BRUCE FUND
SCHEDULE OF INVESTMENTS
March 31, 2020 (Unaudited)
| COMMON STOCKS — 72.9% | Shares | Fair Value | ||||||
| Communication Services — 1.4% | ||||||||
| Actua Corporation(a)(b)(c) | 130,000 | $ | 6,500 | |||||
| Sirius XM Holdings, Inc. | 1,357,843 | 6,707,744 | ||||||
| 6,714,244 | ||||||||
| Consumer Discretionary — 0.9% | ||||||||
| General Motors Company | 200,000 | 4,156,000 | ||||||
| Energy — 0.0% | ||||||||
| Aspire Holdings, LLC(a)(b)(c) | 193,069 | 1,931 | ||||||
| PetroQuest Energy, Inc.(a)(b)(c) | 252,248 | 2,522 | ||||||
| 4,453 | ||||||||
| Financials — 5.3% | ||||||||
| Allstate Corporation (The) | 275,000 | 25,225,750 | ||||||
| Health Care — 21.3% | ||||||||
| Abbott Laboratories | 164,500 | 12,980,696 | ||||||
| AbbVie, Inc. | 164,500 | 12,533,255 | ||||||
| Allergan p.l.c. (Ireland) | 55,000 | 9,740,500 | ||||||
| Bausch Health Companies, Inc. (Canada)(c) | 1,150,000 | 17,825,000 | ||||||
| EDAP TMS SA - ADR (France)(c) | 733,094 | 1,664,123 | ||||||
| Fate Therapeutics, Inc.(c) | 50,000 | 1,110,500 | ||||||
| MannKind Corporation(c) | 274,272 | 282,500 | ||||||
| Merck & Company, Inc. | 300,000 | 23,082,000 | ||||||
| Paratek Pharmaceuticals, Inc.(c) | 466,552 | 1,469,639 | ||||||
| Pfizer, Inc. | 450,000 | 14,688,000 | ||||||
| Prothena Corporation p.l.c. (Ireland)(c) | 3,170 | 33,919 | ||||||
| Supernus Pharmaceuticals, Inc.(c) | 352,105 | 6,334,369 | ||||||
| Xtant Medical Holdings, Inc.(c) | 182,972 | 122,591 | ||||||
| 101,867,092 | ||||||||
| Industrials — 9.2% | ||||||||
| AMERCO | 124,167 | 36,076,722 | ||||||
| General Electric Company | 1,000,000 | 7,940,000 | ||||||
| 44,016,722 | ||||||||
| Information Technology — 6.6% | ||||||||
| Apple, Inc. | 80,000 | 20,343,200 | ||||||
| International Business Machines Corporation | 100,000 | 11,093,000 | ||||||
| 31,436,200 | ||||||||
| Materials — 2.3% | ||||||||
| Ashland Global Holdings, Inc. | 25,000 | 1,251,750 | ||||||
| Compass Minerals International, Inc. | 140,000 | 5,385,801 | ||||||
| Flotek Industries, Inc.(c) | 590,671 | 525,697 | ||||||
| Newmont Goldcorp Corporation | 65,600 | 2,970,368 | ||||||
| Solitario Exploration & Royalty Corporation(c) | 199,270 | 39,734 | ||||||
| Valvoline, Inc. | 68,633 | 898,406 | ||||||
| 11,071,756 | ||||||||
| Utilities — 25.9% | ||||||||
| Avista Corporation | 200,000 | 8,498,000 | ||||||
| CMS Energy Corporation | 450,000 | 26,437,500 | ||||||
| Duke Energy Corporation | 300,000 | 24,264,000 | ||||||
| NextEra Energy, Inc. | 165,000 | 39,702,299 | ||||||
| WEC Energy Group, Inc. | 12,560 | 1,106,913 | ||||||
See accompanying notes which are an integral part of this schedule of investments.
