SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER SECURITIES
ACT OF 1933
Pre-Effective Amendment No. ____ ____
Post-Effective Amendment No. 19 X
SEC File No. 2-27183
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 17
SEC File No. 811-1528
BRUCE FUND, INC.
[Exact Name of Registrant as Specified in Charter]
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
[Address of Principal Executive Offices]
(312) 236-9160
[Registrant's Telephone Number, including Area Code]
Robert B. Bruce
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
[Name and Address of Agent for Service]
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective
(check appropriate box)
Immediately upon filing pursuant to paragraph (b)
X On October 11, 1996 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
__ On (date) pursuant to paragraph (a) of Rule 485
BRUCE FUND, INC.
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
(312) 236-9160
BRUCE FUND, INC. / PROSPECTUS
A diversified, open-end no-load management company, whose objective
is long-term capital appreciation through investments in common
stock primarily; income is a secondary consideration. The Fund may
also invest in other securities as described in this Prospectus
under "General Description of Bruce Fund, Inc."
This Prospectus sets forth concise information about Bruce Fund,
Inc. (the "Fund") that a prospective investor ought to know before
investing. Investors should read and retain this Prospectus for
future reference. Additional information has been filed with the
Securities and Exchange Commission. Such statement of additional
information may be obtained without charge by written request
directed to Bruce Fund, Inc., 20 North Wacker Drive, Suite 2414,
Chicago, Illinois 60606.
___________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________________
October 11, 1996
TABLE OF CONTENTS
General Description 1
Fund Expenses 1
Condensed Financial Information 2
Investment Restrictions 3
Risk Factors 3
Management of the Fund 4
Capital Stock 5
Purchase of Securities Being Offered 6
Determination of Net Asset Value 6
Redemption or Repurchase 7
Pending Legal Proceedings 7
Order Form For Purchasing Shares 8
General Terms 9
Dividend Election 9
GENERAL DESCRIPTION OF BRUCE FUND, INC.
Bruce Fund, Inc., incorporated under the laws of Maryland, is
a diversified open-end management investment company. The primary
investment objective of the Fund is long term capital appreciation;
income, in the form of dividends or interest, is a secondary
consideration. There can be no assurance the objectives can be
achieved. The investment policies pursued in seeking to achieve
this objective involve investment primarily in common stocks and
bonds, but also permit investment in securities convertible into
common stocks, preferred stocks, other debt securities and
warrants. Securities of unseasoned companies, where the risks are
considerably greater than common stocks of more established
companies, may also be acquired from time to time by the Fund, if
the Fund management (Bruce and Co.) believes such investments offer
possibilities of capital appreciation; however, the Investment
Restrictions to which the Fund is subject limit the percentage of
total fund assets which may be invested in the securities of any
one issuer. These restrictions do not apply to securities
representing ownership interest in United States Government
securities. The Fund may invest, without restriction, in future
interest and principal of U.S. Government securities, commonly
known as "zero coupon" bonds.
FUND EXPENSES
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur. The expenses set forth below
are for the 1996 fiscal year.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases 0.00%
Sales Load Imposed on Reinvested Dividends 0.00%
Contingent Deferred Sales Load 0.00%
Redemption Fees 0.00%
Exchange Fees 0.00%
Annual Fund Operating Expenses
Management Fees 1.00%
12b-1 Fees 0.00%
Other Expenses 0.78%
Total Operating Expenses 1.78%
The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the fund
will bear directly or indirectly.
The following example illustrates the expenses that you would
pay on a $1,000 investment over various time periods assuming (1) a
5% annual rate of return and (2) redemption at the end of each time
period:
1 year 3 years 5 years 10 years
$18.38 $56.89 $97.87 $212.23
This example should not be considered a representation of past
or future expenses or performance. Actual expenses may be greater
or lesser than these shown.
CONDENSED FINANCIAL INFORMATION
(for a share outstanding throughout the year)
The following Condensed Financial Information of the Fund is
for the ten years ended June 30, 1996. The Condensed Financial
Information set forth below should be read in conjunction with the
financial statements and related notes included in the Fund's
Annual Report which is incorporated herein by reference.
For Fiscal
Years Ending June 30(1)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Net Asset Value, Beginning
of Period (B) $113.94$94.04$109.61$ 89.52$ 83.53 $113.79$ 89.89 $
93.04 $112.40$117.47
Income From Investment Operations
Net Investment Income 3.77 3.40 2.91 6.22 2.22 2.02 1.53 2.57 2.41
2.77
Net Gains or Losses on Securities20.2219.97(11.53) 16.37 5.74(30.33)
25.13 (3.20) (9.49)(6.55)
(both realized and unrealized)
Total From Investment Operations 23.9923.37(8.62)22.597.96(28.31)
26.66 (0.63) (7.08)(3.78)
Less Distributions
Dividends (from net investment
income) (A) (3.70)(3.47) (6.95)(2.50) (1.97)(1.95) (2.76)
(2.52) (3.65) (1.29)
Distributions (from capital gains)(A) --. ----.----.-----.-- ---.-----.--
- ---.-- ---.-- (8.63)---.--
Total Distributions (3.70)(3.47) (6.95)(2.50) (1.97)(1.95)
(2.76) (2.52) (12.28)(1.29)
Net Asset Value, End of Period (C)134.23 $113.9494.04$109.61 $ 89.52$ 83.53
$113.79 $89.89 $93.04$112.40
Total Return 20.81%25.78% (8.84%) 25.55%9.64%(25.03%) 30.40%
(0.55%) (5.03%) (3.28%)
Ratios/Supplemental Data
Net Assets, End of Period ($ million) 2.56 2.25 2.06 2.42 2.12 2.36 3.39
3.47 4.57 6.93
Ratio of Expenses to Average Net Assets21.78%2.04%1.90%2.12%2.17%2.47%2.25%
1.83% 1.92%1.64%
Ratio of Net Income to Average Net Assets3 2.98%3.48%2.64%6.22%2.49%2.25%
1.58% 2.92%2.55%2.40%
Portfolio Turnover Rate 11.83%19.34% 2.48%13.63% 3.92%40.96%
20.37% 6.09%5.28%10.70%
(1) For 1990 and prior years, figures are based on average month-end shares
outstanding during year, with the following exceptions: (A) number of
shares at last dividend payment date, (B) number of shares at beginning
of year, (C) number of shares at end of year. For 1991 through 1996
figures are based on average daily shares outstanding during year, with
the same exceptions.
(2) If the Fund had paid all of its expenses and there had been no
management fee waiver by the investment advisor, this ratio would have
been 2.36% and 2.05% for the years ended June 30, 1994 and 1989
respectively. The 1996 ratio is based upon total expenses excluding the
loss on defaulted bonds.
