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
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Bruce Fund, Inc.
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(Exact name of registrant as specified in charter)
20 North Wacker Drive, Suite 2414 Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Freddie Jacobs, Jr.
Unified Fund Services, Inc.
431 N. Pennsylvania St.
Indianapolis, IN 46204
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(Name and address of agent for service)
Registrant's telephone number, including area code: 312-236-9160
Date of fiscal year end: 06/30
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Date of reporting period: 06/30/05
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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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
BRUCE FUND, INC.
REPORT TO SHAREHOLDERS
-----------------------
Fiscal Year Ended
June 30, 2005
BRUCE FUND, INC.
20 North Wacker Drive
Suite 2414
Chicago, Illinois 60606
(312) 236-9160
June 30, 2005
Management Discussion and Analysis
- ----------------------------------
The Bruce Fund shares produced a total return of 27.80% for the year ended
June 30, 2005, compared to a total return of 6.32% for the S&P 500 Index for the
same period. Both stock and bond holdings contributed to the gain.
Fund management concentrates its efforts at finding what it sees as
opportunities for capital appreciation. In doing so we feel we take above
average risks, as summarized in the prospectus. Recent areas of investment have
been convertible bonds selling at substantial discounts to par. Certain
smaller-cap equities have also been an area of interest, somewhat divided
between value, emerging growth and turnaround plays. We have attempted to find
situations the market might have overly discounted a company's prospects,
creating a capital appreciation opportunity, in our opinion. We look for
situations with the intent of holding the securities for a three to five year
time frame.
As stated in the Prospectus, the Fund's objective is long-term capital
appreciation from stocks and/or bonds. 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.
TOTAL RETURN TEN YEAR ENDED
JUNE 30, 2005
[GRAPHIC OMITTED]
Bruce Fund S&P 500 Index
6/30/96 $12,081 $12,600
6/30/97 $12,821 $16,972
6/30/98 $16,638 $22,091
6/30/99 $14,399 $27,119
6/30/00 $14,606 $29,085
6/30/01 $19,318 $24,772
6/30/02 $20,914 $20,315
6/30/03 $29,696 $20,368
6/30/04 $48,262 $24,260
6/30/05 $61,678 $25,793
BRUCE FUND AVERAGE ANNUAL TOTAL RETURN
ONE YEAR FIVE YEARS TEN YEARS
----------- ------------ -----------
UNTAXED 27.80% 33.40% 19.96%
Maximum Tax Rate 26.83% 30.65% 17.78%
MTR & Liquidated 18.54% 28.22% 16.64%
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates, and do not reflect the impact of state and
local taxes; and actual after-tax returns depend on the investor's tax situation
and are not relevant in tax deferred accounts. Past performance is not
predictive of future results.
FUND HOLDINGS - (Unaudited)
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BRUCE FUND PORTFOLIO ANALYSIS AS OF JUNE 30, 2005 1
[GRAPHIC OMITTED]
COMMON STOCKS/WARRANTS 54.93%
PREFERRED STOCK 0.59%
BONDS 40.21%
CASH AND OTHER ASSETS LESS LIABILITIES 4.27%
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, 2005) and held for the entire period (through June 30, 2005).
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.
- -------------------------- --------------------------- ---------------------- -----------------------------------
Beginning Account Value Ending Account Expenses Paid During Period*
January 1, 2005 Value January 1, 2005 -
Bruce Fund June 30, 2005 June 30, 2005
- -------------------------- --------------------------- ---------------------- -----------------------------------
Actual $1,000.00 $1,010.00 $4.80
- -------------------------- --------------------------- ---------------------- -----------------------------------
Hypothetical
(5% return before $1,000.00 $1,020.02 $4.82
expenses)
- -------------------------- --------------------------- ---------------------- -----------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.96%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the partial year period).
BRUCE FUND, INC.
