Bruce12.31.14SemiAnnual

2014BRUCE FUND, INC.

SEMI-ANNUAL

REPORT

Report to Shareholders

December 31, 2014

20 North Wacker Drive Š Suite 2414 Š Chicago, Illinois 60606 Š (312) 236-9160

Management’s Discussion and Analysis (Unaudited)The Bruce Fund (the “Fund”) shares produced a total return of -3.19% for the six

months ended December 31, 2014, compared to a total return of 6.12% for the S&P 500Index for the same period. Stock markets improved in the period and the Fund laggedmost averages for the six month period. The Fund’s negative performance in the periodwas mainly due to its exposure to the oil & gas industry, seeing significant declines in therelated companies common stock, preferred stock and corporate bonds. Other stocks andthe government bonds improved during the period.

We believe that the worldwide economy remains fragile, and is likely to produceweaker than expected activity. With lackluster growth and excessive leverage, the risksare to the downside and we feel caution is still warranted. With asset deflation remaininga risk, a more conservative posture is also warranted. While the consensus feels a morenormal like recovery will emerge, we are less certain and don’t mind being out of stepwith convention.

Management continues to screen investment opportunities for their long-termcapital appreciation potential versus the risks that investment might present. Areas ofrecent interest have been special situations, larger capitalization and dividend payingstocks. The bonds as well as the stocks in the portfolio encompass significant investmentrisks, which are again outlined in the prospectus.

Shareholders are invited to use the toll-free number (800) 872-7823 to obtain anyFund information (including the proxy voting record), or can visitwww.thebrucefund.com, to obtain the same.

1

Investment Results (Unaudited)Returns for the Periods Ended December 31, 2014

Average Annual

Fund/Index Six Months 1 Year 5 Year 10 Year

Bruce Fund (3.19)% 13.67% 14.16% 8.41%S&P 500® Index* 6.12% 13.69% 15.45% 7.67%

The gross expense ratio as of the most recent prospectus dated October 28, 2014 was 0.73%,which represented the fiscal year ended June 30, 2014.

The performance quoted represents past performance, which doesnot guarantee future results. The investment return and principalvalue 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 ashareholder would pay on Fund distributions or the redemption ofFund shares. Current performance of the Fund may be lower orhigher than the performance quoted. The Fund’s investmentobjectives, risks, charges and expenses must be considered carefullybefore investing. Performance data current to the most recentmonth end may be obtained by calling 1-800-872-7823.

* The S&P 500® Index is an unmanaged benchmark that assumesreinvestment of all distributions and excludes the effect of taxes andfees. The Index is a widely recognized unmanaged index of equityprices and is representative of a broader market and range ofsecurities than is found in the Fund’s portfolio. Individuals cannotinvest directly in the Index; however, an individual can invest inexchange-traded funds or other investment vehicles that attemptto track the performance of a benchmark index.

The Fund’s investment objectives, risks, charges and expenses must be considered carefully beforeinvesting. The prospectus contains this and other important information about the investment companyand may be obtained by calling the same number as above. Please read it carefully before investing.The Fund is distributed by Unified Financial Securities, Inc. Member FINRA.

Comparison of a $10,000 Investment in the Bruce Fund andthe S&P 500® Index (Unaudited)

$-

$10,000

$20,000

$30,000

$40,000

$50,000

Dec-

11

Dec-

14

Date

Valu

e ($

)

Bruce Fund $22,433 S&P 500® Index $20,947

Dec-

13

Dec-

12

Dec-

10

Dec-

09

Dec-

08

Dec-

07

Dec-

06

Dec-

05

Dec-

04

The chart above assumes an initial investment of $10,000 made on December 31, 2004 and held throughDecember 31, 2014. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEEFUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Funddistributions or the redemption of Fund shares. Investment returns and principal values will fluctuate so thatyour 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 informationon the Bruce Fund, and to obtain performance data current to the most recent month end, please call1-800-872-7823. Investing in the Fund involves certain risks that are discussed in the Fund’sprospectus. Please read the prospectus carefully before you invest or send money.The Fund is distributed by Unified Financial Securities, Inc. Member FINRA.

2

Fund Holdings (Unaudited)

Common Stocks48.5%

ConvertiblePreferred

Stocks1.8%

CorporateBonds4.2%

ConvertibleCorporate

Bonds5.4%

U.S.Government

Bonds16.9%

U.S.Municipal

Bonds0.0%2

Money Market23.0%

Other assetsin excess

of liabilities0.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Bruce Fund Portfolio Analysis as of December 31, 20141

Classifications

1 As a percent of net assets.2 Ratio rounds to less than 0.005%.

Investment ObjectiveThe investment objective of the Bruce Fund is long-term capital appreciation.

