October 23, 2000
Bruce Fund, Inc.
20 North Wacker drive
Suite 2414
Chicago, IL 60606
(312) 236-9160
Securities and Exchange Commission
Attn. Brion Thompson
We are hereby refiling our latest 485BPOS filing as a 485APOS submission.
We have been apprised that our 1999 485BPOS should have been a 485APOS
submission. We feel the changes made in the 1999 485BPOS filing satisfied
the then newly issued requirements. Sales to new shareholders during
that time frame have been small (0-20).
A paper copy of the prospectus in question has been mailed, along with
the one that preceeded it, to the attention of Brion Thompson.
Sincerely, Jeff Bruce (312) 236-9160
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-lA
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
COWANY ACT OF 1940
Amendment No. 17
SEC File No. 811-1528
BRUCE FUND, INC.
[Exact Name of Registrant as Specified in Charter]
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
[Address of Principal Executive Offices]
(312) 236-9160
[Registrant's Telephone Number, including Area Code]
Robert B. Bruce
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
[Name and Address of Agent for Service]
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective
(check appropriate box)
___Immediately upon filing pursuant to paragraph (b)
___On October 12, 2000 pursuant to paragraph (b)
_X_60 days after filing pursuant to paragraph (a)
___On (date) pursuant to paragraph (a) of Rule 485
BRUCE FUND, INC.
20 N. 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 12, 2000
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
(chart)
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, 2000 Fund
Growth Index
One Year 18.17% 29.66%
Five Years 8.90% 12.42%
Ten Years 9.75% 16.26%
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
The following table illustrates all expenses and
fees that a shareholder of the Fund will
incur. The expenses set forth below are for the 2000
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
0.71%
Total Operating Expenses
1.71%
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
$175
$543
$936
$2,038
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: 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 $24,272 during the 2000 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: 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
Advisers, Inc., 431 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 no longer issued.
Redemption of Fund Shares: Shareholders have the right
to request the Fund to redeem
their shares by depositing their certificates at
Unified Advisers, Inc. with a written request
addressed to Unified Advisers, Inc. 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 :
2000 1999 1998 1997 1996
Net Asset Value, Beginning of Period (B) $135.51
$175.27 $138.35 $134.23 $113.94
Income From Investment Operations
Net Investment Income 4.41 4.02 4.32 4.42 3.77
Net Gains or (Losses) on Investments (3.77)
(26.18) 36.88 3.80 20.22
(both realized and unrealized)
Total From Investment Operations 0.64 (22.16)
41.20 8.22 23.99
Less Distributions
Distribution (from net investment
income) (A) (4.50) (4.40) (4.28)
(4.10) (3.70)
Distribution (from net capital gain(A) (3.50)
(13.20) - - -
Total Distributions (8.00) (17.60)
(4.28) (4.10) (3.70)
Net Asset Value, End of Period (C) $128.15 $135.51
$175.27 $138.35 $134.23
Total Return 1.44% (13.46%) 29.77% 6.13%
20.81%
Ratios/Supplemental Data
Net Assets, End of Period ($ million) $2.52 $2.60
$3.25 $2.63 $2.56
Ratio of Expenses to Average Net Assets 1.71% 1.64%
1.59% 1.69% 1.78%
Ratio of Net Income to Average Net Assets 3.55%
2.59% 2.60% 3.29% 2.98%
Portfolio Turnover Rate 22.26% 34.78% 2.60%
4.22% 11.83%
ORDER FORM FOR PURCHASING BRUCE FUND SHARES
GENERAL TERMS
This application is subject to acceptance by the
Fund in Chicago, Illinois. This application will
not be accepted unless accompanied by payment. The
passage of title to and delivery of shares purchased
(including shares hereafter purchased through dividend
reinvestment or otherwise), whether or not
certificates are issued, shall be deemed to take place
in Illinois. The applicant certifies that he or she
has
full capacity to enter into this subscription
agreement. The purchase price shall be the net asset
value in
effect at the time this application is accepted by the
Fund.
DIVIDEND ELECTION
Unless a shareholder otherwise directs, all income
dividends and capital gains distributions are
automatically reinvested in full and fractional shares
of the Fund. If you do NOT wish your dividends
and capital gains distributions reinvested in shares of
the Fund but wish instead to receive the full amount
of dividends and capital gains distributions in cash,
or to receive income dividends only in cash
(reinvesting capital gains distributions in shares of
the Fund), you should check the choice you wish to
make, and sign at the place indicated.
