and management business to Bridges Investment Counsel, Inc.
in late 1994. Bridges Investment Management, Inc. is currently, and will
continue to be in the year 2000, a wholly owned subsidiary of Bridges Investment
Counsel, Inc.
Shareholder Letter -7- January 24, 2000
Since 1995, Bridges Investment Counsel, Inc. has undertaken regular funding
of resources to Bridges Investment Management, Inc. as a part of our approximate
seven year regime to build working capital and other resources to ensure the
economic welfare for the successor business for large, discretionary management
accounts currently handled by Bridges Investment Counsel, Inc. Wisdom suggests
that an orderly transfer of accounts to Bridges Investment Management, Inc.
should take place well ahead of the need to resolicit a management
contract as a result of my death or disability.
Consequently, Bridges Investment Management, Inc. filed a Form ADV with the
Securities and Exchange Commission on December 1, 1999, and the Commission
granted its effectiveness of its registration for service on December 9, 1999.
Bridges Investment Management, Inc. has no clients at this time. Favorable
preliminary consideration was given by the Board of Directors to recommend to
the shareholders the transfer of the investment advisory relationship between
the Fund and Bridges Investment Counsel, Inc. to Bridges Investment Management,
Inc. (subject to review of legal issues) at the Board meetings that were held on
December 7, 1999 and January 11, 2000. However, the matter of the transfer of
the investment advisory relationship will not be a part of the items to be voted
upon for the Annual Meeting to be held on February 15, 2000. A great deal of
additional preparation needs to be completed before the Board of Directors can
formally consider and act upon entering into a new Agreement with Bridges
Investment Management, Inc. At this point in time, there is no schedule to
conduct the legal research and to perform other supporting actions to move
forward with the future change in investment management firms for the Fund.
Eventually, Bridges Investment Management, Inc. will be mainly owned and
controlled by Edson L. Bridges III, "Ted", our President and portfolio manager
for the Fund. A number of key members of the professional staff, whose strong
contributions to the investment process that brought the Fund's total return
performance successes of the late 1990's, will also be owners of Bridges
Investment Management, Inc. along with long tenured staff members of Bridges
Investment Counsel, Inc. who support all of our operational activities. At this
time, Bridges Investment Management, Inc. owns sufficient life insurance
coverage on the life of Edson L. Bridges II to replace more than half of the
equity capital that has been saved in Bridges Investment Counsel, Inc. The
accumulation of retained earnings by Bridges Investment Management, Inc. between
1995 and 1999 has substantially gathered the remaining equity necessary to match
the financial strength of its parent, Bridges Investment Counsel, Inc.
From a personal prospective, it would have been wonderful for the Fund to
become the first client of Bridges Investment Management, Inc. just as the Fund
was the first corporate client for Bridges Investment Counsel, Inc. back on
April 17, 1963. Considering Ted's excellent record as portfolio manager for the
Fund, I believe the transfer of the Fund's investment advisory relationship to
Bridges Investment Management, Inc. would be a gratifying event for both
parties. However, there are a number of disclosures and other actions to take
in order to proceed on a correct path. Therefore, this transitional matter will
wait while management addresses these and other administrative exigencies that
have filled a great deal of our time in the late Fall of 1999 and in the early
months of 2000. Nonetheless, I wanted you to have some advance indications
about possible proposals that may come up at some future date.
Shareholder Letter -8- January 24, 2000
Annual Meeting
The Proxy and Proxy Statement for the Thirty-Seventh Annual Meeting of the
Shareholders of the Fund, to be held on Tuesday, February 15, 2000, at 11:00
a.m. will accompany this report. Shareholders are encouraged to attend the
Annual Meeting at the offices of the Fund. If you plan to
be present, please notify the Fund's Corporate Secretary, Mrs. Mary Ann Mason,
or our Treasurer, Mrs. Nancy K. Dodge, by phone, by letter, or by a written
notation on your Proxy form.
The accompanying Proxy statement will show changes in the classifications
for some directors from "interested persons" to "disinterested persons" status,
who may also be described as an "independent director". The reclassification of
information from Proxy statements issued in past years is the result of an
initiative by the Fund towards the establishment of "Best Practices" and an
Interpretive Release issued by the Securities and Exchange Commission on October
14, 2000 with respect to independent directors of registered investment
companies.
The response by the Fund in regard to these developments has been to retain
an interim legal counsel who will advise the independent directors about certain
matters that come up for action or review by the independent directors.
Further, a detailed Fund Director Questionnaire was prepared for the purpose of
gathering information that would form the basis for classifying persons as
independent directors and for the goal of laying a foundation for disclosures
that appear in the Fund's forthcoming Prospectus and Proxy Statement.
The creation of the independent director framework on the Board of
Directors may lead to the appointment of one or more "lead directors" to
interface with the management of the Fund. In addition, the Fund may create a
newly formed Nominating Committee that will select new independent directors in
the future. These new initiatives are in their infancy, and more information
about the development of new responsibilities for the members of the Board of
Directors will be communicated in due course after careful research and
deliberation about the information that has been gathered.
Certain regulations require the Fund to report the results or tabulation of
the votes on each matter and each director nominee on the next semi-annual and
annual communications that follow the shareholder meeting at which the votes
were recorded. The results for the last Annual Meeting of the Fund held on
February 16, 1999 were published in a letter dated April 19, 1999. This same
report appears again in this letter as Exhibit 4, attached hereto, to fulfill
the annual communication requirement.
Software and the Year 2000
We are pleased to report that the computer software employed by the Fund
and its investment manager performed flawlessly on the morning of January 1,
2000.