(3) If the Fund had paid all of its expenses and there had been no
management fee waiver by the investment advisor, this ratio would have
been 2.18% and 2.70% for the years ended June 30, 1994 and 1989
respectively.
There is no minimum or
maximum percentage of Fund The right, as a defensive
assets required to be invested measure (see above), to invest
in any type of security. Cash Fund assets in conservative
and equivalents are retained by fixed-income securities
the Fund in amounts deemed mandates that not more than 5%
adequate for current needs, of the total assets of the
including without limitation Fund, taken at market value,
the ability to redeem Fund will be invested in the
shares, and pay current fees, securities of any one issuer
costs and expenses of the Fund. (other than securities issued
The Fund reserved the right, as by the United States Government
a temporary defensive measure or an agency thereof, or a
when general economic security evidencing ownership
(including market) conditions in future interest and
are believed by management to principal of U.S. Treasury
warrant such action, to invest securities, such as "zero
any portion of its assets in coupon" bonds). The exception
conservative fixed-income to this restriction, relating
securities such as United to such Government securities
States Treasury Bills, Notes, permits management to invest
Bonds, certificates of deposit, assets of the Fund without
prime-rated commercial paper limit in the instruments
and repurchase agreements with described above.
banks (agreements under which
the seller of a security agrees Risk Factors: In seeking
at the time of sale to capital appreciation, the Fund
repurchase it at an agreed time will invest some of its assets
and price). Securities are not in common stock of small and
generally purchased with a view medium size companies whose
to rapid turnover to obtain stock prices often fluctuate
short-term profits, but rather more than prices of common
are purchased because stocks of larger companies. To
management believes they will the extent Fund assets should
appreciate in value over the become so invested, such
long-term. The investment fluctuations would likely cause
objectives and the other the Fund's price per share to
policies described in this be more volatile in both "up"
paragraph may be changed and "down" markets than most of
without shareholder approval. the popular stock averages.
The Fund is intended for long-
Investment Restrictions: The term investors and not for
Fund has adopted certain those who hope to profit from
investment restrictions, which favorable short term swings in
are matters of fundamental stock market prices. Further,
policy and cannot be changed the Fund is not intended to
without the approval of the provide a balanced investment
holders of a majority of its program to meet all
outstanding shares, as defined requirements of every investor.
by the Investment Company Act. It is also intended only for
Such investment restrictions those financially able to
are set forth in the Fund's assume the risks inherent in
"Statement of Additional investing for long-term capital
Information". The shareholders appreciation. Investors must
will be asked, at the December recognize there is a risk of
1996 annual meeting of loss in any investment seeking
shareholders, to approve capital appreciation, including
amending the following securities issued by the U.S.
investment restriction: Treasury.
Securities of other investment
companies will not be While debt securities are
purchased. If approved, the expected to be redeemed by
amended provision would payment to the investor of the
restrict the Fund from principal amount thereof when
purchasing the securities of such securities mature, they
any investment company, except may provide opportunities to
such securities issued by money contribute to the realization
market funds. of the Fund's paramount
objective, capital MANAGEMENT OF THE FUND
appreciation. Many such
securities outstanding are
traded on exchanges or over-the-
counter and may, from time to
time, be acquired at
substantial discounts from the
principal amount which the
issuer has promised to pay at
maturity. The investment
advisor may invest in such debt
securities of any grade or
quality, subject to the
limitation on percentage of
total Fund assets which may be
invested in the securities of
any one issuer. (See
"Investment Restrictions").
Investments may be made in
defaulted bonds, and management
has invested in such defaulted
bonds, which sell at a great
discount from face redemption
value. In most cases, the risk
of loss or opportunity for gain
on a debt security is less than
on an equity security of the
same issuer because in the case
of corporate issuers, debt
obligations must normally be
satisfied before stockholders
may participate in earnings or
distributions of the issuer.
Notwithstanding, there is risk
that the market price of the
debt security may decline below
the price at which it was
acquired, that the issuer may
become insolvent and unable to
meet interest payments or to
repay principal at maturity,
and that defaulted bonds may
remain in default resulting in
no repayment to the holder at
maturity.
The investment adviser to the
Bruce Fund, Bruce and Co.,
presently manages no other
mutual fund or investment
company.
The Fund has entered into an
Investment Advisory Agreement
employing Bruce and Co. to
manage the investment and
reinvestment of the Fund's
assets and to otherwise
administer the Fund's affairs
to the extent requested by the
Board of Directors. Under the
Agreement Bruce and Co. is,
subject to the authority of the
Fund's board of directors,
responsible for the overall
management of the Fund's
business affairs. This
Agreement is subject to annual
review and will continue in
force if specifically approved
annually by the stockholders.
The adviser, Bruce and Co.,
is an Illinois corporation,
controlled by Robert B. Bruce;
it is located at Suite 2414, 20
North Wacker Drive, Chicago,
Illinois 60606. Bruce and Co.
was, until January 2, 1987, a
sole proprietorship.
Robert B. Bruce, President of
the Fund, and R. Jeffrey Bruce,
Vice President-Secretary of the
Fund, are the only
stockholders, and Robert B.
Bruce is the only control
person of Bruce and Co.
Robert B. Bruce has been an
investment adviser since 1954,
following his graduation from
the University of Wisconsin.
He is a Chartered Financial
Analyst. Since 1974, Mr.
Bruce, through Bruce and Co.,
has been an investment adviser
continuously serving both
individuals and institutions.
In August, 1994 Bruce was
managing assets with an
approximate value of
$21,200,000 million for such
clients. Mr. Bruce is
responsible for making
investment decisions for the
Fund, and is assisted by R.
Jeffrey Bruce who graduated
from the University of Colorado
in 1982. R. Jeffrey Bruce is
the son of Robert B. Bruce.
Bruce and Co.'s compensation for its services to the Fund are
calculated as follows:
Annual
Percentage Fee
1.0%
0.6%
0.5%
Applied to Average
Net Assets of Fund
Up to $20,000,000; plus
$20,000,000 through
$100,000,000; plus
over $100,000,000
The fee is calculated and
paid each calendar month based
on the average of the daily
closing net asset value of the
Fund for each business day of
that month. Since the rates
above are annual rates, the
amount payable to the adviser
for each calendar month is
1/12th of the amount calculated
as described. The annual
percentage fee of 1.0% is
higher than the fee charged to
a majority of open-end
investment companies. The Fund
also bears certain fees and
expenses including, but not
limited to, fees of directors
(not affiliated with Bruce and
Co.), custodian fees, costs of
personnel to perform clerical,
accounting and office services
for the Fund, fees of
independent auditors, counsel,
transfer agencies and brokers'
commissions. These fees are
fully described in the
Investment Advisory Agreement.
For the most recent fiscal
year, the total expenses of the
Fund were 1.75% of the average
net assets. The adviser, Bruce
and Co., received $24,553
during the 1996 fiscal year
(1.02% of average net assets).