Availability of Portfolio ScheduleThe 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 FormN-Q. The Fund’s Form N-Qs are available at the SEC’s website www.sec.gov. The Fund’sForm N-Qs are also available by calling the Fund at (800) 872-7823. The Fund’s Form N-Qsmay be reviewed and copied at the Public Reference Room in Washington D.C.Information on the operation of the Public Reference Room may be obtained by calling1-800-SEC-0330.

3

Shareholder Expense Example (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 ongoingcosts (in dollars) of investing in the Fund and to compare these costs with the ongoingcosts of investing in other mutual funds. The example is based on an investment of$1,000 invested at the beginning of the period (July 1, 2014) and held for the entireperiod (through December 31, 2014).

Actual ExpensesThe 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 youinvested, to estimate the expenses that you paid over the period. Simply divide youraccount 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 theheading entitled “Expenses Paid During the Period” to estimate the expenses you paid onyour account during this period.

Hypothetical Example for Comparison PurposesThe second line of the table below provides information about hypothetical account

values and hypothetical expenses based on the Fund’s actual expense ratio and anassumed rate of return of 5% per year before expenses, which is not the Fund’s actualreturn. The hypothetical account values and expenses may not be used to estimate theactual ending account balance or expenses you paid for the period. You may use thisinformation to compare the ongoing costs of investing in the Fund and other funds. Todo so, compare this 5% hypothetical example with the 5% hypothetical examples thatappear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight yourongoing 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 willnot help you determine the relative total costs of owning different funds. In addition, ifthese transactional costs were included, your costs would have been higher.

Beginning

Account

Value

Ending

Account

Value

Expenses

Paid During

Period*

July 1, 2014 December 31, 2014

July 1 –

December 31, 2014

Bruce FundActual $1,000.00 $ 968.10 $3.36Hypothetical** $1,000.00 $1,021.79 $3.45

* Expenses are equal to the Fund’s six month annualized expense ratio of 0.68%, multiplied by the average account value overthe period, multiplied by 184/365 (to reflect the partial year period).

** Assumes a 5% return before expenses.

4

Schedule of Investments (Unaudited)December 31, 2014

Shares Fair Value

COMMON STOCKS – 48.5%

Consumer Discretionary 4.9%

1,385,000 AirBoss of America Corp. $ 14,612,30475,000 DIRECTV, Class A* 6,502,500

1,357,843 Sirius XM Holdings, Inc. 4,752,450

25,867,254

Consumer Staples 3.8%

100,000 Bunge Ltd. 9,091,000259,000 Diamond Foods, Inc.* 7,311,570341,000 Omega Protein Corp.* 3,604,370

20,006,940

Energy 0.6%

200,000 C&J Energy Services, Inc.* 2,642,000182,168 SandRidge Energy, Inc.* 331,546

2,973,546

Financials 7.1%

250,000 Allstate Corp./The 17,562,500211,502 GAINSCO, Inc.* 2,115,020196,952 Phoenix Companies, Inc./The* 13,564,08490,000 RLI Corp. 4,446,000

37,687,604

Health Care 8.9%

124,500 Abbott Laboratories 5,604,990124,500 AbbVie, Inc. 8,147,280155,677 Agenus, Inc.* 618,038631,746 Durect Corp.* 498,574

1,113,694 EDAP TMS S.A. ADR* 2,594,907200,000 Merck & Co., Inc. 11,358,000

9,926 Perrigo Co. PLC 1,659,230350,000 Pfizer, Inc. 10,902,500

3,170 Prothena Corp PLC* 65,809694,581 Supernus Pharmaceuticals, Inc.* 5,765,022

47,214,350

Industrials 12.3%

203,665 AMERCO 57,893,8131,070,073 Astrotech Corp.* 2,643,080

300,000 Titan International, Inc. 3,189,00025,300 US Ecology, Inc. 1,015,036

64,740,929

See accompanying notes which are an integral part of the financial statements. 5

Schedule of Investments (Unaudited) (continued)December 31, 2014

Shares Fair Value

COMMON STOCKS – (continued)

Information Technology 3.5%

130,000 Actua Corp.* $ 2,401,100100,000 International Business Machines Corp. 16,044,000

18,445,100

Materials 3.6%

25,000 Ashland, Inc. 2,994,000690,671 Flotek Industries, Inc.* 12,936,268150,000 Intrepid Potash, Inc.* 2,082,000280,000 Kinross Gold Corp.* 789,600199,270 Solitario Exploration & Royalty Corp.* 183,328

18,985,196

Utilities 3.8%

296,212 Calpine Corp.* 6,555,17220,000 Integrys Energy Group, Inc. 1,557,000

100,000 NextEra Energy, Inc. 10,629,00050,000 Pepco Holdings, Inc. 1,346,500

20,087,672

Total Common Stocks (Cost $149,133,446) 256,008,591

CONVERTIBLE PREFERRED STOCKS – 1.8%

Consumer Staples 0.6%

27,400 Bunge Ltd., 4.875% 3,082,500

Energy 1.1%

181,500 PetroQuest Energy, Inc., Series B, 6.875% 4,356,00029,200 SandRidge Energy, Inc., 8.500% 1,243,920