SCHEDULE OF INVESTEMENTS
JUNE 30, 2005
COMMON STOCKS/Warrants (54.93%)
No. of Shares Issue Cost Market Value
- ------------- ----- ---- ------------
PROPERTY-CASUALTY INSURANCE (3.55%)
25,000 RLI Corp. $966,400 $1,115,000
1,124,100 *Gainsco 1,104,037 1,776,078
PHARMACUETICAL/DRUG DELIVERY (10.90%)
270,025 *QLT 3,804,036 2,813,660
260,000 *Elan 2,912,729 1,773,200
25,000 *Sepracor 1,133,488 1,500,250
20,000 Merck 609,481 616,000
60,000 Pfizer 1,523,680 1,654,800
60,000 *Epix Pharmacuetical 447,420 529,200
LIFE SCIENCE PRODUCTS (1.04%)
40,000 *Serologicals 754,562 850,000
HEALTH SERVICES (2.36%)
212,300 *Health Grades 162,168 1,019,040
52,000 *America Service Group 605,654 824,200
20,000 *Radiologix 42,400 85,000
BUSINESS SERVICES (5.14%)
200,000 *Darling International 823,083 750,000
75,000 *Danka Business Systems 305,629 111,000
210,000 *Internet Capital Group 1,518,587 1,539,300
358,200 *Open TV 1,016,594 981,468
553,100 *Private Business 1,095,477 807,526
ENERGY/ENERGY SERVICES (8.05%)
297,200 *Arena Resources 2,579,592 3,551,540
102,300 *Arena Resources Warrants 0 511,500
59,800 *Team, Inc. 647,646 1,285,700
52,300 *Duratek 1,020,858 1,207,607
AUTOMOTIVE/TRANSPORTATION (14.26%)
79,800 *Amerco 2,687,322 4,273,290
320,080 *Rural Metro 438,002 2,759,090
376,200 *Amerigon 1,527,441 1,316,700
160,000 Titan Wheel Intl. 2,013,766 2,236,800
7,026,537 *Timco Aviation 966,563 1,053,980
TELECOMMUNICATIONS (1.74%)
522,900 *IBasis 1,099,399 1,422,288
MANUFACTURING (5.74%)
965,200 *AirBoss of America 2,641,420 4,217,924
40,000 *Encore Wire 439,600 463,600
CONSUMER PRODUCTS (1.26%)
410,000 *Oneida 1,058,700 1,025,000
ELECTRONICS MANUFACTURING (0.03%)
24,665 *Reptron Electronics 102,353 27,132
MINERAL EXPLORATION (0.85%)
130,270 *Solatario Resources 140,615 184,983
240,000 *Crown Resources 339,500 508,800
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TOTAL COMMON STOCKS 36,528,202 44,791,656
PREFERRED STOCK (0.59%)
No. of Shares
- -------------
POWER PRODUCERS (0.59%)
10,000 AES Convt. C 6.75% 331,030 483,000
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TOTAL PREFERRED STOCKS 331,030 483,000
BONDS (40.21%)
Principal Issue Cost Market Value
- --------- ----- ---- ------------
U.S. GOVERNMENT (1.81%)
$4,000,000 U.S. Treasury "Strips" bp due 8-15-2028 1,026,405 1,472,500
MUNICIPAL (0.16%)
$1,000,000 *Indianapolis Air Auth. 6.5% due 11-15-2031 (flat) 295,180 130,000
CORPORATE (7.67%)
$3,550,000 Calpine 8.5% due 2-15-2011 2,438,031 2,467,250
$2,300,000 Charter 9.92% due 4-1-2011 1,826,750 1,679,000
$1,029,000 Danka 10% due 4-1-2008 992,721 761,460
$179,149 Reptron 7.00% due 3-3-2009 85,210 107,490
$1,500,000 Level 3 9.125% due 5-1-2008 1,183,750 1,237,500
--------- ---------
TOTAL CORPORATE BONDS 6,526,462 6,252,700
Corporate Convertibles (30.57%)
$2,200,000 *Adelphia 6.00% due 2-15-2006 (flat) 871,125 104,500
$2,000,000 America West 2.491% due 7-30-2023 507,000 640,000
$200,000 Calpine 4.75% due 11-15-2023 162,000 139,000
$1,500,000 Ciphergen Biosystems 4.5% due 9-1-2008 1,075,000 1,065,000
$2,700,000 Corixa 4.25% due 7-1-2008 2,359,500 2,659,500
$100,000 Cubist 5.5% due 11-1-2008 55,880 91,000
$1,100,000 Curagen 6.00% due 2-2-2007 937,500 1,028,500
$4,300,000 Curagen 4.00% due 2-15-2011 3,267,000 3,182,000
$1,200,000 Durect 6.25% due 6-15-2008 932,375 1,968,000
$500,000 Elan 6.5% due 11-10-2008 387,500 580,000
$500,000 Emeritus 6.25% due 1-1-2006 408,000 475,000
$2,500,000 Epix 3% due 6-15-2024 1,903,750 1,900,000
$2,000,000 Guilford 5% due 7-1-2008 1,565,000 1,510,000
$2,359,000 Ibasis 6.75% due 6-18-2009 2,028,758 3,491,320
$3,000,000 Isis 5.5% due 5-1-2009 2,509,375 2,400,000
$2,500,000 *Kellstrom 5.5% due 6-15-2003 (liquidating) 143,750 50,000
$1,000,000 *Kellstrom 5.75% due 10-15-2002 (liquidating) 53,750 20,000
$1,500,000 Level 3 Comm. 6.00% due 3-15-2010 786,750 787,500
$500,000 PMA Group 6.5% due 9-30-2022 422,000 527,500
$1,500,000 Silcon Graphics 6.125% due 2-1-2011 1,030,250 720,000
$200,000 Titan Wheel 5.25% due 7-26-2009 212,000 242,000
$2,000,000 UT Starcom 0.875% due 3-1-08 1,452,500 1,350,000
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TOTAL CORPORATE CONVERTIBLES 23,070,763 24,930,820
Total Bonds (40.21%) $30,918,810 $32,786,020
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Total Investments (95.73%) $67,778,042 $78,060,676
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Cash, other assets less liabilities (4.27%) $3,483,569
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TOTAL NET ASSETS (100%) $81,544,245
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The accompanying notes to financial statements are an integral part of this
schedule.
