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. 20 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)
On October 27, 1997 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 27, 1997
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 6
Purchase of Securities Being Offered 7
Determination of Net Asset Value 7
Redemption or Repurchase 8
Pending Legal Proceedings 8
General Terms 9
Dividend Election 9
Order Form For Purchasing Share 10, 11
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 1997 fiscal year.
Shareholder Transaction Expenses
Sales Load Imposed on 0.00%
Purchases
Sales Load Imposed on 0.00%
Reinvested Dividends
Contingent Deferred 0.00%
Sales Load
Redemption Fees 0.00%
Exchange Fees 0.00%
Annual Fund Operating Expenses
Management Fees 1.00%
12b-1 Fees 0.00%
Other Expenses 0.69%
Total Operating 1.69%
Expenses
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
$17.00 $53.00 $92.00 $200.00
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, 1997. 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)
199 199 199 199 199 199 1991 199 198 198
7 6 5 4 3 2 0 9 8
Net Asset $13 $11 $94 $10 $ $ $113 $ $ $11
Value, 4.2 3.9 .04 9.6 89. 83. .79 89. 93. 2.4
Beginning of 3 4 1 52 53 89 04 0
Period (B)
Income From
Investment
Operations
Net Investment 4.4 3.7 3.4 2.9 6.2 2.2 2.02 1.5 2.5 2.4
Income 2 7 0 1 2 2 3 7 1
Net Gains or 3.8 20. 19. (11 16. 5.7 (30. 25. (3.
Losses on 0 22 97 .53 37 4 33) 13 20) (9.
Securities ) 49)
(both realized
and
unrealized)
Total from 8.2 23. 23. (8. 22. 7.9 (28. 26. (0. (7.
Investment 2 99 37 62) 59 6 31) 66 63) 08)
Operations
Less
Distributions
Dividends (4. (3. (3. (6. (2. (1. (1.9 (2. (2. (3.
(from net 10) 70) 47) 95) 50) 97) 5) 76) 52) 65)
investment
income) (A)
Distributions --. --. --.- --.- --- --- ---.- --- --- (8.
(from capital -- -- - - .-- .-- - .-- .-- 63)
gains) (A)
Total (4. (3. (3. (6. (2. (1. (1.9 (2. (2. (12
Distributions 10) 70) 47) 95) 50) 97) 5) 76) 52) .28
)
Net Asset $13 134 $11 94. $10 $ $ $11 $89 $93
Value, End of 8.3 .23 3.9 04 9.6 89. 83.5 3.7 .89 .04
Period (C) 5 4 1 52 3 9
Total Return 6.1 20. 25. (8. 25. 9.6 (25. 30. (0. (5.
3% 81% 78% 84% 55% 4% 03%) 40% 55% 03%
) ) )
Ratios/Supplem
ental Data
Net Assets, 2.6 2.5 2.2 2.0 2.4 2.1 2.36 3.3 3.4 4.5
End of Period 3 6 5 6 2 2 9 7 7
($ million)
Ratio of 1.6 1.7 2.0 1.9 2.1 2.1 2.47 2.2 1.8 1.9
Expenses to 9% 8% 4% 0% 2% 7% % 5% 3% 2%
Average Net
Assets(2)
Ratio of Net 3.2 2.9 3.4 2.6 6.2 2.4 2.25 1.5 2.9 2.5
Income to 9% 8% 8% 4% 2% 9% % 8% 2% 5%
Average Net
Assets(3)
Portfolio 4.2 11. 19. 2.4 13. 3.9 40.9 20. 6.0 5.2
Turnover Rate 2% 83% 34% 8% 63% 2% 6% 37% 9% 8%
Average Commission (dollars per sh.) 0.0462 ----
- - ---- ---- ---- ----
- - ---- ---- ---- ----
____________________________________
1For 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 1997 figures are based on average daily shares outstanding
during year, with the same exceptions.
2If 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.
