UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number | 811-01528 |
(Exact name of registrant as specified in charter)
| 20 North Wacker Drive, Suite 2414 | Chicago, IL | 60606 |
| (Address of principal executive offices) | (Zip code) |
William J. Murphy
Unified Fund Services, Inc.
2960 N. Meridian Street, Ste. 300
(Name and address of agent for service)
Registrant's telephone number, including area code: | 312-236-9160 |
Date of fiscal year end: | 06/30 |
Date of reporting period: | 06/30/09 |
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
BRUCE FUND, INC.
REPORT TO SHAREHOLDERS
Annual Report
June 30, 2009
BRUCE FUND, INC.
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
(312) 236-9160
BRUCE FUND, INC.
Management’s Discussion and Analysis |
The Bruce Fund (the “Fund”) shares produced a total return of -11.20% for the year ended June 30, 2009, compared to a total return of -26.20% for the S&P 500 Index for the same period. While the results in the second half of the fiscal year were better than the first, we are still in negative territory. It seems for every positive holding, there would be a negative one. Attractive long term investment opportunities seemed scarce. Our positions in convertible bonds staged a rally in the last couple months as well as some of the common stocks we held. The U.S. Government bonds showed slight appreciation in the period and the cash balance remains above normal.
We are not of the opinion that the second half of the calendar year will see a marked improvement in the economy or the stock market in general. We have tried to position the Fund accordingly. We believe the time to be more aggressive is still further down the road. Management continues to screen investment opportunities for their long-term capital appreciation potential versus the risks that investment might present. Areas of recent interest have been various bonds selling at discounts to par value and offering a reasonable yield. The bonds as well as the stocks in the portfolio encompass significant investment risks, which are again outlined in the prospectus.
Shareholders are invited to use the toll-free number (800) 872-7823 to obtain any Fund information (including the proxy voting record), or can visit www.thebrucefund.com, to obtain the same.
Investment Results
The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-800-872-7823.
* The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The S&P 500 Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange-traded funds or other investment vehicles that attempt to track the performance of a benchmark index.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by calling the same number as above. Please read it carefully before investing.
The chart above assumes an initial investment of $10,000 made on June 30, 1999 and held through June 30, 2009. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.Investment returns and principal values will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price.
Current performance may be lower or higher than the performance data quoted. For more information on the Bruce Fund, and to obtain performance data current to the most recent month end, please call 1-800-872-7823. Investing in the Fund involves certain risks that are discussed in the Fund’s prospectus. Please read the prospectus carefully before you invest or send money.
FUND HOLDINGS– (Unaudited)
1As a percent of net assets.
Availability of Portfolio Schedule
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Qs are available at the SEC’s website at www.sec.gov. The Fund’s Form N-Qs are also available by calling the Fund at (800) 872-7823. The Fund’s Form N-Qs may be reviewed and copied at the Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
ABOUT YOUR FUND'S EXPENSES- (Unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period (January 1, 2009) and held for the entire period (through June 30, 2009).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Bruce Fund | Beginning Account Value January 1, 2009 | Ending Account Value June 30, 2009 | Expenses Paid During Period* January 1 – June 30, 2009 |
Actual | $1,000.00 | $1,173.16 | $4.99 |
Hypothetical** | $1,000.00 | $1,020.20 | $4.64 |
* Expenses are equal to the Fund’s annualized expense ratio of 0.93%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the partial year period).
** Assumes a 5% return before expenses.
BRUCE FUND, INC. |
SCHEDULE OF INVESTMENTS |
June 30, 2009 |
|
| | | | | | | | |
