AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON JANUARY 5, 1996{PRIVATE}
SECURITIES ACT REGISTRATION NO. 33-63562
INVESTMENT COMPANY ACT FILE NO. 811-7760
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
KEELEY SMALL CAP VALUE FUND, INC.
(REGISTRANT)
401 SOUTH LASALLE STREET
SUITE 1201
CHICAGO, ILLINOIS 60605
TELEPHONE NUMBER: (312) 786-5050
JOHN L. KEELEY, JR. STEPHEN E. GOODMAN
KEELEY ASSET MANAGEMENT CORP. SCHWARTZ & FREEMAN
401 SOUTH LASALLE STREET 401 NORTH MICHIGAN AVENUE
SUITE 1201 SUITE 1900
CHICAGO, ILLINOIS 60605 CHICAGO, ILLINOIS 60611
(AGENTS FOR SERVICE)
An indefinite number of shares of the Registrant has been registered under
the Securities Act of 1933 in accordance with the provisions of Rule
24f-2 under the Investment Company Act of 1940. The Registrant's Rule
24f-2 Notice for the fiscal year ended September 30, 1995 was filed on
October 27, 1995.
REGISTRANT PROPOSES THAT THIS POST-EFFECTIVE AMENDMENT NO. 3 WILL BECOME
EFFECTIVE ON THE DATE ON WHICH IT IS FILED WITH THE COMMISSION, PURSUANT TO
PARAGRAPH (B) OF RULE 485 UNDER THE SECURITIES ACT OF 1933.
Page 1 of 21 sequential pages (including exhibits).
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The index of exhibits is on page 20.
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KEELEY SMALL CAP VALUE FUND, INC.
CROSS-REFERENCE SHEET PURSUANT TO RULE 495(A) OF REGULATION C
ITEM LOCATION OR CAPTION<F1>
- ---- -----------------------
PART A (PROSPECTUS)
-------------------
1(a) & (b) Front cover
2(a) Fund Expenses
2(b)-(c) Not applicable
3(a) & (b) Financial Highlights
3(c) Performance Information
4(a)(i) General Information
4(a)(ii) & (b) Investment Objectives and Policies; Investment Restrictions
4(c) Risk Factors
5(a)-(c) Management of the Fund
5(d) & (e) Management of the Fund; General Information
5(f) Fund Expenses; Management of the Fund
5(g) Management of the Fund; Portfolio Transactions
5A Not applicable (in annual report)
6(a) General Information
6(b) Certain Stockholders
6(c)-(d) Not applicable
6(e) General Information
6(f) Dividends and Distributions
6(g) Taxation; Exchange Privilege
7 Purchasing Shares
7(a) Management of the Fund; Purchasing Shares
7(b) Fund Expenses; Purchasing Shares; Net Asset Value; Exchange
Privilege
7(c) & (d) Purchasing Shares; Exchange Privilege
7(e) & (f) Distribution Plan
8(a)-(d) Redemption and Repurchase of Shares
9 Not applicable
PART B (STATEMENT OF ADDITIONAL INFORMATION)
--------------------------------------------
10(a) & (b) Front cover
11 Table of Contents
12 History of the Fund
13(a)-(c) Investment Policies; Investment Restrictions
13(d) Part A - Investment Objectives and Policies
14(a) & (b) Directors and Officers
14(c) Not applicable
15(a) & (b) Certain Stockholders
15(c) Directors and Officers
16(a) & (b) Investment Adviser; Part A - Management of the Fund
16(c)-(e) Not applicable
16(f) Distribution of Shares; Part A - Distribution Plan
16(g) Not Applicable
16(h) Custodian; Independent Public Accountants
16(i) Not applicable
17(a) Portfolio Transactions
17(b) Portfolio Transactions
17(c) Portfolio Transactions
17(d) & (e) Not applicable
18 Not applicable
19(a) & (b) Purchasing and Redeeming Shares
19(c) Not applicable
20 Additional Tax Information
21(a) Distribution of Shares
21(b) & (c) Performance Information
22(a) Not applicable
22(b) Performance Information
23 Financial Statements
PART C (OTHER INFORMATION)
--------------------------
24 Financial Statements and Exhibits
25 Persons controlled by or under common control
with registrant
26 Number of holders of securities
27 Indemnification
28 Business and other connections of investment adviser
29 Principal underwriters
30 Location of accounts and records
31 Management services
32 Not applicable
<F1>References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
-----------------------------------
KEELEY SMALL CAP VALUE FUND, INC.
401 SOUTH LASALLE STREET, SUITE 1201
CHICAGO, ILLINOIS 60605
312-786-5050
800-533-5344
JANUARY 5, 1996
PROSPECTUS
KEELEY Small Cap Value Fund, Inc. (the "Fund") is a diversified, open-end
management investment company. The Fund's investment objective is to seek
capital appreciation; current dividend or interest income is not a factor in the
selection of securities to be held by the Fund in its portfolio. The Fund
follows a strategy of investing in securities believed by its investment adviser
to have above average potential for capital appreciation with an emphasis on
companies with a relatively small market capitalization (less than $1 billion at
the time of investment). The Fund will emphasize companies undergoing
substantial changes, such as companies involved in spin-offs and
recapitalizations, companies trading near or below perceived or actual book
value and companies emerging from bankruptcy or other financial restructuring.
This Prospectus sets forth certain information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.
A Statement of Additional Information about the Fund, dated January 5,
1996, has been filed with the Securities and Exchange Commission and contains
further information about the Fund. A copy of the Statement of Additional
Information may be obtained without charge by calling or writing the Fund at the
telephone number or address listed above. The Statement of Additional
Information is incorporated herein by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Fund Expenses.................................................3
Financial Highlights..........................................4
Investment Objectives and Policies............................5
Risk Factors..................................................6
Investment Restrictions.......................................6
Management of the Fund........................................7
Purchasing Shares.............................................8
Redemption and Repurchase of Shares..........................11
Distribution Plan............................................12
Exchange Privilege...........................................12
Determination of Net Asset Value.............................14
Distributions and Taxes......................................14
IRA Plan.....................................................15
Performance Information......................................15
Certain Stockholders.........................................16
General Information..........................................16
Stockholder Reports and Inquiries............................16
KEELEY SMALL CAP VALUE FUND, INC.
INVESTMENT ADVISER:
Keeley Asset Management Corp.
401 South LaSalle Street
Suite 1201
Chicago, Illinois 60605
312-786-5050 800-533-5344
DISTRIBUTOR:
Keeley Investment Corp.
401 South LaSalle Street
Suite 1201
Chicago, Illinois 60605
312-786-5000 800-621-5084
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Fund or its Distributor.
This Prospectus does not constitute an offer by the Fund or by the Distributor
to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful for the Fund or
the Distributor to make such offer or solicitation in such jurisdiction.
FUND EXPENSES
STOCKHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases<F2>
(as a percentage of offering price) 4.50%
Sales Load on Reinvested Dividends None
Deferred Sales Load (as a percentage
of offering price) None
Redemption Fees (as a percentage of
amount redeemed, as applicable) <F3> None
Exchange Fee<F3> None
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
12b-1 Fees<F4> 0.25%
Other Expenses (after expense
reimbursement) <F5> 1.25%
-----
Total Fund Operating Expenses (after
expense reimbursements) 2.50%
=====
EXAMPLE
An investor would pay the following expenses on a
$1,000 investment (based on the Total Fund Opera-
ting Expenses after expense reimbursements above)
assuming (1) 5% annual return; (2) reinvestment
of all dividends and capital gains distributions; and
(3) redemption at the end of each time period:
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$70 $121 $175 $322
<F2>Sales charges are reduced for purchases of $50,000 or more. See
"Purchasing Shares."
<F3>The Fund's Transfer Agent charges a fee of $7.50 for each wire redemption
and $5.00 for each telephone exchange.
<F4>The Rule 12b-1 Fee is an annual fee paid by the Fund (and indirectly by
stockholders). See "Distribution Plan." Over time, long-term stockholders
may pay more in distribution related charges through the imposition of the Rule
12b-1 Fee than the economic equivalent of the maximum front-end sales charge
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc. (the "NASD").
<F5>The Adviser has agreed to waive a portion of its fee to the extent that
total ordinary operating expenses during the current fiscal year as a percentage
of average net assets exceed 2.50%. Absent fee waivers and reimbursements for
the fiscal year ended September 30, 1995, Other Expenses and Total Fund
Operating Expenses would have been 2.69% and 3.94%, respectively.
The Management Fee to be paid by the Fund is higher than that paid by most
other investment companies. The Board of Directors believes that the Fund's
Management Fee is appropriate in light of the Fund's investment objective and
policies.
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that stockholders bear either directly or
indirectly. The information disclosed in the table under the heading
"Stockholder Transaction Expenses" is based on the maximum sales load now in
effect for the Fund. See "Purchasing Shares" and "Redemption and Repurchase
of Shares" below for more complete descriptions of those expenses, including a
description of available reductions in the sales charge. The "Other Expenses"
information contained in the table reflects reimbursements to the Fund made by
the Adviser as a result of an expense limitation agreement. If the expense
reimbursements were removed, the expenses contained in the Example would
increase. The Example shown is based on the Total Fund Operating Expenses above
and should not be considered a representation of future expenses. Actual Fund
Expenses may be greater or lesser than those shown in the Example or in the
table.
FINANCIAL HIGHLIGHTS
The financial information for a Fund share outstanding during the periods
specified in the following table has been derived from the financial records of
the Fund which have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose report thereon was unqualified and is included in the
Statement of Additional Information. The table should be read in conjunction
with the financial statements and related notes included in the Statement of
Additional Information. Further information about the performance of the Fund
is contained in the Fund's Annual Report to Shareholders, copies of which may be
obtained without charge upon request.
YEAR YEAR
ENDED ENDED
9/30/95 9/30/94
Net asset value, beginning of period $10.26 $10.00
Income from investment operations:
Net investment loss (0.13) (0.06)
Net realized and unrealized gains on investments 2.39 0.32
----- -----
Total from investment operations 2.26 0.26
----- -----
Net asset value, end of period $12.52 $10.26
====== ======
Total return<F6> 22.03% 2.60%
Supplemental data and ratios:
Net assets, end of period (in 000s) $7,616 $4,503
Ratio of net expenses to average net assets<F7> 2.50% 2.49%
Ratio of net investment loss to average
net assets<F7> (1.46)% (0.96)%
Portfolio turnover rate 70.59% 63.20%
<F6>The total return calculation does not reflect the 4.50% sales load imposed
on the purchase of shares.
<F7>Without fees waived, the ratio of expenses to average net assets would have
been 3.94% and 5.98% for the years ended September 30, 1995 and 1994,
respectively; and the ratio of net investment loss to average net assets would
have been (2.90)% and (4.45)% for the years ended September 30, 1995 and 1994,
respectively.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to seek capital appreciation; current
dividend or interest income is not a factor in the selection of securities to be
held by the Fund in its portfolio. The Fund seeks to achieve this objective by
investing primarily in companies which have a relatively small market
capitalization (less than $1 billion). Under normal market conditions, the Fund
will have at least 65% of its total assets invested in common stocks and other
equity-type securities of such companies. Other equity-type securities include
preferred stock, convertible debt securities and warrants. Within this group of
companies, the Fund will emphasize two basic categories. The first is companies
involved in various types of corporate reorganizations, such as spin-offs and
recapitalizations. From time to time, the Fund may invest a significant portion
of its net assets in this first category. The second is companies which the
Adviser believes are undergoing substantial changes, such as significant changes
in markets or technologies, management and financial changes. The Fund
generally seeks companies that trade at prices at or below perceived or actual
book value.
The portfolio is expected to have significant differences when compared to
the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), among which
will be a bias by the Fund toward companies which are traded in the over-the-
counter market. See "Risk Factors." Although the Fund invests principally in
common stocks, the Fund also invests in nonconvertible fixed-income securities
when the Adviser believes these securities offer capital appreciation
possibilities. The Fund will not invest in or hold more than 5% of its net
assets in debt securities (including such nonconvertible fixed income
securities) rated lower than Aa by Moody's Investors Service ("Moody's") or AA
by Standard & Poor's Corporation ("S&P") or unrated but determined by the
Adviser to be of comparable quality. See the Statement of Additional
Information and the Appendix thereto for a discussion of these securities.
When, in the judgment of the Adviser, market or economic conditions warrant a
temporary defensive posture, the Fund may invest without limitation in U.S.
Treasury bills and notes and short-term corporate fixed income securities,
including master demand notes (rated Aa or higher by Moody's or AA or higher by
S&P or unrated but determined by the Adviser to be of comparable quality). The
Fund may also hold such securities in amounts deemed adequate to meet
anticipated redemption requests or pending investment or reinvestment. The Fund
invests in securities that are traded in the over-the-counter market as well as
in securities listed on a stock exchange, and in securities that may have above
average volatility of price movement.
The Fund will not invest more than 5% of the value of its net assets in
securities of foreign issuers. Foreign investments involve certain risks which
may be different than the risks in domestic securities, which include political
or economic matters, differing standards of regulation, accounting and
disclosure, trade, tax and currency risks.
The emphasis on appreciation and small capitalization companies may result in
a greater risk than is inherent in other investment alternatives. The Fund will
likely have somewhat greater volatility than the stock market in general, as
measured by the S&P 500 Index. In addition, because the Fund does not seek
current income, an investor should not consider a purchase of shares of the Fund
as equivalent to a complete investment program.