*Non-cash income producing
BRUCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005
ASSETS
Investments, at Market Value (Cost $67,778,042) $78,060,676
Cash 2,917,238
Dividends Receivable 12,400
Interest Receivable 619,251
Prepaid Insurance 523
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TOTAL ASSETS 81,610,088
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LIABILITIES
Accrued Expenses 65,843
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TOTAL LIABILITIES 65,843
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NET ASSETS
$81,544,245
===============
NET ASSETS CONSIST OF:
Capital Stock (232,750 Shares of $1 Par Value
Capital Stock Issued and Outstanding; 1,000,000
Shares Authorized) 232,750
Paid-in Surplus 69,816,659
Accumulated Undistributed Net Investment Income 555,808
Accumulated Net Realized Gains on Investments 656,394
Net Unrealized Appreciation on Investments 10,282,634
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NET ASSETS $81,544,245
=============
NET ASSET VALUE PER SHARE $ 350.35
=============
The accompanying notes are an integral part of this statement.
BRUCE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2005
INVESTMENT INCOME
Dividends $ 97,750
Interest 1,129,967
-----------
$ 1,227,717
-----------
EXPENSES
Management Fees $ 342,177
Custodian/Security Transaction 5,340
Directors 1,008
Transfer Agent Fees 45,046
Audit, Tax, Accounting Fees 17,241
Insurance 1,001
Legal 1,220
Registration 35,500
Printing, Postage 10,030
---------
Total Expenses 458,563
-----------
NET INVESTMENT INCOME 769,154
-----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net Realized Gains on Investments 734,084
Net Change in Unrealized Appreciation on Investments 5,847,709
-----------
NET GAIN ON INVESTMENTS 6,581,793
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 7,350,947
===========
The accompanying notes are an integral part of this statement.
BRUCE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
2005 2004
---- ----
OPERATIONS
Net Investment Income $ 769,154 $ 158,399
Net Realized Gains on Investments 734,084 632,624
Net Change in Unrealized Appreciation
on Investments 5,847,709 2,994,863
--------- ---------
Net Increase in Net Assets
Resulting from Operations 7,350,947 3,785,886
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (510,278) (170,748)
Distributions from Net Capital Gains (637,110) (244,153)
--------- ---------
Decrease in Net Assets Resulting from
Distributions to Shareholders (1,147,388) (414,901)
----------- ---------
CAPITAL STOCK TRANSACTIONS
Proceeds from Shares Issued 74,090,438 5,883,514
Increase from Shares Issued in Reinvested
Distributions 1,050,969 410,090
Cost of Shares Redeemed (14,689,517) (119,655)
------------ -----------
Increase in Net Assets Resulting from
Capital Stock Transactions 60,451,890 6,173,949
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TOTAL INCREASE 66,655,449 9,544,934
NET ASSETS
Beginning of Year 14,888,796 5,343,862
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End of Year (including accumulated undistributed
net investment income of $555,808 and $296,932
respectively) $81,544,245 $14,888,796
=========== ===========
The accompanying notes are an integral part of these statements.
BRUCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2005
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 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 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 also use the evaluated mean
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, 2005, the cost of investments
held was $67,778,042 for both financial reporting and federal income tax
purposes. At June 30, 2005, gross unrealized appreciation on investments
was $15,460,181 and gross unrealized depreciation on investments was
$(5,177,547) for both financial reporting and federal income tax purposes.
3. In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as the
reported amount of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B - CAPITAL STOCK:
During the years ended June 30, 2005 and June 30, 2004, there were 44,399
and 458 shares redeemed; 222,962 and 22,207 shares issued and 3,043 and 1,798
shares issued through dividend reinvestment, respectively.
NOTE C - PURCHASES AND SALES OF SECURITIES:
During the year ended June 30, 2005, purchases and sales of securities with
original maturities of greater than one year were $60,407,048 and $3,942,689
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). 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, 2005, Robert B. Bruce owned 12,941 shares and R. Jeffrey
Bruce owned 1,914 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 2004, the Fund announced a dividend from net investment
income of $5.19 per share, aggregating $510,278 and a long-term capital gain
distribution of $6.48 per share aggregating $637,110. These distributions were
payable December 30, 2004 to shareholders of record on December 29, 2004.