5,599,920

Utilities 0.1%

10,000 AES Trust III, 6.750% 515,312

Total Convertible Preferred Stocks (Cost $12,277,136) 9,197,732

CORPORATE BONDS – 4.2%

Consumer Discretionary 0.3%

1,500,000 Land O’Lakes Capital Trust I, 7.450%, 3/15/28(a) 1,560,000

Energy 0.5%

27,370,000 ATP Oil & Gas Corp., 11.875%, 5/1/15(b) 145,7453,900,000 Endeavour International Corp., 12.000%, 3/1/18 1,521,0002,000,000 Gevo, Inc., 7.500%, 7/1/22 1,062,500

2,729,245

See accompanying notes which are an integral part of the financial statements.6


Shares Fair Value

CORPORATE BONDS – (continued)

Financials 1.3%

6,000,000 Security Benefit Life Insurance Co., 7.450%, 10/1/33(a)(c) $ 6,900,000

Utilities 2.1%

4,000,000 Constellation Energy Group, Inc., 7.600%, 4/1/32 5,577,6445,000,000 GenOn Americas Generation LLC, 9.125%, 5/1/31 4,300,0001,000,000 Oneok, Inc., 6.000%, 6/15/35 973,507

10,851,151

Total Corporate Bonds (Cost $20,624,190) 22,040,396

CONVERTIBLE CORPORATE BONDS – 5.4%

Energy 0.3%

3,000,000 BPZ Resources, Inc., 6.500%, 3/1/15 1,350,000

Health Care 4.9%

12,951,497 deCODE Genetics, Inc., 3.500%, 4/15/11(b)(c)(d) 129,51521,690,000 MannKind Corp., 5.750%, 8/15/15 23,221,8561,762,892 Oscient Pharmaceuticals Corp., 12.500%, 1/15/11(b)(c)(d) 35,2581,500,000 Supernus Pharmaceuticals, Inc., 7.500%, 5/1/19(a) 2,624,063

26,010,692

Industrials 0.2%

1,000,000 Titan International, Inc., 5.625%, 1/15/17(a) 1,221,875

Total Convertible Corporate Bonds (Cost $37,303,034) 28,582,567

U.S. GOVERNMENT BONDS 16.9%

30,000,000 U.S. Treasury “Strips”, 0.000%, 8/15/28 21,597,39030,000,000 U.S. Treasury “Strips”, 0.000%, 8/15/29 21,021,69020,000,000 U.S. Treasury “Strips”, 0.000%, 2/15/36 11,894,48020,000,000 U.S. Treasury “Strips”, 0.000%, 2/15/41 9,878,16035,000,000 U.S. Treasury “Strips”, 0.000%, 5/15/42 16,224,91520,000,000 U.S. Treasury “Strips”, 0.000%, 5/15/44 8,699,120

Total U.S. Government Bonds (Cost $68,066,720) 89,315,755

U.S. MUNICIPAL BONDS 0.0%

972,551 Indianapolis Airport Authority, 6.500%, 11/15/31(b)(d) 9,726

Total U.S. Municipal Bonds (Cost $162,383) 9,726

MONEY MARKET – 23.0%

121,422,873 Fidelity Institutional Money Market Treasury Only – Class I, 0.010%(e) 121,422,873

Total Money Market (Cost $121,422,873) 121,422,873

Total Investments (Cost $408,989,782) 99.8% $ 526,577,640

Other Assets in Excess of Liabilities 0.2% 989,596

NET ASSETS 100.0% $ 527,567,236

See accompanying notes which are an integral part of the financial statements. 7


(a) Security exempt from registration under Rule 144A or Section 4(2) of the Securities Act of 1933. The security may beresold in transactions exempt from registration, normally to qualified institutional buyers.

(b) In default.(c) Security is currently being valued according to the fair value procedures approved by the Board of Directors.(d) Illiquid security.(e) Rate disclosed is the seven day yield as of December 31, 2014.

* Non-income producing security.ADR – American Depositary Receipt

See accompanying notes which are an integral part of the financial statements.8

Statement of Assets and Liabilities (Unaudited)December 31, 2014

Assets:

Investments in securities, at market value (cost $408,989,782) $526,577,640Dividends receivable 369,343Interest receivable 962,150Receivable for Fund shares sold 45,830Prepaid expenses and other assets 15,541

Total Assets 527,970,504

Liabilities:

Payable for Fund shares redeemed 93,678Accrued investment advisory fees 237,535Other accrued expenses 72,055

Total Liabilities 403,268

Net Assets $527,567,236

Net Assets consist of:

Capital stock (1,044,926 shares of $1 par value capital stock issued and outstanding) $ 1,044,926Paid in capital 408,539,326Accumulated undistributed net investment (loss) (560,995)Accumulated net realized gain on investments 955,947Net unrealized appreciation on investments 117,588,032

Net Assets $527,567,236

Shares Outstanding: 2,000,000 shares authorized 1,044,926

Net asset value, offering and redemption price per share $ 504.88

9See accompanying notes which are an integral part of the financial statements.