Two of the present directors
have been serving since 1983;
Mr. Ward M. Johnson was elected
in December 1985 to fill a
vacancy.
Directors are elected until the
next annual meeting of
stockholders, and until the
successor
of each shall have been duly
elected and shall have
qualified. The board of
directors is:
Directors
*Robert B. Bruce
Age 64
James S. Van Pelt, Jr.
Age 60
Ward M. Johnson
Age 59
* Mr. Bruce, as majority owner
of Bruce and Co., is an
Interested Person of the
Fund, as defined in the
Investment Company Act of
1940.
Business Experience
for Last Five Years
1974 to present - principal,
Bruce and Co. (investment
adviser); 1982 to present -
Chairman of Board of Directors,
Treasurer, Professional Life &
Casualty Company (life
insurance issuer), previously
Assistant Treasurer.
1983 to present - President,
Grundy Industries, Inc.
(roofing material manufacturer)
was assistant to President
prior to 1985.
1978 to present - President,
Marty Johnson & Associates (a
manufacturer's agent
representing manufacturers of
housewares, home furnishings ad
consumer electronics products).
As of September 1, 1996, Robert
B. Bruce owned 6,620 shares, R.
Jeffrey Bruce owned 832 shares,
and James S. Van Pelt owned 50
Fund shares. The above-named
directors and officers elected
by them, who are employees of
Bruce and
Co. will receive no fees or
salaries from the Fund for
services rendered as directors
or officers of the Fund.
Officers of the Fund, duly
elected and presently serving,
are:
President Robert
B. Bruce
Vice-President, Secretary
R. Jeffrey Bruce
Treasurer Robert
B. Bruce
The transfer agent and
dividend paying agent of the
Fund is Unified Management
Corporation, 429 North
Pennsylvania Street,
Indianapolis, Indiana 46204-
1897. The Fifth Third Bank,
Cincinnati, Ohio serves as
custodian of the securities and
cash of the Fund. All dividend
shares will be held by the
transfer agent. Customer
Account Service telephone
numbers at Unified Management
Corporation are (800) 872-7823
or (800) 87-BRUCE.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The annual report to shareholders of the Fund contains
performance information in addition to that included in this
prospectus. The Bruce Fund will make available the annual
report to any recipient of its prospectus upon request and
without charge.
CAPITAL STOCK
Bruce Fund, Inc. is a Unless a shareholder
Maryland corporation otherwise directs, all income
incorporated on June 20, 1967. dividends and capital gains
It has only one class of distribution are automatically
authorized stock: Capital reinvested in full and
Stock, $1.00 par value. fractional shares of the Fund.
Stockholders are entitled to Shares are purchased at the net
one vote per full share, to asset value (see "Determination
such distributions as may be of Net Asset Value") next
declared by the Fund's Board of determined after the dividend
Directors out of funds legally declaration and are credited to
available, and upon liquidation the shareholder's account.
to participate ratably in the Stock certificates are not
assets available for issued. A shareholder may
distribution. There are no elect to receive all income
conversion or sinking fund dividends and capital gains
provisions applicable to the distributions in cash or to
shares, and the holders have no reinvest capital gains
preemptive rights and may not distributions and receive
cumulate their votes in the income dividends in cash. An
election of directors. The election to reinvest or receive
shares are redeemable (as dividends and distributions in
described under "How to Redeem cash will apply to all shares
Shares" and "Determination of of the Fund registered in the
Net Asset Value") and are same name, including those
transferable. All shares previously purchased. A
issued and sold by the Fund shareholder wishing to make
will be fully paid and non- such election must notify the
assessable. There are no transfer agent in writing of
material obligations or such election. The dividends
potential liability associated and long-term capital gains
with ownership of Fund stock. distributions are taxable to
the recipient whether received
No person is believed by in cash or
Management to own beneficially, reinvested in additional
either directly or indirectly, shares.
more than 25% of the voting
securities of the Fund.
Shareholder inquiries should
be addressed to Bruce Fund,
Inc., Suite 2414, 20 North
Wacker Drive, Chicago, Illinois
60606.
The Fund intends to
distribute substantially all of
its net income and net realized
capital gains, if any, less any
available capital loss
carryover, to its shareholders
annually and to comply with the
provisions of the Internal
Revenue Code applicable to
investment companies, which
will relieve the Fund of
Federal income taxes on the
amounts so distributed.
Shareholders may elect not to continue in the dividend
reinvestment program at any time. Following such election, the
shareholder will receive income dividends or all distributions in
cash. Any shareholder who is not participating in the dividend
reinvestment program may elect to do so by giving written notice to
the transfer agent. If an election to withdraw from or participate
in the dividend reinvestment program is received between a dividend
declaration date and payment date, it will become effective on the
day following the payment date. The Board of Directors of the
Fund, when it declares a dividend, must fix in advance a recognized
date for the determination of the stockholders entitled to receive
such dividend. The record date must not be more than forty days
preceding any dividend payment.
PURCHASE OF SECURITIES BEING OFFERED
Shares are issued by the Fund
itself. The price per share is
the next determined net asset
value after acceptance of an
application. See
"Determination of Net Asset
Value".
To invest in Fund shares, the
investor should complete the
Order Form enclosed at page 9
of this Prospectus. The
completed and signed
application, accompanied by
payment to Bruce Fund, Inc.,
should be mailed to Bruce Fund,
Inc., c/o Unified Management
Corporation, 429 North
Pennsylvania Street,
Indianapolis, Indiana 46204-
1897. All applications must be
accompanied by payment.
Applications are subject to
acceptance by the Fund, and are
not binding until so accepted.
The Fund does not accept
telephone orders for purchase
of shares and reserves the
right to reject applications in
whole or in part. The Board of
Directors of the Fund has
established $1,000 as the
minimum initial purchase and
$500 as the minimum for any
subsequent purchase (except
through dividend reinvestment),
which minimum amounts are
subject to change at any time.
Shareholders will be notified
in the event such minimum
purchase-amounts are changed.
Stock certificates are not
issued.
Determination of Net Asset
Value: The per share net asset
value is determined as of 3:00 P.M. Central Time each business
day by dividing the value of
the Fund's securities, plus any
cash and other assets
(including dividends and
interest accrued but not
collected) less all liabilities
(including accrued-expenses),
by the number of shares
outstanding. Securities listed
on a stock exchange are valued
on the basis of the last sale
on that day or, lacking any
sales, at the last reported
sale price. Unlisted
securities for which quotations
are available are valued at the
closing bid price.