COMMON STOCKS - (34.98%) | | | | | | |
No. of Shares | | | Issue | | | Cost | | Market Value |
| Automotive/Transportation (2.64%) | | | | |
122,500 | | (a) | AMERCO | | | $ 7,194,045 | | $ 4,550,875 |
53,300 | | (a) | Amerigon, Inc. | | 374,699 | | 325,130 |
133,791 | | (a) | Noble International, Ltd. | | 1,795,793 | | 25,420 |
| | | | | | 9,364,537 | | 4,901,425 |
| | | | | | | | |
| Biological Products (0.09%) | | | | | |
107,410 | | (a) | Advanced Life Sciences Holdings, Inc. | 111,209 | | 54,779 |
58,305 | | (a) | Vion Pharmaceuticals, Inc. | 250,156 | | 114,861 |
| | | | | | 361,365 | | 169,640 |
| | | | | | | | |
| Business Services (0.47%) | | | | | |
130,000 | | (a) | Internet Capital Group, Inc. | 1,016,211 | | 874,900 |
| | | | | | | | |
| Chemicals (1.11%) | | | | | |
506,885 | | (a) | Omega Protein Corp. | | 2,671,525 | | 2,057,953 |
| | | | | | | | |
| Consumer Products (5.29%) | | | | | |
1,663,656 | | (a) | Alanco Technologies, Inc. | 3,609,525 | | 682,099 |
313,900 | | (a) | American Italian Pasta Co. - Class A | 1,302,443 | | 9,147,046 |
| | | | | | 4,911,968 | | 9,829,145 |
| | | | | | | | |
| Electric Services (2.45%) | | | | | |
294,849 | | (a) | Calpine Corp. | | 3,720,342 | | 3,287,566 |
20,000 | | | Integrys Energy Group, Inc. | 463,954 | | 599,800 |
50,000 | | | Pepco Holdings, Inc. | | 554,830 | | 672,000 |
| | | | | | 4,739,126 | | 4,559,366 |
| | | | | | | | |
| Energy/Energy Services (2.86%) | | | | |
80,000 | | (a) | Arena Resources, Inc. | | 709,600 | | 2,548,000 |
238,500 | | (a) | ATP Oil & Gas Corp. | | 9,589,070 | | 1,659,960 |
156,919 | | (a) | Double Eagle Petroleum Co. | 3,182,328 | | 781,457 |
80,000 | | (a) | Hercules Offshore, Inc. | | 2,461,778 | | 317,600 |
| | | | | | 15,942,776 | | 5,307,017 |
| | | | | | | | |
| Guided Missiles & Space Vehicles & Parts (0.89%) | | |
1,370,073 | | (a) | Astrotech Corp. | | 5,557,768 | | 1,644,088 |
| | | | | | | | |
| Health Services (6.10%) | | | | | |
597,347 | | (a) | America Service Group, Inc. | 6,866,334 | | 9,599,366 |
681,934 | | (a) | EDAP TMS S.A. (ADR) | | 5,241,682 | | 1,022,901 |
182,300 | | (a) | Health Grades, Inc. | | 156,028 | | 712,793 |
| | | | | | 12,264,044 | | 11,335,060 |
| | | | | | | | |
| Manufacturing (2.71%) | | | | | |
1,731,500 | | | AirBoss of America Corp. (Canadian) | 5,706,705 | | 5,024,459 |
| | | | | | | | |
| Mineral Exploration (3.21%) | | | | | |
5,825,100 | | (a) | Admiral Bay Resources, Inc. | 4,153,315 | | 500,804 |
280,000 | | | Kinross Gold Corp. | | 2,749,745 | | 5,082,000 |
199,270 | | (a) | Solitario Exploration & Royalty Corp. (Canadian) | 347,555 | | 378,613 |
| | | | | | 7,250,615 | | 5,961,417 |
| | | | | | | | |
| Pharmaceutical/Drug Delivery (3.83%) | | | | |
1,029,412 | | (a) | Cell Genesys, Inc. | | 473,630 | | 300,588 |
631,746 | | (a) | Durect Corp. | | 2,244,259 | | 1,503,555 |
130,000 | | (a) | Elan Corp., plc (ADR) | | 851,573 | | 828,100 |
50,000 | | | Merck & Co., Inc. | | 2,130,679 | | 1,398,000 |
1,668,415 | | (a) | NexMed, Inc. | | 1,785,136 | | 793,331 |
302,300 | | (a) | EPIX Pharmaceuticals, Inc. | 464,102 | | 40,811 |
150,000 | | | Pfizer, Inc. | | | 3,890,679 | | 2,250,000 |
| | | | | | 11,840,058 | | 7,114,385 |
| | | | | | | | |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
SCHEDULE OF INVESTMENTS - continued |
June 30, 2009 |
|
| | | | | | | | |
COMMON STOCKS - (34.98%) - continued | | | | | |
No. of Shares | | | Issue | | | Cost | | Market Value |
| Property-Casualty Insurance (2.88%) | | | | |
211,502 | | (a) | GAINSCO, Inc. | | $ 5,685,629 | | $ 3,331,157 |
45,000 | | | RLI Corp. | | | 2,225,358 | | 2,016,000 |
| | | | | | 7,910,987 | | 5,347,157 |
| | | | | | | | |
| Telecommunications (0.45%) | | | | |
632,679 | | (a) | iBasis, Inc. | | | 1,262,819 | | 828,809 |
| | | | | | | | |
| | | Total Common Stocks | 90,800,504 | | 64,954,821 |
| | | | | | | | |
CONVERTIBLE PREFERRED/PREFERRED STOCKS (1.34%) |
| | | | | | | | |
| Convertible Preferred Stocks (0.37) | | | | |
10,000 | | | AES Trust III 6.75% | | 331,030 | | 430,000 |
129,900 | | | Edge Petroleum Corp. - Series A, 5.75% | 6,340,213 | | 259,800 |
| | | | | | 6,671,243 | | 689,800 |
| | | | | | | | |
| Preferred Stocks (0.97%) | | | | | |
80,000 | | | AMERCO Series A, 8.50% | 1,491,145 | | 1,800,800 |
| | | | | | | | |
| | | Total Convertible Preferred/Preferred Stocks | 8,162,388 | | 2,490,600 |
| | | | | | | | |
BONDS - (52.85%) | | | | | | | |
Principal | | | Issue | | | | | |
| U.S. Government (16.85%) | | | | | |
