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. 22 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)
0Immediately upon filing pursuant to paragraph (b)
1On October 15, 1999 pursuant to paragraph (b)
060 days after filing pursuant to paragraph (a)
0On (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 15, 1999
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. TC "General
Description" \f
C \l "1"
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 TC "Fund Expenses" \f C \l "1"
The following table illustrates all expenses and fees that
a shareholder
of the Fund will incur.
The expenses set forth below are for the 1999 fiscal year.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases
0.00%
Sales Load Imposed on Reinvested
Dividends
0.00%
Contingent Deferred Sales Load
0.00%
Redemption Fees
0.00%
Exchange Fees
0.00%
Annual Fund Operating Expenses
Management Fees
1.00%
12b-1 Fees
0.00%
Other Expenses
0.64%
Total Operating Expenses
1.64%
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
$52.00
$90.00
$196.00
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 TC "Condensed Financial
Information" \f C \l "1"
(for a share outstanding throughout the year)
The following Condensed Financial Information of the Fund
is for the ten
years ended June 30,
1999. 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)
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Net Asset Value, Beginning of
Period (B)
$175.27
$138.35
$134.23
$113.94
$94.04
$109.61
$ 89.52
$ 83.53
$113.79
$ 89.89
Income From Investment
Operations
Net Investment Income
4.02
4.32
4.42
3.77
3.40
2.91
6.22
2.22
2.02
1.53
Net Gains or Losses on Securities
(both realized and unrealized)
(26.18)
36.88
3.80
20.22
19.97
(11.53)
16.37
5.74
(30.33)
25.13
Total from Investment Operations
(22.16)
41.20
8.22
23.99
23.37
(8.62)
22.59
7.96
(28.31)
26.66
Less Distributions
Dividends (from net investment
income) (A)
(4.40)
(4.28)
(4.10)
(3.70)
(3.47)
(6.95)
(2.50)
(1.97)
(1.95)
(2.76)
Distributions (from capital gains)
(A)
(13.20)
- --. --
- --. --
- --. --
- --.--
- --.--
- ---.--
- ---.--
- ---.--
- ---.--
Total Distributions
(17.60)
(4.28)
(4.10)
(3.70)
(3.47)
(6.95)
(2.50)
(1.97)
(1.95)
(2.76)
Net Asset Value, End of Period (C)
$135.51
$175.27
$138.35
134.23
$113.94
94.04
$109.61
$ 89.52
$ 83.53
$113.79
Total Return
(13.46%)
29.77%
6.13%
20.81%
25.78%
(8.84%)
25.55%
9.64%
(25.03%)
30.40%
Ratios/Supplemental Data
Net Assets, End of Period ($
million)
2.60
3.25
2.63
2.56
2.25
2.06
2.42
2.12
2.36
3.39
Ratio of Expenses to Average Net
Assets(2)
1.64%
1.59%
1.69%
1.78%
2.04%
1.90%
2.12%
2.17%
2.47%
2.25%
Ratio of Net Income to Average Net
Assets(3)
2.59%
2.60%
3.29%
2.98%
3.48%
2.64%
6.22%
2.49%
2.25%
1.58%
Portfolio Turnover Rate
34.78%
2.60%
4.22%
11.83%
19.34%
2.48%
13.63%
3.92%
40.96%
20.37%
____________________________________
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 1999 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% for the year ended June 30, 1994. 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% for the year ended June 30, 1994.
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 TC "Investment Restrictions" \f C
\l "1" : 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 TC "Risk Factors" \f C \l "1" : 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 TC "Management of the Fund" \f C \l "1"
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, l999,
Bruce was managing assets with an approximate value of $27
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
Percentage Fee
Applied to Average
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.64% of the
average net
assets. The adviser, Bruce and
Co., received $29,779 during the l999 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
(1) *Robert B. Bruce
Age 67
Business Experience
for Last Five Years
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.
Age 63
l983 to present - President, Grundy
Industries, Inc. (roofing material
manufacturer) was assistant to President
prior to l985.
(3) Ward M. Johnson
Age 62
l978 to present - 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 October 6, l999, Robert B. Bruce owned 7,817
shares, R. Jeffrey
Bruce owned 1,033
shares, and James S. Van Pelt owned 59 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 TC "Capital Stock" \f C \l "1"
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 41.9% of such
securities at October 6, 1999.
