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. 23 X
SEC File No. 2-27183
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 23
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
(..continued)
1
BRUCE FUND, INC.
20 North Wacker
Drive
Suite 2414
Chicago, Illinois
60606
(312)236-9160
BRUCE FUND, INC. / PROSPECTUS
Management of the Bruce Fund, a diversified, open-end no-load
management
company, attempts
to achieve the Fund's objective of long-term capital appreciation
primarily
through investments
in common stock and debt securities; income is a secondary
consideration. The
Fund may also
invest in other securities.
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.
___________________________
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
BRUCE FUND, INC - INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
Bruce Fund's primary investment objective is long term capital
appreciation. It is a no-
load diversified open-end management investment company. The Fund
manager seeks
to achieve
the objective by investing primarily in domestic common stocks and
bonds,
including "zero
coupon" government bonds. 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 if the Fund management (Bruce and Co.) believes such
investments offer
possibilities of capital appreciation. Except as otherwise indicated,
the Fund's
investment
objective and policies may be changed without a vote of shareholders.
Because
the Fund is
"open-end", there are an unlimited number of shares available for sale
by the
Fund to investors at
any time
The Fund may invest, without restriction, in future interest and
principal of
U.S.
Government securities, commonly known as "zero coupon" bonds.
Principal risks: The market prices of common stocks of small and medium
size
companies often fluctuate more than stocks of larger companies.
Accordingly, the
Fund's price
per share is likely to be more volatile in both "up" and "down" markets
than
most of the popular
stock averages. The issuers of debt securities, including "zero
coupon"
government bonds, are
expected to redeem the securities by payment to the investor of the
principal
amount at maturity.
However, market interest rates change, causing the current market value
of debt
securities at any
time to fluctuate. The value of the Fund's debt securities portfolio
may
decline when market
interest rates rise and increase when such rates decline. These
fluctuations
will be continuously
reflected in the net asset value of Fund shares. Investors must
recognize there
is a risk of loss of
money in investing in Fund shares, as there is in any investment
seeking capital
appreciation,
including securities issued by the U.S. Treasury.
Management style: To the extent the Fund invests in stocks of small
unseasoned
companies, the Fund involves greater risk than those that invest in
larger more
established
companies. Debt securities 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. 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. The
risk of loss or opportunity for gain on a debt security is less than on
an
equity security of the
same issuer, but there is risk that the market price of the debt
security may
decline below the
price at which it was acquired. There is also risk 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.
Past Performance: The chart and table below provide some indication of
the risks
of
investing in the Fund by illustrating how the Fund has performed from
year to
year, and
comparing this information to a broad measure of market performance.
Past
performance is not
necessarily an indication of future performance.
Total Returns for Years Ending June 30
For the period included in the bar chart, the Fund's highest return for
a
calendar quarter was
25.05% ( the 2nd fiscal quarter of 1996), and the Fund's lowest return
for a
calendar quarter was
- -26% (the 1st fiscal quarter of 1991).
Average Annual Total Returns
Russell 2000
For periods ended September 30, 1999 Fund Growth Index
One Year -19.32% +32.63%
Five Years +11.25% +12.16%
Ten Years + 5.55% + 9.89%
The Russell 2000 Growth Index is an unmanaged index comprised of common
stocks
of 2000
small U.S. companies with higher than average forecasted growth
orientation.
Index returns
assume reinvestment of dividends and, unlike the Fund's returns, do not
reflect
any fees or
expenses.
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%
This example is intended to help you compare the cost of
investing in the
Fund with the
cost of investing in other mutual funds.
This Example assumes that you invest $10,000 in the Fund for the
time
periods indicated
and then redeeem all of your shares at the end of those periods. The
Example
also assumes that
your investment has a 5% return each year, that dividends and
distributions are
reinvested, and
that the Fund's operating expenses remain the same each year. Although
the
actual expenses may
be higher or lower, based on these assumptions your costs would be:
1 year
3 years
5 years
10 years
$168.00
$521.00
$898.00
$1,955.00
Objectives, Strategies and Related Risks: The investment objective and
principal
strategies described above may be changed at any time without
shareholder
approval. 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.
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, such as "zero coupon" bonds).
Management may, by
reason of the exception to this restriction, invest assets of the Fund
without
limit in such
Government securities.
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.
Management, Organization and Capital Structure: 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. Bruce and Co., presently manages
no other
mutual fund or
investment company. Under the Agreement Bruce and Co. is, subject to
the
authority of the
Fund's board of directors, responsible for the overall management of
the Fund's
business affairs.
This Agreement is subject to annual review and will continue in force
if
specifically approved
annually by the stockholders.
The advisor, Bruce and Co., is an Illinois corporation,
controlled by
Robert B. Bruce; it is
located at Suite 2414, 20 North Wacker Drive, Chicago, Illinois 60606.
Bruce and Co.'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. The
adviser,
Bruce and Co.,
received $29,779 during the l999 fiscal year (1.00% of average net
assets)
The Fund 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.
Pricing of Fund Shares TC "Determination of Net Asset
Value" \f C
\l "1" :
Fund shares are priced at net asset value, which management determines
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.
Purchasing Fund Shares: 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.
Redemption of Fund Shares: 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.