Cordially yours,
Edson L. Bridges II
Chairman
ELBII:elc
<PAGE>
-9-
<TABLE>
Exhibit 1
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF INCOME AND EXPENSES
BY CALENDAR QUARTER
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
March 31, June 30, September 30, December 31, Annual
1999 1999 1999 1999 Total
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 95,609 $ 88,510 $ 93,062 $129,378 $406,559
Dividends _ (net of
foreign withholding
taxes) 115,745 106,295 107,231 105,617 434,888
Total Investment Income $211,354 $194,805 $200,293 $234,995 $841,447
Expenses:
Management fees $ 63,841 $ 68,212 $ 67,918 $ 79,345 $279,316
Custodian fees 8,609 9,046 9,017 10,260 36,932
Insurance 6,691 6,653 6,630 6,348 26,322
Bookkeeping services 5,976 4,126 4,090 4,386 18,578
Printing and supplies 5,655 2,739 2,407 2,478 13,279
Professional services 2,625 2,625 2,625 2,945 10,820
Dividend disbursing and
transfer agent fees 4,137 3,082 2,797 5,722 15,738
Computer programming 1,250 1,250 1,250 1,250 5,000
Taxes and licenses 266 267 266 265 1,064
_________ ________ _________ _________ ________
Total Expenses $ 99,050 $ 98,000 $ 97,000 $112,999 $407,049
NET INVESTMENT INCOME $112,304 $ 96,805 $103,293 $121,996 $434,398
Sources: Unaudited Quarterly Reports to the Shareholders of Bridges
Investment Fund, Inc. for the March 31, June 30, and September 30
periods. Annual total information is per the accompanying financial
statements.
</TABLE>
<PAGE>
-10-
<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 -
-11-
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 -
-12-
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 -
12-31-99 69,735,684 1,508,154 46.24 .159 .91088
</TABLE>
<PAGE>
-13-
<TABLE>
Exhibit 3
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
OCTOBER 1, 1999, THROUGH DECEMBER 31, 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 2,000 5,000
AT&T Liberty Media Group Class A 3,500 3,500
(1)<F1> America OnLine, Inc. 6,000 12,000
(2)<F2> Amgen, Inc. 6,000 12,000
(3)<F3> BP Amoco PLC ADR 6,616 13,232
(4)<F4> Exxon-Mobil Corporation 13,280 13,280
First Data Corporation 5,000 10,000
General Motors Corporation 7.70% 250M 250M
due 4-15-16
HNC Software, Inc. 2,000 18,000
(5)<F5> Home Depot, Inc. 10,000 30,000
Marriott International 7.875% 250M 250M
due 9-15-09
(6)<F6> MCI Worldcom, Inc. 6,500 19,500
(7)<F7> Qualcomm, Inc. 19,500 26,000
(8)<F8> Sun Microsystems, Inc. 5,000 10,000
Tibco Software 2,000 2,000
Transaction Systems Architects 5,000 32,000
Class A
(9)<F9> Vodafone Airtouch PLC ADR 32,000 40,000
Various Issues of Commercial Paper 43,080M 3,130M
Notes Purchased during
4th Quarter, 1999
<F1>(1) Received 6,000 shares in a 2-for-1 stock split on 11-23-99.
<F2>(2) Received 6,000 shares in a 2-for-1 stock split on 11-22-99.
<F3>(3) Received 6,616 shares in a 2-for-1 stock split on 10-4-99.
<F4>(4) Received 13,280 shares of Exxon Mobil Corporation in a merger of Exxon
and Mobil on 12-1-99.
<F5>(5) Received 10,000 shares in a 3-for-2 stock split on 12-31-99.
<F6>(6) Received 6,500 shares in a 3-for-2 stock split on 12-31-99.
<F7>(7) Received 19,500 shares in a 4-for-1 stock split on 12-31-99.
<F8>(8) Received 5,000 shares in a 2-for-1 stock split on 12-8-99.
<F9>(9) Received 32,000 shares in a 5-for-1 stock split on 10-4-99.
-14-
Exhibit 3
BRIDGES INVESTMENT FUND, INC.
PORTFOLIO TRANSACTIONS
DURING THE PERIOD FROM
OCTOBER 1, 1999 THROUGH DECEMBER 31, 1999
(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>
DuPont E.I. de Nemours 8,000 --
(4)<F4> Exxon Corporation 8,000 --
Finova 3,000 --
Goldman Sachs Group, Inc. 3,000 --
Hewlett-Packard Co. 2,000 6,000
I2 Technologies, Inc. 5,000 --
Lucent Technologies 3,000 --
MGIC Investment Corporation 4,000 --
(4)<F4> Mobil Corporation 4,000 --
Providian Financial 4,000 --
Qualcomm, Inc. 3,500 6,500
Sylvan Learning System 7,500 --
Vodafone Airtouch PLC ADR 1,068 8,000
Various Issues of Commercial 41,400M --
Paper Notes maturing during
4th Qtr., 1999
</TABLE>
<PAGE>
-15-
<TABLE>
Exhibit 4
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 16, 1999, at 11:00 a.m.
(2) Election of Directors for one year terms (All Directors Stand for
Annual Election):
<CAPTION>
- - - - - -Votes Cast - - - - - -
Withhold
For All Authority
Names of Directors Nominees To Vote For
Elected at Meeting For Except All Nominees
<S> <C> <C> <C>
Frederick N. Backer 1,107,066 None 782
Edson L. Bridges II 1,107,066 None 782
Edson L. Bridges III 1,107,066 None 782
N. P. Dodge, Jr. 1,102,733 4,333 782
John W. Estabrook 1,107,066 None 782
Jon D. Hoffmaster 1,107,066 None 782
John J. Koraleski 1,107,066 None 782
Roger D. Kupka 1,107,066 None 782
Gary L. Petersen 1,107,066 None 782
John T. Reed 1,107,066 None 782
Roy A. Smith 1,102,733 4,333 782
Janice D. Stoney 1,102,579 4,487 782
L.B. Thomas 1,107,066 None 782
John K. Wilson 1,107,066 None 782
</TABLE>
(3) A brief description for each matter voted upon at the meeting:
<TABLE>
<CAPTION>
For Against Abstain
Matters Voted Upon
<S> <C> <C> <C>
(a) A proposal to set the number of 1,098,550 4,580 4,718
directors at fourteen
(b) For a proposed investment 1,107,132 None 716
advisory contract which continues
the employment of Bridges
Investment Counsel, Inc. as
investment adviser to the Fund
for the period from April 17,
1999 through April 17, 2000
(c) For the ratification of the 1,105,135 None 2,713
selection of KPMG Peat Marwick
LLP as independent auditors
of the Fund for the Fiscal
Year ending December 31, 1999
</TABLE>
<PAGE>
-16-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of
Bridges Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Bridges Investment Fund, Inc. including the schedule of portfolio investments,
as of December 31, 1999, the related statement of operations for the year then
ended, and the statements of changes in net assets and financial highlights for
each of the years in the two year period then ended. These financial statements
are the responsibility of Bridges Investment Fund, Inc. Our responsibility is
to express an opinion on these financial statements based on our audit. The
financial highlights for each of the years in the three year period ended
December 31, 1997 were audited by other auditors whose report thereon dated
January 16, 1998 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 1999 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Bridges Investment Fund, Inc. as of December 31, 1999, the results of its
operations for the year then ended, the changes in its net assets and financial
highlights for each of the years in the two year period then ended, in
conformity with generally accepted accounting principles.