Securities will be sold when, among other things, management believes that
anticipated appreciation is realized or no longer probable, alternative
investments offer superior appreciation prospects, or risk of decline in market
price is too great. Because of its policy with respect to sales of investments,
the Fund may realize short-term gains or losses. To the extent that the
investment policy of the Fund results in a greater number of purchases and sales
of investments than may be the case in an investment which does not emphasize
capital appreciation, the Fund will incur greater expenses, brokerage fees and
taxes. See the preceding "Financial Highlights" table for the Fund's
portfolio turnover rate.
RISK FACTORS
The Adviser believes that under normal market conditions, the Fund will
invest primarily in common stocks. Some of the securities will be traded in the
over-the-counter market. Accordingly, investors should be aware of the nature
of the over-the-counter market and the risks of investing in securities traded
in such market.
The combination of technological changes and market developments to what was
historically considered the over-the-counter market have resulted in increased
liquidity in many of the securities traded in that market. In addition, there
are now defined standards for issuers whose securities are traded in the more
active portions of that market. A significant part of that historic market is
now considered another securities exchange, while other parts of that market
utilize electronic trading with real time quotation. However, the over-the-
counter market is not a centralized facility, and securities can be traded in
certain portions of that market without satisfying any initial or continuing
defined standards. Any security can be traded in some portions of the over-the-
counter market as long as an individual or firm is willing to make a market in
the security. Since there are no minimum requirements for a company's assets or
earnings or the number of its stockholders in order for its stock to be traded
over-the-counter, there is great diversity in the size and profitability of
companies whose stocks trade in this market, ranging from relatively small
little-known companies to well established corporations. The Fund may invest in
securities of both small and large companies which have potential for
significant capital appreciation.
Generally, the volume of trading in an unlisted common stock is less than the
volume of trading in a listed stock. This means that the degree of market
liquidity of some stocks in which the Fund invests may be relatively limited.
When the Fund disposes of such a stock it may have to offer the shares at a
discount from recent prices or sell the shares in small lots over an extended
period of time. In order to minimize this risk, the Fund has adopted a policy
which prohibits the Fund from investing more than 5% of its net assets
(determined at the time an investment is made) in illiquid securities. For this
purpose, an illiquid security is one which cannot be disposed of within seven
days in the normal course of business at approximately the amount at which the
Fund has valued the security.
Some securities issued by companies with a small capitalization, and
especially those in which the Fund may place emphasis, present greater risks and
may be subject to large, abrupt or erratic fluctuations in price due, in part,
to such factors as the issuer's dependence upon key personnel, the lack of
internal resources, the inability to obtain funds from external sources, and
dependence on a new product or service for which there is no firmly established
market. Fluctuations in the price of some of the stocks owned by the Fund,
therefore, could cause the net asset value of the Fund to vary significantly.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which, like the
investment objective, may not be changed without approval by a majority vote of
the Fund's stockholders. These restrictions provide, among other things, that
the Fund will not:
1. With respect to 75% of the Fund's net assets, invest more than 5% of such
net assets in the securities of any one issuer (except the United States
government).
2. With respect to 75% of the Fund's net assets, acquire securities of any one
issuer which, at the time of investment, represents more than 10% of the
outstanding voting securities of that issuer.
3. Make loans except by the purchase of bonds or other debt obligations of
types commonly offered publicly or privately, including investment in repurchase
agreements.
4. Borrow, except that the Fund may borrow from banks as a temporary measure
amounts up to 10% of its total assets, provided that (i) the total of reverse
repurchase agreements and such borrowings will not exceed 10% of the Fund's
total assets and (ii) the Fund will not purchase securities when its borrowings
(including reverse repurchase agreements) exceed 5% of total assets.
Notwithstanding the right of the Fund to invest in reverse repurchase
agreements, the Fund does not currently intend to do so. All of the Fund's
investment restrictions are listed in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is an open-end diversified management investment company, commonly
called a mutual fund. Through the purchase of shares of the Fund, investors with
goals similar to the investment objective of the Fund can participate in the
investment performance of the portfolio of investments held by the Fund. Under
the laws of the State of Maryland, the management and affairs of the Fund are
supervised by the Fund's Board of Directors.
INVESTMENT ADVISER
Keeley Asset Management Corp. (the "Adviser"), 401 South LaSalle Street,
Suite 1201, Chicago, Illinois 60605, is the Fund's investment adviser, and in
that capacity provides investment advice and portfolio management services to
the Fund. The Adviser is also responsible, subject to the authority of the
Fund's Board of Directors, for overall management of the Fund's business
affairs.
For its services, the Adviser receives from the Fund a fee, computed daily
and payable monthly, equal to an annual rate of 1% of the Fund's average net
assets. The Investment Advisory Agreement provides that the Adviser will waive
a portion of its advisory fee or reimburse the Fund to the extent that its total
annual operating expenses exceed the lower of 2.5% of net assets or the amount
permitted by the most restrictive state in which the Fund elects to qualify to
sell its shares, currently believed to be 2.5%. This limitation is exclusive of
(i) taxes, (ii) interest charges, (iii) litigation and other extraordinary
expenses, and (iv) brokerage commissions and other charges relating to the
purchase and sale of the Fund's portfolio securities.
The Adviser is a registered investment adviser incorporated in Illinois on
December 28, 1981. John L. Keeley, Jr., the President, Treasurer and a Director
of the Fund, is the sole stockholder of the Adviser. Mr. Keeley is primarily
responsible for the day-to-day management of the Fund's portfolio and has been
since the Fund's inception. Mr. Keeley has been the President of the Adviser
since its organization in 1981, and the person primarily responsible for
investment management for the Adviser's clients. At September 30, 1995, the
Adviser had total assets under management in excess of $160 million. Officers
of the Adviser are also officers of the Fund.
ADMINISTRATOR
Pursuant to an Administration Agreement (the "Administration Agreement"),
Sunstone Financial Group, Inc. (the "Administrator"), 207 East Buffalo Street,
Suite 400, Milwaukee, Wisconsin 53202, oversees the Fund's Custodian and
Transfer Agent, prepares and files all federal and state tax returns and
required tax filings (other than those required to be made by the Fund's
Custodian or Transfer Agent), oversees the Fund's insurance relationships,
participates in the preparation of the Fund's registration statement, proxy
statements and reports, prepares compliance filings pursuant to state securities
laws, compiles data for and prepares notices to the Securities and Exchange
Commission, prepares annual and semiannual reports to the Securities and
Exchange Commission and current stockholders, monitors the Fund's expense
accounts, monitors the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
monitors the Fund's arrangements with respect to services provided pursuant to
the Fund's Distribution Plan, monitors compliance with the Fund's investment
policies and restrictions and generally assists in the Fund's administrative
operations. The Administrator, at its own expense and without reimbursement
from the Fund, furnishes office space and all necessary office facilities,
equipment, supplies and clerical and executive personnel for performing the
services required to be performed by it under the Administration Agreement.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is computed daily and payable monthly at the annual rate of 0.15% on
the first $50 million, and 0.05% on all assets over $50 million. The minimum
fee is $35,000 per year.
BROKERAGE
Consistent with the policies described in the Statement of Additional
Information regarding allocation of the Fund's portfolio transactions, the
Adviser may place orders for portfolio transactions with Keeley Investment
Corp., the principal underwriter for the Fund and an affiliate of the Adviser,
and may consider sales of Fund shares as a factor in placing orders for
portfolio transactions with other brokers.
EXPENSES
The Fund's expenses are accrued daily and deducted from its total income
before dividends are paid. These expenses will include, but are not limited to,
fees paid to the Adviser and the Administrator; taxes; legal fees; custodian and
auditing fees; transfer agent and distribution fees; and printing and other
expenses paid by the Fund. The Adviser has agreed to waive its management fee
and/or reimburse other Fund operating expenses. See "Investment Adviser."
PURCHASING SHARES
HOW TO PURCHASE SHARES
Keeley Investment Corp. (the "Distributor"), located at 401 South LaSalle
Street, Suite 1201, Chicago, Illinois 60605, is the principal underwriter of
the Fund and, acting as exclusive agent, sells shares of the Fund to the public
on a continuous basis. John L. Keeley, Jr., the President, Treasurer and a
Director of the Fund, is also the President, Treasurer and a Director of the
Distributor, and as such is an "affiliated person" of each. Officers of the
Fund are also officers of the Distributor.
Shares of the Fund are sold in a continuous offering and may be purchased
from the Distributor or from broker/dealers and others that have entered into
agreements with the Distributor with respect to their assistance in distributing
shares of the Fund ("Selected Dealers"). Only the Distributor and Selected
Dealers are authorized to sell shares of the Fund. However, brokers other than
Selected Dealers may offer to place orders for the purchase of shares. Such a
broker may charge the investor a transaction fee as determined by the broker.
That fee will be in addition to the sales charge payable by the investor. Once
an account is established, subsequent orders for shares may be made at the
investor's option with the Distributor or dealers or mailed or wired directly to
Firstar Trust Company (the "Transfer Agent" or "Firstar"). See "Direct
Purchases by Mail or Wire." For further information, reference is made to the
caption "Distribution of Shares" in the Fund's Statement of Additional
Information. Purchases will be effected at the public offering price next
computed after an order is received by the Transfer Agent (either directly from
the investor or transmitted by the Distributor or Selected Dealer.) See "Net
Asset Value and Offering Price."
The minimum investment is $250 on initial orders and $50 on subsequent
orders. There are no minimum investment requirements on initial or subsequent
orders for IRA accounts. These minimums are subject to change at any time. No
stock certificates representing shares purchased will be issued. The Fund's
management reserves the right to reject any purchase order if, in its opinion,
it is in the Fund's best interest to do so.
DIRECT PURCHASES BY MAIL OR WIRE
Account application forms are included with this Prospectus, and should be
sent to: KEELEY Small Cap Value Fund, Inc., c/o Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin 53201-0701. If using overnight delivery, use the
following address: KEELEY Small Cap Value Fund, Inc., c/o Firstar Trust Company,
615 East Michigan Street, 3rd Floor, Milwaukee, Wisconsin 53202. All
applications must be accompanied by payment in the form of a check or money
order made payable to KEELEY Small Cap Value Fund, Inc., or by direct wire
transfer. All purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. Cash will not be accepted. Accounts with checks returned will
be charged a $15 processing fee. In addition, the investor will be responsible
for any losses suffered by the Fund as a result. Investors having an account
with a commercial bank that is a member of the Federal Reserve System may
purchase shares of the Fund by requesting their bank to transmit funds by wire
to: Firstar Bank Milwaukee, N.A., ABA Routing No. 075000022, Credit Firstar
Trust Company, Account Number 112952137, Further credit: KEELEY Small Cap Value
Fund, Inc. The investor's name and account number must be specified in the
wire. The investor's bank may impose a fee for investments by wire. Before
making an initial investment by wire, an investor must first telephone 800-338-
1579 to inform the Transfer Agent of the wire to ensure proper credit. The
investor's name, account number, taxpayer identification or social security
number, and address must be specified in the wire. In addition, the investment
application which accompanies this Prospectus should be promptly forwarded to
KEELEY Small Cap Value Fund, Inc., c/o Firstar Trust Company, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701. Additional investments may be made at any
time through the wire procedures described above, which must include the
investor's name and account number.
The Distributor retains the entire sales charge when it makes sales directly
to the public. The Distributor has the right to increase the dealer re-
allowance. Dealers who receive 90% or more of the entire sales charge may be
deemed to be underwriters under the Securities Act of 1933. In addition, the
Adviser and/or Distributor in their discretion may from time to time, pursuant
to objective criteria established by the Adviser and/or Distributor, sponsor
programs designed to reward Selected Dealers for certain services or activities
which are primarily intended to result in the sale of shares of the Fund. Such
payments are made out of their own assets, and not out of the assets of the Fund
or any distribution fees paid by the Fund. These programs will not change the
price paid for shares or the amount that the Fund will receive from such sale.
NET ASSET VALUE AND OFFERING PRICE
The public offering price is the net asset value (see "Determination of Net
Asset Value") plus a sales charge which varies in accordance with the amount of
the purchase as follows:
Sales Charges
as a Percentage of Dealer Reallowance
Amount of Net Amount as a Percentage
Single Transaction Offering Price Invested of Offering Price
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less
than $100,000 4.00% 4.17% 3.50%
$100,000 but less
than $250,000 3.00% 3.09% 2.50%
$250,000 but less
than $500,000 2.50% 2.56% 2.00%
$500,000 and over 2.00% 2.04% 1.50%
RIGHT OF ACCUMULATION
Reduced sales charges are available through a right of accumulation under
which purchasers may add to their investments in the Fund by purchasing shares
at the offering price applicable to the total of (a) the dollar amount of shares
of the Fund then being purchased plus (b) an amount equal to the greater of the
original cost or the net asset value of the shares owned by the purchaser. (A
"purchaser" is defined to include an individual and his or her spouse.) In
order to receive the cumulative quantity discount, the previous purchases of
shares of the Fund must be called to the attention of the Fund or the
Distributor in writing at the time of the current purchase. This privilege may
be modified or terminated upon 60 days' written notice to each stockholder prior
to the modification or termination taking effect.