Shares/ Principal Amount | Fair Value | |||||||
| Xcel Energy, Inc. | 400,000 | $ | 24,120,000 | |||||
| 124,128,712 | ||||||||
| Total Common Stocks (Cost $231,463,710) | 348,620,929 | |||||||
| CONVERTIBLE PREFERRED STOCKS — 0.5% | ||||||||
| Consumer Staples — 0.5% | ||||||||
| Bunge Ltd. (Bermuda), 4.88% | 27,400 | 2,548,200 | ||||||
| Total Convertible Preferred Stocks (Cost $2,864,600) | 2,548,200 | |||||||
| U.S. GOVERNMENT BONDS — 12.3% | ||||||||
| U.S. Treasury "Strips", 0.00%, 8/15/2029 | $ | 15,000,000 | 14,094,827 | |||||
| U.S. Treasury "Strips", 0.00%, 2/15/2036 | 20,000,000 | 17,337,437 | ||||||
| U.S. Treasury "Strips", 0.00%, 2/15/2041 | 10,000,000 | 7,809,020 | ||||||
| U.S. Treasury "Strips", 0.00%, 5/15/2049 | 30,000,000 | 19,825,567 | ||||||
| Total U.S. Government Bonds (Cost $40,323,597) | 59,066,851 | |||||||
| CONVERTIBLE CORPORATE BONDS — 6.7% | ||||||||
| Health Care — 6.5% | ||||||||
| Acorda Therapeutics, Inc., 1.75%, 6/15/2021 | 11,000,000 | 9,636,047 | ||||||
| Acorda Therapeutics, Inc., 6.00%, 12/1/2024 | 2,500,000 | 2,201,885 | ||||||
| MannKind Corporation, 5.75%, 10/23/2024(a)(b) | 5,000,000 | 3,550,000 | ||||||
| Novavax, Inc., 3.75%, 2/1/2023 | 3,000,000 | 2,403,418 | ||||||
| Paratek Pharmaceuticals, Inc., 4.75%, 5/1/2024 | 15,000,000 | 11,682,001 | ||||||
| Rocket Pharmaceuticals, Inc., 6.25%, 8/1/2022 | 2,000,000 | 1,892,155 | ||||||
| Synergy Pharmaceuticals, Inc., 7.50%, 11/1/2019(a)(b)(d)(e) | 1,500,000 | 150 | ||||||
| 31,365,656 | ||||||||
| Industrials — 0.2% | ||||||||
| Team, Inc., 5.00%, 8/1/2023(d) | 1,000,000 | 762,500 | ||||||
| Total Convertible Corporate Bonds (Cost $36,575,880) | 32,128,156 | |||||||
| CORPORATE BONDS — 4.6% | ||||||||
| Consumer Discretionary — 0.3% | ||||||||
| Land O'Lakes Capital Trust I, 7.45%, 3/15/2028(d) | 1,500,000 | 1,507,500 | ||||||
| Energy — 0.3% | ||||||||
| ONEOK, Inc., 6.00%, 6/15/2035 | 1,000,000 | 853,168 | ||||||
| PetroQuest Energy, Inc., 10.00%, 2/15/2024(a)(b)(f) | 2,504,435 | 626,109 | ||||||
| 1,479,277 | ||||||||
| Financials — 0.9% | ||||||||
| Security Benefit Life Insurance Company, 7.45%, 10/1/2033(d) | 3,000,000 | 4,020,792 | ||||||
| Health Care — 1.9% | ||||||||
| MannKind Corporation, 0.00%, 6/30/2020(a)(b) | 2,630,750 | 2,630,750 | ||||||
| MannKind Corporation, 0.00%, 12/30/2020(a)(b) | 2,630,750 | 2,630,750 | ||||||
| Valeant Pharmaceuticals International, Inc. (Canada), 6.13%, 4/15/2025(d) | 4,000,000 | 3,965,020 | ||||||
| 9,226,520 | ||||||||
See accompanying notes which are an integral part of this schedule of investments.