3If 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 assets
required to be invested in any type of security. Cash and
equivalents are retained by the Fund in amounts deemed adequate
for current needs, including without limitation the ability to
redeem Fund shares, and pay current fees, costs and expenses of
the Fund. The Fund reserved the right, as a temporary defensive
measure when general economic (including market) conditions are
believed by management to warrant such action, to invest any
portion of its assets in conservative fixed-income securities
such as United States Treasury Bills, Notes, Bonds, certificates
of deposit, prime-rated commercial paper and repurchase
agreements with banks (agreements under which the seller of a
security agrees at the time of sale to repurchase it at an agreed
time and price). Securities are not generally purchased with a
view to rapid turnover to obtain short-term profits, but rather
are purchased because management believes they will appreciate in
value over the long-term. The investment objectives and the
other policies described in this paragraph may be changed without
shareholder approval.
Investment Restrictions: 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 its outstanding shares, as defined by the Investment
Company Act. Such investment restrictions are set forth in the
Fund's "Statement of Additional Information".
The right, as a defensive measure (see above), to invest
Fund assets in conservative fixed-income securities mandates that
not more than 5% of the total assets of the Fund, taken at market
value, will be invested in the securities of any one issuer
(other than securities issued by the United States Government or
an agency thereof, or a security evidencing ownership in future
interest and principal of U.S. Treasury securities, such as "zero
coupon" bonds). The exception to this restriction, relating to
such Government securities permits management to invest assets of
the Fund without limit in the instruments described above.
Risk Factors: In seeking capital appreciation, the Fund
will invest some of its assets in common stock of small and
medium size companies whose stock prices often fluctuate more
than prices of common stocks of larger companies. To the extent
Fund assets should become so invested, such fluctuations would
likely cause the Fund's price per share to be more volatile in
both "up" and "down" markets than most of the popular stock
averages. The Fund is intended for long-term investors and not
for those who hope to profit from favorable short term swings in
stock market prices. Further, the Fund is not intended to
provide a balanced investment program to meet all requirements of
every investor. It is also intended only for those financially
able to assume the risks inherent in investing for long-term
capital appreciation. Investors must recognize there is a risk
of loss in any investment seeking capital appreciation, including
securities issued by the U.S. Treasury.
While debt securities are expected to be redeemed by payment
to the investor of the principal amount thereof when such
securities mature, they may provide opportunities to contribute
to the realization of the Fund's paramount objective, capital
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.
MANAGEMENT OF THE FUND
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 advisor, 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 advisor
since l954, 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 advisor
continuously serving both individuals and institutions. In
August, l997, Bruce was managing assets with an approximate
value of $20.5 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 l982. 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 Applied to Average
Percentage Fee Net Assets of Fund
1.0% Up to $20,000,000; plus
0.6% $20,000,000 through
$l00,000,000;plus
0.5% over $l00,000,000
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 l/l2th of the amount calculated as described.
The annual percentage fee of l.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
l.69% of the average net assets. The adviser, Bruce and Co.,
received $25,720 during the l997 fiscal year (1.00% of average
net assets)
DIRECTORS AND OFFICERS
Directors are elected at the annual meeting and serve 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 Business Experience
for Last Five Years
(1) *Robert B. Bruce
Age 65 l974 to present -
principal, Bruce and Co.
(investment advisor);
l982 to present -
Chairman of Board of
Directors, Treasurer,
Professional Life &
Casualty Company (life
insurance issuer),
previously Assistant
Treasurer.
(2) James S. VanPelt, Jr. l983 to present -
Age 6l President, Grundy
Industries, Inc.
(roofing material
manufacturer) was
assistant to President
prior to l985.
(3) Ward M. Johnson l978 to present -
Age 60 Manufacturer's agent
representing
manufacturers of
housewares, home
furnishings, consumer
electronics products,
and office equipment.
Two of the present directors have been serving since l983;
Mr. Ward M. Johnson was elected in December, l985 to fill a
vacancy.
As of September 30, l997, Robert B. Bruce owned 6,8l7
shares, R. Jeffrey Bruce owned 858 shares, and James S. Van Pelt
owned 52 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-l897. 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 Maryland corporation incorporated on
June 20, 1967. It has only one class of authorized stock:
Capital Stock, $1.00 par value. 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. There are no conversion or
sinking fund provisions applicable to the shares, and the
holders have no preemptive rights and may not cumulate their
votes in the election of directors. The shares are redeemable
(as described under "How to Redeem Shares" and "Determination of
Net Asset Value") 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 liability associated
with ownership of Fund stock.