( ) I (We) elect to receive the full amount of
all dividends and capital gains distributions
hereafter paid on shares of Bruce Fund, Inc. registered
in the name(s) of the undersigned in cash, until
contrary written instructions are received by the Fund.
( ) I (We) elect to receive the full amount of
all income dividend distributions hereafter paid
on shares of Bruce Fund, Inc. registered in the name(s)
of the undersigned in cash, and approve the
automatic reinvestment of all capital gains
distributions in full and fractional shares of the
Fund, until
contrary written instructions are received by the Fund.
____________________________________
Signature
____________________________________
Signature of Co-Owner, if any.
If shares are to be
registered. jointly, all
owners must sign.
(NOTE: If this election is not signed, dividends and
capital gains distributions will be reinvested in Fund
shares, as described on the Order Form. If you elect
to receive dividends/capital gains in cash, this signed
Dividend Election must be returned with your Order Form
for Purchasing Bruce Fund Shares).
MAIL THIS ORDER FORM AND CHECK DIRECTLY TO UNIFIED
ADVISERS, INC.
ORDER FORM FOR PURCHASING BRUCE FUND SHARES
(Minimum initial investment of $1,000; $500,
thereafter)
Unified Advisers, Inc. Date:
431 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
Advisers, Inc..
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 12, 2000
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
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 for 1999 and
2000 was 2.01% and 2.18%, respectively.
3
1
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 July 31, 2000. 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 12, 2000.
Date: October 12, 2000
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:
4
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, 2000 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 68
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) Ward M. Johnson
Age 63
l998 to present - Publisher "Florida
Golfer"magazine; 1995 to 1998-
Manufacturer's agent representing
manufacturers of housewares, home
furnishings, consumer electronics
products, and office equipment.
(3) John R. Nixon
Age 59
Member, Chicago Board Options
Exchange, Trader
Mr. Bruce has been a director since l983; Mr. Ward
M. Johnson was elected in
December, l985 and Mr. Nixon was elected in December,
1999.
*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 42.5%, and R. Jeffrey Bruce
owned 5.9%, of the
outstanding shares of the Fund at June 30, 2000. No
other person is 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
8,384 shares of the Fund, and his
wife owns 538 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 2000
was $24,272,
during 1999 was $29,779, and during 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
Advisers, Inc., 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 Advisers, Inc. 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, 2000.
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:
2000
$2,000
1999
$ 500
1998
$4,000
(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,
2000, including:
(1) Report of independent public accountants, dated
July 31, 2000.
(2) Schedule of Investments.
(3) Balance Sheet.
(4) Statement of Operations, for year ended June 30,
2000.
(5) Statement of Changes in Net Assets, years ended
June 30, 2000
and 1999.
(6) Notes to Financial Statements.
Other information respecting Bruce Fund, Inc. is
included in Part C, filed heretofore.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of
Directors of BRUCE FUND, INC.:
We have audited the accompanying balance sheet of
BRUCE FUND, INC. (a
Maryland corporation), including the schedule of
investments, as of June 30, 2000, and the
related statement of operations for the year then
ended, the statements of changes in net
assets for each of the two years in the period then
ended, and the financial highlights
included in Note G for each of the five years in the
period then ended. These financial
statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with
auditing standards generally accepted
in the United States. 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, 2000,
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, 2000, the results of its operations for the year
then ended, the changes in its net assets for
each of the two years in the period then ended, and the
financial highlights for each of the
five years in the period then ended, in conformity with
accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 31, 2000
July
31, 2000
Management Discussion and Analysis
The Bruce Fund shares produced a total return of
1.44% for the year ended June
30, 2000, compared to a total return of 5.97% for the
S&P 500 Index for the same period.
Stocks in the portfolio were down slightly
overall, while the bonds were up
slightly for the year. Interest rates declined in the
period, resulting in gains for the bonds
held throughout the entire year. Two corporate
convertible notes were added to take
advantage of their high current yields and yield to
maturities. The stock market indices
proved to be very volatile and we believe still to
present unacceptable levels of risk.
Management would like to make clear that, as
stated in the Prospectus, the Fund's
objective is long-term capital appreciation from stocks
and/or bonds. Out-of-favor,
turnaround, and distressed situations are emphasized,
as well as growth stocks.
Shareholders are invited to use the toll-free
number (800) 347-8607 to obtain any
Fund information.
BRUCE FUND, INC.