Shares/ Principal Amount | Fair Value | |||||||
| Utilities — 1.2% | ||||||||
| Constellation Energy Group, Inc., 7.60%, 4/1/2032 | $ | 4,000,000 | $ | 5,858,360 | ||||
| Total Corporate Bonds (Cost $19,663,470) | 22,092,449 | |||||||
| U.S. MUNICIPAL BONDS — 0.0% | ||||||||
| Indianapolis Airport Authority, 6.50%, 11/15/2031(b)(c)(e) | 972,551 | 292 | ||||||
| Total U.S. Municipal Bonds (Cost $162,383) | 292 | |||||||
| MONEY MARKET FUNDS - 2.8% | ||||||||
| Morgan Stanley Institutional Liquidity Government Portfolio, Institutional Class, 0.25%(g) | 13,523,619 | 13,523,619 | ||||||
| Total Money Market Funds (Cost $13,523,619) | 13,523,619 | |||||||
| Total Investments — 99.8% (Cost $344,577,259) | 477,980,496 | |||||||
| Other Assets in Excess of Liabilities — 0.2% | 758,762 | |||||||
| NET ASSETS — 100.0% | $ | 478,739,258 | ||||||
| (a) | Security is currently being valued according to the fair value procedures approved by the Board of Directors. |
| (b) | Illiquid security. The total fair value of these securities as of March 31, 2020 was $9,449,004, representing 2.0% of net assets. |
| (c) | Non-income producing security. |
| (d) | Security exempt from registration under Rule 144A or Section 4(2) of the Securities Act of 1933. The security may be resold in transactions exempt from registration, normally to qualified institutional buyers. The total fair value of these securities as March 31, 2020 was $10,255,962, representing 2.1% of net assets. |
| (e) | In default. |
| (f) | Payment in kind security which may pay interest in additional principal. |
| (g) | Rate disclosed is the seven day effective yield as of March 31, 2020. |
ADR- American Depositary Receipt
The sectors shown on the schedule of investments are based on the Global Industry Classification Standard, or GICS® ("GICS"). The GICS was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor's Financial Services LLC ("S&P"). GICS is a service mark of MSCI, Inc. and S&P and has been licensed for use by Ultimus Fund Solutions, LLC.
At March 31, 2020, the breakdown of net unrealized appreciation and tax cost of investments for federal income tax purpose is as follows:
| Gross Unrealized Appreciation | $ | 159,055,984 | ||
| Gross Unrealized Depreciation | (25,651,946 | ) | ||
| Net Unrealized Appreciation on Investments | $ | 133,404,038 | ||
| Tax Cost | $ | 344,576,458 |
See accompanying notes which are an integral part of this schedule of investments.
BRUCE FUND, INC.
NOTES TO THE SCHEDULE OF INVESTMENTS
March 31, 2020 (Unaudited)
The Bruce Fund (the “Fund”) is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Security Transactions and Related Income – Investment transactions are accounted for no later than the first calculation of the Net Asset Value (“NAV”) on the business day following the trade date. For financial reporting purposes, however, security transactions are accounted for on the trade date on the last business day of the reporting period. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are accreted or amortized using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political development in specific country or region.
Securities Valuation and Fair Value Measurements – In accordance with Accounting Standards Codification 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. ASC 820 established a three-tier hierarchy to maximize the use of the observable market data and minimize the use of unobservable inputs and to establish classification of the fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (the risk inherent in a particular valuation technique used to measure fair value 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 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. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
| • | Level 1 – unadjusted quoted prices in active markets for identical investments and/or registered investment companies where the value per share is determined and published and is the basis for current transactions for identical assets or liabilities at the valuation date |
| • | Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, 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 based on the best information available) |
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, including common stocks, convertible preferred stocks, and American Depositary Receipts (ADR’s), 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 value of such securities. 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 and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security will be classified as a Level 2 security.
BRUCE FUND, INC.
NOTES TO THE SCHEDULE OF INVESTMENTS - continued
March 31, 2020 (Unaudited)
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 fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined by the Adviser, in conformity with guidelines adopted by and subject to review by the Board of Directors (the “Board”). These securities are generally categorized as Level 3 securities.