KPMG LLP
January 7, 2000
<PAGE>
-17-
<TABLE>
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
<CAPTION>
NUMBER MARKET
TITLE OF SECURITY OF SHARES COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - (86.3%)
ADVERTISING _ 0.5%
INTERPUBLIC GROUP OF COMPANIES, INC. (THE) 4,000 $ 106,953 $ 230,750
LAMAR ADVERTISING COMPANY*<FN> 2,000 92,125 121,125
$ 199,078 $ 351,875
AIRCRAFT _ MANUFACTURING - 0.7%
THE BOEING COMPANY 12,000 $ 278,135 $ 497,250
AMUSEMENTS _ RECREATION _ SPORTING GOODS _ 0.3%
NIKE, INC. 5,000 $ 171,270 $ 247,813
BANKING AND FINANCE - 3.2%
CHASE MANHATTAN CORPORATION (THE) 2,000 $ 86,650 $ 155,375
FIRST NATIONAL OF NEBRASKA, INC. 230 346,835 552,000
MBNA CORPORATION 15,000 234,825 408,750
STATE STREET CORPORATION 8,000 66,525 584,500
U.S. BANCORP 5,000 166,370 119,063
WELLS FARGO & CO. 10,000 138,173 404,375
$ 1,039,378 $ 2,224,063
BEVERAGES _ SOFT DRINKS - 1.2%
PEPSICO, INC. 24,000 $ 307,470 $ 846,000
BROADCAST SERVICE/PROGRAM _ 0.3%
AT&T CORPORATION _ LIBERTY MEDIA*<FN> 3,500 $ 169,085 $ 198,844
CHEMICALS - 1.1%
THE DOW CHEMICAL COMPANY 6,000 $ 396,947 $ 801,750
COMMUNICATIONS _ RADIO AND TELEVISION _ 1.3%
CLEAR CHANNEL COMMUNICATIONS, INC.*<FN> 10,000 $ 366,954 $ 892,500
COMPUTERS _ HARDWARE AND SOFTWARE - 11.8%
CISCO SYSTEMS, INC.*<FN> 18,000 290,726 1,928,250
DELL COMPUTER CORPORATION *<FN> 3,000 109,594 153,000
HNC SOFTWARE, INC.*<FN> 18,000 598,741 1,903,500
HEWLETT-PACKARD CO. 6,000 83,784 682,500
MICROSOFT CORPORATION*<FN> 20,000 93,361 2,335,000
TIBCO SOFTWARE, INC.*<FN> 2,000 153,194 306,000
TRANSACTION SYSTEMS ARCHITECTS, INC.*<FN> 32,000 1,102,118 896,000
$ 2,431,518 $ 8,204,250
COMPUTERS _ MEMORY DEVICES _ 2.5%
EMC CORPORATION/MASS*<FN> 16,000 $ 358,855 $ 1,748,000
COMPUTERS _ MICRO _ 1.1%
SUN MICROSYSTEMS, INC.*<FN> 10,000 $ 281,812 $ 774,375
<FN>*NONINCOME-PRODUCING SECURITY
-18-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1999
<CAPTION>
NUMBER MARKET
TITLE OF SECURITY OF SHARES COST VALUE
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
DATA PROCESSING AND MANAGEMENT _ 1.7%
CSG SYSTEMS*<FN> 18,000 $ 509,169 $ 717,750
FIRST DATA CORPORATION 10,000 458,100 493,125
$ 967,269 $ 1,210,875
DIVERSIFIED OPERATIONS _ 0.6%
BERKSHIRE HATHAWAY INC., CLASS B *<FN> 210 $ 150,375 $ 384,300
DRUGS - MEDICINES _ COSMETICS - 6.3%
ABBOTT LABORATORIES 15,000 $ 169,395 $ 544,688
AMGEN, INC.*<FN> 12,000 248,688 720,750
BRISTOL-MYERS SQUIBB CO. 8,000 141,675 513,500
ELAN CORPORATION PLC ADR*<FN> 20,000 419,005 590,000
JOHNSON & JOHNSON 10,000 109,396 932,500
MERCK & CO., INC. 16,000 274,266 1,075,000
$ 1,362,425 $ 4,376,438
ELECTRICAL EQUIPMENT AND SUPPLIES - 1.8%
GENERAL ELECTRIC CO. 8,000 $ 147,473 $ 1,238,000
ELECTRIC _ GENERATION _ 0.5%
AES CORPORATION*<FN> 5,000 $ 277,053 $ 373,750
ELECTRONIC COMPONENTS _ CONDUCTORS _ 0.4%
ALTERA CORPORATION*<FN> 6,000 $ 185,375 $ 297,375
ELECTRONICS - 4.1%
INTEL CORPORATION 20,000 $ 334,735 $ 1,646,250
SOLECTRON CORPORATION *<FN> 13,000 301,136 1,236,625
$ 635,871 $ 2,882,875
FINANCE _ CREDIT CARDS _ 0.5%
AMERICAN EXPRESS COMPANY 2,000 $ 165,255 $ 332,500
FINANCE _ DIVERSIFIED _ 0.6%
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. 3,000 $ 202,960 $ 428,250
FINANCE _ INVESTMENT BANKS _ 0.5%
MERRILL LYNCH & CO., INC. 3,000 168,586 249,938
E*TRADE GROUP, INC.*<FN> 4,000 98,188 104,500
$ 266,774 $ 354,438