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 TC "Purchase of Securities
Being Offered" \f C \l "1"
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 TC "Determination of Net
Asset Value" \f
C \l
"1" : 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 TC "Redemption or Repurchase" \f C \l
"1"
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 TC "Pending Legal Proceedings" \f C
\l
"1"
There are no legal proceedings to which the Fund or the adviser
is a party.
GENERAL TERMS TC "General Terms" \f C \l "1"
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 TC "Dividend Election" \f C \l "1"
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: _________________________________
(please print)
Name: _________________________________
Street: _________________________________
Street: _________________________________
City: ___________ State: _________ Zip:_____
City: ___________ State: _________ Zip:_____
_______________________________________
Signature
_______________________________________
Signature
If shares are to be registered jointly, all owners must sign.
Any registration
in the names of two or more co-owners
will, unless otherwise specified, be as joint tenants with right
of survivorship
and not as tenants in common. Shares
may be registered in the name of a custodian for a minor under
applicable state
law. In such cases, the name of the
state should be indicated, and the taxpayer identification or
social security
number should be that of the minor.
PROSPECTUS
October 15, 1999
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 15, 1999.
Date: October 15, 1999
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: 6
Capital Stock and Other Securities: 7
Purchase, Redemption and Pricing of Stock Being Offered: 7
Tax Status: 7
Underwriters: 8
Financial Statements as of June 30, 1999 8
General Information and History:
Bruce Fund, Inc.'s (the "Fund") only business during the
past five years
has been an open-end no-load
investment company. The name of the Fund was changed in October
1983, following
stockholder approval of such
change, to BRUCE FUND, INC. at a special meeting held October
17, 1983. At all
times prior thereto, from the
Fund's formation in 1967, its name was THE HEROLD FUND, INC.
Other general
information and history is set
forth in the Prospectus.
Investment Objectives and Policies:
The Fund has adopted certain investment restrictions which
are matters of
fundamental policy and cannot be
changed without the approval of the holders of a majority of the
outstanding
shares of the Fund as defined by the
Investment Company Act. These fundamental policies are:
1. Securities of other investment companies will not be
purchased,
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 34.78% in 1999, and 2.60% in
1998. 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:
Name and Address
Positions Held With Registrant
Principal Occupation During the
Past Five Years
Robert B. Bruce
1340 Asbury Avenue
Winnetka, IL 60093
Director, Chairman of the Board,
President, Treasurer
See Prospectus,
"Management of Fund"
Ward M. Johnson
Savannah, GA 31406
Director
See Prospectus
James S. Van Pelt, Jr.
1393 Edgewood Lane
Winnetka, IL 60093
Director
See Prospectus
R. Jeffrey Bruce 2,
1049 W. Montana
Chicago, IL 60614
Vice President, Secretary
1983 to present - Vice President
of 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. 3-601 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, 1999: Robert B. Bruce,
41.9%.
(c) Robert B. Bruce, President of the Fund and principal owner
of Bruce and
Co., investment adviser to the
Fund, presently owns 7,817 shares of the Fund, and his wife owns
502 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 1999 was
$29,779 and 1998
was $29,366.
(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, 1999.
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:
1999
$ 500
1998
$4,000
1997
$2,000
(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, 1999,
including:
(1) Report of independent public accountants, dated August 18,
1999.
(2) Schedule of Investments, at June 30, 1999.
(3) Balance Sheet at June 30, 1999.
(4) Statement of Operations, for year ended June 30, 1999.
(5) Statement of Changes in Net Assets, for years ended June
30, 1999 and
1998.
(6) Notes to Financial Statements.
Other information respecting Bruce Fund, Inc. is included in
Part C, filed
heretofore.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS PRIVATE
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,
1999, and the related statement of operations for the year then
ended, the
statements of changes in net assets for each of the two years
then ended,
and the financial highlights included in Note G for each of the
five years
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, 1999, 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, 1999, the results of
its
operations for the year then ended, the changes in its net
assets for each
of the two years then ended, and the financial highlights for
each of the
five years then ended, in conformity with generally accepted
accounting
principles.