Dividends and Distribution: 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. The dividends and long-term capital gains
distributions
are taxable to the
recipient whether received in cash or reinvested in additional shares.
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.
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.
Pending Legal Proceedings: There are no legal proceedings to which the
Fund or
the
adviser is a party.
Financial Highlights
The financial highlights table is intended to help you understand
the
Fund's financial
performance for the past five years. Certain information reflects
financial
results for a single Fund share.
The total returns in the table represent the rate that an investor
would have
earned [or lost] on an
investment in the Fund (assuming reinvestment of all dividends and
distributions. This information has
been audited by Arthur Andersen L.L.P., whose report, along with the
Fund's
financial statements, are
included in the Statement of Additional Information and in the annual
report to
shareholders, either or
both of which are available upon request.
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%
ORDER FORM FOR PURCHASING BRUCE FUND SHARES
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
Additional information about the Fund may be found in the
Statement of
Additional Information, and in shareholder reports. Shareholder
inquiries may be
made by calling the Bruce Fund at 1-800-347-8607. The Statement of
additional
Information contains more information on Fund investments and
operations. The
semiannual and annual shareholder reports contain a discussion of the
market
conditions
and the investment strategies that significantly affected the Fund's
performance
during
the last fiscal year, as well as a listing of portfolio holdings and
financial
statements.
These and other fund documents may be obtained without charge from the
following
sources:
BY PHONE: Call Bruce Fund at 1-800-347-8607
BY MAIL: Bruce Fund, Inc. at the above address
or
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009
(a duplication fee is charged)
IN PERSON: Public Reference Room
Securities and Exchange Commission
Washington, D.C.
(call 1-800-SEC-0330 for more information
The Statement of Additional Information is incorporated by
reference into
this
prospectus (is legally a part of this prospectus).
Investment Company Act File Number: 811-1528
1 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%.
1
9
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. Certain information is incorporated by
reference to
the Report to Shareholders dated August 18, 1999. The Report to
Shareholders is
available, without charge, upon request by calling 1-800-347-8607.
This
Statement of
Additional Information relates to the Prospectus dated October 15,
1999.
Date: October 15, 1999
TABLE OF CONTENTS
Fund
History................................................................
.........
..........................................................1
Classification: 1
Investment Strategies and Risk 1
Fund
Policies:..............................................................
.........
...........................................................1
Management of the Fund 3
Control Persons and Principal Holders of Securities: 3
Investment Advisory and Other Services: 4
Brokerage Allocation: 6
Capital Stock and Other Securities: 7
Purchase, Redemption and Pricing of Shares: 7
Taxation of the Fund 7
Underwriters: 8
Financial Statements as of June 30, 1999 8
STATEMENT OF ADDITIONAL INFORMATION
Fund History: Bruce Fund, Inc. is a Maryland corporation
incorporated on
June 20, 1967. .The Fund's
only business during the past five years has been an investment
company. The
name of the Fund was changed
to BRUCE FUND, INC. in October 1983.
Classification: The Fund is an open end, diversified, management
investment company.
Investment Strategies and Risks: The principal strategies
followed in
seeking to achieve the Fund's
primary investment objective of long term capital appreciation are
described in
the prospectus. 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 if the Fund
management
believes such investments offer
possibilities of capital appreciation. The Fund may also invest in
securities
convertible into common stocks,
preferred stocks, other debt securities and warrants. The Investment
Restrictions, to which the Fund is
subject, limit the percentage of total fund assets that 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.
Fund 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.
MANAGEMENT OF THE FUND
The Fund is managed by its officers and directors. It has no advisory
board.
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.
*R. Jeffrey Bruce is Vice President and Secretary of the Fund,
and is Vice
President of Bruce and Co.,
the Fund manager. He has held these positions since 1983. R. Jeffrey
Bruce is
the son of Robert B. Bruce. (*
Indicates Affiliated Person)
Compensation Table: No director or officer receives compensation
from the
Fund. Robert B. Bruce and
R. Jeffrey Bruce are officers and stockholders of the Fund manager,
Bruce and
Co., which is paid a
management fee by the Fund. There are no concessions to directors or
affiliated
persons who invest in Fund
shares.
Control Persons and Principal Holders of Securities
(a) Robert B. Bruce is believed by management to be the only person
who owns
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) Robert B. Bruce owned 41.9% of the outstanding shares of the Fund
at June
30, 1999. Mr.
Bruce is the only person known to the Board of Directors of the Fund to
be the
beneficial owner of more than
5%:
(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 the son of Robert B.
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
,1998 was
$29,366, and
1997 was $25,720.
(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 Shares
See Prospectus, "Purchasing Fund Shares " and "Redemption of Fund
Shares".
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.
Taxation of the Fund
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.
(3) Balance Sheet.
(4) Statement of Operations, for year ended June 30, 1999.
(5) Statement of Changes in Net Assets, years ended June 30, 1999 and
`98.
(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 statements 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 of the requirements
for
effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933
and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly
authorized, in the City of Chicago and State of Illinois on the 1st day
of
November, 1999.
BRUCE FUND, INC.
By: __Robert B. Bruce_____________
Its President and Treasurer
By:__R. Jeffrey Bruce_______________
Its Vice President and Secretary
By:________________________________
A Director
By:________________________________
A Director
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%.
5
5
