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. 21 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 30, 1998 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 30, 1998
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
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 1998 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 0.59%
Total Operating 1.59%
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
$16.00 $51.00 $88.00 $190.00
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, 1998. 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 19 199 19 19 19 199 19 19 198
8 97 6 95 94 93 2 91 90 9
Net Asset $13 $1 $11 $9 $1 $ $ $1 $ $
Value, 8.3 34 3.9 4. 09 89 83. 13 89 93.
Beginning 5 .2 4 04 .6 .5 53 .7 .8 04
of Period 3 1 2 9 9
(B)
Income
From
Investment
Operations
Net 4.3 4. 3.7 3. 2. 6. 2.2 2. 1. 2.5
Investment 2 42 7 40 91 22 2 02 53 7
Income
Net Gains 36. 3. 20. 19 (1 16 5.7 (3 25 (3.
or Losses 88 80 22 .9 1. .3 4 0. .1 20)
on 7 53 7 33 3
Securities ) )
(both
realized
and
unrealized
)
Total from 41. 8. 23. 23 (8 22 7.9 (2 26 (0.
Investment 20 22 99 .3 .6 .5 6 8. .6 63)
Operations 7 2) 9 31 6
)
Less
Distributi
ons
Dividends (4. (4 (3. (3 (6 (2 (1. (1 (2 (2.
(from net 28) .1 70) .4 .9 .5 97) .9 .7 52)
investment 0) 7) 5) 0) 5) 6)
income)
(A)
Distributi --. -- --. -- -- -- --- -- -- ---
ons (from -- . -- .- .- -.- .-- -.- -.- .--
capital -- - - - - -
gains) (A)
Total (4. (4 (3. (3 (6 (2 (1. (1 (2 (2.
Distributi 28) .1 70) .4 .9 .5 97) .9 .7 52)
ons 0) 7) 5) 0) 5) 6)
Net Asset $17 $1 134 $1 94 $1 $ $ $1 $89
Value, End 5.2 38 .23 13 .0 09 89. 83 13 .89
of Period 7 .3 .9 4 .6 52 .5 .7
(C) 5 4 1 3 9
Total 29. 6. 20. 25 (8 25 9.6 (2 30 (0.
Return 77% 13 81% .7 .8 .5 4% 5. .4 55%
% 8% 4% 5% 03 0% )
) %)
Ratios/Sup
plemental
Data
Net 3.2 2. 2.5 2. 2. 2. 2.1 2. 3. 3.4
Assets, 5 63 6 25 06 42 2 36 39 7
End of
Period ($
million)
Ratio of 1.5 1. 1.7 2. 1. 2. 2.1 2. 2. 1.8
Expenses 9% 69 8% 04 90 12 7% 47 25 3%
to Average % % % % % %
Net
Assets(2)
Ratio of 2.6 3. 2.9 3. 2. 6. 2.4 2. 1. 2.9
Net Income 0% 29 8% 48 64 22 9% 25 58 2%
to Average % % % % % %
Net
Assets(3)
Portfolio 2.6 4. 11. 19 2. 13 3.9 40 20 6.0
Turnover 0% 22 83% .3 48 .6 2% .9 .3 9%
Rate % 4% % 3% 6% 7%
____________________________________
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 1998 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.
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, l998, Bruce was managing
assets with an approximate value of $28.5 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.59% of the average net assets. The
adviser, Bruce and Co., received $29,366 during the
l998 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 66 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 62 President, Grundy
Industries, Inc. (roofing
material manufacturer) was
assistant to President
prior to l985.
(3) Ward M. Johnson l978 to present -
Age 61 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 10, l998, Robert B. Bruce owned
6,983 shares, R. Jeffrey Bruce owned 878 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 38.6% of such securities
at September 10, 1998.
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 30, 1998
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 30, 1998.
Date: October 30, 1998
TABLE OF CONTENTS
PART B
General
Description............................................
1
Investment Objectives and Policies: 1
Management of the Fund 3
Control Persons and Principal Holders of Securities: 4
Investment Advisory and Other Services: 4
Brokerage Allocation: 5
Capital Stock and Other Securities: 6
Purchase, Redemption and Pricing of Stock Being
Offered: 7
Tax Status: 7
Underwriters: 7
Financial Statements as of June 30, 1998 7
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 2.60% in 1998, 4.22%
in 1997, and 11.83% in 1996. 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
Name and Address Positions Held Occupation During
With Registrant1 the Past Five Years
Robert B. Bruce2 Director, See Prospectus,
1340 Asbury Chairman of the "Management of
Avenue Board, Fund"
Winnetka, IL President,
60093 Treasurer
Ward M. Johnson Director See Prospectus
Savannah, GA
31406
James S. Van Director See Prospectus
Pelt, Jr.
1393 Edgewood
Lane
Winnetka, IL
60093
R. Jeffrey Bruce Vice President, 1983 to present -
2,3 Secretary Vice President of
1049 W. Montana Bruce and Co.
Chicago, IL
60614
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, 1998:
Robert B. Bruce, 37.6%.
(c) Robert B. Bruce, President of the Fund and
principal owner of Bruce and Co., investment adviser to
the Fund, presently owns 6,983 shares of the Fund, and
his wife owns 450 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:
_______________________________
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.