Short-term securities are
valued at amortized cost. Any
securities for which there are
no readily available market
quotations and other assets
will be valued at their fair
value as determined in good
faith by the Board of
Directors. Odd lot
differentials and brokerage
commissions will be excluded in
calculating values. The net
asset value would also be
determined at the close of
business on any other day on
which there is a sufficient
degree of trading in the Fund's
portfolio securities that the
current net asset value of the
Fund's shares might be materially affected by changes
in the value of the portfolio securities, provided that
such day is a business day on which shares were
tendered for redemption or orders to purchase shares were
received by the Fund. Except
under extraordinary conditions,
the Fund's business days will
be the same as those of the New
York Stock Exchange.
REDEMPTION OR REPURCHASE
Shareholders have the
right to request the Fund to
redeem their shares by
depositing their certificates
at Unified Management
Corporation with a written
request addressed to Unified
Management Corporation that the
shares be redeemed. Redemption
may be accomplished by a signed
written request to the transfer
agent that the Fund redeem the
shares. Requests for
redemption of Fund shares must
be signed by each shareholder
and EACH SIGNATURE MUST BE
GUARANTEED by a bank or trust
company in, or having a
correspondent in New York City,
or by a member firm of a
national securities exchange.
Signatures on endorsed
certificates submitted for
redemption must also be
similarly guaranteed.
Redemption requests received by
the transfer agent before the
close of business on the New
York Stock Exchange on any day
on which that Exchange is open
will be effected at the
redemption price calculated as
of such close. Requests
received after that time will
be entered at the redemption
price calculated as of such
close on the next day on which
that Exchange is open. It is
suggested that all redemption
requests by mail be sent
Certified Mail with return
receipt.
The redemption price is
the net asset value per share
determined as described above.
See,
"Determination of Net Asset
Value". Payment for shares
redeemed, except as described
hereafter, is made by the Fund
to the shareholder within seven
days after the certificates are
received, but the Fund may
suspend the right of
redemption, subject to rules
and regulations of the
Securities and Exchange
Commission, at any time when
(a) The New York Stock Exchange
is closed, (b) trading on such
exchange is restricted, (c) an
emergency exists as a result of
which it is not reasonably
practicable for the Fund to
dispose of securities owned by
it or to determine fairly the
value of its net assets, or (d)
the Commission by order permits
such suspension for the
protection of shareholders.
If in the opinion of the
Board of Directors, conditions
exist which make cash payments
undesirable, payment may be
made in securities or other
property in whole or in part.
Securities delivered in payment
of redemptions are valued at
the same value of the Fund's
assets. Shareholders receiving
such securities or redemption
will incur brokerage costs on
the sale thereof. Long-term
capital gains distribution will
be taxed to the individual Fund
shareholder as such, regardless
of the length of time the Fund
shares have been held.
PENDING LEGAL PROCEEDINGS
There are no legal proceedings to which the Fund or the adviser is
a party.
MAIL THIS ORDER FORM AND CHECK DIRECTLY TO UNIFIED MANAGEMENT
CORPORATION
ORDER FORM FOR PURCHASING BRUCE FUND SHARES
(Minimum initial investment of $1,000; $500, thereafter)
Unified Management CorporationDate:
429 North Pennsylvania Street
Indianapolis, Indiana 46204-1897
Attn: Bruce Fund, Inc.
Gentlemen:
Enclosed is my check in the amount of $ (make check
payable to Bruce Fund, Inc.) for the purchase of shares of Bruce
Fund, Inc. Capital Stock. The undersigned subscribes for:
( )Exactly
shares,
OR
( )The maximum number of full and fractional shares which may
be purchased with the enclosed amount.
The minimum initial purchase is $1,000, and the minimum for any
subsequent purchase is $500, except through dividend reinvestment.
All applications must be accompanied by payment. Differences
between amounts submitted and actual cost of shares purchased will
be refunded or billed to the registered owner designated below,
unless otherwise specified.
I have received and read the latest prospectus of the Bruce Fund.
AUTOMATIC DIVIDEND REINVESTMENT - I understand that all dividends
and capital gains will be automatically reinvested unless the
Dividend Election on the reverse side is signed or until contrary
written instructions are received by the Fund, as set forth in the
prospectus.
STOCK CERTIFICATES - All shares purchased (including
reinvestments) will be credited to the stockholder's account; no
stock certificates will be issued.
All dividend shares will be held by Unified Management
Corporation.
Shares of the Bruce Fund are to be registered as follows:
(Social Security or other
taxpayer identification number)
Name: Name:
(please print)
(please print)
Street: Street:
City: State: Zip: City: State:
Zip:
Signature Signature
If shares are to be registered jointly, all owners must sign. Any
registration in the names of two or more co-owners will, unless
otherwise specified, be as joint tenants with right of survivorship
and not as tenants in common. Shares may be registered in the name
of a custodian for a minor under applicable state law. In such
cases, the name of the state should be indicated, and the taxpayer
identification or social security number should be that of the
minor.
GENERAL TERMS
This application is subject to acceptance by the Fund in
Chicago, Illinois. This application will not be accepted unless
accompanied by payment. The passage of title to and delivery of
shares purchased (including shares hereafter purchased through
dividend reinvestment or otherwise), whether or not certificates
are issued, shall be deemed to take place in Illinois. The
applicant certifies that he or she has full capacity to enter into
this subscription agreement. The purchase price shall be the net
asset value in effect at the time this application is accepted by
the Fund.
___________________________________________________________________
___________
DIVIDEND ELECTION
Unless a shareholder otherwise directs, all income dividends
and capital gains distributions are automatically reinvested in
full and fractional shares of the Fund. If you do NOT wish your
dividends and capital gains distributions reinvested in shares of
the Fund but wish instead to receive the full amount of dividends
and capital gains distributions in cash, or to receive income
dividends only in cash (reinvesting capital gains distributions in
shares of the Fund), you should check the choice you wish to make,
and sign at the place indicated.
( ) I (We) elect to receive the full amount of all dividends
and capital gains distributions hereafter paid on shares of Bruce
Fund, Inc. registered in the name(s) of the undersigned in cash,
until contrary written instructions are received by the Fund.
( ) I (We) elect to receive the full amount of all income
dividend distributions hereafter paid on shares of Bruce Fund, Inc.
registered in the name(s) of the undersigned in cash, and approve
the automatic reinvestment of all capital gains distributions in
full and fractional shares of the Fund, until contrary written
instructions are received by the Fund.
Signature
Signature of Co-Owner, if any.
If shares are to be registered.
jointly, all
owners must sign.
(NOTE: If this election is not signed, dividends and capital gains
distributions will be reinvested in Fund shares, as described on
the Order Form).
PROSPECTUS
October 11, 1996
BRUCE FUND, INC.
BRUCE FUND INC.
20 North Wacker Drive
Chicago, Illinois 60606
Investment Adviser
Bruce and Co.