ARTHUR ANDERSEN
LLP
Chicago, Illinois
August 18, 1999
BRUCE FUND, INC. PRIVATE
SCHEDULE OF INVESTMENTS
June 30, 1999
Common Stocks (25.30%)
No. of Market
Shares Issue Cost
Value
Property-Casualty Insurance
(6.81%)
4,562 RLI Corp. $ 42,335
$ 176,778
Cosmetics (0.25%)
382,000 *Chantal Pharm. 40,975
6,494
Medical Services (11.62%)
23,137 *InSight Health
73,762 147,498
16,100 *Atrix Labs. 128,213
153,956
Energy Services (5.42%)
37,500 *Team, Inc. 105,895
140,625
Utilities (1.20%)
2,600 *Unisource Energy 47,480
31,038
Total Common
Stocks $438,660
$656,389
Bonds (75.76%)
Market
Principal Cost
Value
U.S. Government (75.76%)
$4,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
5-15-2018 $817,018 $1,207,500
$4,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
11-15-2026 959,690 757,500
Total Bonds $1,776,708
$1,965,000
Total Investments (101.06%)
$2,215,368 $2,621,389
Cash and Other Assets, Less
Liabilities (-1.06%)
$-27,570
TOTAL NET ASSETS (100%)
$2,593,819
The accompanying notes to financial
statements are an integral part of this
schedule.
*Non-cash income producing.
BRUCE FUND, INC. PRIVATE
BALANCE SHEET
JUNE 30, 1999
ASSETS
Investments, at Market Value (Cost $2,215,368) $2,621,389
Cash 25,740
Dividends Receivable 639
Interest Receivable 516
Prepaid Insurance 572
TOTAL ASSETS $2,648,856
LIABILITIES
Accrued Expenses $ 15,387
Payable for Fund Shares Redeemed 39,650
TOTAL LIABILITIES $55,037
CAPITAL
Capital Stock (19,141 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 200,000
Shares Authorized) $ 19,141
Paid-in Surplus 1,951,743
Accumulated Undistributed Net Investment Income 216,788
Accumulated Net Realized Gains on Investments 126
Net Unrealized Appreciation on Investments 406,021
TOTAL CAPITAL (NET ASSETS) $2,593,819
TOTAL LIABILITIES AND CAPITAL $2,648,856
NET ASSET VALUE (Capital) Per Share $ 135.51
The accompanying notes to financial statements are an integral
part of
this statement.
BRUCE FUND, INC. PRIVATE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
INVESTMENT INCOME
Dividends $ 2,418
Interest 123,479
$ 125,897
EXPENSES
Management Fees $ 29,779
Custodian/Security Transaction 1,541
Directors 197
Transfer Agent Fees 11,959
Legal Fees 548
Audit and Accounting Fees 14,150
Insurance 1,000
Printing
632
Total Expenses Before Expense Reimbursement
59,806
Expense Reimbursement (11,000)
Net Expenses 48,806
NET INVESTMENT INCOME 77,091
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net Realized Gains on Investments 377,850
Net Change in Unrealized Appreciation on Investments
(882,797)
NET LOSS ON INVESTMENTS (504,947)
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS
$(427,856)
The accompanying notes to financial states are an integral part
of
this statement.
BRUCE FUND, INC. PRIVATE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
OPERATIONS
Net Investment Income $ 77,091 $79,621
Net Realized Gains on Investments 377,850
116,718
Net Change in Unrealized Appreciation
on Investments (882,797) 555,931
Net Increase (Decrease) in Net Assets
Resulting from Operations $(427,856)
$752,270
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income $ (79,767)
$(77,341)
Distributions from Net Capital Gains
(239,302) -0-
Decrease in Net Assets Resulting from
Distributions to Shareholders $(319,069)
$(77,341)
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued $59,311 $39,570
Increase from Shares Issued in Reinvested
Distributions 316,024 76,550
Cost of Shares Redeemed (283,482) (166,035)
Increase (Decrease) in Net Assets Resulting from
Capital Stock Transactions $ 91,853
$(49,915)
TOTAL INCREASE (DECREASE) $(655,072) $625,014
NET ASSETS
Beginning of Year 3,250,876 2,625,862
End of Year (including accumulated undistributed
net investment income of $216,788 and $219,464,
respectively) $2,595,804 $3,250,876
The accompanying notes to financial statements are an integral
part of this
statement.