FINANCE - REAL ESTATE - 2.0%
FREDDIE MAC 30,000 $ 470,320 $ 1,411,875
<FN>*NONINCOME-PRODUCING SECURITY
-19-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1999
<CAPTION>
NUMBER MARKET
TITLE OF SECURITY OF SHARES COST VALUE
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCE _ SERVICES - 2.7%
CAPITAL ONE FINANCIAL CORPORATION 35,000 $ 683,206 $ 1,686,563
PAYCHEX, INC. 5,000 154,125 200,000
$ 837,331 $ 1,886,563
FOOD _ MISCELLANEOUS PRODUCTS - 0.5%
PHILIP MORRIS COMPANIES, INC. 15,000 $ 263,604 $ 345,000
INSURANCE _ MULTILINE - 0.5%
AMERICAN INTERNATIONAL GROUP, INC. 3,125 $ 118,455 $ 337,891
INSURANCE _ MUNICIPAL BOND _ 0.6%
MBIA, INC. 8,000 $ 360,053 $ 422,500
INTERNET SOFTWARE _ 1.3%
AMERICA ONLINE, INC.*<FN> 12,000 $ 529,238 $ 903,000
LINEN SUPPLY AND RELATED PRODUCTS - 0.3%
CINTAS CORPORATION*<FN> 4,000 $ 166,578 $ 212,500
MOTION PICTURES AND THEATRES - 0.9%
THE WALT DISNEY COMPANY 22,000 $ 236,300 $ 643,500
PETROLEUM PRODUCING - 4.4%
BP AMOCO PLC-SPONSORED ADR 13,232 $ 246,135 $ 784,823
ATLANTIC RICHFIELD COMPANY 4,000 211,835 346,000
CHEVRON CORPORATION 10,000 340,535 866,250
EXXON MOBIL CORPORATION 13,280 325,810 1,069,870
$ 1,124,315 $ 3,066,943
PUBLISHING _ NEWSPAPERS - 1.0%
GANNETT CO., INC. 8,000 $ 179,310 $ 652,500
PUBLISHING _ ELECTRONIC - 0.6%
REUTERS GROUP PLC, ADR SPONSORED 5,199 $ 166,303 $ 420,144
RETAIL STORES _ APPAREL AND CLOTHING - 3.3%
GAP, INC. 50,000 $ 521,360 $ 2,300,000
RETAIL STORES _ BUILDING MATERIALS AND HOME
IMPROVEMENT _ 3.0%
THE HOME DEPOT, INC. 30,000 $ 587,115 $ 2,062,500
<FN>*NONINCOME-PRODUCING SECURITY
-20-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1999
<CAPTION>
NUMBER MARKET
TITLE OF SECURITY OF SHARES COST VALUE
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL STORES _ DEPARTMENT - 1.6%
DAYTON HUDSON CORPORATION 15,000 $ 146,129 $ 1,101,563
STEEL - PRODUCERS _ 0.4%
NUCOR CORPORATION 5,500 $ 122,061 $ 301,469
TELECOMMUNICATIONS - 9.6%
LEVEL 3 COMMUNICATIONS *<FN> 12,000 $ 483,300 $ 982,500
MCI WORLDCOM, INC. *<FN> 19,500 466,188 1,034,719
SPRINT CORPORATION 10,000 83,964 673,125
SPRINT PCS CORPORATION *<FN> 5,500 188,878 563,750
VODAFONE AIRTOUCH PLC SPONSORED ADR 40,000 915,541 1,980,000
WEST TELESERVICES CORPORATION*<FN> 58,200 780,844 1,422,263
$ 2,918,715 $ 6,656,357
TELECOMMUNICATIONS _ EQUIPMENT _ 9.9%
NOKIA CORPORATION SPONSORED ADR 12,000 $ 492,858 $ 2,292,750
QUALCOMM INCORPORATED *<FN> 26,000 273,901 4,582,500
$ 766,759 $ 6,875,250
TELEVISION _ CABLE _ 0.4%
COMCAST CORPORATION*<FN> 6,000 $ 141,375 $ 303,375
TRANSPORTATION _ AIRFREIGHT _ 2.0%
EAGLE USA AIRFREIGHT, INC. *<FN> 33,000 $ 416,042 $ 1,423,125
TRANSPORTATION _ RAILROADS - 0.3%
UNION PACIFIC CORPORATION 4,000 $ 148,580 $ 174,750
TOTAL COMMON STOCKS (COST - $20,581,276) $20,581,276 $60,166,326
PREFERRED STOCKS (1.2%)
BANKING AND FINANCE _ 0.7%
CFB CAPITAL II 8.20% CUMULATIVE PREFERRED 5,000 $ 125,000 $ 101,875
CFC CAPITAL TRUST 9.375% PREFERRED, SERIES B 5,000 125,000 112,500
HARRIS PREFERRED CAPITAL CORP., 10,000 250,000 203,125
7.375%, SERIES A
SILICON VALLEY BANCSHARES 5,000 125,000 92,500
8.25% PREFERRED SERIES I
$ 625,000 $ 510,000
<FN>*NONINCOME-PRODUCING SECURITY
-21-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1999
<CAPTION>
NUMBER MARKET
TITLE OF SECURITY OF SHARES COST VALUE
<S> <C> <C> <C>
OIL COMP. _ EXPLORATION AND PRODUCTION _ 0.2%