NOTE G - FINANCIAL HIGHLIGHTS:
Selected data for each share of capital stock outstanding through each year
is presented below 1:
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
Net Asset Value, Beginning of Period (B) $ 283.34 $184.27 $145.67 $157.42 $128.15
Net Investment Income 5.67 4.41 6.19 6.76 4.74
Net Gains or (Losses) on Investments 73.01 107.66 50.11 6.74 35.43
(both realized and unrealized) ------ ------- ------ ------- -------
Total From Investment Operations 78.68 112.07 56.30 13.50 40.17
------ ------- ------ ------- -------
Distribution (from net investment
income) (A) (5.19) (5.35) (5.30) (8.00) (1.90)
Distribution (from net capital gain) (A) (6.48) (7.65) (12.40) (17.25) (9.00)
------ ------ ------- ------ ------
Total Distributions (11.67) (13.00) (17.70) (25.25) (10.90)
------- ------- ------- ------- -------
Net Asset Value, End of Period (C) $350.35 $283.34 $184.27 $145.67 $ 157.42
======= ======= ======== ======= ========
Total Return 27.80% 62.52% 41.99% 8.26% 32.26%
------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period ($ million) $81.54 $14.88 $ 5.34 $ 3.70 $ 3.29
Ratio of Expenses to Average Net Assets2 1.03% 1.17% 1.41% 1.46% 1.60%
Ratio of Net Income to Average Net Assets3 1.73% 1.81% 4.11% 4.27% 3.28%
Portfolio Turnover Rate 10.05% 22.01% 30.72% 28.59% 49.42%
- --------
1 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.
2 Ratio of expenses to average net assets before reimbursement for 2004,
2003, 2002 and 2001 was 1.27%,1.62%, 1.67% and 1.85% respectively. There
were no expense reimbursements in 2005.
3 Ratio of net income to average net assets before reimbursement for 2004,
2003, 2002 and 2001 was 1.70%, 3.90%, 4.07% and 3.03% respectively. There
were no expense reimbursements in 2005.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and
Board of Directors of
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, 2005, and the related statements of operations for
the year then ended, the statements of changes in net assets for the years ended
June 30, 2005 and June 30, 2004, and the financial highlights included in Note G
for the five years ended June 30, 2005. 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 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 is 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, 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, as of June 30, 2005, the results of its operations for the year then
ended, the changes in its net assets for the years ended June 30, 2005 and June
30, 2004, and the financial highlights for the five years ended June 30, 2005,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Grant Thornton LLP
Chicago, Illinois
September 7, 2005
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
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
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.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) The registrant's Board of Trustees has determined that the registrant does
not have an audit committee financial expert. The Board of Trustees has
determined that, although none of its members meet the technical definition of
an audit committee financial expert, the Board of Trustees has sufficient
financial expertise to adequately perform its duties without the addition of a
qualified expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
FY 2005 $13,695
FY 2004 $12,000
(b) Audit-Related Fees
Registrant
FY 2005 N/A
FY 2004 N/A
Nature of the fees:
(c) Tax Fees
Registrant
FY 2005 $2,500
FY 2004 $2,500
Nature of the fees:
(d) All Other Fees
Registrant
FY 2005 $0
FY 2004 $0
Nature of the fees:
(e) (1) Audit Committee's Pre-Approval Policies
The independent Trustees of the Board of Trustees serve as the
Audit Committee. Currently, they do not have written
pre-approval policies for choosing the Trust's independent
public accounting firm, but will consider adopting such
policies in the future. The independent Trustees select the
independent public accounting firm each year based on their
annual review of the performance, cost and independence of the
prior year's independent public accounting firm.
(2) Percentages of Services Approved by the Audit Committee
The Board of Trustees does not currently have a separate Audit
Committee, and the following percentages of services were
approved by the independent Trustees:
Registrant
Audit-Related Fees: 100%
Tax Fees: 100%
All Other Fees: N/A
None of the services described in paragraph (b) through (d)
of this Item were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) During the 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:
Registrant Advisor
FY 2005 $ 0 $ 0
FY 2004 $ 0 $ 0
(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 - applies to listed
companies only
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 - applies to closed-end funds only
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. NOT
APPLICABLE - applies to closed-end funds only.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED PURCHASERS. NOT APPLICABLE - applies to closed-end
funds only
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NOT APPLICABLE The
registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of August 16, 2005, 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
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code 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.
By /s/ Robert B. Bruce
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Robert B. Bruce, President
Date 9/20/05
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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.
By /s/ Robert B. Bruce
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Robert B. Bruce, President
Date 9/20/05
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By /s/ R. Jeffery Bruce
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R. Jeffery Bruce, Principal Accounting Officer
Date 9/20/05
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