SALES AT NET ASSET VALUE
Purchases of the Fund's shares at net asset value may be made by the
following persons: (a) nondealer assisted (or assisted only by the Distributor)
tax-exempt entities (including pension and profit sharing plans) whose minimum
initial investment is $50,000 or more, (b) nondealer assisted (or assisted only
by the Distributor) purchases by a bank or trust company in a single account
where such bank or trust company is named as trustee and the minimum initial
investment is over $50,000, (c) nondealer assisted (or assisted only by the
Distributor) purchases by banks, insurance companies, insurance company separate
accounts and other institutional purchasers, (d) a registered investment adviser
purchasing shares on behalf of a client or on his own behalf through an
intermediary service institution offering a separate and established program for
registered investment advisers and notifying the Fund and its Distributor of
such arrangement, (e) any current or retired officer, Director or employee, or
any member of the immediate family of such person of the Fund, Adviser,
Distributor or its affiliates thereof, (f) the Fund's Adviser, Distributor or
any affiliated company thereof, (g) any employee benefit plan established for
employees of the Adviser, Distributor or its affiliates, (h) advisory clients of
the Adviser, (i) registered representatives and their spouses and minor children
and employees of Selected Dealers, (j) for-fee clients of investment advisers
registered under the Investment Advisers Act of 1940, who have for-fee clients
with at least $50,000 of net asset value of shares in the Fund after giving
effect to the purchase, and who have directed their for-fee clients to the Fund,
(k) stockholders of the Fund, solely with respect to their reinvestment of
dividends and distributions from the Fund, (l) shares exchanged in accordance
with the Fund's exchange privilege on which a sales charge has been paid in
connection with the previous purchase of shares of the Fund (see "Exchange
Privilege"), (m) employees, pension, profit sharing and retirement plans of the
Administrator of the Fund, (n) consultants to the Adviser of the Fund, their
employees and pension, profit sharing and retirement plans for those employees,
and (o) pension, profit sharing and retirement plans for employees of Directors
and employees of business entities owned and controlled by Directors of the
Fund. In the opinion of the Fund's management, these sales will result in less
selling effort and expense. In order to qualify for these waivers, sufficient
information must be submitted at the time of purchase with the application to
determine whether the account is entitled to the waiver of the sales charge.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan ("AIP") whereby an investor
may automatically make purchases of shares of the Fund on a regular, convenient
basis ($50 minimum per transaction). Under the AIP, an investor's designated
bank or other financial institution debits a preauthorized amount from the
investor's account each month and applies the amount to the purchase of Fund
shares. The AIP must be implemented with a financial institution that is a
member of the Automated Clearing House. No service fee is currently charged by
the Fund for participating in the AIP. A fee of $15 will be imposed by the
Transfer Agent if sufficient collected funds are not available in the investor's
account at the time of the automatic transaction. To establish the AIP,
complete the appropriate section on the Purchase Application when opening an
account or, after an account is established, complete an AIP Application which
is available from the Fund. The Fund's applicable minimum initial investment
must be met before the AIP may be established. The AIP may be terminated by the
Fund at any time.
REDEMPTION AND REPURCHASE OF SHARES
Stockholders may require the Fund to redeem their shares by sending a written
request, signed by the record owner(s), to KEELEY Small Cap Value Fund, Inc.,
c/o Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
Stockholders with accounts at the Distributor or a Selected Dealer may submit
redemption requests to such firm. If shares are held in a broker's street name,
the redemption must be made through the broker. If the redemption is sent
directly to the Transfer Agent and either the amount requested is greater than
$10,000 or the proceeds are to be sent to a location other than the address of
record, each registered owner's signature must be guaranteed by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934. Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A broker/dealer
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program.
Further documentation may be required from corporations, executors,
administrators, trustees, guardians, agents and attorneys-in-fact. The
redemption price shall be the net asset value per share next computed after
receipt by the Transfer Agent of the redemption request. See "Determination of
Net Asset Value." In addition, the Distributor is authorized as agent for the
Fund to offer to repurchase shares which are presented by telephone or telegraph
to the Distributor by Selected Dealers. The repurchase price is the net asset
value per share next determined after the request is received. See
"Determination of Net Asset Value." Broker/dealers may charge a fee for their
services in connection with the repurchase, but the Distributor and its
affiliates will not charge any fee for such repurchase. Payment for shares
presented for repurchase or redemption by Selected Dealers will be made within
seven days after receipt by the Transfer Agent of a written redemption request
in proper order. Redemption proceeds may also be paid by wire upon request.
The Transfer Agent imposes a $7.50 fee for each wire of redemption proceeds. The
right of redemption and payment of redemption proceeds are subject to suspension
for any period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or when trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission;
during any period when an emergency as defined by the rules and regulations of
the Securities and Exchange Commission exists; or during any period when the
Securities and Exchange Commission has by order permitted such suspension. The
Fund will not mail or wire redemption proceeds until checks (including certified
checks or cashier's checks) received for the shares purchased have cleared,
which can be as long as 15 days after the purchase date. The value of shares on
repurchase or redemption may be more or less than the investor's cost depending
upon the market value of the Fund's portfolio securities at the time of
redemption. No redemption fee is charged for the redemption of shares.
Because it can be more expensive for the Fund to maintain small accounts, the
Fund has reserved the right on 60 days' written notice to the stockholder, to
redeem shares in any account and send the proceeds to the owner, if the account
has a value of less than $500 as a result of redemptions. It is the Fund's
current policy not to exercise its right to redeem small accounts. No change in
that policy would be implemented without advance notice having been given to
stockholders. The Fund may make payment for certain redemptions in securities
of the Fund, rather than in cash. Investors would bear any brokerage or other
transaction costs incurred in converting the securities to cash.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-
1 under the Investment Company Act of 1940 (the "1940 Act"), whereby the Fund
may pay up to 0.25% per annum of its average daily net assets to the Distributor
for the purpose of financing any activity which is primarily intended to result
in the sale of Fund shares. The Plan is designed to reimburse the Distributor
for certain promotional and other sales related costs, and to implement a dealer
incentive program which provides for periodic payment by the Fund to Selected
Dealers who furnish assistance to their customers in connection with the
purchase of shares of the Fund and who provide administrative support services
to customers who own shares of the Fund. In addition, certain banks who sell
shares of the Fund on an agency basis may receive payments by the Fund pursuant
to the Plan. The Fund will obtain a representation from financial institutions
that they are licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Activities appropriate for
financing under the Plan include, but are not limited to, the preparation and
distribution of advertising material and sales literature; expenses of
organizing and conducting sales seminars; printing of Prospectuses and
Statements of Additional Information and supplements thereto and reports for
other than existing stockholders; supplemental payments to dealers under a
dealer incentive program; and costs of administrating the Plan. Unreimbursed
amounts may be carried forward and paid in a subsequent year.
The fees payable to a Selected Dealer who participates in the program are
calculated at the annual rate up to 0.25% of the average daily net asset value
of those Fund shares that are held in such dealer's customers' accounts. Under
no circumstances will the Fund pay a fee pursuant to the Plan, the effect of
which would be to exceed the NASD's limitations on asset based compensation.
See "Distribution of Shares" in the Statement of Additional Information.
EXCHANGE PRIVILEGE
All or part of the Fund shares owned by an investor may be exchanged for
shares in the Portico Money Market Fund (the "Money Market Fund") in an
identically registered account. Investors may subsequently exchange such shares
and shares purchased with reinvested dividends for shares of the Fund. A
stockholder who has moved an investment from the Fund to the Money Market Fund
and then decides at a later date to move the investment back to the Fund may do
so without the imposition of any additional sales charges, so long as the
investment has been continuously invested in shares of the Money Market Fund
during the period between withdrawal and investment. Use of this expanded
exchange privilege is subject to the minimum purchase and redemption amounts set
forth in the Prospectus for the Money Market Fund. Stockholders must obtain a
copy of that Prospectus from the Fund or the Distributor, and are advised to
read it carefully before authorizing any investment in shares of the Money
Market Fund. Exchange requests are subject to a $1,000 minimum, and each
stockholder is limited to a maximum of four exchanges in any twelve month
period.
Exchange requests may be subject to other limitations that may be established
from time to time to ensure that the exchanges do not disadvantage the Fund or
its investors. Investors will be notified at least 60 days in advance of any
changes in such limitations and may obtain the terms of any such limitations by
writing to the Fund, c/o Shareholder Services Center, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. Except as stated above, the Fund currently does not
impose any limitations on exchanges. Exchanges may be made by telephone once a
stockholder has authorized telephone exchanges either by checking the
appropriate box on the Purchase Application or, once an account is established,
by sending the Transfer Agent the appropriate form which is available from the
Fund. There will be a $5.00 fee charged to the investor's account for each
telephone exchange transacted by the investor. This fee will be charged to the
account from which the funds are being withdrawn prior to effecting the
exchange. There is no fee for a written exchange request. However, the
Distributor is entitled to receive a fee from the Money Market Fund for certain
distribution and support services at the annual rate of 0.20 of 1% of the
average daily net asset value of the shares for which it is the holder or dealer
of record.
An exchange involves a redemption of all or a portion of the shares in the
Fund and the investment of the redemption proceeds in shares of the Money Market
Fund. The redemption will be made at the per share net asset value of the
shares to be redeemed next determined after the exchange request is received as
described above. The shares of the Money Market Fund to be acquired will be
purchased at the per share net asset value of those shares next determined
coincident with or after the time of redemption. For federal income tax
purposes, an exchange of shares is a taxable event and, accordingly, the
investor may realize a capital gain or loss. Before making an exchange request,
the investor should consult a tax or other financial adviser to determine the
tax consequences of a particular exchange. For further information regarding
the exchange privilege, see "Exchange Privilege" in the Fund's Statement of
Additional Information.
The Fund has implemented procedures designed to reasonably assure that
telephone exchange instructions are genuine. These procedures include
requesting verification of various pieces of personal information, restricting
transmittal of redemption proceeds to preauthorized designations, recording all
such telephone calls and sending written confirmations to the address of record.
If the Fund, the Distributor or the Transfer Agent or any of their employees
fails to abide by these procedures, the Fund may be liable to a stockholder for
losses suffered from any resulting unauthorized transaction. However, none of
the Fund, Distributor, Transfer Agent or any of their employees will be liable
for losses suffered by a stockholder which results from following telephone
instructions reasonably believed to be authentic after verification pursuant to
these procedures.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is computed daily, Monday through Friday, as of
4:00 p.m., Eastern Time, except that the net asset value will not be computed on
the following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net
asset value per share is computed by deducting total liabilities from total
assets of the Fund and dividing the remainder by the total number of shares
outstanding. The net asset value so computed will be used for all purchase
orders and redemption requests received between such computation and the
preceding computation. Portfolio securities listed on an exchange or quoted on a
national market system are valued at the last sales price. Securities traded on
only over-the-counter markets are valued at the last sales price on days in
which the security is traded, otherwise they are valued on the basis of closing
over-the-counter bid prices. In the event a listed security is traded on more
than one exchange, it is valued at the last sale price on the exchange on which
it is principally traded. If there are no transactions in a security during the
day, it is valued at the most recent bid price. However, debt securities (other
than short-term obligations) including listed issues, are valued on the basis of
valuations furnished by a pricing service which utilizes electronic data
processing techniques to determine valuations for normal institutional size
trading units of debt securities, without exclusive reliance upon exchange or
over-the-counter prices. Short-term obligations (debt securities which are
purchased within 60 days of their stated maturity date) are valued at amortized
cost, which approximates current value. Securities as to which market
quotations are not readily available and other assets held by the Fund, if any,
are valued at their fair value as determined in good faith by the Board of
Directors.
DISTRIBUTIONS AND TAXES
Distributions (whether treated for tax purposes as ordinary income or capital
gains) to stockholders of the Fund are paid in additional shares of the Fund
with no sales charge, unless otherwise instructed in writing by a stockholder.
A stockholder who prefers to have dividends paid in cash, rather than in
additional shares of the Fund, should give such instructions in writing to the
Transfer Agent. Cash dividends and distributions will be paid by check unless
the Fund's Transfer Agent receives a voided check or deposit ticket to enable
the dividends or distributions to be directly deposited into the stockholder's
bank account. The Fund will pay any dividends from investment company taxable
income annually, and intends to make any distributions representing capital gain
annually. The Fund will advise each stockholder annually of the amounts of
dividends from investment company taxable income and of net capital gain
distributions reinvested or paid in cash to the stockholder during the calendar
year.
The Fund intends to continue to qualify as a regulated investment company
under the federal tax law. As such, the Fund generally will not pay federal
income tax on the income and capital gains it pays as dividends to its
stockholders. In order to avoid a 4% federal excise tax, the Fund intends to
distribute each year all of its net income and capital gains. Stockholders will
be taxed on distributions received from the Fund, regardless of whether received
in cash or reinvested in additional shares. Stockholders must treat
distributions, other than long-term capital gain distributions, as ordinary
income. Dividends designated as capital gain dividends are taxable to
stockholders as long-term capital gains regardless of how long the stockholder
owned the shares of the Fund. Investors are advised to consult their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
IRA PLAN
The Fund has a master individual retirement account (IRA) plan which allows
an investor to invest in the Fund. Income and capital gains earned by an IRA
are sheltered from taxation until withdrawal. There is no minimum investment.