CANADIAN OCCIDENTAL PETROLEUM LTD. 5,000 $ 125,000 $ 111,563
9.375% PREFERRED _ SERIES 1
UTILITIES _ ELECTRIC _ 0.3%
TENNESSEE VALLEY AUTHORITY 6.75% 10,000 $ 250,000 $ 216,250
VARIABLE PREFERRED SERIES D
TOTAL PREFERRED STOCKS (COST - $1,000,000) $ 1,000,000 $ 837,813
TOTAL STOCKS (COST - $21,581,276) $21,581,276 $61,004,139
DEBT SECURITIES (10.4%)
AUTO-CARS/LIGHT TRUCKS _ 0.4%
GENERAL MOTORS CORPORATION 7.700% DEBENTURES
DUE APRIL 15, 2016 $250,000 $ 252,320 $ 249,525
ENERGY _ ALTERNATE SOURCES - 0.3%
CALENERGY CO., INC., 7.630% NOTES
DUE OCTOBER 15, 2007 $200,000 $ 200,000 $ 197,217
HOTELS AND MOTELS _ 0.4%
MARRIOT INTERNATIONAL 7.875% NOTES SERIES C
DUE SEPTEMBER 15, 2009 $250,000 $ 250,068 $ 246,157
HOUSEHOLD APPLIANCES AND UTENSILS - 0.1%
MAYTAG CORP., 9.750% NOTES,
DUE MAY 15, 2002 $100,000 $ 102,200 $ 105,537
OFFICE EQUIPMENT AND SUPPLIES - 0.1%
XEROX CORPORATION, 9.750% NOTES
DUE MARCH 15, 2000 $100,000 $ 100,025 $ 100,621
RETAIL STORES _ DEPARTMENT - 0.4%
DILLARD DEPARTMENT STORES, INC., 7.850%
DEBENTURES, DUE OCTOBER 1, 2012 $150,000 $ 151,348 $ 139,046
SEARS ROEBUCK & CO., 9.375% DEBENTURES
DUE NOVEMBER 1, 2011 100,000 $ 106,399 108,971
$ 257,747 $ 248,017
<FN>*NONINCOME-PRODUCING SECURITY
-22-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1999
<CAPTION>
PRINCIPAL MARKET
TITLE OF SECURITY AMOUNT COST VALUE
<S> <C> <C> <C>
DEBT SECURITIES (CONTINUED)
TELECOMMUNICATIONS _ 0.3%
LEVEL 3 COMMUNICATIONS, INC., 9.125% SENIOR $250,000 $ 241,938 $ 236,895
NOTES DUE MAY 1, 2008
U.S. GOVERNMENT _ 3.9%
U.S. TREASURY, 8.750% NOTES,
DUE AUGUST 15, 2000 200,000 $ 211,900 $ 203,406
U.S. TREASURY, 8.000% NOTES,
DUE MAY 15, 2001 200,000 199,052 204,688
U.S. TREASURY, 7.500% NOTES,
DUE MAY 15, 2002 200,000 214,098 205,406
U.S. TREASURY, 10.750% BONDS
DUE FEBRUARY 15, 2003 200,000 219,525 224,062
U.S. TREASURY, 7.250% NOTES,
DUE MAY 15, 2004 300,000 303,245 309,234
U.S. TREASURY, 7.500% NOTES,
DUE FEBRUARY 15, 2005 300,000 305,871 313,030
U.S. TREASURY, 9.375% BONDS,
DUE FEBRUARY 15, 2006 200,000 256,223 228,250
U.S. TREASURY, 7.625% BONDS,
DUE FEBRUARY 15, 2007 300,000 307,910 305,718
U.S. TREASURY, 8.750% BONDS,
DUE NOVEMBER 15, 2008 200,000 237,473 214,124
U.S. TREASURY, 9.125% BONDS,
DUE MAY 15, 2009 200,000 234,910 218,312
U.S. TREASURY, 7.500% BONDS,
DUE NOVEMBER 15, 2016 300,000 308,534 320,953
$ 2,798,741 $ 2,747,183
-23-
BRIDGES INVESTMENT FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
<CAPTION>
PRINCIPAL MARKET
TITLE OF SECURITY AMOUNT COST VALUE
<S> <C> <C> <C>
DEBT SECURITIES (CONTINUED)
COMMERCIAL PAPER _ SHORT TERM _ 4.5%
AMERICAN EXPRESS CREDIT CORPORATION
COMMERCIAL PAPER NOTE 6.250%
DUE JANUARY 4, 2000 $1,260,000 $ 1,260,000 $ 1,260,000
AMERICAN EXPRESS CREDIT CORPORATION
COMMERCIAL PAPER NOTE 5.000%
DUE JANUARY 7, 2000 1,500,000 1,500,000 1,500,000
FORD MOTOR CREDIT CORPORATION
COMMERCIAL PAPER NOTE 2.000%
DUE JANUARY 7, 2000 370,000 370,000 370,000
$ 3,130,000 $ 3,130,000
TOTAL DEBT SECURITIES (COST - $7,333,039) $ 7,333,039 $ 7,261,152
TOTAL INVESTMENTS IN SECURITIES - (97.9%)
(COST - $28,914,320) $28,914,320 $68,265,291
CASH AND RECEIVABLES
LESS TOTAL LIABILITIES _ (2.1%) 1,470,393
NET ASSETS, DECEMBER 31, 1999 _ (100.0%) $69,735,684
<FN>THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
ARE AN INTEGRAL PART OF THIS SCHEDULE.