Statement of Operations (Unaudited)Six Months Ended December 31, 2014

Investment Income

Interest income $ 2,583,420Dividends (Net of foreign taxes withheld of $19,253) 2,143,236

Total investment income 4,726,656

Expenses:

Investment advisor fee 1,416,517Transfer agent expense 99,156Administration expense 132,477Fund accounting expense 49,202Report printing expense 27,377Audit expense 19,569Registration expense 17,118Custodian expense 21,668Postage expense 6,253Trustee expense 1,008Insurance expense 66224f-2 fees 2,755

Total Expenses 1,793,762

Net Investment Income 2,932,894

Realized & Unrealized Gain (Loss)

Net realized gain on investment securities 10,430,186Change in unrealized depreciation on investment securities (30,537,300)

Net realized and unrealized loss on investment securities (20,107,114)

Net decrease in net assets resulting from operations $(17,174,220)

10 See accompanying notes which are an integral part of the financial statements.

Statements of Changes in Net Assets

Six Months Ended

December 31, 2014

(Unaudited)

Year Ended

June 30, 2014

Operations

Net investment income $ 2,932,894 $ 9,297,629Net realized gain on investment securities 10,430,186 11,821,539Change in unrealized appreciation/(depreciation) on

investment securities (30,537,300) 103,626,546

Net increase (decrease) in net assets resulting from operations (17,174,220) 124,745,714

Distributions

From net investment income (8,938,028) (10,537,361)From net realized gain on investments (7,181,338) –

Total distributions (16,119,366) (10,537,361)

Capital Transactions

Proceeds from shares sold 32,349,814 60,516,260Reinvestments of distributions 14,975,859 9,773,475Amount paid for shares redeemed (27,276,162) (30,437,423)

Net increase in net assets resulting fromcapital transactions 20,049,511 39,852,312

Total increase (decrease) in net assets (13,244,075) 154,060,665Net Assets

Beginning of period 540,811,311 386,750,646

End of period $527,567,236 $540,811,311

Accumulated undistributed net investment income (loss)included in net assets at end of period $ (560,995) $ 5,444,139

Share Transactions

Shares Sold 62,120 126,492Shares issued in reinvestment of distributions 29,673 21,531Shares redeemed (52,200) (66,053)

Net increase in shares outstanding resulting fromshare transactions 39,593 81,970

11See accompanying notes which are an integral part of the financial statements.

Financial HighlightsSelected data for each share of capital stock outstanding through each year is presented below

Six Months

Ended

December 31,

2014

(Unaudited)

Fiscal Year Ended June 30,

2014 2013 2012 2011 2010

Selected Per Share Data

Net asset value,beginning of period $537.94 $418.85 $391.05 $402.03 $330.82 $285.69

Income from investmentoperations:

Net investment income 2.86 9.51 13.57 14.34 14.62 14.28

Net realized andunrealized gain (loss) (20.03) 120.91 28.94 (10.81) 72.43 43.18

Total from investmentoperations (17.17) 130.42 42.51 3.53 87.05 57.46

Less Distributions toShareholders:

From net investmentincome (8.81) (11.33) (14.71) (14.51) (15.84) (12.33)

From net realized gain (7.08) – – – – –

Total distributions (15.89) (11.33) (14.71) (14.51) (15.84) (12.33)

Net asset value,end of period $504.88 $537.94 $418.85 $391.05 $402.03 $330.82

Total Return1 -3.19%2 31.64% 11.12% 1.04% 26.83% 20.44%

Ratios and Supplemental Data

Net assets, end of period($ millions) $527.57 $540.81 $386.75 $344.91 $299.69 $220.57

Ratio of expenses to averagenet assets 0.68%3 0.70% 0.75% 0.78% 0.82% 0.88%

Ratio of net investmentincome to averagenet assets 1.11%3 2.10% 3.29% 3.95% 4.07% 4.48%

Portfolio turnover rate 4%2 11% 7% 10% 21% 11%

1 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.

2 Not annualized.3 Annualized.

12 See accompanying notes which are an integral part of the financial statements.

Notes to Financial Statements (Unaudited)December 31, 2014

NOTE A – ORGANIZATION

Bruce Fund, Inc. (the “Fund”) is a Maryland corporation incorporated on June 20, 1967. The Fund isan open end diversified management investment company and the Fund’s primary investmentobjective 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

Basis of Preparation – The Fund is an investment company and follows accounting and reportingguidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification(“ASC”) Topic 946, “Financial Services-Investment Companies”. The following is a summary ofsignificant accounting policies followed by the Fund in preparation of their financial statements.These policies are in conformity with the generally accepted accounting principles in the UnitedStates of America (“GAAP”).