$ 30,000,000 | | | U.S. Treasury "Strips", 0.00% due 8-15-2028 | 11,505,291 | | 12,769,470 |
30,000,000 | | | U.S. Treasury "Strips", 0.00% due 8-15-2029 | 11,591,011 | | 12,226,050 |
20,000,000 | | | U.S. Treasury "Strips", 0.00% due 2-15-2036 | 5,922,225 | | 6,287,840 |
| | | | | | 29,018,527 | | 31,283,360 |
| | | | | | | | |
| Municipal (0.02%) | | | | | |
1,000,000 | | (a) | Indianapolis Airport Authority 6.50% due 11-15-2031 | 166,972 | | 32,500 |
| | | | | | | | |
| Corporate (11.35%) | | | | | |
2,300,000 | | (b) | Charter Communications, LLC 9.92% due 4-1-2011 | 1,881,438 | | 18,400 |
4,000,000 | | | Constellation Energy Group 7.60% due 4-1-2032 | 3,503,924 | | 3,570,720 |
6,000,000 | | | Energy XXI Gulf Coast, Inc. 10.00% due 6-15-2013 | 2,926,205 | | 3,570,000 |
1,500,000 | | (c) | Land O' Lakes Capital Trust I 7.45% due 3-15-2028 | 963,243 | | 1,140,000 |
3,000,000 | | | McMoRan Exploration Co. 11.875% due 11-15-2014 | 2,272,345 | | 2,553,750 |
1,000,000 | | | ONEOK, Inc. 6.00% due 6-15-2035 | 736,951 | | 840,682 |
2,000,000 | | (c) | W & T Offshore, Inc. 8.25% due 6-15-2014 | 1,425,208 | | 1,550,000 |
2,000,000 | | | Whiting Petroleum Corp., 7.00%, due 2-01-2014 | 1,386,705 | | 1,865,000 |
7,300,000 | | (c) | XM Satellite Radio, Inc. 13.00% due 8-1-2013 | 2,760,404 | | 5,976,875 |
| | | | | | 17,856,423 | | 21,085,427 |
| | | | | | | | |
| Corporate Convertibles (24.63%) | | | | |
10,179,000 | | (e) | Antigenics, Inc. 5.25% due 2-1-2025 | 6,043,923 | | 6,158,295 |
11,013,000 | | (b) | Atherogenics, Inc. 4.50% due 3-1-2011 | 7,251,717 | | 936,105 |
4,389,000 | | (c) | C&D Technologies, Inc. 5.25% due 11-1-2025 | 3,929,450 | | 2,770,556 |
2,250,000 | | | C&D Technologies, Inc. 5.25% due 11-1-2025 | 2,178,028 | | 1,420,313 |
1,695,000 | | (e) | C&D Technologies, Inc. 5.50% due 11-15-2026 | 1,106,432 | | 1,105,988 |
1,000,000 | | | Cell Genesys, Inc. 3.125% due 11-1-2011 | 1,566,557 | | 560,000 |
1,550,000 | | (e) | Cell Genesys, Inc. 3.125% due 5-1-2013 | 821,627 | | 744,000 |
5,500,000 | | | Cell Therapeutics, Inc. 4.00% due 7-1-2010 | 4,842,393 | | 4,482,500 |
5,250,000 | | (c)(e) | Cell Therapeutics, Inc. 5.75% due 12-15-2011 | 4,856,419 | | 3,885,000 |
1,000,000 | | (c) | Cell Therapeutics, Inc. 6.75% due 10-31-2010 | 1,000,000 | | 815,000 |
1,800,000 | | (b)(c)(e) | Ciphergen Biosystems, Inc. 7.00% due 9-1-2011 | 1,567,678 | | 180,000 |
14,887,000 | | (b) | deCODE Genetics, Inc. 3.50% due 4-15-2011 | 8,434,904 | | 1,190,960 |
2,000,000 | | (c)(e) | EDAP TMS S.A. 9.00% due 10-30-2012 | 2,000,000 | | 1,800,000 |
6,600,000 | | | Endeavor International Corp. 6.00% due 1-15-2012 | 6,295,802 | | 4,801,500 |
3,000,000 | | | Flotek Industries, Inc. 5.25% due 2-15-2028 | 791,470 | | 1,211,250 |
3,000,000 | | | Human Genome Sciences, Inc. 2.25% due 10-15-2011 | 2,818,660 | | 1,830,000 |
2,150,000 | | | Incyte Corp. 3.50% due 2-15-2011 | 1,985,253 | | 1,499,625 |
3,000,000 | | (c) | Isis Pharmaceuticals, Inc. 2.625% due 2-15-2027 | 2,765,694 | | 3,637,500 |
60,000 | | | Isis Pharmaceuticals, Inc. 2.625% due 2-15-2027 | 62,233 | | 72,750 |
2,466,638 | | (b)(e) | Kellstrom Industries, Inc. 5.50% due 6-15-2003 | 100,250 | | 24,666 |
1,000,000 | | (b)(e) | Kellstrom Industries, Inc. 5.75% due 10-15-2002 | 36,350 | | 10,000 |
3,000,000 | | | Mankind Corp. 3.75% due 12-15-2013 | 1,440,988 | | 1,863,750 |
2,700,000 | | (b)(e) | Midway Games, Inc. 6.00% due 9-30-2025 | 2,532,792 | | 540,000 |
1,762,892 | | (e) | Oscient Pharmaceuticals 12.50% due 1-15-2011 | 3,126,193 | | 387,836 |
7,000,000 | | (c) | Vion Pharmaceuticals, Inc. 7.75% due 2-15-2012 | 6,746,145 | | 2,406,250 |
920,000 | | | Vion Pharmaceuticals, Inc. 7.75% due 2-15-2012 | 569,840 | | 316,250 |
2,000,000 | | | ViroPharma, Inc. 2.00% due 3-15-2017 | 1,551,699 | | 1,095,000 |
| | | | | | 76,422,497 | | 45,745,094 |
| | | | | | | | |
| | | Total Bonds | | 123,464,419 | | 98,146,381 |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
SCHEDULE OF INVESTMENTS - continued |
June 30, 2009 |
|
| | | | | | | | |
WARRANTS - (0.02%) | | | | | | | |
No. of Shares | | | Issue | | | Cost | | Market Value |
168,000 | | (a)(e) | Edap Inc., expires 10-30-2013 | $ - | | $ 42,000 |
468,000 | | (a)(e) | Vion Pharmaceuticals, Inc., expires 2-15-2010 | - | | 4,680 |
| | | | Total Warrants | - | | 46,680 |
| | | | | | | | |
RIGHTS - (0.01%) | | | | | | | | |
| | | | | | | | |
200,000 | | (a)(e)(f) | Calpine Corp. Escrow Retirement Rights | - | | 20,000 |
3,500 | | (a)(e)(f) | Epix Pharmacuticals CVR | - | | - |