</TABLE>
<PAGE>
-24-
<TABLE>
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<CAPTION>
ASSETS Amount
<S> <C>
Investments, at market value
Common and preferred stocks
(cost $21,581,276) $61,004,139
Debt securities (cost $7,333,039) 7,261,152
Total investments $68,265,291
Cash 123,928
Receivables
Dividends and interest 114,614
Subscriptions to capital stock 841,774
Securities sold 638,362
TOTAL ASSETS $69,983,969
LIABILITIES
Dividend distributions payable $ 134,226
Redemption of capital stock 3,800
Investment advisor, management and
service fees payable 85,066
Accrued operating expenses 25,193
TOTAL LIABILITIES $ 248,285
NET ASSETS
Capital stock, $1 par value - Authorized 3,000,000 shares,
1,508,154 shares outstanding $ 1,508,154
Paid-in surplus - 27,816,382
Net capital paid in on shares $29,324,536
Net unrealized appreciation on investments 39,350,976
Accumulated undistributed net realized gains 1,058,779
Accumulated undistributed net
investment income 1,393
TOTAL NET ASSETS $69,735,684
NET ASSET VALUE PER SHARE $46.24
OFFERING PRICE PER SHARE $46.24
REDEMPTION PRICE PER SHARE $46.24
<FN>The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<PAGE>
-25-
<TABLE>
BRIDGES INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
Amount Amount
<S> <C> <C>
INVESTMENT INCOME
Interest $406,559
Dividends (Net of foreign withholding taxes
of $2,372) 434,888
Total Investment Income $ 841,447
EXPENSES
Management fees $ 279,316
Custodian fees 36,932
Insurance and Other Administrative Fees 26,322
Bookkeeping services 18,578
Printing and supplies 13,279
Professional services 10,820
Dividend disbursing and transfer
agent fees 15,738
Computer programming 5,000
Taxes and licenses 1,064
Total Expenses $ 407,049
NET INVESTMENT INCOME $ 434,398
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on transactions in
investment securities $2,401,788
Net increase in unrealized
appreciation of investments 16,580,965
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $18,982,753
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $19,417,151
<FN>The accompanying notes to financial statements
are an integral part of this statement.
</TABLE>
<PAGE>
-26-
<TABLE>
BRIDGES INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
INCREASE IN NET ASSETS
Operations -
Net investment income $ 434,398 $ 573,399
Net realized gain on transactions
in investment securities 2,401,788 2,816,870
Net increase in unrealized
appreciation of investments 16,580,965 6,973,448
Net increase in net assets
resulting from operations $ 19,417,151 $10,363,717
Net equalization credits 3,190 9,098
Distributions to shareholders from -
Net investment income (434,398) (573,399)
Net realized gain from investment
transactions (1,343,009) (2,810,407)
Return of capital (6,815) (9,316)
Net capital share transactions 3,666,452 4,805,885
Total increase in Net Assets $ 21,302,571 $11,785,578
NET ASSETS:
Beginning of year $ 48,433,113 $36,647,535
End of year $ 69,735,684 $48,433,113
<FN>The accompanying notes to financial statements
are an integral part of these statements.
</TABLE>
-27-
BRIDGES INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(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>
1999 1998 Net Change
<S> <C> <C> <C>
Net unrealized appreciation
(depreciation):
Aggregate gross unrealized
appreciation
on securities $39,880,716 $23,102,283
Aggregate gross unrealized
depreciation
on securities (529,740) (332,272)
Net $39,350,976 $22,770,011 $16,580,965
</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.
-28-
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.
-29-
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 year ended December 31, 1999.
(3) DIVIDEND DISBURSING AND TRANSFER AGENT
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 years ended
December 31, was:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
United States government obligations $ -- $ --
Other Securities 9,166,680 9,631,883
Total Cost $9,166,680 $9,631,883
</TABLE>
Net proceeds from sales of long-term investments during the years
ended December 31, were:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
United States government obligations $ 200,500 $ 200,000
Other Securities 8,675,466 9,280,532
Total Net Proceeds $8,875.966 $9,480,532
</TABLE>
(5) NET ASSET VALUE
The net asset value per share represents the effective price for all
subscriptions and redemptions.
-30-
(6) CAPITAL STOCK
Shares of capital stock issued and redeemed are as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Shares sold 123,704 108,559
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 35,210 87,751
158,914 196,310
Shares redeemed 64,491 45,397
Net increase 94,423 150,913
Value of capital stock issued and redeemed is as follows:
<CAPTION>
1999 1998
<S> <C> <C>
Shares sold $4,777,640 $3,444,495
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 1,435,313 2,800,423
$6,212,953 $6,244,918
Shares redeemed 2,546,501 1,439,033
Net increase $3,666,452 $4,805,885
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On December 7, 1999 a cash distribution was declared from net
investment income accrued through December 31, 1999. This distribution was
ultimately calculated as $.089 per share aggregating $134,226. The
dividend will be paid on January 24, 2000, to shareholders of record on
December 31, 1999.
-31-
<TABLE>
FINANCIAL HIGHLIGHTS*<F1>
Per share income and capital changes for a share outstanding for each
of the last five years were:
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $34.26 $29.02 $24.56 $21.54 $17.10
Income From Investment Operations
Net Investment Income $ .30 $ .44 $ .51 $ .55 $ .58
Net Gains or (Losses) on Securities
(both realized and unrealized) 12.89 7.36 4.77 3.28 4.63
Total From Investment Operations $13.19 $ 7.80 $ 5.28 $ 3.83 $ 5.21
Less Distributions
Dividends from net investment income $ (.30) $ (.44) $ (.51) $ (.55) $ (.58)
Distributions from capital gains (.91) (2.12) (.31) (.26) (.19)
Total Distributions $(1.21) $(2.56) $ (.82) $ (.81) $ (.77)
Net Asset Value, End of Period $46.24 $34.26 $29.02 $24.56 $21.54
Total Return 38.90% 27.48% 22.33% 18.06% 30.96%
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands) $69,736 $48,433 $36,648 $29,249 $24,052
Ratio of Expenses to Average
Net Assets**<F2> .73% .77% .81% .87% .89%
Ratio of Net Investment Income to
Average Net Assets **<F2> .78% 1.37% 2.64% 3.23% 3.80%
Portfolio Turnover Rate 16% 24% 8% 8% 7%
<F1>* Per share income and capital change data is computed using the weighted
average number of shares outstanding method.
<F2>** Average net asset data is computed using monthly net asset value figures.
</TABLE>
<PAGE>
Bridges Investment Fund, Inc. January 24, 2000
Shareholder Communication
Annual Report for 1999
MANAGEMENT'S DISCUSSION AND ANALYSIS
Introduction
The following information is provided in response to Item 5 and Item 5A in
the Form N-1A to be filed annually under the Investment Company Act of 1940 with
the Securities and Exchange Commission in Washington, D.C. The Form N-1A
prescribes certain information that is to be included in the Prospectus for the
Fund.