The plan also permits an investor to "roll over" to the Fund IRA a lump sum
distribution from a qualified pension or profit-sharing plan, including a direct
transfer from the plan trustee, thereby postponing the investor's federal income
tax on the distribution if rolled over within 60 days.
If an investor's employer has a Simplified Employee Pension Plan (SEP), the
investor may establish an IRA with the Fund to which his employer may
contribute. Detailed information about the IRA, including related documents and
charges of Firstar, as custodian, may be obtained from the Fund.
PERFORMANCE INFORMATION
The Fund may from time to time include figures indicating the Fund's total
return or average annual total return in advertisements or reports to
stockholders or prospective investors. Average annual total return and total
return figures represent the increase (or decrease) in the value of an
investment in the Fund over a specified period. Both calculations assume that
all income dividends and capital gain distributions during the period are
reinvested at net asset value in additional Fund shares. Quotations of the
average annual total return may reflect the deduction of the maximum sales
charge and a proportional share of Fund expenses on an annual basis. The
results, which are annualized, represent an average annual compounded rate of
return on a hypothetical investment in the Fund over a period of 1, 5 and 10
years ending on the most recent calendar quarter (but not for a period greater
than the life of the Fund). Quotations of total return, which are not
annualized, represent historical earnings and asset value fluctuations. Total
return figures used in advertisements or sales literature will not usually
reflect the deduction of the maximum sales charges which, if deducted, would
reduce the Fund's total return. Total return is based on past performance and
is not a guarantee of future results.
Performance information for the Fund may be compared in reports and
promotional literature to: (a) the Value Line Index, S&P 500 Index, the Dow
Jones Industrial Average, New York Stock Exchange Composite Index, the Nasdaq
Composite Index or other appropriate unmanaged indices of performance of various
types of investments, so that investors may compare the Fund's results with
those of indices widely regarded by investors as representative of the
securities markets in general; (b) other groups of mutual funds tracked by
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, or
tracked by other services, companies, publications or persons who rank mutual
funds on overall performance or other criteria; and (c) the Consumer Price Index
(measure of inflation) to assess the real rate of return from an investment in
the Fund. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses. Performance information for the Fund reflects only the performance of
a hypothetical investment in the Fund during the particular time period on which
the calculations are based. Performance information should be considered in
light of the Fund's investment objective and policies, the types and quality of
the Fund's portfolio investments, market conditions during the particular time
period and operating expenses. Such information should not be considered as a
representation of the Fund's future performance. For a description of the
methods used to determine the Fund's average annual total return and total
return, see "Performance Information" in the Statement of Additional
Information.
CERTAIN STOCKHOLDERS
As of September 30, 1995, John L. Keeley, Jr., owned 206,438 shares of the
Fund, which represented 33.94% of the outstanding shares of the Fund. As a
holder of more than 25% of the outstanding shares of the Fund, John L. Keeley,
Jr., is presumed (under the 1940 Act) to "control" the Fund.
GENERAL INFORMATION
The Fund is an open-end diversified management investment company, as defined
in the 1940 Act, as amended. It was incorporated in Maryland on May 17, 1993.
The Fund has an authorized capitalization of 10,000,000 shares of $0.01 par
value common stock. There is no other class of security outstanding. All
shares have equal voting and liquidation rights and have one vote per share.
Voting rights are noncumulative, which means that holders of more than 50% of
the shares voting for the election of Directors may elect 100% of the Directors
if they choose to do so, and in such event the holders of the remaining less
than 50% of the shares voting for the Directors will not be able to elect any
Directors. All shares have equal dividend rights, are fully paid, nonassessable
and freely transferable and have no conversion, preemptive or subscription
rights. Fractional shares have the same rights, pro rata, as full shares. The
Fund's securities are held by Firstar, 615 East Michigan Street, Milwaukee,
Wisconsin 53201-0701, under a Custodian Agreement with the Fund. Firstar also
acts as both Transfer Agent and dividend paying agent for the Fund.
Under the General Corporation Law of Maryland, the Fund is not required to
hold, and does not intend to hold, an annual meeting of its stockholders unless
required under the 1940 Act. However, stockholders have the right to require
the Secretary of the Fund to call a stockholders' meeting upon the written
request of stockholders entitled to vote not less than ten percent of all votes
entitled to be cast at such meeting, provided that (a) such request shall state
the purposes of such meeting and matters proposed to be acted on, and (b) the
stockholders requesting such meeting shall have paid to the Fund the reasonably
estimated cost of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such stockholders. No meeting shall be called
upon the request of stockholders to consider any matter which is substantially
the same as a matter voted upon at any special meeting of the stockholders held
during the preceding twelve months, unless requested by the holders of a
majority of all shares entitled to be voted at such meeting. In addition, the
holders of not less than 10% of the shares entitled to vote at a special meeting
have the right to call such meeting for the purpose of removing one or more of
the Directors. See the Statement of Additional Information for more information.
STOCKHOLDER REPORTS AND INQUIRIES
Stockholders will be provided at least semi-annually with a report showing
the Fund's portfolio and other information and annually after the close of the
Fund's fiscal year, which ends September 30, with an annual report containing
audited financial statements. Stockholders who have questions about the Fund
including inquiries about investment or redemption procedures, should call the
Fund at 800-338-1579, or contact their brokers.
Investment Adviser
KEELEY ASSET MANAGEMENT CORP.
Chicago, Illinois
Distributor
KEELEY INVESTMENT CORP.
Chicago, Illinois
Custodian, Transfer Agent and Dividend Disbursing Agent
FIRSTAR TRUST COMPANY
Milwaukee, Wisconsin
800-338-1579
Auditors
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
KEELEY SMALL CAP VALUE FUND, INC.
PROSPECTUS
JANUARY 5, 1996
-------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
January 5, 1996
KEELEY SMALL CAP VALUE FUND, INC.
401 SOUTH LASALLE STREET
SUITE 1201
CHICAGO, ILLINOIS 60605
312-786-5050
800-533-5344
This Statement of Additional Information is not a prospectus, but provides
information about KEELEY Small Cap Value Fund, Inc. (the "Fund") that should be
read in conjunction with the Fund's Prospectus dated January 5, 1996, and any
additional supplements to the Prospectus and the Fund's financial statements.
The Prospectus and additional copies of the annual report may be obtained
without charge by writing or telephoning the Fund at the address or telephone
number set forth above.
TABLE OF CONTENTS
History of the Fund 1
Investment Policies and Risk Considerations 1
Investment Restrictions 5
Performance Information 7
Investment Adviser 8
Directors and Officers 9
Certain Stockholders 10
Purchasing and Redeeming Shares 10
Exchange Privilege 11
Additional Tax Information 11
Distribution of Shares 11
Portfolio Transactions 13
Removal of Directors by Stockholders 14
Custodian 15
Independent Public Accountants 15
Financial Statements and Reports 16
Appendix
HISTORY OF THE FUND
The Fund was incorporated in Maryland on May 17, 1993, and registered under
the Investment Company Act of 1940 (the "1940 Act") on July 27, 1993.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Fund's investment objective is to seek capital appreciation; current
dividend or interest income is not a factor in the selection of securities to be
held by the Fund in its portfolio. The Fund's investment objective may not be
changed by the Board of Directors without stockholder approval.
DEBT SECURITIES
The Fund may invest in debt securities, including debt securities that are
not rated or are rated below investment grade by the recognized rating agencies
(i.e., Baa or higher by Moody's Investor Services, Inc. ("Moody's") or BBB or
higher by Standard & Poor's Corporation ("S&P"). However, the Fund will not
invest in or hold more than 5% of its net assets in debt securities other than
U.S. Treasury bills and notes, short-term corporate fixed income securities,
including master demand notes (rated Aa or higher by Moody's or AA or higher by
S&P, or unrated but determined by the Adviser to be of comparable quality).
Securities rated Baa or BBB are considered to be medium grade and to have
speculative characteristics. Lower-rated debt securities are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Investment in medium- or lower-quality debt securities involves
greater investment risk, including the possibility of issuer default or
bankruptcy. An economic downturn could severely disrupt the market for such
securities and adversely affect the value of such securities. In addition,
lower-quality bonds are less sensitive to interest rate changes than
higher-quality instruments and generally are more sensitive to adverse economic
changes or individual corporate developments. During a period of adverse
economic changes, including a period of rising interest rates, issuers of such
bonds may experience difficulty in servicing their principal and interest
payment obligations.
To the extent the Fund invests in lower-rated debt securities, achievement
by the Fund of its investment objective will be more dependent on the Adviser's
credit analysis than would be the case if the Fund were investing in higher
quality debt securities. Since the ratings of rating services (which evaluate
the safety of principal and interest payments, not market risks) are used only
as preliminary indicators of investment quality, the Adviser employs its own
credit research and analysis. These analyses may take into consideration such
quantitative factors as an issuer's present and potential liquidity,
profitability, internal capability to generate funds, debt/equity ratio and debt
servicing capability, and such qualitative factors as an assessment of
management, industry characteristics, accounting methodology, and foreign
business exposure.
Medium- and lower-quality debt securities tend to be less marketable than
higher-quality debt securities because the market for them is less broad. The
market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and the Fund may have greater difficulty selling this
type of security. The market value of these securities and their liquidity may
be affected by adverse publicity and investor perceptions.
A description of the ratings used by Moody's and S&P is included as an
appendix to this Statement of Additional Information.
FOREIGN SECURITIES
The Fund may invest in foreign securities, which may entail a greater
degree of risk (including risks relating to exchange rate fluctuations, tax
provisions, or expropriation of assets) than does investment in securities of
domestic issuers.
To the extent positions in portfolio securities are denominated in foreign
currencies, the Fund's investment performance is affected by the strength or
weakness of the U.S. dollar against these currencies. For example, if the
dollar falls in value relative to the Japanese yen, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall.
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, which are generally
denominated in foreign currencies, and utilization of forward foreign currency
exchange contracts involve certain considerations comprising both risks and
opportunities not typically associated with investing in U.S. securities. These
considerations include: fluctuations in exchange rates of foreign currencies;
possible imposition of exchange control regulation or currency restrictions that
would prevent cash from being brought back to the United States; less public
information with respect to issuers of securities; less governmental supervision
of stock exchanges, securities brokers, and issuers of securities; lack of
uniform accounting, auditing, and financial reporting standards; lack of uniform
settlement periods and trading practices; less liquidity and frequently greater
price volatility in foreign markets than in the United States; possible
imposition of foreign taxes; possible investment in securities of companies in
developing as well as developed countries; and sometimes less advantageous
legal, operational, and financial protection applicable to foreign subcustodial
arrangements.
Although the Fund intends to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations.
SHORT SALES
The Fund may make short sales of securities if at all times when a short
position is open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in amount to, the
securities sold short. This technique is called selling short "against the
box." Although permitted by its investment restrictions, the Fund does not
currently intend to sell securities short.
In a short sale against the box, the Fund does not deliver from its
portfolio the securities sold and does not receive immediately the proceeds from
the short sale. Instead, the Fund borrows the securities sold short from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the purchaser of such
securities. Such broker-dealer is entitled to retain the proceeds from the
short sale until the Fund delivers to such broker-dealer the securities sold
short. In addition, the Fund is required to pay to the broker-dealer the amount
of any dividends paid on shares sold short. Finally, to secure its obligation
to deliver to such broker-dealer the securities sold short, the Fund must
deposit and continuously maintain in a separate account with the Fund's
custodian an equivalent amount of the securities sold short or securities
convertible into or exchangeable for such securities without the payment of
additional consideration. The Fund is said to have a short position in the
securities sold until it delivers to the broker-dealer the securities sold, at
which time the Fund receives the proceeds of the sale. Because the Fund
ordinarily will want to continue to hold securities in its portfolio that are
sold short, the Fund will normally close out a short position by purchasing on
the open market and delivering to the broker-dealer an equal amount of the
securities sold short, rather than by delivering portfolio securities.
Short sales may protect the Fund against the risk of losses in the value of
its portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium. The Fund will incur transaction
costs in connection with short sales.
In addition to enabling the Fund to hedge against market risk, short sales
may afford the Fund an opportunity to earn current income to the extent the Fund
is able to enter into arrangements with broker-dealers through which the short
sales are executed to receive income with respect to the proceeds of the short
sales during the period the Fund's short positions remain open.
UNSEASONED ISSUERS
The Fund may invest up to 5% of its net assets in the securities of
unseasoned issuers, that is, issuers that, together with predecessors, have been
in operation less than three years. The Adviser believes that investment in
securities of unseasoned issuers may provide opportunities for long-term capital
growth, although the risks of investing in such securities are greater than with
common stock of more established companies because unseasoned issuers have only
a brief operating history and may have more limited markets and financial
resources.