| | | | Total Rights | - | | 20,000 |
| | | | | | | | |
MONEY MARKET - (9.88%) | | | | | | |
| | | | | | | | |
18,346,239 | | (d) | Fidelity Institutional Money Market Treasury Only - Class I, 0.13% | 18,346,239 | | 18,346,239 |
| | | | Total Money Market | 18,346,239 | | 18,346,239 |
| | | | | | | | |
| | | | | | | | |
| | | | Total Investments (99.08%) | $ 240,773,550 | | $ 184,004,721 |
| | | | | | | | |
| | | | Other assets less liabilities (0.92%) | | 1,706,538 |
| | | | | | | | |
| | | | TOTAL NET ASSETS (100.00%) | | $ 185,711,259 |
| | | | | | | | |
| | (a) | Non-cash income producing security. | | |
| | (b) | In default. | | | | |
| | (c) | Private Placement and restricted security under Rule 144A of the Securities Act of 1933. |
| | (d) | Variable rate securities; the money market rate shown represents the rate at June 30, 2009. |
| | (e) | This security is currently valued according to the fair value procedures approved by the Board of Directors. |
| | (f) | This security has no expiration date, it will convert to common stock at a future date. |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
Statement of Assets and Liabilities |
June 30, 2009 |
|
|
| | | | | | | | |
Assets | | | | | | | | |
Investments in securities, at market value (cost $240,773,550) | | | | $ 184,004,721 |
Interest receivable | | | | | | | 1,709,490 |
Dividends receivable | | | | | | | 74,438 |
Receivable for Fund shares sold | | | | | | 97,497 |
Prepaid expenses | | | | | | | 8,907 |
Total Assets | | | | | | | 185,895,053 |
| | | | | | | | |
Liabilities | | | | | | | | |
Accrued advisory fees | | | | | | | 89,076 |
Other accrued expenses | | | | | | | 76,620 |
Payable for Fund shares redeemed | | | | | | 18,098 |
Total Liabilities | | | | | | | 183,794 |
| | | | | | | | |
Net Assets | | | | | | | | $ 185,711,259 |
| | | | | | | | |
Net Assets consist of: | | | | | | | |
Capital stock (650,037 shares of $1 par value | | | | | |
capital stock issued and outstanding: 2,000,000 | | | | | |
shares authorized) | | | | | | | $ 650,037 |
Paid in capital | | | | | | | 244,168,039 |
Accumulated undistributed net investment income | | | | | 5,045,827 |
Accumulated net realized (loss) on investments | | | | | (7,383,815) |
Net unrealized depreciation on investments | | | | | (56,768,829) |
| | | | | | | | |
Net Assets | | | | | | | | $ 185,711,259 |
| | | | | | | | |
Shares outstanding (2,000,000 shares authorized) | | | | | 650,037 |
| | | | | | | | |
Net asset value, offering and redemption price per share | | | | $ 285.69 |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
Statement of Operations |
For the fiscal year ended June 30, 2009 |
|
| | | | | | | | |
Investment Income | | | | | | | |
Interest income | | | | | | | $ 10,478,952 |
Dividend income (Net of foreign withholding taxes of $9,790) | | | | 600,154 |
Total Income | | | | | | | 11,079,106 |
| | | | | | | | |
Expenses | | | | | | | | |
Investment adviser fee | | | | | | | 1,070,229 |
Transfer agent expense | | | | | | | 222,805 |
Administration expense | | | | | | | 138,236 |
Fund accounting expense | | | | | | | 55,581 |
Postage expense | | | | | | | 31,336 |
Report printing expense | | | | | | | 57,322 |
Registration expense | | | | | | | 22,328 |
Custodian expense | | | | | | | 21,854 |
Audit expense | | | | | | | 30,970 |
Insurance expense | | | | | | | 3,440 |
Miscellaneous expense | | | | | | | 545 |
Total Expenses | | | | | | | 1,654,646 |
Net Investment Income | | | | | | | 9,424,460 |
| | | | | | | | |
| | | | | | | | |
Realized & Unrealized Gain (Loss) | | | | | | |
Net realized gain (loss) on investment securities | | | | | (7,634,111) |
Change in unrealized appreciation (depreciation) | | | | | |
on investment securities | | | | | | (30,745,268) |
Net realized and unrealized gain (loss) on investment securities | | | | (38,379,379) |
Net increase (decrease) in net assets resulting from operations | | | $ (28,954,919) |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
Statements of Changes in Net Assets |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | Fiscal | | Fiscal | |
| | | | | | Year ended | | Year ended | |
| | | | | | June 30, 2009 | | June 30, 2008 | |
Operations | | | | | | | | | |
Net investment income | | | | | $ 9,424,460 | | $ 12,528,542 | |
Net realized gain (loss) on investment securities | | | (7,634,111) | | 3,221,511 | |
Change in unrealized appreciation (depreciation) on investment securities | (30,745,268) | | (60,291,963) | |