Chicago, Illinois
Custodian
Fifth Third Bank
Cincinnati, Ohio
Shareholder Service and Transfer Agent
Unified Management Corporation
429 North Pennsylvania Street
Indianapolis, Indiana 46204-1897
Counsel
McBride Baker & Coles
Chicago, Illinois
Independent Public Accountants
Arthur Andersen LLP
Chicago, Illinois
STATEMENT OF ADDITIONAL INFORMATION
BRUCE FUND, INC.
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
(312) 236-9160
This Statement of Additional Information is not a Prospectus, but
it should be read in conjunction with the Prospectus. The
Prospectus may be obtained by writing or calling BRUCE FUND, INC.
This Statement of Additional Information relates to the Prospectus
dated October 11, 1996.
Date: October 11, 1996
TABLE OF CONTENTS
PART B
Investment Objectives and Policies
Management of the Fund
Control Persons and Principal Holders of Securities
Investment Advisory and Other Services
Brokerage Allocation
Capital Stock and Other Securities
Purchase, Redemption and Pricing of Stock Being Offered
Tax Status
Underwriters
Financial Statements as of June 30, 1996 8
General Information and History:
Bruce Fund, Inc.'s (the "Fund") only business during the past
five years has been an open-end no-load investment company. The
name of the Fund was changed in October 1983, following stockholder
approval of such change, to BRUCE FUND, INC. at a special meeting
held October 17, 1983. At all times prior thereto, from the Fund's
formation in 1967, its name was THE HEROLD FUND, INC. Other
general information and history is set forth in the Prospectus.
Investment Objectives and Policies:
The Fund has adopted certain investment restrictions which are
matters of fundamental policy and cannot be changed without the
approval of the holders of a majority of the outstanding shares of
the Fund as defined by the Investment Company Act. These
fundamental policies are:
1. Securities of other investment companies will not be
purchased. (See Prospectus. OInvestment RestrictionsO, p.3).
2. The Fund will not acquire or retain any security issued by a
company if one or more officers or directors of the Fund or any
affiliated persons of its investment adviser beneficially own
more than one-half of one percent (0.5%) of such company's stock
or other securities, and all of the foregoing persons owning
more than one-half of one percent (0.5%) together own more than
5% of such stock or security.
3. The Fund will not borrow money or pledge any of its assets.
4. Investments will not be made for the purpose of exercising
control or management of any company. The Fund will not
purchase securities of any issuer if, as a result of such
purchase, the Fund would hold more than 10% of the voting
securities of such issuer.
5. The Fund will not sell short, buy on margin or engage in
arbitrage transactions.
6. The Fund will not lend money, except for the purchase of a
portion of an issue of publicly-distributed debt securities.
7. The Fund will not buy or sell commodities, commodity futures
contracts or options on such contracts.
8. The Fund will not act as an underwriter or distributor of
securities, other than its own capital stock, except as it may
be considered a technical "underwriter" as to certain securities
which may not be publicly sold without registration under the
Securities Act of 1933.
9. The Fund will not purchase or write any puts, calls or
combinations thereof. The Fund may, however, purchase warrants
for the purchase of securities of the same issuer issuing such
warrants, or of a subsidiary of such issuer. The investment in
warrants, valued at the lower of cost or market, may not exceed
5.0% of the value of the Fund's net assets. Included within
that amount, but not to exceed 2.0% of the value of the Fund's
net assets, may be Warrants which are not listed on the New York
or American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without
value.
10. The Fund will not purchase or own real estate or
interests in real estate, except in the marketable securities of
real estate investment trusts.
11. The Fund will not purchase any securities which would
cause more than 10% of the Fund's net assets at the time of
purchase to be invested in securities which may not be publicly
sold without registration under the Securities Act of 1933.
12. Not more than 25% of the value of the Fund's total
assets (exclusive of government securities) will be invested in
companies of any one industry or group of related industries.
The Fund will not issue senior securities.
13. The Fund will be required to have at least 75% of the
value of its total assets represented by (i) cash and cash items
(including receivables), (ii) government securities as defined
in the Investment Company Act of 1940, and (iii) other
securities, limited in respect of any one issuer to an amount
not greater in value than 5% of the value of the total assets of
the Fund and to not more than 10% of the outstanding voting
securities of the issuer.
14. The Fund will not invest in oil, gas or other mineral
leases.
It is the policy of the Fund not to invest more than 5% of the
value of the Fund's total assets in securities of issuers,
including their predecessor, which have been in operation less than
three years. Registrant does not presently invest in foreign
securities and has no present plans to make such investments.
There is no restriction against making investments in the
securities of unseasoned issuers or of foreign Issuers and such
Investments may be made in management's discretion, without
approval of a majority of the Fund's outstanding voting securities.
Management has no present intention of changing either policy
described.
Portfolio turnover rate was 11.83% in 1996, 19.34% in 1995, and
2.48% in 1994. Portfolio turnover rate is the percentage
relationship between the value of the lesser of purchases or sales
of the Fund's portfolio securities during the year and the average
monthly value of portfolio securities owned by the Fund during such
year. The shareholders receive distributions of income and taxable
gains (see, "Tax Status"); if capital gains result from portfolio
securities sold, it may increase the income tax liability of the
shareholder.
Management of the Fund:
(a) The Fund is managed by its officers and directors. It
has no advisory board. The persons serving are:
Positions Held Principal Occupation
Name and Address With Registrant1
During Past Five Years
Robert B. Bruce2 Director, Chairman See
Prospectus,
1340 Asbury Avenue of the Board "Management of
Fund"
Winnetka, IL 60093 President,
Treasurer
Ward M. Johnson Director See Prospectus
Savannah, GA 31406
James S. Van Pelt, Jr. Director See
Prospectus
1393 Edgewood Lane
Winnetka, IL 60093
R. Jeffrey Bruce2,3 Vice President, 1983
to present -
2226 N. Fremont Secretary Vice President
of
Chicago, IL 60614 Adviser, Bruce and
Co.
Control Persons and Principal Holders of Securities:
(a) One person is believed by management to own
beneficially, either directly or indirectly, more than 25% of the
voting securities of the Fund. (See, (b) below). Bruce Fund, Inc.
is a Maryland corporation. In that no major corporate measure
requires approval by more than 75% of all outstanding shares, no
person voting alone could permit:
(1) the consolidation, merger, share exchange or
transfer of assets to another person;
(2) the distribution of a portion of the assets of the
Fund to its stockholders in partial liquidation;
(3) the voluntary dissolution of the Fund;
(4) the "business combination" of the Fund with
another person as described in Maryland General Corporation
Law, Sec.E3-601 through 3-603.
(b) The following table sets forth information as to all
persons known to the Board of Directors of the Fund to be the
beneficial owners of more than 5% of the outstanding shares of the
Fund at August 31, 1996: Robert B. Bruce, 34.8%.