ILLIQUID SECURITIES
The Fund may invest up to 5% of its net assets in securities for which
there is no ready market ("illiquid securities"), including any securities that
are not readily marketable either because they are restricted securities or for
other reasons. Restricted securities are securities that have not been
registered under the Securities Act of 1933 and are thus subject to restrictions
on resale. Under the supervision of the Board of Directors, the Adviser
determines the liquidity of the Fund's investments. Securities that may be sold
pursuant to Rule 144A under the Securities Act may be considered liquid by the
Adviser. A position in restricted securities might adversely affect the
liquidity and marketability of a portion of the Fund's portfolio, and the Fund
might not be able to dispose of its holdings in such securities promptly or at
reasonable prices. In those instances where the Fund is required to have
restricted securities held by it registered prior to sale by the Fund and the
Fund does not have a contractual commitment from the issuer or seller to pay the
costs of such registration, the gross proceeds from the sale of securities would
be reduced by the registration costs and underwriting discounts.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions. The following
restrictions supplement those set forth in the Prospectus. Unless otherwise
noted, whenever an investment restriction states a maximum percentage of the
Fund's assets that may be invested in any security or other asset, such
percentage restriction will be determined immediately after and as a result of
the Fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, total assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment limitations.
The Fund has adopted the following fundamental investment restrictions,
which cannot be changed without the approval of the holders of the lesser of (i)
67% of the Fund's shares present or represented at a stockholders' meeting at
which the holders of more than 50% of such shares are present or represented; or
(ii) more than 50% of the outstanding shares of the Fund:
1. With respect to 75% of the Fund's net assets, the Fund will not invest
more than 5% of such net assets (valued at the time of investment) in securities
of any one issuer, except in U.S. government obligations.
2. With respect to 75% of the Fund's net assets, the Fund will not acquire
securities of any one issuer which at the time of investment represent more than
10% of the voting securities of the issuer.
3. The Fund will not act as an underwriter or distributor of securities
other than its own capital stock, except insofar as it may be deemed an
underwriter for purposes of the Securities Act of 1933 on disposition of
securities acquired subject to legal or contractual restrictions on resale.
4. The Fund will not lend money, but this restriction shall not prevent the
Fund from investing in (i) a portion of an issue of debt securities or (ii)
repurchase agreements.
5. The Fund will not purchase or sell real estate, interests in real estate
or real estate limited partnerships, although it may invest in marketable
securities of issuers that invest in real estate or interests in real estate.
6. The Fund will not pledge any of its assets, except to secure
indebtedness permitted by the Fund's investment restrictions.
7. The Fund will not concentrate its investments by investing 25% or more
of the value of the Fund's total assets taken at market value at the time of the
investment (other than U. S. Government securities) in companies of any one
industry.
8. The Fund will not purchase and sell commodities or commodity contracts
except that it may enter into forward contracts to hedge securities transactions
made in foreign currencies. This limitation does not apply to financial
instrument futures and options on such futures.
9. The Fund will not borrow, except that the Fund may borrow from banks as
a temporary measure amounts up to 10% of its total assets, provided (i) that the
total of reverse repurchase agreements<F8> and such borrowings will not exceed
10% of the Fund's total assets and (ii) the Fund will not purchase securities
when its borrowings (including reverse repurchase agreements) exceed 5% of total
assets.
10. The Fund will not issue senior securities, except for reverse
repurchase agreements and borrowings as permitted by the Fund's other investment
restrictions.
In addition to the fundamental restrictions listed above, the Fund has
adopted the following restrictions that may be changed by the Board of Directors
without stockholder approval:
1. The Fund will not invest in interests in oil, gas or other mineral
exploration or development programs or leases, although it may invest in
marketable securities of issuers engaged in oil, gas or mineral exploration.
2. The Fund will not purchase or hold securities of an issuer if all of the
officers and Directors of the Fund and its Adviser who individually own
beneficially more than one-half of 1% of the securities of such issuer
collectively own beneficially more than 5% of such securities.
3. The Fund will not invest more than 5% of its net assets (valued at the
time of investment) in securities of issuers with less than three years'
operation (including predecessors).
4. The Fund will not invest more than 5% of its net assets in securities
for which there is no ready market (including restricted securities and
repurchase agreements maturing in more than seven days).
5. The Fund will not participate in a joint trading account, purchase
securities on margin (other than short-term credits as necessary for the
clearance of purchases and sales of securities) or sell securities short (unless
the Fund owns an equal amount of such securities, or owns securities that are
convertible or exchangeable without payment of further consideration into an
equal amount of such securities).<F9>
6. The Fund will not invest for the purpose of exercising control or
management of any company.
7. The Fund will not invest more than 2% of its net assets (valued at the
time of investment) in warrants not listed on the New York or American stock
exchanges, nor more than 5% of its net assets in warrants. Warrants acquired by
the Fund in units or attached to securities are not subject to this restriction.
<F8>The Fund does not currently intend to enter into reverse repurchase
agreements.
<F9>The Fund does not currently intend to sell securities short even under the
conditions described in Investment Restrictions.
8. The Fund will not acquire securities of other investment companies
except (i) by purchase in the open market, where no commission or profit to a
sponsor or dealer results from such purchase other than the customary broker's
commission and (ii) where the acquisition results from a dividend or a merger,
consolidation or other reorganization. <F10>
9. The Fund will not invest in or write options, puts, calls, straddles
or spreads.
10. The Fund will not invest more than 5% of its net assets in foreign
securities.
11. The Fund will not invest more than 5% of its net assets in forward
contracts, financial instrument futures and options on such futures.
The Fund may make commitments more restrictive than the restrictions listed
above so as to permit the sale of shares of the Fund in certain states. Should
the Fund determine that a commitment is no longer in the best interest of the
Fund and its stockholders, the Fund reserves the right to revoke the commitment
by terminating the sale of Fund shares in the state involved.
PERFORMANCE INFORMATION
From time to time the Fund may give information about its performance by
quoting total return figures in advertisements and sales literature. "Total
return" for a period is the percentage change in value of an investment in Fund
shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. Average annual total return is the
average annual compounded rate of change in value represented by the total
return for the period.
Average annual total return is computed as follows:
ERV 1/N
T = (--------) -1
P
Where: P = the amount of an assumed initial investment in Fund shares
T = average annual total return
N = number of years from initial investment to the end of the period
ERV = ending redeemable value of shares held at the end of the period
<F10>In addition to this investment restriction, the 1940 Act provides that the
Fund may neither purchase more than 3% of the voting securities of any one
investment company nor invest more than 10% of the Fund's assets (valued at
time of investment) in all investment company securities purchased by the
Fund.
The Fund imposes a maximum 4.50% sales charge and pays distribution
expenses equal to 0.25% of net assets. Income taxes payable by stockholders are
not taken into account. The Fund's performance is a result of conditions in the
securities market, portfolio management, and operating expenses. Although
information such as that described above may be useful in reviewing the Fund's
past performance and in providing some basis for comparison with other
investment alternatives, it is not necessarily indicative of future performance
and should not be used for comparison with other investments using different
reinvestment assumptions or time periods.
The Fund may also compare its performance to various stock indices (groups
of unmanaged common stocks) including the Value Line Index, the New York Stock
Exchange Composite Index, Standard & Poor's 500 Stock Index, the Nasdaq
Composite Index and the Dow Jones Industrial Average, or to the Consumer Price
Index or groups of comparable mutual funds, including rankings determined by
Lipper Analytical Services, Inc., an independent service that monitors the
performance of over 1,000 mutual funds, or that of another service. After
deduction of initial sales charge, the Fund's total return for the years ended
September 30, 1995 and 1994, was 16.57% and (2.01)%, respectively. The average
annual total return for the period from October 1, 1993 (commencement of
operations) through September 30, 1995, after deduction of initial sales charge,
was 9.35%.
INVESTMENT ADVISER
The Fund's investment adviser, Keeley Asset Management Corp. (the
"Adviser"), furnishes continuing investment supervision to the Fund and is
responsible for overall management of the Fund's business affairs. It furnishes
office space, equipment and personnel to the Fund and assumes the expenses of
printing and distributing the Fund's Prospectus and reports to prospective
investors. The Fund pays all of its expenses except those specifically assumed
by the Adviser, including but not limited to printing and postage charges
related to current stockholders; securities registration, custodian and transfer
agency fees; audit and legal fees; and expenses in connection with its
organization.
For its services, the Adviser receives a monthly fee at an annual rate of
1% of the average daily net assets of the Fund. The Investment Advisory
Agreement provides that the Adviser will waive a portion of its management fee
or reimburse the Fund to the extent that its total annual operating expenses
exceed 2.50%, exclusive of (i) taxes, (ii) interest charges, (iii) litigation
and other extraordinary expenses, and (iv) brokers' commissions and other
charges relating to the purchase and sale of the Fund's portfolio securities.
In addition, in order to comply with regulations applicable to the sale of Fund
shares in California, the Adviser has undertaken to waive its management fee to
the extent the Fund's annual operating expenses exceed 2.50% of the first $30
million of average net assets, 2.00% of the next $70 million, and 1.50% of
average net assets in excess of $100 million.
The Adviser is a registered investment adviser organized on December 28,
1981. John L. Keeley, Jr., is the sole stockholder of the Adviser. For the
year ended September 30, 1995, the Adviser waived its entire advisory fee of
$54,624 and reimbursed the Fund an additional $24,297 for operating expenses
that exceeded the 2.50% expense limitation. For the year ended September 30,
1994, the Adviser waived its entire advisory fee of $28,262 and reimbursed the
Fund an additional $71,031 for operating expenses that exceeded the 2.50%
expense limitation.
DIRECTORS AND OFFICERS
The Directors and officers of the Fund and their principal business
activities during the past five years are:
Positions Held Principal Occupations
Name and Address with Fund and Other Affiliations
- ---------------- --------- ----------------------
John L. Keeley, Jr.* Director, Director, President
401 South LaSalle President and and Treasurer of
Street Treasurer Keeley Asset
Suite 1201 Management Corp and of
Chicago, Illinois Keeley Investment
60605 Corp.
Michael J. O'Brien Director President, O'Brien
53 West Jackson Bros. Trading Co.
Boulevard (Commodities Trading),
Suite 1240 Registered Commodity
Chicago, Illinois Trading Advisor,
60604 Commodity Pool
Operator and
Introducing Broker
John F. Lesch Director Attorney, Nisen &
200 West Adams Elliott, a partnership
Street
Suite 2500
Chicago, Illinois
60606
John G. Kyle Director Owner and operator,
10 Skokie Highway Shell Oil Service
Highland Park, Stations and Gasoline
Illinois 60035 Distributor
Mary G. Filice Vice President Senior Vice President,
401 South LaSalle Keeley Asset
Street Management Corp. and
Suite 1201 Keeley Investment
Chicago, Illinois Corp.
60605
Barbara G. Keeley Secretary Investor, Corporate
401 South LaSalle Secretary, Keeley
Street Asset Management Corp.
Suite 1201 and Keeley Investment
Chicago, Illinois Corp.
60605
Each of the above persons has held the position and engaged in the
principal occupation described above for more than five years.
*John L. Keeley, Jr., is an "interested person" of the Fund as defined in
the 1940 Act. John L. Keeley, Jr., and Barbara G. Keeley are husband and wife.
Mr. O'Brien is a limited partner in investment partnerships in which Mr.
Keeley and the Adviser are general partners. Such investments were made under
the same terms and conditions applicable to all other partners. Mr. Keeley is a
limited partner in a commodity trading partnership in which Mr. O'Brien is the
general partner. Such investment by Mr. Keeley was made under the same terms
and conditions applicable to all the other limited partners.
Mr. Lesch has performed legal services (principally related to Federal
income tax matters) for Mr. Keeley on an individual basis, unrelated to the
business of Keeley Asset Management Corp. or Keeley Investment Corp. Fees paid
by Mr. Keeley to Mr. Lesch were approximately $4,400 for the last two years.
Mr. Kyle maintains a brokerage account with Keeley Investment Corp., the
Fund's principal underwriter.
At September 30, 1995, the Directors and officers owned 219,919 shares,
representing 36.16% of the outstanding shares of the Fund.
The Fund has agreed to pay to Directors, other than Mr. Keeley, a fee of
$250 for each meeting attended. The fee may be changed at any time.
CERTAIN STOCKHOLDERS
As of September 30, 1995, John L. Keeley, Jr., (whose address is set forth
in the table above) owned 206,348 shares of the Fund's common stock. These
shares represent 33.94% of the issued and outstanding shares of common stock of
the Fund.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Fund's Prospectus under the
headings "Purchasing Shares," "Redemption and Repurchase of Shares" and
"Determination of Net Asset Value." All of that information is incorporated
herein by reference.
For purposes of computing the net asset value of a share of the Fund,
securities listed on an exchange, or quoted on a national market system are
valued at the last sales price at the time of valuation or lacking any reported
sales on that day, at the most recent bid quotations. Securities traded on only
the over-the-counter markets are valued on the basis of the closing over-the-
counter bid prices when there is no last sale price available. Securities for
which quotations are not available and any other assets are valued at a fair
value as determined in good faith by the Board of Directors. Money market
instruments having a maturity of 60 days or less from the valuation date are
valued on an amortized cost basis.
The Fund's net asset value will not be determined on any day on which the
New York Stock Exchange is not open for trading. That Exchange is regularly
closed on Saturdays and Sundays and on New Year's Day, the third Monday in
February, Good Friday, the last Monday in May, Independence Day, Labor Day,
Thanksgiving and Christmas. If one of these holidays falls on a Saturday or
Sunday, the Exchange will be closed on the preceding Friday or the following
Monday, respectively.
The Fund has elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which it is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund during any 90 day
period for any one stockholder. Redemptions in excess of the above amounts will
normally be paid in cash, but may be paid wholly or partly by a distribution in
kind of securities.