Estimates – The preparation of financial statements in conformity with GAAP requiresmanagement to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statementsand the reported amounts of increases and decreases in net assets from operations during thereporting period. Actual results could differ from those estimates.

Securities Valuation – All investments in securities are recorded at their fair value as described inNote C.

Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fundintends to qualify each year as a regulated investment company (“RIC”) under subchapter M of theInternal Revenue Code of 1986, as amended, by complying with the requirements applicable toRICs and by distributing substantially all of its taxable income. The Fund also intends to distributesufficient net investment income and net capital gains, if any, so that it will not be subject to excisetax on undistributed income and gains. If the required amount of net investment income or gains isnot distributed, the Fund could incur a tax expense.

As of and during the period ended December 31, 2014, the Fund did not have a liability for anyunrecognized tax benefits. The Fund recognizes interest and penalties, if any, related tounrecognized tax benefits as income tax expense in the statement of operations. During the period,the Fund did not incur any interest or penalties. Management of the Fund has reviewed taxpositions taken in tax years that remain subject to examination by all major tax jurisdictions,including federal (i.e., the last four tax year ends and the interim tax period since then, asapplicable). Management believes that there is no tax liability resulting from unrecognized taxbenefits related to uncertain tax positions taken.

Security Transactions and Related Income – Investment transactions are accounted for nolater than the first calculation of the Net Asset Value (“NAV”) on the business day following thetrade date. For financial reporting purposes, however, security transactions are accounted for onthe trade date on the last business day of the reporting period. The specific identification method isused for determining gains or losses for financial statements and income tax purposes. Dividendincome is recorded on the ex-dividend date and interest income is recorded on an accrual basis.

13

Notes to Financial Statements (Unaudited) (continued)December 31, 2014

Discounts and premiums on securities purchased are accreted or amortized using the effectiveinterest method. Withholding taxes on foreign dividends have been provided for in accordancewith the Fund’s understanding of the applicable country’s tax rules and rates. The ability of issuersof debt securities held by the Fund to meet their obligations may be affected by economic andpolitical development in specific country or region.

Distributions – Distributions to shareholders, which are determined in accordance with incometax regulations, are recorded on the ex-dividend date. The Fund intends to distribute substantiallyall of its net investment income as dividends to its shareholders on at least an annual basis. TheFund intends to distribute its net realized long-term capital gains and its net realized short-termcapital gains at least once a year. The treatment for financial reporting purposes of distributionsmade to shareholders during the year from net investment income or net realized capital gainsmay differ from their ultimate treatment for federal income tax purposes. These differences arecaused primarily by differences in the timing of the recognition of certain components of income,expenses or realized capital gain for federal income tax purposes. Where such differences arepermanent in nature, they are reclassified in the components of the net assets based on theirultimate characterization for federal income tax purposes. Any such reclassifications will have noeffect on net assets, results of operations or net asset values per share of the Fund.

Subsequent Events – In accordance with GAAP, management has evaluated subsequent eventsthrough the date these financial statements were issued. All subsequent events determined to berelevant and material to the financial statements as a whole have been accordingly disclosed.

NOTE C – SUMMARY OF SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

In accordance with Accounting Standards Codification 820, “Fair Value Measurements andDisclosures” (“ASC 820”), fair value is defined as the price that the Fund would receive upon sellingan investment in an orderly transaction to an independent buyer in the principal or mostadvantageous market of the investment. ASC 820 established a three-tier hierarchy to maximizethe use of the observable market data and minimize the use of unobservable inputs and to establishclassification of the fair value measurements for disclosure purposes. Inputs refer broadly to theassumptions that market participants would use in pricing the asset or liability, includingassumptions about risk (the risk inherent in a particular valuation technique used to measure fairvalue such as 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 theassumptions market participants would use in pricing the asset or liability, developed based onmarket data obtained from sources independent of the reporting entity. Unobservable inputs areinputs that reflect the reporting entity’s own assumptions about the assumptions marketparticipants would use in pricing the asset or liability, developed based on the best informationavailable in the circumstances. The three-tier hierarchy of inputs is summarized in the three broadlevels listed below:

• Level 1 – quoted prices in active markets for identical securities

• Level 2 – other significant observable inputs (including, but not limited to, quoted prices foran identical security in an inactive market, quoted prices for similar securities, interestrates, prepayment speeds, credit risk, etc.)

14


• Level 3 – significant unobservable inputs (including the Fund’s own assumptions indetermining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. Insuch cases, for disclosure purposes, the level in the fair value hierarchy within which the fair valuemeasurement falls in its entirety, is determined based on the lowest level input that is significant tothe fair value measurement in its entirety.