(c) Robert B. Bruce, President of the Fund and principal
owner of Bruce and Co., investment adviser to the Fund, presently
owns 6,620 shares of the Fund, and his wife owns 425 shares; Mr.
Bruce disclaims any beneficial ownership in Mrs. Bruce's shares.
All other officers and directors of the Fund own less than 10% of
the outstanding shares.
Investment Advisory and Other Services:
(a) Bruce and Co., an Illinois corporation controlled by
Robert B. Bruce, is the only investment adviser to the Fund. Mr.
Bruce is in control of the adviser, and is Chairman of the Board of
Directors, President and Treasurer of the Fund. R. Jeffrey Bruce
is employed by, and a stockholder, officer and director of, Bruce
and Co. and is Vice-President and Secretary of the Fund.
The advisory fee payable by the Fund to Bruce and Co. is a
percentage applied to the average net assets of the Fund as
follows:
Annual Applied to
Average
Percentage Fee Net Assets of Fund
1.0% Up to $20,000,000; plus
0.6% $20,000,000 through $100,000,000;
plus
0.5% over $100,000,000
A fee installment will be paid in each month and will be computed
on the basis of the average of the daily closing net asset values
for each business day of the previous calendar month for which the
fee is paid (e.g., 1/12% of such average will be paid in respect to
each month in which such average is less than $20 million).
(1) The advisory fee paid to Bruce and Co. during 1996 was
$24,553 and in 1995 was $20,609.
(2) The Fund is not subject to any expense limitation
provision.
(b) The following services furnished for and on behalf of the
Fund are supplied and paid for wholly or in substantial part by the
investment adviser in connection with the Investment Advisory
Contract:
The adviser provides suitable office space in its
own offices and all necessary office facilities and
equipment for managing the assets of the Fund; members
of the adviser's organization serve without salaries
from the Fund as directors, officers or agents of the
Fund, if duly elected or appointed to such positions
by the shareholders or by the Board of Directors; the
adviser bears all sales and promotional expenses of
the Fund, other than expenses incurred in complying
with laws regulating the issue or sale of securities.
(c) There are no fees, expenses, and costs of the Fund
which are to be paid by persons other than the investment adviser
or the Fund.
(d) There are no management related service contracts under
which services are provided to the Fund.
(e) No person other than a director, officer, or employee
of the Fund or person affiliated with Bruce and Co. regularly
furnishes advice to the Fund and to Bruce and Co. with respect to
the desirability of the Fund's investing in, purchasing and selling
securities or other property or is empowered to determine what
securities or other property should be purchased or sold by the
Fund and no other person receives, directly or indirectly,
remuneration for such advice, etc.
(f) There is no plan pursuant to which the Fund incurs
expenses related to the distribution of its shares and there are no
agreements relating to the implementation of such a plan.
(g) The Fund's custodian is Fifth Third Bank, Cincinnati,
Ohio. The Fund's independent public accountant
is Arthur Andersen LLP, 33 West Monroe Street, Chicago,
Illinois 60603.
The above named custodian has custody of all the Fund's
securities. It accepts delivery and makes payment for securities
purchased and makes delivery and receives payment for securities
sold. The Fund's Shareholder and Transfer Agent is Unified
Management Corp., Indianapolis, Indiana; it receives and processes
all orders by investors to purchase and to redeem Fund's shares,
maintaining a current list of names and addresses of all
stockholders and their respective holdings. Upon receipt of
authorization to make payment of Fund expenses from the investment
adviser, the above named custodian makes such payments from
deposits of the Fund, and sends confirmation of all bills paid.
Unified Management Corp. pays dividends, makes capital gain
distributions and mails annual reports and proxy statements to
stockholders.
Certified independent public accountants performed an annual
audit of Fund's financial statements for each of the ten years
ended June 30, 1994.
Brokerage Allocation:
(a) Decisions to buy and sell securities for the Fund, the
selection of brokers and negotiation of the commission rates to be
paid, or mark-ups (or mark-downs) on principal transaction, are
made by Bruce and Co. Robert B. Bruce, an employee of the Fund and
owner of Bruce and Co., is primarily responsible for making the
Fund's portfolio decisions, subject to direction by the Board of
Directors of the Fund. He is also primarily responsible for
placing the Fund's brokerage business and, where applicable,
negotiating the amount of the commission rate paid taking into
account factors described in paragraph (c) below. It is the
adviser's policy to obtain the best security price and execution of
transactions available. During each of the last three fiscal
years, the total brokerage commissions on the purchases and sales
of portfolio securities by the Fund were:4
1996 $2,000
1995 $1,000
1994 $1,000
(b) None of the brokers with whom the Fund dealt in the
last three years was affiliated in any manner with the Fund, or
with any affiliated person of the Fund, including the investment
adviser.
(c) Brokers are selected to effect securities transactions
for the Fund based on the adviser's overall evaluation of the
commission rates charged, the reliability and quality of the
broker's services and the value and expected contribution of such
services to the performance of the Fund. Where commissions paid
reflect services furnished in addition to execution, the adviser
will stand ready to demonstrate that such services were bona fide
and rendered for the benefit of the Fund. Such commissions may, on
occasion, be somewhat higher than could be obtained from brokers
not supplying such services. The adviser considers the
supplementary research and statistical or other factual information
provided by dealers in allocating portfolio business to dealers.
Such allocation is not on the basis of any formula, agreement or
understanding.
It is not possible to place a dollar value on such research and
other information and it is not contemplated that the receipt and
study of such research and other information will reduce the cost
to Bruce and Co. of performing duties under the Advisory Agreement.
The Board of Directors of the Fund has permitted the Fund to pay
brokerage commissions which may be in excess of those which other
brokers might have charged for effecting the same transactions, in
recognition of the value of the brokerage and research services
provided by the executing brokers. The research which is received
from brokers includes such matters as information on companies,
industries, areas of the economy and market factors. The
information received may or may not be useful to the Fund, and may
or may not be useful to the investment adviser in servicing other
of its accounts.
Bruce and Co. attempts to evaluate the overall reasonableness of
the commissions paid by the Fund by attempting to negotiate
commissions which are within a reasonable range, in the light of
any knowledge available as to the levels of commissions being
charged, but keeping in mind the brokerage and research services
provided. Bruce and Co. will not execute portfolio transactions
for the Fund and does not expect to receive reciprocal business
from dealers who do so. Purchases and sales of securities which
are not listed or traded on a securities exchange will ordinarily
be executed with primary market makers, acting as principals,
except where better prices or execution may otherwise be obtained.
(d) Bruce and Co. is not aware that any of the Fund's
brokerage transactions during the last fiscal year were placed
pursuant to an agreement or understanding with a broker or
otherwise through an internal allocation procedure because of
research services provided.