Net increase (decrease) in net assets resulting from operations | | (28,954,919) | | (44,541,910) | |
| | | | | | | | | |
Distributions | | | | | | | | |
From net investment income | | | | (7,692,453) | | (16,226,177) | |
From net realized gain | | | | | (2,723,394) | | (4,414,701) | |
Total distributions | | | | | (10,415,847) | | (20,640,878) | |
| | | | | | | | | |
Capital Share Transactions | | | | | | | |
Proceeds from shares sold | | | | 21,557,009 | | 27,267,676 | |
Reinvestment of distributions | | | | 9,776,442 | | 19,628,827 | |
Amount paid for shares redeemed | | | | (40,374,120) | | (128,471,052) | |
Net increase (decrease) in net assets resulting | | | | | | |
from capital share transactions | | | | (9,040,669) | | (81,574,549) | |
| | | | | | | | | |
Total Increase (Decrease) in Net Assets | | | (48,411,435) | | (146,757,337) | |
| | | | | | | | | |
Net Assets | | | | | | | | | |
Beginning of year | | | | | 234,122,694 | | 380,880,031 | |
| | | | | | | | | |
End of year | | | | | $ 185,711,259 | | $ 234,122,694 | |
| | | | | | | | | |
Accumulated undistributed net investment income | | | | | | |
included in net assets at end of year | | | | $ 5,045,827 | | $ 3,313,819 | |
| | | | | | | | | |
Capital Share Transactions | | | | | | | |
Shares sold | | | | | 83,301 | | 70,759 | |
Shares issued in reinvestment of distributions | | | 39,963 | | 55,958 | |
Shares redeemed | | | | | (157,362) | | (340,586) | |
| | | | | | | | | |
Net increase (decrease) from capital share transactions | | (34,098) | | (213,869) | |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC. |
Financial Highlights |
Selected data for each share of capital stock outstanding through each year is presented below |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | Fiscal year ended June 30, | |
| | | | | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 | |
| | | | | | | | | | | | | | | |
Selected Per Share Data | | | | | | | | | | | | | |
Net asset value, beginning of year | | | | $ 342.22 | | $ 424.14 | | $ 408.85 | | $ 350.35 | | $ 283.34 | |
| | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | |
Net investment income | | | | | 14.44 | | 18.48 | | 12.86 | | 8.14 | | 5.67 | 1 |
Net realized and unrealized gain (loss) | | | (55.37) | | (73.12) | | 25.57 | | 60.55 | | 73.01 | |
Total from investment operations | | | | (40.93) | | (54.64) | | 38.43 | | 68.69 | | 78.68 | |
| | | | | | | | | | | | | | | |
Less Distributions to Shareholders: | | | | | | | | | | | | | |
From net investment income | | | | (11.52) | | (21.45) | | (10.17) | | (5.41) | | (5.19) | |
From net realized gain | | | | | (4.08) | | (5.83) | | (12.97) | | (4.78) | | (6.48) | |
Total distributions | | | | | (15.60) | | (27.28) | | (23.14) | | (10.19) | | (11.67) | |
| | | | | | | | | | | | | | | |
Net asset value, end of year | | | | $ 285.69 | | $ 342.22 | | $ 424.14 | | $ 408.85 | | $ 350.35 | |
| | | | | | | | | | | | | | | |
Total Return2 | | | | | -11.20% | | -13.04% | | 9.66% | | 19.98% | | 27.80% | |
| | | | | | | | | | | | | | | |
Ratios and Supplemental Data | | | | | | | | | | | | | |
Net assets, end of year ($ millions) | | | | $ 185.71 | | $ 234.12 | | $ 380.88 | | $ 225.59 | | $ 81.54 | |
Ratio of expenses to average net assets | | | | 0.93% | | 0.82% | | 0.78% | | 0.94% | | 1.03% | |
Ratio of net investment income to | | | | | | | | | | | | | |
average net assets | | | | | 5.29% | | 4.22% | | 3.72% | | 2.89% | | 1.73% | |
Portfolio turnover rate | | | | | 15.61% | | 20.80% | | 14.69% | | 29.02% | | 10.05% | |
. | | | | | | | | | | | | | | | |
1 Figures are based on average daily shares outstanding during the year. | | | | | | | | | |
2 Total return in the above table represents the rate that the investor would have earned | | | | | | | |
or lost on an investment in the Fund, assuming reinvestment of dividends. | | | | | | | | | |
*See accompanying notes which are an integral part of these financial statements
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2009
NOTE A - ORGANIZATION
Bruce Fund, Inc. (the “Fund”) is a Maryland corporation incorporated on June 20, 1967. The Fund’s only business during the past five years has been as an investment company. The name of the Fund was changed to Bruce Fund, Inc., in October 1983. The Fund is an open end, diversified, management investment company and the Fund’s primary investment objective is long-term capital appreciation. The investment adviser to the Fund is Bruce and Co., Inc. (the “Adviser”).