BRUCE FUND, INC. PRIVATE
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
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 preparation of financial statements in
conformity
with GAAP requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and
disclosure
of contingent assets and liabilities at the date of the
financial
statements and the reported amounts of revenues and expenses
during
the reporting period. Actual results could differ from those
estimates.
A description of the significant accounting policies
follows:
1. Portfolio valuation: Market value of investments is
based
on the last sales price reported on each valuation date. 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, 1999, the cost of investments held was $2,215,368 for
both
financial reporting and federal income tax purposes. At June
30,
1999, gross unrealized appreciation on investments was $659,134
and
gross unrealized depreciation on investments was $(253,113) for
both
financial reporting and federal income tax purposes.
NOTE B - CAPITAL STOCK:
During the years ended June 30, 1999 and June 30, 1998,
there
were 1,950 and 1,101 shares redeemed; 398 and 233 shares issued
and
2,145 and 436 shares issued through dividend reinvestment,
respectively.
NOTE C - PURCHASES AND SALES OF SECURITIES: PRIVATE
During the year ended June 30, 1999, purchases and sales
of
securities with original maturities of greater than one year
were
$986,554 and $1,149,098 respectively.
NOTE D - RELATED PARTIES
Bruce and Company, an Illinois corporation, is the
investment
advisor of the Fund and furnishes investment advice. In addition
it
provides office space and facilities and pays the cost of all
prospectuses and financial reports (other than those mailed to
current
shareholders). During 1999 the investment adviser also
voluntarily
absorbed certain accounting, transfer agent and legal expenses
of the
Fund, that the investment adviser felt exceeded the amount that
would
have been charged to the Fund, based on its size. These
expenses
approximated $11,000 in 1999. 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, 1999, Robert B. Bruce owned 7,817 shares,
R. Jeffrey Bruce owned 1,033 shares, and James S. Van Pelt, Jr.,
owned
59 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
and 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.
NOTE F - DIVIDEND DISTRIBUTION:
During December 1998, the Fund announced a dividend from
net
investment income of $4.40 per share, aggregating $79,767 and a
long
term capital gain distribution of $13.20 per share aggregating
$239,302. These distributions were payable December 31, 1998 to
shareholders of record on December 30, 1998.
NOTE G - FINANCIAL HIGHLIGHTS: PRIVATE
Selected data for each share of capital stock outstanding
through each
year is
presented below :
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period (B) 175.27 $138.35
$134.23
$113.94 $94.04
Income From Investment Operations
Net Investment Income 4.02 4.32 4.42 3.77 3.40
Net Gains or (Losses) on Investments (26.18)
36.88 3.80 20.22
19.97
(both realized and unrealized)
Total From Investment Operations (22.16) 41.20 8.22
23.99 23.37
Less Distributions
Distribution (from net investment
income) (A) (4.40) (4.28) (4.10)
(3.70) (3.47)
Distribution (from net capital gain(A) (13.20) -
-
- -
Total Distributions (17.60) (4.28) (4.10)
(3.70)
(3.47)
Net Asset Value, End of Period (C) 135.51 $175.27
$138.35
$134.23 $113.94
Total Return (13.46%) 29.77% 6.13% 20.81%
25.78%
Ratios/Supplemental Data
Net Assets, End of Period ($ million) 2.60 3.25 2.63 2.56
2.25
Ratio of Expenses to Average Net Assets 1.64% 1.59% 1.69%
1.78% 2.04%
Ratio of Net Income to Average Net Assets 2.59% 2.60% 3.29%
2.98% 3.48%
Portfolio Turnover Rate 34.78% 2.60% 4.22% 11.83%
19.34%
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
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 15th day of
October, 1999.
BRUCE FUND, INC.
By: Robert B. Bruce
Its President and Treasurer
By: R.Jeffrey Bruce
Its Vice President and Secretary
By: James S. Van Pelt
A Director
By: Ward M. Johnson
A Director
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.
Interested person as defined in the Investment Company Act of
1940.
R. Jeffrey Bruce is the son of Robert B. Bruce.
In 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.
Figures are based on average daily shares
outstanding during year,
with the following exceptions: (A) number
of shares at dividend payment date, (B) number of shares at
beginning of year,
(C) number of shares at end of
year.
The 1996 ratio is based upon total expenses excluding
the loss on
defaulted bonds. Ratio of expenses to
average net assets before reimbursement in 1999 was
2.01%.
(..continued)
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