Equity securities, including common stocks and American Depositary Receipts (ADR’s) are generallyvalued by using market quotations, but may be valued on the basis of prices furnished by a pricingservice when the Adviser believes such prices more accurately reflect the fair value of suchsecurities. Securities that are traded on any stock exchange are generally valued by the pricingservice at the last quoted sale price. Lacking a last sale price, an exchange traded security isgenerally 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 ClosingPrice. When using the market quotations or close prices provided by the pricing service and whenthe market is considered active, the security will be classified as a Level 1 security. Sometimes, anequity security owned by the Fund will be valued by the pricing service with factors other thanmarket quotations or when the market is considered inactive. When this happens, the security willbe classified as a Level 2 security.

When market quotations are not readily available, when the Adviser determines that the marketquotation or the price provided by the pricing service does not accurately reflect the current fairvalue, or when restricted or illiquid securities are being valued, such securities are valued asdetermined in good faith by the Adviser, in conformity with guidelines adopted by and subject toreview by the Board. These securities are generally categorized as Level 3 securities.

Investments in mutual funds, including money market mutual funds, are generally priced at theending NAV provided by the service agent of the funds. These securities will be categorized asLevel 1 securities.

Fixed income securities, including convertible preferred stocks, corporate bonds, convertiblecorporate bonds, U.S. government bonds, and U.S. municipal bonds are valued using marketquotations in an active market, will be categorized as Level 1 securities. However, they may bevalued on the basis of prices furnished by a pricing service when the Adviser believes such pricesmore accurately reflect the fair value of such securities. A pricing service uses various inputs andtechniques, which include broker-dealer quotations, live trading levels, recently executedtransactions in securities of the issuer or comparable issuers, and option adjusted spread modelsthat include base curve and spread curve inputs. Adjustments to individual bonds can be applied torecognize trading differences compared to other bonds issued by the same issuer. The broker-dealerquotations received are supported by credit analysis of the issuer that takes into considerationcredit quality assessments, daily trading activity, and the activity of the underlying equities, listedbonds and sector-specific trends. To the extent that these inputs are observable, the fixed incomesecurities are categorized as Level 2 securities. If the Adviser decides that a price provided by thepricing service does not accurately reflect the fair value of the securities, when prices are notreadily 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

15


guidelines adopted by and subject to review of the Board. These securities are generally categorizedas Level 3 securities. The ability of issuers of debt securities held by the Fund to meet theirobligations may be affected by economic and political developments in a specific country or region.

Short-term investments in fixed income securities, (those with maturities of less than 60 days whenacquired, or which subsequently are within 60 days of maturity), may be valued by using theamortized cost method of valuation, which the Board has determined will represent fair value.These securities will be classified as Level 2 securities.

The following is a summary of the inputs used to value the Fund’s investments as of December 31,2014, based on the three levels defined above:

Level 1 Level 2 Level 3 Total

Common StocksConsumer Discretionary $ 25,867,254 $ – $ – $ 25,867,254Consumer Staples 20,006,940 – – 20,006,940Energy 2,973,546 – – 2,973,546Financials 37,687,604(a) – 37,687,604Health Care 47,214,350 – – 47,214,350Industrials 64,740,929 – – 64,740,929Information Technology 18,445,100 – – 18,445,100Materials 18,985,196 – – 18,985,196Utilities 20,087,672 – – 20,087,672

Convertible Preferred StocksConsumer Staples 3,082,500 – – 3,082,500Energy 5,599,920 – – 5,599,920Utilities 515,312 – – 515,312

Corporate BondsConsumer Discretionary – 1,560,000 – 1,560,000Energy – 2,729,245 – 2,729,245Financials – – 6,900,000 6,900,000Utilities – 10,851,151 – 10,851,151

Convertible Corporate BondsEnergy – 1,350,000 – 1,350,000Health Care – 25,845,919 164,773 26,010,692Industrials – 1,221,875 – 1,221,875

U.S. Government BondsU.S. Treasury Strips – 89,315,755 – 89,315,755

U.S. Municipal Bonds – 9,726 – 9,726Money Market 121,422,873 – – 121,422,873

Total $386,629,196 $132,883,671 $7,064,773 $526,577,640(a) At the reporting period ended December 31, 2014, GAINSCO, Inc. common stock transferred from Level 2 to Level 1 from the

previous reporting period due to increased trading activity.

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In the absence of a listed price quote, or a supplied price quote which is deemed to beunrepresentative of the actual market price, the Adviser shall use any or all of the following criteriato value Level 3 securities:

• Last sales price

• Price given by pricing service

• Last quoted bid & asked price

• Third party bid & asked price

• Indicated opening range

The significant unobservable inputs that may be used in the fair value measurement of the Fund’sinvestments in common stock, corporate bonds and convertible corporate bonds for which marketquotations are not readily available include: broker quotes, discounts from the most recent trade or“stale price” and estimates from trustees (in bankruptcies) on disbursements. A change in theassumption used for each of the inputs listed above may indicate a directionally similar change inthe fair value of the investment.