BALANCE SHEET
JUNE 30, 2000
ASSETS
Investments, at Market Value (Cost $2,370,167)
$2,479,967
Cash 78,943
Dividends Receivable 442
Interest Receivable 6,428
Prepaid Insurance 522
TOTAL ASSETS $2,566,302
LIABILITIES
Accrued Expenses $ 20,663
Payable for Securities Purchased 20,725
TOTAL LIABILITIES $41,388
CAPITAL
Capital Stock (19,703 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 200,000
Shares Authorized) $ 19,703
Paid-in Surplus 1,998,431
Accumulated Undistributed Net Investment Income
220,911
Accumulated Net Realized Gains on Investments
179,069
Net Unrealized Appreciation on Investments
109,800
TOTAL CAPITAL (NET ASSETS) $2,524,914
TOTAL LIABILITIES AND CAPITAL $2,566,302
NET ASSET VALUE (Capital) Per Share $ 128.15
The accompanying notes to financial statements are an
integral part of this statement.
BRUCE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
INVESTMENT INCOME
Dividends $ 1,446
Interest
127,190
$ 128,636
EXPENSES
Management Fees $ 24,272
Custodian/Security Transaction 1,825
Directors 193
Transfer Agent Fees 10,755
Legal Fees 548
Audit and Accounting Fees 14,150
Insurance 1,051
Printing
342
Total Expenses Before Expense Reimbursement
53,136
Expense Reimbursement (11,242)
Net Expenses 41,894
NET INVESTMENT INCOME 86,742
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net Realized Gains on Investments
239,399
Net Change in Unrealized Appreciation on
Investments (296,221)
NET LOSS ON INVESTMENTS (56,822)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $29,920
The accompanying notes to financial statements are an
integral part of this statement.
BRUCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of Bruce Fund, Inc. (the
"Fund") have been prepared in conformity with
accounting principles generally accepted in the United
States ("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, 2000, the
cost of investments held was $2,370,167 for both
financial reporting and federal income tax purposes.
At June 30, 2000, gross unrealized appreciation on
investments was $390,822 and gross unrealized
depreciation on investments was $(281,022) for both
financial
reporting and federal income tax purposes.
NOTE B - CAPITAL STOCK:
During the years ended June 30, 2000 and June 30,
1999, there were 990 and 1,950 shares redeemed;
232 and 398 shares issued and 1,320 and 2,145 shares
issued through dividend reinvestment, respectively.
NOTE C - PURCHASES AND SALES OF SECURITIES:
During the year ended June 30, 2000, purchases and
sales of securities with original maturities of greater
than one year were $529,728 and $729,922 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 2000 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 $11,242 in 2000. 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
Average Net 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, 2000, Robert B. Bruce owned 8,384
shares and R. Jeffrey Bruce owned 1,166 shares.
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.
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 1999, the Fund announced a
dividend from net investment income of $4.50 per share,
aggregating $82,619 and a long term capital gain
distribution of $3.50 per share aggregating $64,259.
These
distributions were payable December 31, 1999 to
shareholders of record on December 30, 1999.
BRUCE FUND, INC.
SCHEDULE OF INVESTMENTS
June 30, 2000
Common Stocks (19.72%)
No. of Market
Shares Issue Cost Value
Property-Casualty Insurance (2.15%)
1,562 RLI Corp. $ 14,495 $
54,280
Cosmetics (0.11%)
282,000 *Chantal Pharm. 23,620
2,820
Medical Services (12.95%)
23,137 *InSight Health 73,762
151,835
16,100 *Atrix Labs. 128,214
150,938
5,000 *Serologicals 20,725
24,063
Energy Services (2.97%)
37,500 *Team, Inc. 105,895
75,000
Utilities (1.54%)
2,600 Unisource Energy 47,480
39,000
Total Common
Stocks $414,191
$497,936
Bonds (78.50%)
Market
Principal Cost Value
U.S. Government (70.89%)
$2,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
5-15-2018 $429,021 $661,875
$4,000,000 U.S. Treasury
"STRIPS", Bond
Principal, due
11-15-2026 1,011,035 825,000
$1,500,000 U.S. Treasury
"STRIPS",
Coupon, due
2-15-2027
289,233 303,281
Corporate Convertibles (7.61%)
$200,000 Res-Care 6% due
12-1-2004
125,750 100,000
$250,000 Viropharma 6%
due 3-1-2007
100,937 91,875
Total Bonds $1,955,976
$1,982,031
Total Investments (98.22%) $2,370,167
$2,479,967
Cash and Other Assets, Less
Liabilities (1.78%)
$44,947
TOTAL NET ASSETS (100%)
$2,524,914
The accompanying notes to financial statements are an
integral part of this schedule.
*Non-cash income producing.
BRUCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
OPERATIONS
Net Investment Income $ 86,742 $
77,091
Net Realized Gains on Investments 239,399
377,850
Net Change in Unrealized Appreciation
on Investments (296,221) (882,797)
Net Increase (Decrease) in Net Assets
Resulting from Operations
$ 29,920 $(427,856)
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income $
(82,619) $ (79,767)
Distributions from Net Capital Gains
(64,259) (239,302)
Decrease in Net Assets Resulting from
Distributions to Shareholders $(146,878)
$(319,069)
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued $ 30,650
$ 59,311
Increase from Shares Issued in Reinvested
Distributions 145,440 316,024
Cost of Shares Redeemed (128,037) (285,467)
Increase in Net Assets Resulting from
Capital Stock Transactions $ 48,053
$ 89,868
TOTAL INCREASE (DECREASE) $ (68,905) $
(657,057)
NET ASSETS
Beginning of Year 2,593,819 3,250,876
End of Year (including accumulated undistributed
net investment income of $220,911 and $216,788,
respectively) $2,524,914 $2,593,819
The accompanying notes to financial statements are an
integral part of these statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of
Directors of BRUCE FUND, INC.:
We have audited the accompanying balance sheet of
BRUCE FUND, INC. (a
Maryland corporation), including the schedule of
investments, as of June 30, 2000, and the
related statement of operations for the year then
ended, the statements of changes in net
assets for each of the two years in the period then
ended, and the financial highlights
included in Note G for each of the five years in the
period then ended. These financial
statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with
auditing standards generally accepted
in the United States. 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, 2000,
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, 2000, the results of its operations for the year
then ended, the changes in its net assets for
each of the two years in the period then ended, and the
financial highlights for each of the
five years in the period then ended, in conformity with
accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 31, 2000
NOTE G - FINANCIAL HIGHLIGHTS:
Selected data for each share of capital stock
outstanding through each year is presented below :
2000 1999 1998 1997 1996
Net Asset Value, Beginning of Period ( B)
$135.51 $175.27 $138.35
$134.23 $113.94
Income From Investment Operations
Net Investment Income
4.41 4.02 4.32 4.42 3.77 ..
Net Gains or (Losses) on Investments (3.77)
(26.18) 36.88 3.80
20.22
(both realized and unrealized)
Total From Investment Operations 0.64
(22.16) 41.20 8.22 23.99
Less Distributions
Distribution (from net investment
income) (A)
(4.50) (4.40) (4.28) (4.10) (3.70)
Distribution (from net capital gain(A)
(3.50) (13.20) ---
Total Distributions
(8.00) (17.60) (4.28) (4.10)
(3.70)
Net Asset Value, End of Period (C) $
128.15 $ 135.51 $ 175.27 $ 138.35
$ 134.23
Total Return
1.44% (13.46%) 29.77% 6.13% 20.81%
Ratios/Supplemental Data
Net Assets, End of Period ($ million) $
2.52 $ 2.60 $ 3.25 $ 2.63 $ 2.56
Ratio of Expenses to Average Net Assets
1.71% 1.64% 1.59% 1.69% 1.78%
Ratio of Net Income to Average Net Assets
3.55% 2.59% 2.60% 3.29% 2.98%
Portfolio Turnover Rate
22.26% 34.78% 2.60%
4.22% 11.83%
BRUCE FUND
OFFICERS AND
DIRECTORS
Robert B. Bruce
President and Treasurer
R. Jeffrey Bruce
Vice President and Secretary
John R. Nixon
Director
W. Martin Johnson
Director
Investment Adviser
Bruce and Co., Inc.
Chicago, Illinois
Custodian
Fifth Third Bank
Cincinnati, Ohio
Transfer Agent
Unified Advisers, Inc.
Indianapolis, Indiana
Counsel
McBride Baker & Coles
Chicago, Illinois
Independent Public Accountants
Arthur Andersen LLP
Chicago, Illinois
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 12th day of October, 2000.
BRUCE FUND, INC.
By: __Robert B. Bruce_____________
Its President and Treasurer
By:__R. Jeffrey Bruce_______________
Its Vice President and Secretary
By:___W. Martin Johnson_____________________________
A Director
By:___John R. Nixon_____________________________
A Director
ARTHUR ANDERSEN
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the use of our report dated
July 31, 2000, and to all references to our Firm
included in or made a part of this
Registration Statement on Form N-lA of Bruce Fund, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 10, 2000
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 for
1999 and 2000 was 2.01% and 2.18%, respectively.
3
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