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Fund have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and reporting practices prescribed for the mutual fund industry. The preparation of financial statements in conformity with US 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
A description of the significant accounting policies follows:
1. The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), on July 1, 2008. In accordance with FAS 157, fair value is defined as the price that a Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. In addition, in April 2009, FASB issued Staff Position No. 157-4, “Determining Fair Value When the Volume and Activity for the Asset or Liability Have Significantly Decreased and Indentifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 further clarifies the requirements of FAS 157. The Fund adopted FAS 157-4 as of June 30, 2009.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
| • | Level 1 – quoted prices in active markets for identical securities |
| • | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments) |
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Equity securities are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair market value of such securities.
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - continued
June 30, 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service, the security will be classified as a Level 1 security. Sometimes, a preferred security owned by the Fund will be valued by the pricing service with factors other than market quotations. When this happens, the security will be classified as a Level 2 security. When market quotations are not readily available, when the Adviser determines that the market quotation or the price provided by the pricing service does not accurately reflect the current market value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review by the Board of Directors of the Fund (the “Board”). These securities will be categorized as Level 3 securities.
Investments in money market mutual funds are generally priced at the ending net asset value (NAV) provided by the service agent of the money market fund. These securities will be categorized as Level 1 securities.
Fixed income securities (corporate bonds, asset-backed securities, U.S. government securities and U.S. government agency securities) are generally valued using market quotations and will be categorized as Level 1 securities. However, they may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. These securities will be categorized as Level 2 securities. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board. These securities will be categorized as Level 3 securities.
Short-term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. These securities will be classified as Level 2 securities. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific country or region.
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - continued
June 30, 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
The following is a summary of the inputs used to value the Fund’s assets as of June 30, 2009:
| | Valuation Inputs | | |
Assets | Level 1 - Quoted Prices in Active Markets | Level 2 - Other Significant Observable Inputs | Level 3 - Significant Unobservable Inputs | Total |
| | | | |
Common Stocks | $ 64,954,821 | $ - | $ - | $ 64,954,821 |
| | | | |
Convertible Preferred Securities | - | 2,490,600 | - | 2,490,600 |
| | | | |
Corporate Bonds | - | 13,513,552 | - | 13,513,552 |
| | | | |
Restricted Corporate Bonds | - | 8,666,875 | - | 8,666,875 |
| | | | |
Convertible Corporate Bonds | - | 20,185,003 | 8,970,785 | 29,155,788 |
| | | | |
Restricted Convertible Corporate Bonds | - | 9,629,306 | 5,865,000 | 15,494,306 |
| | | | |
U.S. Government Bonds | - | 31,283,360 | - | 31,283,360 |
| | | | |
Municipal Bonds | - | 32,500 | - | 32,500 |
| | | | |
Warrants | - | - | 46,680 | 46,680 |
| | | | |
Rights | - | - | 20,000 | 20,000 |
| | | | |
Money Market | 18,346,239 | - | - | 18,346,239 |
| | | | |
Total | $ 83,301,060 | $ 85,801,196 | $ 14,902,465 | $ 184,004,721 |
In the absence of a listed price quote, or a supplied price quote which is deemed to be unrepresentative of the actual market price, the Adviser shall use any or all of the following criteria to value Level 3 securities:
| • | Price given by pricing service |
| • | Last quoted bid & asked price |
| • | Third party bid & asked price |
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - continued
June 30, 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value for the Fund:
| Balance as of June 30, 2008 | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Net purchases (sales) | Transfers in and/or out of Level 3 | Balance as of June 30, 2009 |
| | | | | | |
Convertible Corporate Bonds | $ 2,526,099 | $ - | $ (69,333) | $ 2,454,988 | $ 4,059,031 | $ 8,970,785 |
| | | | | | |
Restricted Convertible Corporate Bonds | 4,567,500 | - | 1,597,500 | - | (300,000) | 5,865,000 |
| | | | | | |
Warrants | 65,400 | - | (18,720) | - | - | 46,680 |
| | | | | | |
Rights | 20,000 | - | - | - | - | 20,000 |
| | | | | | |
Total | $ 7,178,999 | $ - | $ 1,509,447 | $ 2,454,988 | $ 3,759,031 | $ 14,902,465 |
| | | | | | |
The total change in unrealized appreciation (depreciation) included in the Statement of Changes in Net Assets |
attributable to Level 3 investments still held at June 30, 2009 was $ (3,481,410). | | |
| 2. | The Fund makes no provision for federal income tax. The Fund intends to qualify each year as a “regulated investment company” under subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its net investment income and net realized capital gains. If the required amount of net investment income is not distributed, the Fund could incur a tax expense. |
In accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) “Accounting for Uncertainty in Income Taxes”, as of and during the fiscal year ended June 30, 2009, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of operations. During the fiscal year ended June 30, 2009, the Fund did not incur any interest or penalties related to income tax expense. The Fund is not subject to examination by the U.S. Federal tax authorities for the tax years prior to 2006.