Item 5(c)
Item 5(c) requires the disclosure of the name and title of the person or
persons employed by or associated with the Fund's investment adviser, Bridges
Investment Counsel, Inc., who are primarily responsible for the day-to-day
management of the Fund's portfolio as well as the length of their service and
business experience during the past five years.
Mr. Edson L. Bridges III, President of the Fund and Executive Vice
President - Investments, of Bridges Investment Counsel, Inc., is responsible for
the day-to-day operation of the Fund's portfolio. Mr. Bridges III dedicates his
professional efforts toward security research and portfolio management for
Bridges Investment Counsel, Inc. Mr. Bridges III has been employed in these
areas of responsibility for all clients, including Bridges Investment Fund,
Inc., for more than 15 years.
Mr. Edson L. Bridges II, Chairman and Chief Executive Officer, served as
the portfolio manager for almost 34 years from July 1, 1963 through April 13,
1997. He is available to be a back-up person to Mr. Bridges III whenever the
assumption of that responsibility is appropriate or required.
Item 5A.(a)
The first response under this disclosure is Item 5A.(a) that requests the
management to briefly discuss those factors, including relevant market
conditions and the investment strategies and techniques pursued by the Fund's
investment adviser, that materially affected the performance of the Registrant
during the most recently completed fiscal year. The investment performance for
1999, the most recently completed fiscal year, developed a 38.9% total return
for a $10,000 investment with cash distributions reinvested in shares of capital
stock in the Fund. This number differs from the 38.5% total return reported on
page one of the cover letter to this Annual Report because that earlier
calculation did not reinvest dividends and the capital gains distribution and
did not include the cost of five reinvestment transaction fees.
The relevant market conditions and the investment strategies pursued by the
Fund's investment adviser that materially affected the performance of Registrant
during the most recently completed fiscal year are fully described on pages one
through four of the Shareholder Letter.
Item 5A.(b)
The Fund is required to provide a line graph comparing the initial account
value and subsequent account values at the end of each of the most recently
completed ten fiscal years of the Fund, assuming a $10,000 investment in the
Fund at the beginning of the first fiscal year to the same investment over the
same periods in an appropriate broad-based securities market index. In a table
placed within or contiguous to the graph, the Fund's average annual total
returns for the one, five, and ten-year periods
Shareholder Communication MD&A-2 January 24, 2000
ended on the last day of the most recent fiscal year, computed in accordance
with applicable SEC regulations and guidelines, are provided.
This line graph appears on page MD&A 4. The information on the line graph
is set forth without amplifying commentary. However, the interpretative
discussion that precedes and follows in this section of the Annual Shareholder
Report for 1999 is an integral part of the overall presentation concerning
investment performance.
The assumptions for the preparation of data to compute performance for the
Standard & Poor's 500 Composite Index and for Bridges Investment Fund, Inc.,
along with other items of information and analysis, appear at pages MD&A 5.
The Standard & Poor's 500 Composite Stock Index was chosen as the
appropriate broad-based market index for comparison with our Fund for the
purpose of benchmarking the results of a 100% common stock investment as an
alternative to an investment in our Fund. Common stocks would average about 70%
to 80% of total market value in the Fund's portfolio over the last decade. This
observation means that our Fund's investment record in the typical year cannot
be expected to match the results of a securities investment in the Standard &
Poor's 500 Composite Index because the same degree of risk/reward has not been
assumed by the Fund. Nevertheless, the S&P 500 has the best data for tracking
the general price trends for large capitalization, widely owned stocks, a
representative list of which is held by our Fund. In 1999, the Fund's total
return exceeded the S & P by a wide margin.
Item 5A.(c)
This response addresses the impact that any policy or practice as to the
maintenance of a specified level of distributions to shareholders had on
investment strategies of the Fund and the per share net asset value during the
Fund's last fiscal year -- 1999.
The initiative to support the primary investment objective of long term
capital growth is causing a reduction in the ownership of income earning assets
(U.S. Treasury securities, corporate bonds, preferred stocks) as a percent of
total market value for the Fund's portfolio. In addition, the number of common
stocks held in the portfolio that do not make dividend payments has increased
significantly in 1998 and 1999.
The disclosures required for Item 5(c) and Item 5A.(a), (b), and (c)
conclude at this point in this text.
Other Comments
History of Calculations for MD&A Page 4 -- The table that appears on page 4
sets forth the dollars reported for a $10,000 investment in Bridges Investment
Fund, Inc. and the Standard & Poor's 500 Composite Stock Index in the one year,
five year, and ten year illustrations. One purpose for this presentation is to
demonstrate the dynamics that result from dropping off the base year and
starting with a new one. The data for each Annual Shareholder Report
Management's Discussion and Analysis will be published to portray the volatility
and/or consistency of the returns as they develop over the years.
The level of prices at the opening of the investment and at the time of the last
calculation carry the dominant forces in the determination of the final results:
Shareholder Communication MD&A-3 January 24, 2000
<TABLE>
Value of a $10,000 Investment
<CAPTION>
% Chg. % Chg. % Chg.
Annual Prior Prior Prior
Report Yr. Yr. Yr.
Year Investment 1 Yr. Disclo. 5 Yr. Disclo. 10 Yr. Disclo.