Investments in mutual funds, including money market mutual funds, are generally priced at the ending NAV provided by the service agent of the funds. These securities will be categorized as Level 1 securities.
Fixed income securities, including corporate bonds, convertible corporate bonds, U.S. government bonds, and U.S. municipal bonds are valued using market quotations in an active market, will be categorized as Level 2 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 value of such securities. A pricing service uses various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable, the fixed income securities are categorized as Level 2 securities. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair 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 are generally categorized as Level 3 securities.
The following is a summary of the inputs used to value the Fund’s investments as of March 31, 2020 based on the three levels defined previously:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Common Stocks | ||||||||||||||||
| Communication Services | $ | 6,707,744 | $ | - | $ | 6,500 | $ | 6,714,244 | ||||||||
| Consumer Discretionary | 4,156,000 | - | - | 4,156,000 | ||||||||||||
| Energy | - | - | 4,453 | 4,453 | ||||||||||||
| Financials | 25,225,750 | - | - | 25,225,750 | ||||||||||||
| Health Care | 101,867,092 | - | - | 101,867,092 | ||||||||||||
| Industrials | 44,016,722 | - | - | 44,016,722 | ||||||||||||
| Information Technology | 31,436,200 | - | - | 31,436,200 | ||||||||||||
| Materials | 11,071,756 | - | - | 11,071,756 | ||||||||||||
| Utilities | 124,128,712 | - | - | 124,128,712 | ||||||||||||
| Convertible Preferred Stocks | ||||||||||||||||
| Consumer Staples | 2,548,200 | - | - | 2,548,200 | ||||||||||||
| U.S. Government Bonds | ||||||||||||||||
| U.S. Treasury Strips | - | 59,066,851 | - | 59,066,851 | ||||||||||||
| Convertible Corporate Bonds | ||||||||||||||||
| Health Care | - | 27,815,506 | 3,550,150 | 31,365,656 | ||||||||||||
| Industrials | - | 762,500 | - | 762,500 | ||||||||||||
| Corporate Bonds | ||||||||||||||||
| Consumer Discretionary | - | 1,507,500 | - | 1,507,500 | ||||||||||||
| Energy | - | 853,168 | 626,109 | 1,479,277 | ||||||||||||
| Financials | - | 4,020,792 | - | 4,020,792 | ||||||||||||
| Health Care | - | 3,965,020 | 5,261,500 | 9,226,520 | ||||||||||||
| Utilities | - | 5,858,360 | - | 5,858,360 | ||||||||||||
| U.S. Municipal Bonds | - | 292 | - | 292 | ||||||||||||
| Money Market Funds | 13,523,619 | - | - | 13,523,619 | ||||||||||||
| Total | $ | 364,681,795 | $ | 103,849,989 | $ | 9,448,712 | $ | 477,980,496 | ||||||||
BRUCE FUND, INC.
NOTES TO THE SCHEDULE OF INVESTMENTS - continued
March 31, 2020 (Unaudited)
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:
| • | 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’s investments in common stock, corporate bonds and convertible corporate bonds for which market quotations 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 the assumption used for each of the inputs listed above may indicate a directionally similar change in the fair value of the investment.