Capital Stock and Other Securities:
Bruce Fund, Inc. has only one class of authorized stock, Capital
Stock, $1.00 par value; its Articles of Incorporation authorize the
Issuance of 200,000 such shares. Stockholders are entitled to one
vote per full share, to such distributions as may be declared by
the Fund's Board of Directors out of funds legally available, and
upon liquidation to participate ratably in the assets available for
distribution. The holders have no preemptive rights. All shares
have non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of directors
can elect 100% of such directors if they choose to do so, and, in
such event, the holders of the remaining shares so voting will not
be able to elect any directors. The shares are redeemable (as
described in the Prospectus) and are transferable. All shares
issued and sold by the Fund will be fully paid and non-assessable.
There are no material obligations or potential liabilities
associated with ownership of Fund stock. There are no conversion
rights and no sinking fund provisions.
Purchase, Redemption and Pricing of Stock Being Offered:
See Prospectus, "Purchase of Securities Being Offered" and
"Redemption or Repurchase". There are no underwriters and no
distribution of expenses of offering price over the net amount
invested. There is no difference in the price at which securities
are offered to public and individual groups and the directors,
officers and employees of the Fund or its adviser.
Tax Status:
The Fund intends to distribute all taxable income to its
shareholders and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies.
Therefore, no provision will be made for Federal income taxes since
the Fund has elected to be taxed as a "regulated investment
company".
On dividends from ordinary income and short-term gains the
stockholders pay income tax in the usual manner. The
dividend-received exclusion does not apply to capital gains
distributions. The dividend-received exclusion is subject to
proportionate reduction if the aggregate dividends received by the
Fund from domestic corporations in any year is less than 75% of the
Fund's gross income exclusive of capital gains. Statements will be
mailed to shareholders in January of the year after the close of
the fiscal year showing the amounts paid and the tax status of the
year's dividends and distribution. The dividends and long term
capital gains are taxable to the recipient whether received in cash
or reinvested in additional shares. Federal legislation requires
the Fund to withhold and remit to the Treasury a portion (20%) of
dividends payable if the shareholder fails to furnish his taxpayer
identification number to the Fund, if the Internal Revenue Service
notifies the Fund that such number, though furnished, is incorrect,
or if the shareholder is subject to withholding for other reasons
set forth in Sec. 3406 of the Internal Revenue Code.
Underwriters:
The Fund will continuously offer public distribution of its
securities. There are no underwriters with respect to such public
distributions.
Financial Statements:
The Financial Statements filed herewith consist of:
A. Audited Financial Statements as of June 30, 1996, including:
(1) Report of independent certified public
accountants, dated August 19, 1996.
(2) Schedule of Investments, at JuneE30, 1996.
(3) Balance Sheet at JuneE30, 1996.
(4) Statement of Operations, for year ended JuneE30, 1996.
(5) Statement of Changes in Net Assets, for years
ended JuneE30, 1996 and 1995.
(6) Notes to Financial Statements.
Other information respecting Bruce Fund, Inc. is included in
Part C, filed heretofore.
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our report dated August 19, 1996, and to all references to our firm
included in or made a part of this Registration Statement on Form N-
1A of Bruce Fund, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
October 10, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of
Directors of BRUCE FUND, INC.:
We have audited the accompanying balance sheet of BRUCE FUND,
INC. (a Maryland corporation), including the schedule of
investments, as of June 30, 1996, and the related statement of
operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and
the financial highlights included in Note G for each of the five
years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits 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 and financial highlights 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 June 30, 1996, by correspondence with the custodian.
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
audits provide 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 Bruce Fund, Inc. as of June 30,
1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
August 19, 1996.
BRUCE FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1996
Common Stocks (37.39%)
No. of
Market
Shares Issue Cost
Value
Property-Casualty
Insurance
6,250 RLI Corp. $72,500
$152,344
Cosmetics
13,000 *Chantal Pharm. 127,962
83,687
Communications
10,000 *NTN 56,850
58,750
Communications
Medical Services
46,199 *Maxum Health 90,256
167,471
10,000 *Atrix 61,688
97,500
Laboratories
Energy Services
37,000 *Team, Inc. 105,089
76,313
Utilities
2,000 Houston 39,225
49,250
Industries
Telecommunications
6,000 *Cellular 47,750
105,000
Technical Services
Real Estate Inv. Trust
6,000 Capstead 85,980
168,000
Mortgage
Total Common$687,300$958
,315
Stocks
Bonds (59.02%)
Market
Principal Cost Value
U.S. Government (57.61%)
$7,000,000*U.S. Treasury
"STRIPS", Bond
Principal, due
5-15-2018$1,129,056$1,476,562
Corporate Bonds (1.41%)
200,000*Lomas Financial C
onvertible
9% due 10/31/200380,00036,000
(in default)
Total Bonds $1,209,056$1,512,562
Total Investments(96.41)% $1,896,356 $2,470,877
Cash and Other Assets, Less
Liabilities (3.59%) $ 92,132
Total Net Assets (100%) $2,563,009
The accompanying notes to
financial statements
are an integral part of this
schedule.
*Non-cash income producing
BRUCE FUND, INC.
BALANCE SHEET
JUNE 30, 1996
ASSETS
Investments, atEMarket Value, (Cost $1,896,356) $
2,470,877
Cash 106,565
Dividends Receivable 875
Prepaid Insurance 472
Interest Receivable
422
TOTAL ASSETS $ 2,579,211
LIABILITIES
Accrued Expenses 16,202
TOTAL LIABILITIES $ 16,202
CAPITAL
Capital Stock (19,094 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 200,000
Shares Authorized) $ 19,094
Paid-in Surplus 1,926,547
Accumulated Undistributed Net Investment Income 210,288
Accumulated Net RealizedELosses on Investments
(167,441)
Net Unrealized Appreciation on Investments
574,521
TOTAL CAPITAL (NET ASSETS) $2,563,009
TOTAL LIABILITIES AND CAPITAL $2,579,211
NET ASSET VALUE (Capital) Per Share $ 134.23
The accompanying notes to financial statements are an integral part
of this statement.
BRUCE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
INVESTMENT INCOME
Dividends $ 22,758
Interest 102,558
$ 125,316
EXPENSES
Management Fees $ 24,553
Custodian/Security Transactions 1,143
Directors 200
Transfer Agent Fees 2,887
Legal Fees 364
Audit and Accounting Fees 11,520
Insurance 2,497
Printing 728
Loss on Defaulted Bonds 7,900
$ 51,792
NET INVESTMENT INCOME $ 73,524
REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
Net Realized Gains on Investments
$263,212
Net Change in Unrealized Appreciation
on Investments 115,013
NET GAIN ON INVESTMENTS $378,225
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $451,749
The accompanying notes to financial statements are an integral part
of this statement.
BRUCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
1996 1995
OPERATIONS
Net Investment Income $73,524 $71,732
Net Realized Gains (Losses) on Investments 263,212
(52,603)
Increase in Unrealized Appreciation
on Investments 115,013 458,146
Net Change in Net Assets Resulting
from Operations $451,749 $477,275
DISTRIBUTION TO SHAREHOLDERS
Distributions from Net Investment Income $(70,020)
$(73,708)
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued $228,153 $17,000
Increase from Shares Issued in Reinvested
Distributions 68,356 71,361
Cost of Shares Redeemed (361,895) (310,136)
Decrease in Net Assets Resulting from Capital
Stock Transactions $(65,386)$(221,775)
TOTAL INCREASE $316,343 $181,792
NET ASSETS
Beginning of Year 2,246,666 2,064,874
End of Year (including accumulated undistributed
net investment income of $210,288 and $206,784,
respectively) $2,563,009$2,246,666
The accompanying notes to financial statements are an integral part
of these statements.
BRUCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of Bruce Fund, Inc. (the "Fund") have
been prepared in conformity with generally accepted accounting
principles (OGAAPO) and reporting practices prescribed for the
mutual fund industry. The presentation of financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of 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 and
assumptions.
A description of the significant accounting policies follows:
1. Portfolio valuation: Market value of investments is
based on the last sales price reported on the last trading day of
the Fund's fiscal year. If there were no reported sales on that
day, the investments are valued using the mean of the closing bid
and asked quotations obtained from published sources. Unlisted
securities for which quotations are available are valued at the
closing bid price.
2. Securities transactions and investment income:
Securities transactions are recorded on a trade date basis.
Dividend income and distributions to shareholders are recorded on
the ex-dividend date, interest income is recorded as earned, and
discounts on investments are accreted into income using the
effective interest method. Realized gains or losses from
securities transactions are recorded on the specific identification
method for both book and tax purposes. At June 30, 1996, the cost
of investments held was $1,896,356 or both financial reporting and
federal income tax purposes. On a tax basis at JuneE30, 1996,
gross unrealized appreciation on investments was $691,572 and gross
unrealized depreciation on investments was $(117,051).
NOTE B - CAPITAL STOCK:
During the years ended June 30, 1996 and 1995, there were
2,794 and 3,196 shares redeemed; 1,700 and 174 shares were issued
and 470 and 782 shares were issued through dividend reinvestment,
respectively.
NOTE C - PURCHASES AND SALES OF SECURITIES:
During the year ended June 30, 1996, purchases and sales of
securities with original maturities of greater than one year were
$277,186 and $519,881 respectively.
NOTE D - RELATED PARTIES:
Bruce and Company, an Illinois corporation, is the investment
advisor of the Fund and furnishes investment advice, provides
office space and facilities, pays the compensation of all officers
and employees of the Fund, and pays the cost of all prospectuses
(other than those mailed to current shareholders). Compensation to
Bruce and Company for its services under the Investment Advisory
Contract is paid monthly based on the following:
Annual Percentage Fee Applied to Net Average
Assets of Fund
1.0% Up to $20,000,000;
plus
0.6% $20,000,000 to
$100,000,000; plus
0.5% over $100,000,000.
As of June 30, 1996, Robert B. Bruce owned 6,620 shares, R.
Jeffrey Bruce owned 832 shares, and James S. Van Pelt, Jr. owned 50
shares of the Fund. Robert B. Bruce is a director of the Fund;
both Robert B. Bruce and R. Jeffrey Bruce are officers of the Fund
and are officers, directors and owners of the investment advisor,
Bruce & Company. James S. Van Pelt, Jr. is a director of the Fund.
NOTE E - TAXES:
The Fund has made distributions to its shareholders so as to
be relieved of all Federal income tax under provisions of current
tax regulations applied to regulated investment companies, and
personal holding companies.
As of June 30, 1996, the Fund had available for Federal income
tax purposes an unused capital loss carryover of approximately
$167,441 which expires beginning in the year 2000.
NOTE F - DIVIDEND DISTRIBUTION:
During December 1995, the Fund announced a dividend from net
investment income of $3.70 per share, aggregating $70,020. These
distributions were payable DecemberE29, 1995 to shareholders of
record on DecemberE28, 1995.
NOTE G - FINANCIAL HIGHLIGHTS:
Selected data for each share of capital stock outstanding
through each year is presented below5:
1996 1995 1994 1993 1992
Net Asset Value, Beginning of Period (B)$113.94$94.04$109.61$89.52
$83.53
Income From Investment Operations
Net Investment Income 3.77 3.40 2.91 6.22 2.22
Net Gains or Losses on Securities 20.22 19.97(11.53) 16.37
5.74
(both realized and unrealized)
Total From Investment Operations 23.99 23.37 (8.62) 22.59
7.96
Less Distributions
Dividends (from net investment
income) (A) (3.70) (3.47) (6.95)(2.50) (1.97)
Distributions (from capital gains) (A) -- -
- - __-- -- --
Total Distributions (3.70) (3.47) (6.95)(2.50) (1.97)
Net Asset Value, End of Period (C) $134.23 $113.94$94.04$109.61
$89.52
Total Return 20.81% 25.78%(8.84)%25.55%
9.64%
Ratios/Supplemental Data
Net Assets, End of Period ($ million) 2.56 2.25 2.06 2.42
2.12
Ratio of Expenses to Average Net Assets61.78% 2.04% 1.90% 2.12%
2.17%
Ratio of Net Income to Average Net Assets7 2.98% 3.48% 2.64%
6.22% 2.49%
Portfolio Turnover Rate 11.83% 19.34% 2.48%13.63% 3.92%
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 the Registrant certifies that it
meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized,
in the City of Chicago and State of Illinois on the 11th day of
October, 1996.
BRUCE FUND, INC.
By:
Its President and Treasurer
By:
Its Vice President and Secretary
By:
A Director
By:
A Director
_______________________________
1All persons named in this paragraph (a) assumed the
position held with Fund at either October 17 or 18, 1983
except Mr. Johnson, who was elected to the board of directors
in December 1985.
2Interested person as defined in the Investment Company
Act of 1940.
3R. Jeffrey Bruce is the son of Robert B. Bruce.
4In addition to commissions, the Fund frequently
purchases securities from dealers acting as principals; no
commissions are paid on such transactions which include
mark-ups determined by the seller.
5 Figures are based on average daily shares outstanding
during year, with the following exceptions: (A)
number of shares at last dividend payment date, (B) number
of shares at beginning of year, (C) number of shares
at end of year.
6 If the Fund had paid all of its expenses and there
had been no management fee waiver by the investment
advisor, this ratio would have been 2.36% for the year
ended June 30, 1994. The 1996 ratio is based upon
total expenses excluding the loss on defaulted bonds.
7 If the Fund had paid all of its expenses and there
had been no management fee waiver by the investment
advisor, this ratio would have been 2.18% for the year
ended June 30, 1994.