The following provides quantitative information about the Fund’s significant Level 3 fair valuemeasurements as of December 31, 2014:

Quantitative Information about Significant Level 3 Fair Value Measurements

Asset Category

Fair Value At

December 31, 2014

Valuation

Techniques Unobservable Input(s) Range

Corporate Bonds 6,900,000 Adjusted BrokerQuotes

Non-Binding BrokerQuotes

N/A

Convertible CorporateBonds

164,773 Adjusted BrokerQuotes

Non-Binding BrokerQuotes

N/A

Discount for Lack ofMarketability

1%–20%

Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were usedin determining fair value for the Fund:

Balance as

of June 30,

2014

Realized

gain

Amortization/

Accretion

Change in

unrealized

Appreciation Purchases Sales

Transfer

in

Level 3*(a)

Transfer

out

Level 3*(b)

Balance as of

December 31,

2014

CommonStock $ 8,738 $(4,153,314) $ – $4,144,576 $– $ – $– $– $ –

CorporateBonds 6,900,000 – 5,556 (5,556) – – – – 6,900,000

ConvertibleCorporateBonds 496,844 99,334 – (194,737) – (236,668) – – 164,773

Total $7,405,582 $(4,053,980) $5,556 $3,944,283 $– $(236,668) $– $– $7,064,773

* The amount of transfers in and/or out are reflected at the reporting period end.(a) Transfers in relate primarily to securities for which observable inputs became unavailable during the period. Therefore, the

securities were valued at fair value by the Adviser, in conformity with guidelines adopted by and subject to review by theBoard, and are categorized as Level 3 inputs as of December 31, 2014.

(b) Transfer out relate primarily to securities for which observable inputs became available during the period, and as ofDecember 31, 2014, the Fund was able to obtain quotes from its pricing service. These quotes represent Level 2 inputs, whichis the level of the fair value hierarchy in which these securities are included as of December 31, 2014.

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The total change in unrealized depreciation included in the Statement of Operations attributable toLevel 3 investments still held December 31, 2014 was ($200,293).

Total Change in

Unrealized Depreciation

Corporate Bonds $ (5,556)Convertible Corporate Bonds (194,737)

Total $(200,293)

NOTE D – PURCHASES AND SALES OF SECURITIES

For the six months ended December 31, 2014, cost of purchases and proceeds from maturities andsales of securities, other than short-term investments and short-term U.S. Government obligationswere as follows:

Purchases Sales

U.S. Government Obligations $ – $ –Other 17,827,401 48,468,892

NOTE E – RELATED PARTIES

Bruce & Co., Inc., an Illinois corporation, is the investment adviser of the Fund and furnishesinvestment advice. In addition, it provides office space and facilities and pays the cost of allprospectuses and financial reports (other than those mailed to current shareholders).Compensation to the Adviser for its services under the Investment Advisory Contract is paidmonthly based on the following:

Annual Percentage Fee Applied to Average Net Assets of Fund

1.00% Up to $20,000,000; plus0.60% $20,000,000 to $100,000,000; plus0.50% over $100,000,000

At December 31, 2014, Robert B. Bruce was the beneficial owner of 16,996 Fund shares, R. JeffreyBruce was the beneficial owner of 7,766 Fund shares and Robert DeBartolo was the beneficialowner of 131 Fund shares. Robert B. Bruce and Robert DeBartolo are directors of the Fund; bothRobert B. Bruce and R. Jeffrey Bruce are officers of the Fund and are officers, directors and ownersof the Adviser.

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NOTE F – FEDERAL INCOME TAXES

At December 31, 2014, the breakdown of net unrealized appreciation and tax cost of investmentsfor federal income tax purpose is as follows:

Gross Unrealized Appreciation $149,161,071Gross Unrealized (Depreciation) (31,628,520)

Net Unrealized Appreciation onInvestments $117,532,551

Tax Cost $409,045,263

At June 30, 2014, the components of distributable earnings (accumulated losses) on a tax basiswere as follows:

Undistributed Ordinary Income $ 5,499,620Capital Loss Carryforwards (2,292,901)Unrealized Appreciation 148,069,852

Total $151,276,571

At June 30, 2014, the Fund has available for federal tax purposes an unused capital losscarryforward of $2,292,901, which is available for offset against future taxable net capital gains.This loss carryforward expires on June 30, 2019 as shown in the table below. To the extent thesecarryforwards are used to offset future capital gains, it is probable that the amount offset will notbe distributed to shareholders.

Amount Expires June 30,

$2,292,901 2019

Capital losses generated during the fiscal year ending June 30, 2014 will be subject to theprovisions of the Regulated Investment Company Modernization Act of 2010 (the “Act”). Effectivefor taxable years beginning after the enactment date of the Act (December 22, 2010), if capitallosses are not reduced by capital gains during the fiscal year, the losses will be carried forward withno expiration and with the short-term or long-term character of the loss retained. Capital losscarryforwards generated in future years must be fully utilized before those capital losscarryforwards listed with the noted expiration dates above. As of June 30, 2014, the Fund did nothave any post-enactment capital loss carryovers.