No person is believed by Management to own beneficially,
except Robert B. Bruce, either directly or indirectly, more than
25% of the voting securities of the Fund. Mr. Bruce owed 37.5%
of such securities at September 30, 1997.
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.
Unless a shareholder otherwise directs, all income
dividends and capital gains distribution are automatically
reinvested in full and fractional shares of the Fund. Shares
are purchased at the net asset value (see "Determination of Net
Asset Value") next determined after the dividend declaration and
are credited to the shareholder's account. Stock certificates
are not issued. A shareholder may elect to receive all income
dividends and capital gains distributions in cash or to reinvest
capital gains distributions and receive income dividends in
cash. An election to reinvest or receive dividends and
distributions in cash will apply to all shares of the Fund
registered in the same name, including those previously
purchased. A shareholder wishing to make such election must
notify the transfer agent in writing of such election. The
dividends and long-term capital gains distributions are taxable
to the recipient whether received in cash or reinvested in
additional shares.
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.
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. If you elect to receive
dividends/capital gains in cash, this signed Dividend Election
must be returned with your Order Form for Purchasing Bruce Fund
Shares).
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 Corporation Date:
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:______________________________________
(Name)
This section must be completed to open your account.
Failure to complete this section and sign the Order
Form may result in backup withholding.
SOCIAL SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER
Individual accounts. Specify the Social Security
number of the owner.
Joint accounts. Specify the Social Security number of
the first named owner.
Uniform Gifts/Transfers to Minors account. Specify
minor's Social Security number.
Corporations, Partnerships, Estates, Other Entities or
Trust accounts. Specify the Taxpayer Identification
Number of the legal entity or organization that will
report income and/or gains resulting from your
investments in the Fund.
In addition to the above, Joint accounts must also
specify the Social Security number of the second named
owner here.
Taxpayer Identification Number Certification
The IRS requires all taxpayers to write their Social Security
Number or Taxpayer Identification Number in this Order Form, and
sign this Certification. Failure by a non-exempt taxpayer to
give us the correct Social Security Number or Taxpayer
Identification Number will result in the withholding of 31% of
all taxable dividends paid to your account and/or the withholding
of certain other payments to you (referred to as "backup
withholding").
Under penalties of perjury, you certify that:
1. The Social Security or Taxpayer Identification Number on
this Application is correct; and
2. You are not subject to backup withholding because a) you are
exempt from backup withholding; or b) you have not been
notified by the Internal Revenue Service that you are
subject to backup withholding; or c) the IRS has notified
you that you are no longer subject to backup withholding.
Cross out item 2 above if it does not apply to you.
The Internal Revenue Service does not require your
consent to any provision of this document other than
the certifications required to avoid backup
withholding.
Name: Name:
_______________________________ _______________________________
__ __
(please print)
Street: Street:
_______________________________ _______________________________
__ __
City: ___________ State: City: ___________ State:
_________ Zip:_____ _________ 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.
PROSPECTUS
October 27, 1997
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 27, 1997.
Date: October 27, 1997
TABLE OF CONTENTS
PART B
General Description 1
Fund Expenses 1
Condensed Financial Information 2
Investment Restrictions 3
Risk Factors 3
Management of the Fund 4
Capital Stock 6
Purchase of Securities Being Offered 7
Determination of Net Asset Value 7
Redemption or Repurchase 8
Pending Legal Proceedings 8
General Terms 9
Dividend Election 9
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, except the Fund may purchase securities issued by
money market funds.
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 4.22% in 1997, 11.83% in 1996,
and 19.34% in 1995. 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:
Principal Occupation
Name and Address Positions Held With During the Past Five
Registrant1 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, Director See Prospectus
Jr.
1393 Edgewood Lane
Winnetka, IL 60093
R. Jeffrey Bruce 2,3 Vice President, 1983 to present -
1049 W. Montana Secretary Vice President of
Chicago, IL 60614 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 June 30, 1997: Robert B. Bruce, 35.9%.