<S> <C> <C> <C> <C> <C> <C> <C>
1993 BIF, Inc. 10,618 N.C. 17,154 N.C. 27,656 N.C.
1994 BIF, Inc. 10,033 -5.5 13,882 -19.1 27,502 - 0.6
1995 BIF, Inc. 13,066 +30.2 18,031 +29.9 27,949 + 1.6
1996 BIF, Inc. 11,792 -9.8 17,566 -2.6 28,186 + 0.8
1997 BIF, Inc. 12,229 + 3.9 20,147 +14.7 35,959 +27.6
1998 BIF, Inc. 12.712 + 3.9 24,098 +19.6 41,014 +14.1
1999 BIF, Inc. 13,891 + 9.3 53,482 +38.9 46,614 +13.6
1993 S&P 500 11,010 N.C. 19,703 N.C. 39,656 N.C.
1994 S&P 500 10,122 -8.1 15,153 -23.1 37,800 - 4.7
1995 S&P 500 13,661 +35.0 21,334 +40.8 39,519 + 4.6
1996 S&P 500 12,229 -10.5 20,134 - 5.6 41,001 + 3.8
1997 S&P 500 13,332 + 9.0 25,112 +24.7 55,261 +34.8
1998 S&P 500 12,852 - 3.6 29,366 +16.3 57,706 + 4.4
1999 S&P 500 12,101 -.5.8 35,026 +19.3 53,075 - 8.8
<FN>
Sources: Graphs in MD&A Reports 1993 through 1999
N.C.: Not Calculated
</TABLE>
The foregoing data show significant variations from time to time. With respect
to the calculation for the $10,000 investments in the S&P 500 Composite Index,
the values calculated do not have deductions for operating expenses and
brokerage expenses that are reflected in the values shown for the comparative
investment in the Fund. The values shown for the S&P 500 Composite Index may
not be similar to data prepared by other issuers of this type of information due
to the methodology and timing for the reinvestment of dividends received by S&P
companies. Please refer to MD&A, page 5, for further information.
Integrity and Trust -- In the final analysis, investors make judgments
about organizations and the persons who manage and operate them. There can and
should be a strong faith and trust factor that develops over time. Our
investment record is based upon extensive research efforts and conservative
judgments. The process to improve efforts is a continuing one, particularly
with respect to addressing the implementation of what we know to the investment
selection process. The results of the changes in this direction will probably
be an increase in the portfolio turnover to adjust better to rapidly changing
market conditions. The management believes that its organization and people are
at the highest level of proficiency now than at any time in our entire
relationship with the Fund.
Respectfully submitted,
Edson L. Bridges II
Chairman
Year BIF S & P 500
1989 10,000.00 10,000.00
1990 10,180.36 9,689.22
1991 12,318.63 12,318.63
1992 13,060.87 13,589.54
1993 13,881.48 14,950.48
1994 13,922.13 15,153.12
1995 18,230.79 20,826.41
1996 21,522.01 25,596.74
1997 26,326.60 34,125.56
1998 33,559.22 43,858.21
1999 46,614.11 53,075.17
(Amounts in table above represent year-end market values, and are plotted
as data points on a line graph in the actual annual shareholder report.)
Average Annual Total Return for Bridges Investment Fund, Inc.:
1 Year 38.90%
5 Year 27.34%
10 Year 16.64%
Past Performance is not predictive of future performance.
<PAGE>
Shareholder Communication MD&A-5 January 24, 2000
INFORMATION SUPPORTING AND SETTING QUALIFICATIONS
FOR INVESTMENT RETURNS
Assumptions
1.The initial investment was made at the public offering price last
calculated on the business day before the first day of the first fiscal
year.
2.The subsequent account values are based on the net asset values of the
Fund last calculated on the last business day of the first and each
subsequent fiscal year.
3.The calculation for the final account value assumes the account was closed
and the redemption was at the price last calculated on the last business
day of the most recent fiscal year.
4.All dividends and capital gains distributions by the Fund were reinvested
at the price on the reinvestment dates. The dividend for the Standard &
Poor's 500 Composite Index for the previous quarter was invested at the
month-end price closest to the reinvestment date for the Fund.
5.Reinvestment fees for dividend and capital gains distributions were
deducted before reinvestment in shares of the Fund. The Standard & Poor's
500 Composite Index was not charged with any brokerage commissions,
reinvestment fees, or operating expenses.
Appropriate Index
The Fund is to select an "appropriate broad-based securities market index"
that is administered by an organization that is not an affiliated person of the
Fund or its investment adviser. The securities index chosen must be adjusted to
reflect reinvestment of dividends on securities in the index, but not the
expenses of the Fund.
Use of Additional Indexes
In addition to the required comparison to a broadly-based index, mutual
fund registrants with the Securities and Exchange Commission are urged to
compare their performances to other more narrowly-based indexes that reflect the
market sectors in which they invest. Management has investigated commercial
paper, Treasury Bill, Treasury Note, Treasury Bond, and Corporate Bond indexes
to cover those portfolio segments not invested in the common stock market. Some
problems with comparable information have been encountered particularly with
respect to the difficulty of matching income reinvestment dates in the indexes
with the reinvestment calendar scheme in effect for the Fund. Therefore, at
this point in time, the Fund management has decided not to present the
comparisons to the more narrow indices.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Thirty-Seventh Annual Shareholder Report 1999 and is qualified in its
entirety by reference to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 28,914,320
<INVESTMENTS-AT-VALUE> 68,265,291
<RECEIVABLES> 1,594,750
<ASSETS-OTHER> 123,928
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,983,969
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 248,285
<TOTAL-LIABILITIES> 248,285
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,324,536
<SHARES-COMMON-STOCK> 1,508,154
<SHARES-COMMON-PRIOR> 1,413,731
<ACCUMULATED-NII-CURRENT> 1,393
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,058,779
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,350,976
<NET-ASSETS> 69,735,684
<DIVIDEND-INCOME> 434,888
<INTEREST-INCOME> 406,559
<OTHER-INCOME> 0
<EXPENSES-NET> 407,049
<NET-INVESTMENT-INCOME> 434,398
<REALIZED-GAINS-CURRENT> 2,401,788
<APPREC-INCREASE-CURRENT> 16,580,965
<NET-CHANGE-FROM-OPS> 19,417,151
<EQUALIZATION> 3,190
<DISTRIBUTIONS-OF-INCOME> 434,398
<DISTRIBUTIONS-OF-GAINS> 1,343,009
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 123,704
<NUMBER-OF-SHARES-REDEEMED> 64,491
<SHARES-REINVESTED> 35,210
<NET-CHANGE-IN-ASSETS> 21,302,571
<ACCUMULATED-NII-PRIOR> 5,019
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 279,316
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 407,049
<AVERAGE-NET-ASSETS> 55,863,159
<PER-SHARE-NAV-BEGIN> 34.26
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 12.89
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0.91
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 46.24
<EXPENSE-RATIO> 0.73
</TABLE>