The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 2013

Distributions paid from:Ordinary Income $10,537,361 $12,687,935

NOTE G – RESTRICTED SECURITIES

The Fund has acquired several securities, the sale of which is restricted, through private placement.At December 31, 2014, the aggregate market value of such securities listed below amounted to$12,305,938 or 2% of the Fund’s net assets. 44% of the restricted securities are valued usingquoted market prices, while the other 56% are valued according to fair value procedures approved

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by the Board of Directors. It is possible that the estimated value may differ significantly from theamount that might ultimately be realized in the near term, and the difference could be material.

The chart below shows the restricted securities held by the Fund as of December 31, 2014:

Issuer Description

Acquisition

Date

Principal

Amount Cost Value

Corporate BondsLand O’ Lakes Capital Trust I, 7.450%, 3/15/28 1/23/09 $1,500,000 $1,022,429 $1,560,000Security Benefit Life Insurance Co., 7.450%, 10/1/33(a) (b) 6,000,000 5,495,167 6,900,000

Convertible Corporate BondsSupernus Pharmaceuticals, Inc., 7.500%, 5/1/19 (c) 1,500,000 1,516,048 2,624,063Titan International, Inc., 5.625%, 1/15/17 2/5/10 1,000,000 996,500 1,221,875(a) Security is currently being valued according to the fair value procedures approved by the Board of Directors.(b) Purchased multiple taxlots beginning on 4/21/11.(c) Purchased multiple taxlots beginning on 4/26/13.

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Approval of Management Agreement (Unaudited)The Board approved and renewed the Investment Advisory Agreement at a meeting held onNovember 19, 2014 using the following as their basis as transcribed from the minutes:

The Directors discussed and reviewed the performance and expenses of the Fund and the Directorsheld that Fund activities were being conducted for the benefit of the shareholders. Furthercommenting, director DeBartolo noted that the performance of the Fund has been impressive, thatcosts have remained very low, taking advantage of economies of scale and achieving really superiorlong term returns while remaining thoughtful and true to the Fund’s model.

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Privacy PolicyThe following is a description of the Fund’s policies regarding disclosure of nonpublic personalinformation that you provide to the Fund or that the Fund collects from other sources. In the eventthat you hold shares of the Fund through a broker-dealer or other financial intermediary, theprivacy policy of your financial intermediary would govern how your nonpublic personalinformation would be shared with unaffiliated third parties.

Categories of Information the Fund Collects. The Fund collects the following nonpublicpersonal information about you:

• Information the Fund receives from you on or in applications or other forms,correspondence, or conversations (such as your name, address, phone number, socialsecurity number, assets, income and date of birth); and

• Information about your transactions with the Fund, or others (such as your accountnumber and balance, payment history, parties to transactions, cost basis information, andother financial information).

Categories of Information the Fund Discloses. The Fund does not disclose any nonpublicpersonal information about its current or former shareholders to unaffiliated third parties, exceptas required or permitted by law. The Fund is permitted by law to disclose all of the information itcollects, as described above, to its service providers (such as the Fund’s custodian, administrator andtransfer agent) to process your transactions and otherwise provide services to you.

Confidentiality and Security. The Fund restricts access to your nonpublic personal formation tothose persons who require such information to provide products or services to you. The Fundmaintains physical, electronic and procedural safeguards that comply with federal standards toguard your nonpublic personal information.

Disposal of Information. The Fund, through its transfer agent, has taken steps to reasonablyensure that the privacy of your nonpublic personal information is maintained at all times, includingin connection with the disposal of information that is no longer required to be maintained by theFund. Such steps shall include whenever possible, shredding paper documents and records prior todisposal, requiring off-site storage vendors to shred documents maintained in such locations priorto disposal, and erasing and/or obliterating any data contained on electronic media in such amanner that the information can no longer be read or reconstructed.

Proxy VotingA description of the policies and procedures that the Fund uses to determine how to vote proxiesrelating to portfolio securities and information regarding how the Fund voted those proxies duringthe 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 andExchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

BRUCE FUNDOFFICERS AND DIRECTORS

Robert B. BrucePresident and Treasurer

R. Jeffrey BruceVice President and Secretary

Robert DeBartoloDirector

W. Martin JohnsonDirector

Investment AdviserBruce and Co., Inc.Chicago, Illinois

CustodianHuntington National BankColumbus, Ohio

Administrator, Transfer Agent andFund AccountantHuntington Asset Services, Inc.Indianapolis, Indiana

DistributorUnified Financial Securities, Inc.2960 North Meridian Street, Suite 300Indianapolis, Indiana 46208

CounselKlevatt & AssociatesChicago, Illinois

Independent Registered Public Accounting FirmGrant Thornton LLPChicago, Illinois

This report is intended only for the information of shareholders or those who have received theFund’s prospectus which contains information about the Fund’s management fees and expenses.Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.Member FINRA/SIPC

Bruce12.31.14SemiAnnual

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