3. 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.
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - continued
June 30, 2009
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
4. Subsequent events – Pursuant to Financial Accounting Standards Board (“FASB”) Statement No. 165, “Subsequent Events” (“FAS 165”), management has evaluated subsequent events through August 26, 2009 and determined there was no material impact on these financial statements.
5. Recent Accounting Pronouncements - In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, "The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No 162" ("SFAS 168"). SFAS 168 replaces SFAS No.162, "The Hierarchy of Generally Accepted Accounting Principles" and establishes the "FASB Accounting Standards Codification TM" ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States. All guidance contained in the Codification carries an equal level of authority. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Fund evaluated this new statement, and has determined that it will not have a significant impact on the determination or reporting of the Fund's financial statements.
NOTE C - PURCHASES AND SALES OF SECURITIES
For the fiscal year ended June 30, 2009, purchases and sales of securities, other than short-term investments and short-term U.S. Government obligations were as follows:
| | Purchases | | Sales |
U.S. Government Obligations | | $ - | | $ 6,446,620 |
Other | | 25,421,702 | | 29,371,621 |
As of June 30, 2009, the net unrealized depreciation on investments for tax purposes was as follows:
Gross Appreciation | $ 25,260,545 |
Gross (Depreciation) | (87,831,303) |
| |
Net Depreciation | |
on Investments | $ (62,570,758) |
| |
At June 30, 2009, the aggregate cost of securities for federal income tax purposes was $246,575,479.
NOTE D - RELATED PARTIES
Bruce and Co., an Illinois corporation, is the investment adviser 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). Compensation to the Adviser 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 |
| 1.00% | Up to $20,000,000; plus |
| 0.60% | $20,000,000 to $100,000,000; plus |
BRUCE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - continued
June 30, 2009
NOTE D - RELATED PARTIES - continued
As of June 30, 2009, Robert B. Bruce was the beneficial owner of 16,356 Fund shares, R. Jeffrey Bruce was the beneficial owner of 4,877 Fund shares and Robert DeBartolo was the beneficial owner of 164 Fund shares. Robert B. Bruce and Robert DeBartolo are directors of the Fund; both Robert B. Bruce and R. Jeffrey Bruce are officers of the Fund and are officers, directors and owners of the Adviser.
NOTE E - DIVIDEND DISTRIBUTION
During December 2008, the Fund announced a dividend from net investment income of $11.5164 per share and a long-term capital gain distribution of $4.0772 per share. These distributions were payable December 17, 2008 to shareholders of record on December 16, 2008.
The tax character of distributions paid during fiscal years 2009 and 2008 was as follows:
| | 2009 | | 2008 |
Distributions paid from: | | | | |
Ordinary Income | | $ 7,692,453 | | $ 16,226,177 |
Short-Term Capital Gain | | - | | 596,127 |
Long-Term Capital Gain | | 2,723,394 | | 3,818,574 |
| | | | |
| | $ 10,415,847 | | $ 20,640,878 |
As of June 30, 2009, the components of distributable earnings (accumulated losses) on a tax basis were as follows:.
Undistributed Ordinary Income | | $ 5,083,803 |
Accumulated Undistributed Realized Gain | (1,832,182) |
Unrealized Depreciation | | (62,570,758) |
| | |
| | $ (59,319,137) |
At June 30, 2009, the difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the deferral of post-October losses in the amount of $5,801,929.
NOTE F - CAPITAL LOSS CARRYFORWARD
As of June 30, 2009, the Fund has available for federal tax purposes an unused capital loss carryforward of $1,832,182 which is available for offset against future taxable net capital gains. This loss carryforward expires on June 30, 2017.To the extent these carryforwards are used to offset future capital gains, it is probable that the amount, which is offset, will not be distributed to shareholders.
NOTE G - RESTRICTED SECURITIES
The Fund has acquired several securities, the sale of which is restricted, through private placements. At June 30, 2009, the aggregate market value of such securities amounted to $24,161,181 or 13.01% of the Fund’s net assets. 76% of the restricted securities are valued using quoted market prices. The other 24% are valued according to fair value procedures approved by the Board of Directors. It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Bruce Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Bruce Fund, Inc. (the “Fund”) (a Maryland corporation), including the schedule of investments as of June 30, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for the years ended June 30, 2009 and 2008, and the financial highlights for the five years ended June 30, 2009. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Fund was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of the securities owned as of June 30, 2009, 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, 2009, the results of its operations for the year then ended, the changes in its net assets for the years ended June 30, 2009 and 2008, and the financial highlights for the five years ended June 30, 2009, in conformity with accounting principles generally accepted in the United States of America.