(c) Robert B. Bruce, President of the Fund and principal
owner of Bruce and Co., investment adviser to the Fund, presently
owns 6,817 shares of the Fund, and his wife owns 437 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 Percentage Fee Applied to Average 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 1997
was $25,720 and in 1996 was $24,553.
(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, 1997.
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
1997 $2,000
1996 $2,000
1995 $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, 1997,
including:
(1) Report of independent public accountants, dated
August 15, 1997.
(2) Schedule of Investments, at JuneE30, 1997.
(3) Balance Sheet at JuneE30, 1997.
(4) Statement of Operations, for year ended JuneE30,
1997.
(5) Statement of Changes in Net Assets, for years
ended JuneE30, 1997 and 1996.
(6) Notes to Financial Statements.
Other information respecting Bruce Fund, Inc. is included in
Part C, filed heretofore.
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use
of our report dated August 15, 1997, 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 20, 1997
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, 1997, 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, 1997, 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, 1997, 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 15, 1997.
BRUCE FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
Common Stocks (36.76%) Bonds (63.31%)
No. of
Market Market
Shares Issue Cost Principal
Value Cost Value
Property-Casualty U.S. Government (63.31%)
Insurance
$7,000,000*U.S. Treasury
6,250 RLI Corp. $72,500 $227,734 "STRIPS", Bond
Principal, due
5-15-2018$1,227,290$1,662,500
Cosmetics
Total Bonds $1,227,290$1,662,500
40,000 *Chantal Pharm. 95,275 42,500
Communications
10,000 *NTN
Communications 56,850 44,375Cash and Other Assets, Less
Liabilities (-0.07%) <$1,862>
Medical Services
Total Net Assets (100%) $2,625,862
27,627 *InSight Health 90,256 117,415
11,000 *Atrix The accompanying notes to
Laboratories72,688129,250 financial statements
are an integral part of this
Energy Services schedule.
37,500 *Team, Inc. 105,895 98,438*Non-cash income producing
Utilities
2,600*Tucson Electric
Power 47,480 37,700
Telecommunications
5,000 *Cellular
Technical Services40,625 45,625
Real Estate Inv. Trust
9,000 Capstead
Mortgage 85,980 222,187
Total Common
Stocks $667,549$965,224
BRUCE FUND, INC.
BALANCE SHEET
JUNE 30, 1997
ASSETS
Investments, at Market Value, (Cost $1,894,839) $
2,627,724
Cash 14,898
Dividends Receivable 938
Prepaid Insurance 518
Interest Receivable
53
TOTAL ASSETS $ 2,644,131
LIABILITIES
Accrued Expenses 18,269
TOTAL LIABILITIES $ 18,269
CAPITAL
Capital Stock (18,980 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 200,000
Shares Authorized) $ 18,980
Paid-in Surplus 1,911,952
Accumulated Undistributed Net Investment Income
217,184
Accumulated Net Realized Losses on Investments
(255,140)
Net Unrealized Appreciation on Investments
732,886
TOTAL CAPITAL (NET ASSETS) $2,625,862
TOTAL LIABILITIES AND CAPITAL $2,644,131
NET ASSET VALUE (Capital) Per Share $ 138.35
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, 1997
INVESTMENT INCOME
Dividends $ 26,423
Interest 100,873
$ 127,296
EXPENSES
Management Fees $ 25,720
Custodian/Security Transactions 1,691
Directors 202
Transfer Agent Fees 2,534
Legal Fees 367
Audit and Accounting Fees 11,010
Insurance 954
Printing 734
$ 43,212
NET INVESTMENT INCOME $ 84,084
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
Net Realized Losses on Investments
($87,700)
Net Change in Unrealized Appreciation
on Investments 158,364
NET GAIN ON INVESTMENTS $ 70,664
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $154,748
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, 1997 AND 1996
1997 1996
OPERATIONS
Net Investment Income $84,084 $73,524
Net Realized Gains (Losses) on Investments (87,700)
263,212
Increase in Unrealized Appreciation
on Investments 158,364 115,013
Net Change in Net Assets Resulting
from Operations $154,748 $451,749
DISTRIBUTION TO SHAREHOLDERS
Distributions from Net Investment Income $(77,188)
$(70,020)
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued $30,450 $228,153
Increase from Shares Issued in Reinvested
Distributions 75,880 68,356
Cost of Shares Redeemed (121,037) (361,895)
Decrease in Net Assets Resulting from Capital
Stock Transactions $(14,707) $(65,386)
TOTAL INCREASE $62,853 $316,343
NET ASSETS
Beginning of Year 2,563,009 2,246,666
End of Year (including accumulated undistributed
net investment income of $217,184 and $210,288,
respectively) $2,625,862$2,563,009
The accompanying notes to financial statements are an integral
part of these statements.
BRUCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
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 ("GAAP") 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 amouts 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. NASDAQ and
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, 1997, the cost of investments held was $1,894,839 for both
financial reporting and federal income tax purposes. At June 30,
1997, gross unrealized appreciation on investments was $815,373
and gross unrealized depreciation on investments was $(82,487)
for both financial reporting and federal income tax purposes.
NOTE B - CAPITAL STOCK:
During the years ended June 30, 1997 and 1996, there were
891 and 2,794 shares redeemed; 228 and 1,700 shares were issued
and 550 and 470 shares were issued through dividend reinvestment,
respectively.
NOTE C - PURCHASES AND SALES OF SECURITIES:
During the year ended June 30, 1997, purchases and sales of
securities with original maturities of greater than one year were
$106,411 and $118,463 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, 1997, Robert B. Bruce owned 6,817 shares, R.
Jeffrey Bruce owned 858 shares, and James S. Van Pelt, Jr. owned
52 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, 1997, the Fund had available for Federal
income tax purposes an unused capital loss carryover of
approximately $255,140 which expires beginning in the year 2001.
NOTE F - DIVIDEND DISTRIBUTION:
During December 1996, the Fund announced a dividend from net
investment income of $4.10 per share, aggregating $77,188. These
distributions were payable December 31, 1996 to shareholders of
record on December 30, 1996.
NOTE G - FINANCIAL HIGHLIGHTS:
Selected data for each share of capital stock outstanding
through each year is presented below5:
1997 1996 1995 1994
1993
Net Asset Value, Beginning of Period (B)$134.23$113.94$94.04$1
09.61 $89.52
Income From Investment Operations
Net Investment Income 4.42 3.77 3.40 2.91 6.22
Net Gains or Losses on Securities 3.80 20.22 19.97
(11.53)16.37
(both realized and unrealized)
Total From Investment Operations 8.22 23.99 23.37
(8.62)22.59
Less Distributions
Dividends (from net investment
income) (A) (4.10) (3.70) (3.47)(6.95)
(2.50)
Distributions (from capital gains) (A) --
- - -- -- __-- --
Total Distributions (4.10) (3.70) (3.47)(6.95)
(2.50)
Net Asset Value, End of Period (C) $138.35 $134.23$113.94$94.04
$109.61
Total Return 6.13% 20.81%25.78%
(8.84)%25.55%
Ratios/Supplemental Data
Net Assets, End of Period ($ million) 2.63 2.56 2.25 2.06
2.42
Ratio of Expenses to Average Net Assets61.69% 1.78% 2.04%
1.90%2.12%
Ratio of Net Income to Average Net Assets7 3.29% 2.98%
3.48%2.64%6.22%
Portfolio Turnover Rate 4.22% 11.83% 19.34% 2.48%
13.63%
Average Commission (dollars per sh.) 0.0462 N/A N/A N/A
N/A
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 20th day of October, 1997.
BRUCE FUND, INC.
By: /s/ Robert B. Bruce
Its President and Treasurer
By: /s/ R. Jeffrey Bruce
Its Vice President and Secretary
By: /s/ James S. VanPelt, Jr.
A Director
_______________________________
1 All persons named in this paragraph (a) assumed the position
held with Fund at either Ocober 17 or 18, 1983 except Mr.
Johnson, who was elected to the board of directors in December
1985.
2 Interested person as defined in the Investment Company Act of
1940.
3 R. 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.