Investments by corporations must include a certified copy of corporate
resolutions indicating which officers are authorized to act on behalf of the
account. Investments by trustees must include a copy of the title and signature
page of the trust agreement and pages indicating who is authorized to act.
EXCHANGE PRIVILEGE
Investors may exchange shares of the Fund having a value of $1,000 or more
for shares of the Portico Money Market Fund (the "Money Market Fund") at their
net asset value and at a later date exchange such shares and shares purchased
with reinvested dividends for shares of the Fund at net asset value. Investors
who are interested in exercising the exchange privilege should first contact the
Fund to obtain instructions and any necessary forms. The exchange privilege
does not in any way constitute an offering of, or recommendation on the part of
the Fund or the Adviser of, an investment in the Money Market Fund. Any
investor who considers making such an investment through the exchange privilege
should obtain and review the prospectus of the Money Market Fund before
exercising the exchange privilege.
The exchange privilege will not be available if (i) the proceeds from a
redemption of shares are paid directly to the investor or at his or her
discretion to any persons other than the Money Market Fund or (ii) the proceeds
from redemption of the shares of the Money Market Fund are not immediately
reinvested in shares of the Fund. The exchange privilege may be terminated by
the Fund upon at least 60 days prior notice to investors.
For federal income tax purposes, a redemption of shares pursuant to the
exchange privilege will result in a capital gain if the proceeds received exceed
the investor's tax-cost basis of the shares redeemed. Such a redemption may
also be taxed under state and local tax laws, which may differ from the Code.
ADDITIONAL TAX INFORMATION
The Fund intends to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code and thus not be subject to
federal income taxes on amounts it distributes to stockholders. The Fund
intends to manage its portfolio so as to minimize or eliminate any additional
tax liability. To the extent, if at all, the Fund is subject to tax, payment of
that tax would reduce the Fund's total return for the period in which the
liability accrued.
DISTRIBUTION OF SHARES
The Fund has entered into an Underwriting Agreement (the "Underwriting
Agreement") between the Fund and the Distributor, an affiliate of the Adviser,
pursuant to which the Distributor acts as underwriter of the shares of the Fund.
The Underwriting Agreement provides that the Distributor will use its best
efforts to distribute the shares of the Fund on a continuous basis and will
receive commissions on such sales as described in the Prospectus under
"Purchasing Shares." The Underwriting Agreement further provides that the
Distributor bears the costs of advertising and any other costs attributable to
the distribution of the shares of the Fund. (A portion of these costs may be
reimbursed by the Fund pursuant to the Fund's Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act described below). The Distributor may
receive brokerage commissions for executing portfolio brokerage for the Fund.
The Distributor may enter into sales agreements with other entities to assist in
the distribution effort. Any compensation to these other entities will be paid
by the Distributor from the proceeds of the sales charge. The Distributor may
also compensate these entities out of the distribution fee received from the
Fund. For the years ended September 30, 1995 and 1994 the Distributor received
$45,543 and $93,065, respectively in front-end sales commissions and paid
$18,644 and $26,188, respectively of such proceeds to dealers as sales
concessions as described in the Prospectus.
The Plan was adopted in anticipation that the Fund will benefit from the
Plan through increased sales of shares of the Fund thereby reducing the Fund's
expense ratio and providing an asset size that allows the Adviser greater
flexibility in management. The Plan may be terminated at any time by a vote of
the Directors of the Fund who are not interested persons of the Fund and who
have no direct or indirect financial interest in the Plan or any agreement
related thereto (the "Rule 12b-1 Directors") or by a vote of a majority of the
outstanding shares of the Fund. Any change in the Plan that would materially
increase the distribution expenses of the Fund provided for in the Plan requires
the approval of the stockholders and the Board of Directors, including the Rule
12b-1 Directors.
While the Plan is in effect, the selection and nomination of Directors who
are not interested persons of the Fund will be committed to the discretion of
the Directors of the Fund who are not interested persons of the Fund. The Board
of Directors of the Fund must review the amount and purposes of expenditures
pursuant to the Plan quarterly as reported to it by the Adviser. The Plan will
continue in effect for as long as its continuance is specifically approved at
least annually by a majority of the Directors, including the Rule 12b-1
Directors.
For the years ended September 30, 1995 and 1994, the Distributor received
$10,667 and $4,471, respectively, pursuant to the Plan. During the same
periods, the Fund paid an additional $2,357 and $1,689, respectively, pursuant
to the Plan, all of which represented compensation to dealers.
Amounts paid under the Plan (which may not exceed a maximum monthly
percentage of 1/12 of 0.25% (0.25% per annum) of the Fund's average daily net
assets) are paid to the Distributor in connection with its services as
distributor. Payments, if any, are made monthly and shall be based on reports
submitted by the Distributor to the Fund which sets forth all amounts expended
by Distributor pursuant to the Plan. Under no circumstances will the Fund pay a
fee pursuant to the Plan, the effect of which would be to exceed the National
Association of Securities Dealers' ("NASD") limitations on asset based
compensation described below.
The NASD has recently adopted amendments to its rules which amendments may
limit the extent to which the Fund may make payments under the Plan. Although
the NASD's rules do not apply to the Fund directly, the rules apply to members
of the NASD such as the Distributor and prohibit them from offering or selling
shares of the Fund if the sale charges (including 12b-1 fees) imposed on such
shares exceed the NASD's limitations.
The rules impose two related limits on 12b-1 fees paid by investors: an
annual limit and a rolling cap. The annual limit is 0.75% of assets (with an
additional 0.25% permitted as a service fee). The rolling cap on the total of
all sales charges (including front end charges, contingent deferred sales
charges and asset based charges such as 12b-1 payments) is 6.25% of new sales
(excluding sales resulting from the reinvestment of dividends and distributions)
for funds that charge a service fee and 7.25% of new sales for funds that do not
assess a service fee.
Whether the rolling applicable maximum sales charge has been exceeded
requires periodic calculations of the Fund's so-called "remaining amount." The
remaining amount is the amount to which the Fund's total sales charges are
subject for purposes of ensuring compliance with the NASD limits. The Fund's
remaining amount is generally calculated by multiplying the Fund's new sales by
its appropriate NASD maximum sales charge (6.25% or 7.25%). From this amount is
subtracted the Fund's sales charges on the new sales and the 12b-1 payments
accrued or paid over the period. The Fund's remaining amount increases with new
sales of the Fund (because the Fund's front end sales charge is less than the
applicable NASD maximum) and decreases as the 12b-1 charges are accrued. The
NASD rules permit the remaining amount to be credited periodically with interest
based on the rolling balance of the remaining amount. If the Fund's remaining
amount reaches zero, it must stop accruing its 12b-1 charges until it has new
sales that increase the remaining amount. The Fund's remaining amount may be
depleted as a result of the payment of 12b-1 fees if, for example, the Fund
experiences an extended period of time during which no new sales are made or
during which new sales are made but in an amount insufficient to generate
increases in the remaining amount to offset the accruing 12b-1 charges.
PORTFOLIO TRANSACTIONS
The Adviser has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser and to select the markets in
which such transactions are to be executed. The primary responsibility
regarding portfolio transactions is to select the best combination of net price
and execution for the Fund. When executing transactions for the Fund, the
Adviser will consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of the
commission. It is anticipated that the Adviser will select the Distributor from
time to time to execute portfolio transactions, subject to best price and
execution. In any such transaction, the Distributor will charge commissions at
a substantial discount from retail rates, regardless of the size of the
transaction. Portfolio transactions executed by the Distributor will comply
with all applicable provisions of Section 17(e) of the 1940 Act. Transactions
of the Fund in the over-the-counter market may be executed with primary market
makers acting as principal except where it is believed that better prices and
execution may be obtained elsewhere.
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser is authorized
to consider "brokerage and research services" (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934), statistical quotations,
specifically the quotations necessary to determine the Fund's asset value, and
other information provided to the Fund or the Adviser. The Adviser is also
authorized to cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Adviser must
determine in good faith, however, that such commission was reasonable in
relation to the value of the brokerage and research services provided, viewed in
terms of that particular transaction or in terms of all the accounts over which
the Adviser exercises investment discretion. It is possible that certain of the
services received by the Adviser attributable to a particular transaction will
benefit one or more other accounts for which investment discretion is exercised
by the Adviser. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under management of the Adviser to save
brokerage costs or average prices among them is not deemed to result in a
securities trading account.
In valuing research services, the Adviser makes a judgment of the
usefulness of research and other information provided by a broker to the Adviser
in managing the Fund's investment portfolio. In some cases, the information,
e.g., data or recommendations concerning particular securities relates to the
specific transaction placed with the broker but for greater part the research
consists of a wide variety of information concerning companies, industries,
investment strategy and economic, financial and political conditions and
prospects, useful to the Adviser in advising the Fund.
The Adviser is the principal source of information and advice to the Fund
and is responsible for making and initiating the execution of investment
decisions by the Fund. However, the Board of Directors of the Fund recognizes
that it is important for the Adviser, in performing its responsibilities to the
Fund, to continue to receive the broad spectrum of economic and financial
information that many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Fund to take into account the value
of the information received for use in advising the Fund. The extent, if any,
to which the obtaining of such information may reduce the expenses of the
Adviser in providing management services to the Fund is not determinable. In
addition, it is understood by the Board of Directors that other clients of the
Adviser might also benefit from the information obtained for the Fund, in the
same manner that the Fund might also benefit from the information obtained by
the Adviser in performing services for others.
Although investment decisions for the Fund are made independently from
those for other investment advisory clients of the Adviser, it may develop that
the same investment decision is made for both the Fund and one or more other
advisory clients. If both the Fund and other clients purchase or sell the same
class of securities on the same day, the transactions will be allocated as to
amount and price in a manner considered equitable to each.
For the years ended September 30, 1995 and 1994, the Fund paid to brokers,
other than the Distributor, brokerage commissions totaling $1,429 and $4,827,
respectively, on transactions having a total market value of $445,087 and
$1,051,751, respectively. All of such brokers provided research services. For
the years ended September 30, 1995 and 1994, the Fund paid the Distributor
brokerage commissions of $20,414 and $20,322, respectively, on transactions
involving the payment of commissions having a total market value of $5,878,662
and $5,271,189, respectively. Of the brokerage transactions paid by the Fund
for the years ended September 30, 1995 and 1994, 93% and 81%, respectively, were
paid to the Distributor and such commissions paid to the Distributor were paid
in connection with transactions involving securities having a market value equal
to 93% and 83%, respectively, of the total market value of securities on which
the Fund paid commissions.
REMOVAL OF DIRECTORS BY STOCKHOLDERS
The Fund's By-Laws contain procedures for the removal of Directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may, by the affirmative vote of the holders of a
majority of the votes then entitled to vote at an election of Directors, remove
any Director or Directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed Directors.
Upon the written request of the holders of shares entitled to not less than
ten percent (10%) of all of the votes entitled to be cast at such meeting, the
Secretary of the Fund shall promptly call a special meeting of stockholders for
the purpose of voting upon the question of removal of any Director. Whenever
ten or more stockholders of record who have been such for at least six months
preceding the date of application, and who hold in the aggregate either shares
having a net asset value of at least $25,000 or at least one percent (1%) of the
total outstanding shares, whichever is less, shall apply to the Fund's Secretary
in writing, stating that they wish to communicate with other stockholders with a
view to obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to transmit,
the Secretary shall within five business days after such application either; (i)
afford to such applicants access to a list of the names and addresses of all
stockholders as recorded on the books of the Fund; or (ii) inform such
applicants as to the approximate number of stockholders of record and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Secretary elects to follow the course specified in clause (ii) of
the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all stockholders of record at their addresses as recorded
on the books unless within five business days after such tender the Secretary
shall mail to such applicants and file with the Securities and Exchange
Commission (the "SEC"), together with a copy of the material to be mailed, a
written statement signed by at least a majority of the Board of Directors to the
effect that in their opinion either such material contains untrue statements of
fact or omits to state facts necessary to make the statements contained therein
not misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified in the written
statement so filed, the SEC may, and if demanded by the Board of Directors or by
such applicants shall, enter an order either sustaining one or more of such
objections or refusing to sustain any of them. If the SEC shall enter an order
refusing to sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the SEC shall find, after notice and
opportunity for hearing, that all objections so sustained have been met, and
shall enter an order so declaring, the Secretary shall mail copies of such
material to all stockholders with reasonable promptness after the entry of such
order and the renewal of such tender.
CUSTODIAN
Firstar Trust Company, (the "Custodian") 615 East Michigan Avenue,
Milwaukee, Wisconsin 53201-0701, is the custodian for the Fund. It is
responsible for holding all securities and cash of the Fund, receiving and
paying for securities purchased, delivering against payment securities sold,
receiving and collecting income from investments, making all payments covering
expenses of the Fund, and performing other administrative duties, all as
directed by authorized persons of the Fund. The Custodian does not exercise any
supervisory function in such matters as purchase and sale of portfolio
securities, payment of dividends, or payment of expenses of the Fund. The Fund
has authorized the Custodian to deposit certain portfolio securities in central
depository systems as permitted under federal law. The Fund may invest in
obligations of the Custodian and may purchase or sell securities from or to the
Custodian.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P., Milwaukee, Wisconsin, audits and reports on the
Fund's annual financial statements, reviews certain regulatory reports, reviews
the Fund's income tax returns, and performs other professional accounting,
auditing, tax and advisory services when engaged to do so by the Fund.