Chicago, Illinois
August 26, 2009
Directors and Officers
The Fund is managed by its officers and directors. It has no advisory board, and no standing committees of the board of directors. Directors serve until the successor of each shall have been duly elected and shall have qualified. Independent Directors constitute a majority of the board.
The following table provides information regarding the Independent Directors:
Name, Address*, (Age), Position with Fund**, Term of Position with Fund | Principal Occupation During Past 5 Years and Other Directorships |
Ward M. Johnson (72) Independent Director, December 1985 to present | 2002 to present - Real Estate Sales, Landings Co. |
Robert DeBartolo (49) Independent Director, March 2007 to present | 2008 to present – Vice President, Client Engagements, Cadient Group 2000 to 2008 – Managing Director, Executive Vice President, Corbett Accel Healthcare Group, Omnicom |
* | The address for each director is 20 North Wacker Drive, Suite 2414, Chicago, Illinois 60606. |
** The Fund consists of one series. The Fund is not part of a Fund Complex.
The following table provides information regarding each Director who is an “interested person” of the Fund, as defined in the 1940 Act, and each officer of the Fund.
Name, Address*, (Age), Position with Fund,** Term of Position with Fund | Principal Occupation During Past 5 Years and Other Directorships |
Robert B. Bruce*** (77) Chairman, Director, President, and Treasurer, 1983 to present; Chief Compliance Officer, 2004 to present | l974 to present - principal, Bruce and Co. (investment adviser); l982 to present - Chairman of Board of Directors, Treasurer, Professional Life & Casualty Company (life insurance issuer), previously Assistant Treasurer. |
R. Jeffrey Bruce*** (49) Vice President and Secretary, 1983 to present | 1983 to present – analyst/manager, Bruce and Co. (investment adviser); 1993 to present – Director, Professional Life & Casualty Company (life insurance issuer) |
* | The address for each of the directors and officers is 20 North Wacker Drive, Suite 2414, Chicago, Illinois 60606. |
** The Fund consists of one series. The Fund is not part of a Fund Complex.
*** Mr. Robert Bruce and Mr. Jeffrey Bruce are “interested” persons because they are officers, directors, and owners of the Adviser. Robert Bruce is the father of Jeffrey Bruce.
The Fund’s Statement of Additional Information (“SAI”) includes information about the directors and is available, without charge, upon request. You may call toll-free (800) 872-7823 to request a copy of the SAI or to make shareholder inquiries.
PROXY VOTING
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies during the most recent twelve month period ended June 30 are available without charge upon request by (1) calling the Fund at (800) 872-7823 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
BRUCE FUND
OFFICERS AND
DIRECTORS
Robert B. Bruce
President and Treasurer
R. Jeffrey Bruce
Vice President and Secretary
Robert DeBartolo
Director
W. Martin Johnson
Director
Investment Adviser
Bruce and Co., Inc.
Chicago, Illinois
Custodian
Huntington National Bank
Columbus, Ohio
Transfer Agent
Unified Fund Services, Inc.
Indianapolis, Indiana
Counsel
Thomas P. Ward
Lake Forest, Illinois
Independent Registered Public Accounting Firm
Grant Thornton LLP
Chicago, Illinois
This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fees and expenses. Please read the prospectus carefully before investing.
Item 2. Code of Ethics.
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
| (1) | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| (2) | Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; |
| (3) | Compliance with applicable governmental laws, rules, and regulations; |
| (4) | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
| (5) | Accountability for adherence to the code. |
(c) Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.
(d) Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.
(e) | Posting: We do not intend to post the Code of Ethics for the Officers or any amendments or waivers on a website. |
(f) Availability: The Code of Ethics for the Officers can be obtained, free of charge by calling the toll free number for the appropriate Fund.
Item 3. Audit Committee Financial Expert.
(a) The registrant’s board of directors has determined that the registrant does not have an audit financial expert. The directors determined that, although none of its members meet the technical definition of an audit expert, the group has sufficient financial expertise to adequately perform its duties.
Bruce Fund
| Bruce Fund | Registrant | Adviser |
Nature of the fees:
| Nature of the fees: | preparation of the 1120 RIC |
(e) | (1) | Board Audit Policies |
The Board of Directors are responsible for the selection, retention or termination of auditors and, in connection therewith, to (i) evaluate the proposed fees and other compensation, if any, to be paid to the auditors, (ii) evaluate the independence of the auditors, (iii) receive the auditors’ specific representations as to their independence;
| (2) | Percentages of Services Billed Pursuant to Waiver of Pre-Approved Requirement |
(f) During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
(g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:
(h) Not applicable. The auditor performed no services for the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments. | Not applicable – schedule filed with Item 1. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant’s board of directors.
Item 11. Controls and Procedures.
(a) Based on an evaluation of the registrant’s disclosure controls and procedures as of September 3, 2009, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) | Code of ethics is filed herewith. |
(a)(2) | Certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 and required by Rule 30a-2under the |
| Investment Company Act of 1940 are filed herewith. |
(a)(3) | Not Applicable – there were no written solicitations to purchase securities under Rule 23c-1 |
during the period
(b) | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Bruce Fund, Inc. |
| Robert B. Bruce, President |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Robert B. Bruce, President |
R. Jeffery Bruce, Principal Accounting Officer