The following provides quantitative information about the Fund’s significant Level 3 fair value measurements as of March 31, 2020:
| Quantitative Information about Significant Level 3 Fair Value Measurements | ||||||||||||
| Fair Value At | ||||||||||||
| Asset Category | March 31, 2020 | Valuation Techniques | Unobservable Input(s) | Range | ||||||||
| Common Stocks | $ | 4,453 | Adjusted Broker Quotes | Non-Binding Broker Quotes | N/A | |||||||
| 6,500 | Asset Liquidation Analysis | Liquidation Proceeds | N/A | |||||||||
| Convertible Corporate Bonds | 3,550,150 | Adjusted Broker Quotes | Non-Binding Broker Quotes | N/A | ||||||||
| Discount for Lack of Marketability | 1%-20% | |||||||||||
| Comparable Security Analysis | Matrix Pricing Range | N/A | ||||||||||
| Common Stock Valuation | N/A | |||||||||||
| Corporate Bonds | 5,887,609 | Priced at Par | Liquidation/Reorganization Valuation | 50%-100% | ||||||||
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, 2019 | Realized gain (loss) | Amortization/ Accretion | Change in unrealized appreciation (depreciation) | |||||||||||||
| Common Stock | $ | 636,427 | $ | - | $ | - | $ | (625,474 | ) | |||||||
| Convertible Corporate Bonds | 13,658,700 | (2,702,043 | ) | - | 3,664,426 | |||||||||||
| Corporate Bonds | - | - | - | - | ||||||||||||
| Total | $ | 14,295,127 | $ | (2,702,043 | ) | $ | - | $ | 3,038,952 | |||||||
| Purchases | Sales | Transfer in Level 3* (a) | Transfer out Level 3* (b) | Balance as of March 31, 2020 | ||||||||||||||||
| Common Stock | $ | - | $ | - | $ | - | $ | - | $ | 10,953 | ||||||||||
| Convertible Corporate Bonds | 5,000,000 | (16,070,933 | ) | - | - | 3,550,150 | ||||||||||||||
| Corporate Bonds | 5,261,500 | - | 626,109 | - | 5,887,609 | |||||||||||||||
| Total | $ | 10,261,500 | $ | (16,070,933 | ) | $ | 626,109 | $ | - | $ | 9,448,712 | |||||||||
BRUCE FUND, INC.
NOTES TO THE SCHEDULE OF INVESTMENTS - continued
March 31, 2020 (Unaudited)
| * | 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 the Board, and are categorized as Level 3 inputs as of March 31, 2020. |
| (b) | Transfers out relate primarily to securities for which observable inputs became available during the period, and as of March 31, 2020, the Fund was able to obtain quotes from its pricing service. These quotes represent Level 2 inputs, which is the level of the fair value hierarchy in which these securities are included as of March 31, 2020. |
The total change in unrealized appreciation attributable to Level 3 investments still held at March 31, 2020 was as follows:
| Total Change in Unrealized Appreciation (Depreciation) | ||||
| Common Stock | $ | (625,474 | ) | |
| Convertible Corporate Bonds | 3,664,426 | |||
| Corporate Bonds | - | |||
| Total | $ | 3,038,952 | ||
Restricted Securities – The Fund has acquired several securities, the sale of which is restricted, through private placement. At March 31, 2020, the aggregate market value of such securities listed below amounted to $10,255,962 or 2% of the Fund’s net assets. 100% of the restricted securities are valued using quoted market prices. 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.
The chart below shows the restricted securities held by the Fund as of March 31, 2020:
| Issuer Description | Acquisition Date | Principal Amount | Cost | Value | ||||||||||
| Corporate Bonds | ||||||||||||||
| Land O' Lakes Capital Trust I, 7.45%, 3/15/28 | 1/23/09 | 1,500,000 | $ | 1,130,308 | $ | 1,507,500 | ||||||||
| Security Benefit Life Insurance Company, 7.45%, 10/1/33 | (a) | 3,000,000 | 2,784,839 | 4,020,792 | ||||||||||
| Valeant Pharmaceuticals International, Inc. 6.13%, 4/15/25 | (b) | 4,000,000 | 3,568,920 | 3,965,020 | ||||||||||
| Convertible Corporate Bonds | ||||||||||||||
| Synergy Pharmaceuticals, Inc., 7.50%, 11/1/19 | 3/4/15 | 1,500,000 | 932,534 | 150 | ||||||||||
| Team, Inc., 5.00%, 8/1/23 | 8/24/17 | 1,000,000 | 921,272 | 762,500 | ||||||||||
| (a) | Purchased multiple taxlots beginning on 4/21/11. |
| (b) | Purchased multiple taxlots beginning on 5/11/17. |