FINANCIAL STATEMENTS AND REPORTS
Stockholders will receive audited annual and unaudited semi-annual reports
when published, and will receive written confirmation of all confirmable
transactions in their accounts.
The following audited financial information is attached hereto:
1 Report of Independent Accountants
2 Statement of Assets and Liabilities
3 Schedule of Investments
4 Statement of Operations
5 Statements of Changes in Net Assets
6 Financial Highlights
7 Notes to the Financial Statements
APPENDIX
DESCRIPTION OF BOND RATINGS
Ratings of a rating service represent the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Adviser believes that the quality of debt securities
in which the Fund invests should be continuously reviewed and that individual
analysts give different weightings to the various factors involved in credit
analysis. A rating is not a recommendation to purchase, sell or hold a
security. It does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating should be evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the ratings services
from other sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
The following is a description of the rating characteristics used by Moody's and
S&P.
RATINGS BY MOODY'S
Aaa-Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge". Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they compose what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A-Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa-Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA-Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation among such bonds and CC the highest degree of
speculation. Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
-----------------------------------------------------------------------
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost $6,221,220) $7,605,381
Cash 14,964
Receivable for investments sold 45,586
Receivable for shares issued 45,349
Dividends and interest receivable 4,474
Due from Adviser 9,870
Organization costs, net of accumulated amortization 13,441
----------
Total Assets 7,739,065
----------
LIABILITIES:
Payable to Adviser 12,073
Payables for investments purchased 84,375
Payables for shares redeemed 1,053
Other accrued expenses 25,230
----------
Total Liabilities 122,731
----------
NET ASSETS $7,616,334
==========
NET ASSETS CONSIST OF:
Capital stock $6,275,279
Accumulated net realized loss on investments (43,106)
Unrealized net appreciation on investments 1,384,161
----------
Total Net Assets $7,616,334
==========
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 10,000,000
Issued and outstanding 608,163
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $12.52
==========
OFFERING PRICE PER SHARE $13.11
==========
</TABLE>
See notes to the financial statements.
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 49,580
Interest income 7,486
----------
57,066
----------
EXPENSES:
Investment advisory fees 54,624
Administration fees 35,000
Transfer agent fees and expenses 29,226
Professional fees 23,899
Fund accounting fees 22,748
12b-1 fees 13,656
Federal and state registration fees 12,945
Custody fees 11,242
Amortization of organization costs 4,478
Directors' fees 3,000
Reports to shareholders 2,807
Other 1,856
----------
Total expenses before reimbursement 215,481
Less: Reimbursement and waiver of expenses (78,921)
----------
Net expenses 136,560
----------
NET INVESTMENT LOSS (79,494)
----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 101,874
Increase in unrealized appreciation on investments 1,225,751
----------
Net gain on investments 1,327,625
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,248,131
==========
</TABLE>
See notes to financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<C> <S> <C> <C>
COMMON STOCK 90.10%
BUILDING MATERIALS 1.15%
10,000 Nortek, Inc.* $ 87,500
----------
CHEMICALS 1.48%
6,000 Albemarle Corp. 112,500
----------
COMMUNICATIONS AND
MEDIA 10.97%
8,500 Ackerley Communications, Inc. 129,625
3,500 Airtouch Communications, Inc.* 107,187
4,600 Associated Group, Inc. Class A* 95,450
3,250 Citicasters, Inc.* 108,469
5,500 Cox Communications, Inc. Class A* 111,375
2,800 GC Companies, Inc.* 89,950
3,000 Lin Television Corp.* 93,000
6,000 Telemundo Group, Inc. Class A* 100,500
----------
835,556
----------
CONSUMER SERVICE 2.79%
6,500 Kinder Care Learning Centers, Inc.* 87,750
2,000 Pittway Corp. Class A 124,500
----------
212,250
----------
CONTAINERS 1.00%
4,000 Alltrista Corp.* 76,000
----------
DISTRIBUTORS - CONSUMER PRODUCTS 1.15%
9,500 Primesource Corp. 87,875
----------
ELECTRICAL EQUIPMENT 1.12%
5,000 AMETEK, Inc. 85,625
----------
ELECTRONICS 2.82%
6,000 Harris Computer Systems Corp.* 101,250
2,400 Western Atlas, Inc.* 113,700
----------
214,950
----------
ENERGY - RAW MATERIALS 1.53%
6,500 INDRESCO, Inc.* 116,188
----------
ENGINEERING AND CONSTRUCTION 1.82%
15,000 Emcor Group, Inc.* 138,750
----------
ENTERTAINMENT AND LEISURE 1.21%
11,000 Aztar Corp.* 92,125
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------- ----------
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL 1.45%
7,000 Culligan Water Technologies, Inc.* 110,250
----------
FINANCE COMPANY 1.52%
5,000 Lehman Brothers Holdings, Inc. 115,625
----------
FINANCIAL SERVICES 5.94%
9,000 AmeriCredit Corp.* 133,875
7,500 Duff & Phelps Credit Rating Corp. 118,125
4,000 Signet Banking Corp. 105,000
2,600 White River Corp.* 95,550
----------
452,550
----------
FOOD, BEVERAGE AND TOBACCO 5.81%
8,000 Consolidated Products, Inc.* 120,000
6,000 Interstate Bakeries Corp. 126,750
6,500 Tasty Baking Co. 92,625
5,000 Whitman Corp. 103,125
----------
442,500
----------
FURNITURE/HOME APPLIANCES 1.71%
16,500 Interco, Inc.* 129,937
----------
HOUSEHOLD PRODUCTS 1.30%
3,000 Aptargroup, Inc. 99,375
----------
HOUSING 3.88%
7,500 Kaufman & Broad Home Corp. 94,687
15,500 MDC Holdings, Inc. 118,188
6,500 Walter Industries, Inc.* 82,875
----------
295,750
----------
INSURANCE 1.46%
2,500 Finova Group, Inc. 111,250
----------
LODGING 4.61%
11,000 Host Marriott Corp.* 136,125
3,000 Marriott International, Inc. 112,125
10,000 Prime Hospitality Corp.* 102,500
----------
350,750
----------
MACHINERY 4.46%
7,000 Gardner Denver Machinery, Inc.* 119,000
11,500 IMO Industries, Inc.* 106,375
8,000 Strattec Security Corp.* 114,000
----------
339,375
----------
</TABLE>
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<C> <S> <C> <C>
MECHANICS AND SOFTWARE 1.06%
14,000 Triad Systems Corp.* 80,500
----------
MISCELLANEOUS 2.58%
10,500 Rexel, Inc.* 106,312
4,700 Whittaker Corp.* 90,475
----------
196,787
----------
OIL AND GAS - EQUIPMENT & SERVICES 2.95%
5,000 Cooper Cameron Corp.* 129,375
10,000 Lone Star Technologies, Inc.* 95,000
----------
224,375
----------
PAPER PRODUCTS 0.88%
3,000 Crown Vantage, Inc.* 66,750
----------
PHARMACEUTICALS AND HEALTHCARE PRODUCTS 1.71%
2,900 McKesson Corp. 130,500
----------
PRINTING AND PUBLISHING 3.23%
3,000 Media General, Inc. - Class A 107,250
3,500 Meredith Corp. 139,125
----------
246,375
----------
RAILROAD 5.76%
2,500 Illinois Central Corp. - Series A 97,813
3,000 Kansas City Southern Industries, Inc. 136,500
11,700 Katy Industries, Inc. 111,150
11,500 Providence and Worcester Railroad Co. 93,437
----------
438,900
----------
RETAIL 8.81%
30,000 Ames Department Stores, Inc.* 78,750
12,500 Best Products Co.* 106,250
7,000 Grand Union Co.* 91,000
2,400 Harcourt General, Inc. 100,500
14,000 Phar-Mor, Inc.* 112,000
8,000 Shopko Stores, Inc. 99,000
6,000 Zale Corp.* 83,250
----------
670,750
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ----------
<C> <S> <C> <C>
SOFTWARE 1.25%
6,000 Wang Laboratories, Inc.* 95,250
----------
TEXTILE AND APPAREL 1.36%
12,000 Griffon Corp.* 103,500
----------
TRUCKING 1.33%
4,000 Ryder System, Inc. 101,500
----------
TOTAL COMMON STOCKS 6,861,868
----------
(cost $5,512,028)
WARRANTS 4.50%
9,000 BJ Services Co.* 49,500
7,000 Federated Department Stores - Series C* 63,875
6,000 Fleet Financial Group, Inc.* 47,250
7,500 Lone Star Industries, Inc.* 62,812
7,500 U.S. Home Corp. - Class B* 66,563
7,000 Viacom Inc. - Class B* 52,938
----------
TOTAL WARRANTS 342,938
----------
(cost $308,617)
<CAPTION>
PAR VALUE VALUE
--------- ----------
<C> <S> <C> <C>
DEMAND NOTES 5.26%
$ 35,000 General Mills, Inc. 35,000
52,900 Pitney Bowes Credit Corp. 52,900
176,675 Sara Lee Corp. 176,675
95,000 Southwestern Bell Telephone Co. 95,000
41,000 Warner-Lambert Co. 41,000
----------
TOTAL DEMAND NOTES 400,575
----------
(cost $400,575)
TOTAL INVESTMENTS 99.86%
(cost $6,221,220) 7,605,381
Cash and Other Assets,
Less Liabilities 0.14% 10,953
----------
NET ASSETS 100.00% $7,616,334
==========
*Non-income producing
</TABLE>
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment loss ($79,494) ($27,357)
Net realized gain (loss) on investments 101,874 (144,980)
Increase in unrealized appreciation on investments 1,225,751 158,410
---------- ----------
Net increase (decrease) in net assets resulting from
operations 1,248,131 (13,927)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from 187,949 and 450,261 shares issued,
respectively 2,054,266 4,630,280
Cost of 18,472 and 21,575 shares redeemed,
respectively (188,727) (213,689)
---------- ----------
Net increase from capital share transactions 1,865,539 4,416,591
---------- ----------
TOTAL INCREASE IN NET ASSETS 3,113,670 4,402,664
NET ASSETS:
Beginning of year 4,502,664 100,000
---------- ----------
End of year $7,616,334 $4,502,664
========== ==========
</TABLE>
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 (1)
------------------ ----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.26 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.13) (0.06)
Net realized and unrealized gains on
investments 2.39 0.32
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 2.26 0.26
---------- ----------
NET ASSET VALUE, END OF PERIOD $ 12.52 $ 10.26
========== ==========
TOTAL RETURN (2) 22.03% 2.60%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period $7,616,334 $4,502,664
Ratio of net expenses to average net
assets (3) 2.50% 2.49%
Ratio of net investment loss to
average net
assets (3) (1.46)% (0.96)%
Portfolio turnover rate 70.59% 63.20%
</TABLE>
(1) The Fund commenced operations on October 1, 1993.
(2) The total return calculation does not reflect the 4.50% sales load imposed
on the purchase of shares.
(3) Without fees waived, the ratio of net expenses and net investment loss to
average net assets would have been 3.94% and (2.90)% for the year ended
September 30, 1995 and 5.98% and (4.45)% for the year ended September 30,
1994.
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1.ORGANIZATION
The KEELEY Small Cap Value Fund, Inc. (the "Fund") was incorporated on May
17, 1993 as a Maryland Corporation and is registered as a diversified open-
end investment company under the Investment Company Act of 1940 (the "1940
Act"). The Fund commenced operations on October 1, 1993. The Fund initially
issued and sold 10,000 shares of its capital stock to a shareholder of
Keeley Asset Management Corp. (the "Adviser") and Keeley Investment Corp.
(the "Distributor").
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Securities which are traded on a recognized stock
exchange are valued at the last sale price on the securities exchange on
which such securities are primarily traded or at the last sale price on a
national securities exchange. Exchange-traded securities for which there
were no transactions are valued at the current bid prices. Securities traded
on only over-the-counter markets are valued on the basis of closing over-
the-counter bid prices when there is no last sale price available. Debt
securities which are purchased within 60 days of their stated maturity date
are valued at amortized cost, which approximates current value. Securities
for which quotations are not readily available and other assets are valued
at fair value as determined in good faith by the Board of Directors.
b) Federal Income Taxes - No provision for federal income taxes has been
made since the Fund has complied to date with the provisions of the Internal
Revenue Code available to regulated investment companies and intends to
continue to so comply in future years.
c) Distributions to Shareholders - Dividends from net investment income will
be declared and paid annually. Distributions of net realized capital gains,
if any, will be declared and paid annually. Distributions to shareholders
are recorded on the ex-dividend date. The Fund may periodically make
reclassifications among certain of its capital accounts as a result of the
timing and characterization of certain income and capital gains
distributions determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. Accordingly,
at September 30, 1995, reclassifications were recorded from accumulated net
investment losses to reduce capital stock by $79,494.
d) Other - Investment transactions are recorded on the trade date plus one.
