BRUCE FUND, INC.
REPORT TO SHAREHOLDERS
_______________
Six Months Ended
December 31, 1998
January 13, 1999
Management Discussion and Analysis
- -----------------------------------------------
The Bruce Fund shares produced a total return of -
5.9% in the six months ended
December 31, 1998, compared to a total return of 8.5% for
the S&P 500 Index for the
same period.
Interest rates declined slightly in the period
resulting in a small gain overall for the
bonds in the portfolio. The common stocks in the portfolio
were uniformily weak during
the period and were responsible for the decline. The
strength in the stock market averages
was concentrated and generally favored larger
capitalization issues. Small capitalization
stocks similar to ours performed poorly in both relative
and absolute terms.
The percentage of Fund assets in common stocks again
declined in the period. We
continue to believe the most prudent investment opportunity
is in U.S. Treasury Securities
and thus a majority of the Fund rests there.
Shareholders are invited to use (800)347-8607 to
obtain any Fund information.
Sincerely,
Robert B. Bruce
BRUCE FUND, INC.
BALANCE SHEET
DECEMBER 31, 1998
(Unaudited)
ASSETS
Investments, at Market Value, (Cost $2,203,602)
$2,844,188
Cash 161,291
Dividends Receivable 593
Interest Receivable 1,019
TOTAL ASSETS $3,007,091
LIABILITIES
Dividends Payable $ 2,045
Accrued Expenses 16,654
TOTAL LIABILITIES $ 18,699
CAPITAL
Capital Stock (20,280 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 200,000
Shares Authorized) $ 20,280
Paid-in Surplus 2,105,951
Accumulated Undistributed Net Investment Income
81,658
Accumulated Net Realized Gains
on Investments 139,918
Net Unrealized Appreciation on Investments
640,585
TOTAL CAPITAL (NET ASSETS) $2,988,392
TOTAL LIABILITIES AND CAPITAL $3,007,091
NET ASSET VALUE (Capital) Per Share $ 147.35
The accompanying notes to financial statements are an
integral part of this statement.
BRUCE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(Unaudited)
INVESTMENT INCOME
Dividends $ 1,186
Interest 61,799
$ 62,985
EXPENSES
Management Fees $ 15,666
Custodian/Security Transaction 368
Directors 102
Transfer Agent Fees 736
Legal Fees 276
Audit and Accounting Fees 5,888
Insurance 478
Printing 368
$ 23,882
NET INVESTMENT INCOME $ 39,103
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net Realized Gains on Investments 394,069
Net Change in Unrealized Appreciation on Investments
(621,802)
NET LOSS ON INVESTMENTS $227,773
NET CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS ($188,630)
The accompanying notes to financial statements are an
integral part of these statements.
BRUCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(Unaudited)
OPERATIONS
Net Investment Income $ 39,103
Net Realized Gain on Investments 394,069
Net Change in Unrealized Appreciation on Investments
(621,802)
Net Decrease in Net Assets Resulting from Operation
$ 188,630
DISTRIBUTION TO SHAREHOLDERS
Distributions from Net Investment Income $ (79,767)
Distributions from Long Term Capital Gains
(239,302)
Total Distributions
(319,069)
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued $ 15,030
Increase from Shares Issued in Reinvested
Distributions 316,024
Cost of Shares Redeemed (85,839)
Increase in Net Assets Resulting from Capital
Stock Transactions $245,215
TOTAL DECREASE $(262,484)
NET ASSETS
Beginning of Fiscal Year $3,250,876
At December 31, 1998 $2,988,392
The accompanying notes to financial statements are in
integral part of these statements.
BRUCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
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
and reporting practices
prescribed for the mutual fund industry.
A description of the significant accounting policies
follows:
1. Portfolio valuation: Market value of
investments is based on the last sales
price reported on the last trading day of the Fund's fiscal
year. If there were no reported
sales on that day, the investments are valued using the
mean of the closing bid and asked
quotations obtained from published sources. Unlisted
securities for which quotations are
available are valued at the closing bid price.
2. Securities transactions and investment income:
Securities transactions are
recorded on a trade-date basis. Dividend income and
distributions to shareholders are
recorded on the ex-dividend date, interest income is
recorded as earned, and discounts on
investments are accreted into income using the effective
interest method. Realized gains
or losses from securities transactions are recorded on the
specific identified cost basis for
both book and tax purposes. At December 31, 1998, the cost
of investments held was
$2,203,602 for both financial reporting and federal income
tax purposes. On a tax basis at
December 31, 1998, gross unrealized appreciation on
investments was $746,482 and gross
unrealized depreciation on investments was $(105,897).
NOTE B - CAPITAL STOCK:
During the six months ended December 31, 1998 there
were 502 shares redeemed;
90 shares were issued and 2,144 shares were issued through
dividend reinvestment.
NOTE C - PURCHASES AND SALES OF SECURITIES:
During the six months ended December 31, 1998,
purchases and sales of securities
with original maturities of greater than one year were
$986,554 and $1,147,611,
respectively.
NOTE D - RELATED PARTIES
Bruce and Company, an Illinois corporation, is the
investment advisor of the Fund
and furnishes investment advice, provides office space and
facilities, pays the
compensation of all officers and employees of the Fund, and
pays the cost of all
prospectuses (other than those mailed to current
shareholders). Compensation to Bruce
and Company for its services under the Investment Advisory
Contract is paid monthly
based on the following:
Annual Percentage Fee Applied to Net
Average Assets of
Fund
1.0%
Up to $20,000,000; plus
0.6%
$20,000,000 to $100,000,000;
plus
0.5%
over $100,000,000.
As of December 31, 1998, Robert B. Bruce owned 7,817
shares, R. Jeffrey Bruce
owned 983 shares, and James S. Van Pelt, Jr., owned 58
shares of the Fund. Robert B.
Bruce is a director of the Fund; both Robert B. Bruce and
R. Jeffrey Bruce are officers of
the Fund and are officers, directors and owners of the
investment advisor, Bruce &
Company. James S. Van Pelt, Jr., is a director of the
Fund.
NOTE E - TAXES:
The Fund has made distributions to its shareholders
so as to be relieved of all
Federal income tax under provisions of current tax
regulations applied to regulated
investment companies, and personal holding companies.
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.
BRUCE FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1998
(Unaudited)
Common Stocks (19.55%)
No. of
Market
Shares Issue Cost
Value
Property-Casualty Insurance (5.08%)
4,562 RLI Corp. 42,335
151,686
Cosmetics (0.19%)
482,000 *Chantal Pharm. 59,194
5.784
Medical Services (8.56%)
23,137 *InSight Health 73,762
112,793
16,100 *Atrix Labs. 128,213
142,888
Energy Services (4.55%)
37,500 *Team, Inc. 105,895
135,937
Utilities (1.17%)
2,600 *Unisource Energy 47,480
35,100
Communications
Total Common
Stocks $456,879
$584,188
Bonds (75.62%)
Market
Principal Cost
Value
U.S. Government (75.62%)
$4,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
5-15-2018 $ 811,617 $1,365,000
$4,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
11-15-2026 $ 935,106 $895,000
Total Bonds $1,746,723
$2,260,000
Total Investments (95.17%) $2,203,603
$2,844,188
Cash and Other Assets, Less
Liabilities (4.83%)
$144,204
TOTAL NET ASSETS (100%)
$2,988,392
The accompanying notes to financial statements
are an integral part of this schedule.
*Non-cash income producing.
BRUCE FUND, INC.
REPORT TO SHAREHOLDERS
_______________________
Six Months Ended
December 31, 1998
BRUCE FUND, INC.
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
(312)236-9160