The Fund determines the gain or loss realized from the investment
transactions by comparing the original cost of the security lot sold with
the net sale proceeds. Dividend income is recognized on the ex-dividend date
and interest income is recognized on an accrual basis.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
3.INVESTMENT ADVISORY AGREEMENT
The Fund has an agreement with the Adviser, with whom certain officers and
directors of the Fund are affiliated, to furnish investment advisory
services to the Fund. Under the terms of this agreement, the Fund will pay
the Adviser a monthly fee at the annual rate of 1.00% of the Fund's average
net assets. Under the investment advisory agreement, if the aggregate annual
operating expenses (excluding interest, taxes, brokerage commissions and
other costs incurred in connection with the purchase or sale of portfolio
securities, and extraordinary items) exceed the lowest limitations imposed
by state securities administrators, the Adviser will reimburse the Fund for
the amount of such excess. Accordingly, for the year ended September 30,
1995, the Adviser reimbursed the Fund $78,921. As of September 30, 1995,
John Keeley, Jr., President of the Adviser, controlled either directly or
indirectly 33.9% of the Fund's outstanding shares.
4.DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan is designed to reimburse the Distributor
for certain promotional and other sales related costs and to permit the Fund
to employ other dealers of its shares. Unreimbursed amounts may be carried
forward and paid in a subsequent year. The Fund paid to the Distributor and
each dealer a monthly fee at the rate of 0.25% per annum of the aggregate
daily net asset value of the Fund shares beneficially owned by the
Distributor's and each dealer's existing brokerage clients. For the period
from October 1, 1994 to September 30, 1995, the Fund paid $10,667 of
distribution fees to the Distributor.
5.INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the period from October 1, 1994 to September
30, 1995, were $5,223,474 and $3,779,143, respectively. For the period from
October 1, 1994 to September 30, 1995, the Fund paid $20,414 of brokerage
commissions on trades of securities to the Distributor.
At September 30, 1995, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $6,241,932,
were as follows:
<TABLE>
<S> <C>
Appreciation $1,497,102
(Depreciation) (133,653)
----------
Net appreciation on
investments $1,363,449
==========
</TABLE>
At September 30, 1995, the Fund had an accumulated net realized capital
loss carryforward of $22,394, expiring September 30, 2002. To the extent the
Fund realizes future net capital gains, taxable distributions to its
shareholders will be offset by any unused capital loss carryforward.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
6.OFFERING PRICE PER SHARE
The public offering price is the net asset value plus a sales charge which
varies in accordance with the amount of the purchase as follows:
<TABLE>
<CAPTION>
SALES CHARGE
AS A PERCENTAGE OF
AMOUNT OFFERING PRICE
------ ------------------
<S> <C>
Less than $50,000 4.50%
$50,000 but less
than $100,000 4.00%
$100,000 but less
than $250,000 3.00%
$250,000 but less
than $500,000 2.50%
$500,000 and over 2.00%
</TABLE>
The Distributor retains the entire sales charge when it makes sales
directly to the public. Otherwise, when sales are made through dealers, the
Distributor receives a portion of the related sales charge. For the period
from October 1, 1994 to September 30, 1995, the Fund was advised that the
Distributor received $26,899 of sales charges.
Reduced sales charges are available through a right of accumulation and
certain sales of Fund shares are made at net asset value per share, as
specified in the Fund's Prospectus.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
KEELEY Small Cap Value Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
KEELEY Small Cap Value Fund, Inc., including the schedule of investments, as of
September 30, 1995, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for each of the two years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
KEELEY Small Cap Value Fund, Inc., as of September 30, 1995, and the results of
its operations for the year then ended, and the changes in its net assets and
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
Milwaukee, Wisconsin
October 19, 1995
<PAGE>
Investment Adviser
KEELEY ASSET MANAGEMENT CORP.
Chicago, Illinois
Distributor
KEELEY INVESTMENT CORP.
Chicago, Illinois
Custodian, Transfer Agent and Dividend
Disbursing Agent
FIRSTAR TRUST COMPANY
Milwaukee, Wisconsin
800-338-1579
Auditors
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
Performance information is historical and is no guarantee of future results.
The investment return and principal value of shares will fluctuate and when
redeemed, may be worth more or less than the investor's original cost. This
material may only be used when preceded or accompanied by the Fund's
prospectus.
401 South LaSalle Street . Suite 1201 . Chicago . Illinois . 60605
(312) 786-5050 . (800) 553-5344 . (312) 786-5003
KEELEY SMALL CAP VALUE FUND, INC.
-------------------------------------
PART C {PRIVATE}
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(A) FINANCIAL STATEMENTS:
--------------------
(i) Financial statements included in Part A of this Amendment to
registration statement:
Audited financial information
(a) Financial Highlights
(ii) Financial statements included in Part B of this Amendment to
registration statement:
Audited financial information
(a) Report of Independent Accountants
(b) Statement of Assets and Liabilities
(c) Statement of Investments
(d) Statement of Operations
(e) Statement of Changes in Net Assets
(f) Financial Highlights
(g) Notes to Financial Statement
Note: Schedules II, III, IV, V, VI and VII have been omitted as the required
information is not present.
(B) EXHIBITS
--------
1 Articles of Incorporation<F11>
2 Bylaws<F11>
2.2 Form of Amendment to Sections 2.2, 3.6
and 3.9 of Bylaws<F11>
2.3 Form of Amendment to Sections 3.6 and 3.9 of the Bylaws<F11>
3 None
5 Investment Advisory Agreement between the
Fund and Keeley Asset Management Corp.<F11>
6.1 Underwriting Agreement between the Fund and
Keeley Investment Corp.<F11>
6.2 Form of Broker/Dealer Agreement between
Keeley Investment Corp. and Dealers<F11>
7 None
8 Custody Agreement between the Fund and
Firstar Trust Company<F11>
9.1 Fund Accounting Services Agreement between
the Fund and Firstar Trust Company<F11>
9.2 Transfer Agent Agreement between the Fund
and Firstar Trust Company<F11>
9.3 Administration Agreement between the Fund
and Sunstone Financial Group, Inc.<F11>
10 Opinion of Schwartz & Freeman<F11>
11 Consent of Independent Public Accountants
12 None
13 Agreement with John L. Keeley, Jr.,
regarding initial capital and funding<F11>
14 Individual Retirement Custodial Account,
Disclosure Statement and Application<F11>
15 Distribution Plan<F11>
16 Schedule of Computation of Performance Quotations
17 Financial Data Schedule
<F11>Previously filed.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
The information in the prospectus under the caption "Certain
Stockholders" is incorporated by reference. Except as described therein, the
Registrant does not consider that there are any persons directly or indirectly
controlling, controlled by, or under common control with, the Registrant within
the meaning of this item.
The information in the prospectus under the caption "Management of the
Fund" and in the Statement of Additional Information under the caption
"Directors and Officers" is incorporated by reference.
ITEM 26. NUMBERS OF HOLDERS OF SECURITIES
--------------------------------
(1) (2)
Number of Record Holders
Title of Class as of September 30, 1995
Common Stock 639
ITEM 27. INDEMNIFICATION
---------------
Section 2-418 of the General Corporation Law of Maryland authorizes
the registrant to indemnify its directors and officers under specified
circumstances. Article Tenth of the Charter of the registrant (Exhibit 1 to
this registration statement, which is incorporated herein by reference) provides
in effect that the registrant shall provide certain indemnification of its
directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the charter shall not protect any person against
any liability to the registrant or its stockholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
The information in the prospectus under the caption "Management of the
Fund - Investment Adviser" is incorporated by reference. Except as noted
therein and below, neither Keeley Asset Management Corp., nor any of its
directors or officers, has at any time during the past two years been engaged in
any other business, profession, vocation or employment of a substantial nature
either for its or his own account or in the capacity of director, officer,
employee, partner or trustee.
ITEM 29. PRINCIPAL UNDERWRITERS
----------------------
(a) None
(b) NAME AND PRINCIPAL POSITION AND OFFICE POSITION AND OFFICE
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ ---------------- ---------------
John L. Keeley, Jr. Director, President Director, President and
Keeley Investment Corp. and Treasurer Treasurer
401 South LaSalle Street
Suite 1201
Chicago, Illinois 60605
(c) None
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and the rules promulgated thereunder are in the physical
possession of Registrant, Registrant's Custodian, Registrant's
Transfer Agent and Registrant's Administrator as follows: the
documents required to be maintained by paragraphs (5), (6), (7), (10)
and (11) of Rule 31a-l(b) will be maintained by the Registrant; the
documents required to be maintained by paragraph (4) of Rule 31a-l(b)
will be maintained by Registrant's Administrator; information
described in Rule 31a-1(b)(2)(iv) shall be maintained by the Fund's
Transfer Agent; and all other records will be maintained by the
Registrant's Custodian.
ITEM 31. MANAGEMENT SERVICES
-------------------
None
ITEM 32. UNDERTAKINGS
------------
The Registrant undertakes to furnish each person to whom a
current Prospectus is delivered with a copy of Registrant's
latest Annual Report to Shareholders upon request and without
charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it has duly caused
this amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois, on December 29,
1995. Registrant certifies that it meets all the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the Securities Act
of 1933.
KEELEY SMALL CAP VALUE FUND, INC.
By: /s/John L. Keeley, Jr., President
----------------------------------
John L. Keeley, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/S/John L. Keeley, Jr. Director, President and Treasurer 12-29-95
- -------------------- (principal executive and financial
John L. Keeley, Jr. officer)
/S/Michael J. O'Brien Director 12-29-95
- --------------------
Michael J. O'Brien
/S/John F. Lesch Director 12-29-95
- --------------------
John F. Lesch
/S/John G. Kyle Director 12-29-95
- --------------------
John G. Kyle
EXHIBIT INDEX
- -------------
EXHIBITS
--------
1 Articles of Incorporation<F11>
2 Bylaws<F11>
2.2 Form of Amendment to Sections 2.2, 3.6
and 3.9 of Bylaws<F11>
2.3 Form of Amendment to Sections 3.6 and 3.9 of the Bylaws<F11>
3 None
5 Investment Advisory Agreement between the
Fund and Keeley Asset Management Corp.<F11>
6.1 Underwriting Agreement between the Fund and
Keeley Investment Corp.<F11>
6.2 Form of Broker/Dealer Agreement between
Keeley Investment Corp. and Dealers<F11>
7 None
8 Custody Agreement between the Fund and
Firstar Trust Company<F11>
9.1 Fund Accounting Services Agreement between
the Fund and Firstar Trust Company<F11>
9.2 Transfer Agent Agreement between the Fund
and Firstar Trust Company<F11>
9.3 Administration Agreement between the Fund
and Sunstone Financial Group, Inc.<F11>
10 Opinion of Schwartz & Freeman<F11>
11 Consent of Independent Public Accountants
12 None
13 Agreement with John L. Keeley, Jr.,
regarding initial capital and funding<F11>
14 Individual Retirement Custodial Account,
Disclosure Statement and Application<F11>
15 Distribution Plan<F11>
16 Schedule of Computation of Performance Quotations
17 Financial Data Schedule
<F11>Previously filed.
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
KEELEY Small Cap Value Fund, Inc.
We consent to the inclusion in Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A of KEELEY Small Cap Value Fund, Inc. of our
report dated October 19, 1995 on our audit of the financial statements and
financial highlights of the Fund, which report is included in the Annual Report
to Shareholders for the year ended September 30, 1995 which is also included in
the Registration Statement. We also consent to the reference to our Firm under
the caption "INDEPENDENT ACCOUNTANTS" in the Statement of Additional
Information and under the caption "FINANCIAL HIGHLIGHTS" in the Prospectus.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 11, 1995
EXHIBIT 16
KEELEY SMALL CAP VALUE FUND, INC.
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
TOTAL RETURN
For the one year period ended September 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total return = 16.57%
16.57% = (1,165.74/1,000) - 1
For the period from October 1, 1993 (commencement of operations) to
September 30, 1995
Cumulative Total Return = (Ending Redeemable Value/Initial Value) - 1
Total return = 19.58%
19.58% = (1,195.80/1,000) - 1
1/n
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total return = 9.35%
1/2
9.35% = (1,195.8/1,000) - 1
[ARTICLE] 6 EXHIBIT 17
[CIK] 0000906333
[NAME] KEELEY SMALL CAP VALUE FUND, INC.
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-START] OCT-01-1994
[PERIOD-END] SEP-30-1995
[INVESTMENTS-AT-COST] 6221220
[INVESTMENTS-AT-VALUE] 7605381
[RECEIVABLES] 105279
[ASSETS-OTHER] 28405
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 7739065
[PAYABLE-FOR-SECURITIES] 84375
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 38356
[TOTAL-LIABILITIES] 122731
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 6275279
[SHARES-COMMON-STOCK] 608163
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (43106)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1384161
[NET-ASSETS] 7616334
[DIVIDEND-INCOME] 49580
[INTEREST-INCOME] 7486
[OTHER-INCOME] 0
[EXPENSES-NET] 136560
[NET-INVESTMENT-INCOME] (79494)
[REALIZED-GAINS-CURRENT] 101874
[APPREC-INCREASE-CURRENT] 1225751
[NET-CHANGE-FROM-OPS] 1248131
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 187949
[NUMBER-OF-SHARES-REDEEMED] 18472
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 3113670
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 54624
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 215481
[AVERAGE-NET-ASSETS] 5463011
[PER-SHARE-NAV-BEGIN] 10.26
[PER-SHARE-NII] (0.13)
[PER-SHARE-GAIN-APPREC] 2.39
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.52
[EXPENSE-RATIO] 2.5
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
