AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1998
SECURITIES ACT REGISTRATION NO. 33-63562
INVESTMENT COMPANY ACT FILE NO. 811-7760
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
PRE-EFFECTIVE AMENDMENT NO. ( )
POST-EFFECTIVE AMENDMENT NO. 5 (X)
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
AMENDMENT NO. 7
KEELEY SMALL CAP VALUE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
401 South LaSalle Street
Suite 1201
Chicago, Illinois 60605
(Address of Principal Executive Offices)
Registrant's Telephone Number including Area Code: (312) 786-5050
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Copy to
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
(Name and Address of Agents for Service)
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It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 29, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
Pursuant to Rule 24f-2 of the Investment Company Act of 1940 and Securities Act
of 1933 Registrant has elected to register an indefinite number of shares. The
Rule 24f-2 Form was filed with the Securities and Exchange Commission on
December 29, 1997.
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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
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PART A (PROSPECTUS)
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1 Front cover
2 Fund Expenses
3 Financial Highlights; Performance Information
4 General Information; Investment Objectives and
Policies; Investment Restrictions; Risk Factors
5 Management of the Fund; General Information; Fund
Expenses; Portfolio Transactions
5A Contained in Annual Report to Shareholders
6 General Information; Certain Stockholders; Dividends
and Distributions; Taxation; Exchange Privilege
7 Purchasing Shares; Management of the Fund; Fund
Expenses; Net Asset Value; Exchange Privilege;
Distribution Plan
8 Redemption and Repurchase of Shares
9 Not applicable
PART B (STATEMENT OF ADDITIONAL INFORMATION)
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10 Cover Page
11 Table of Contents
12 History of the Fund
13 Investment Policies; Investment Restrictions; Part A -
Investment Objectives and Policies
14 Directors and Officers
15 Certain Stockholders, Directors and Officers
16 Investment Adviser; Part A - Management of the Fund
Distribution of Shares; Part A - Distribution
Plan; Custodian; Independent Public Accountants
17 Portfolio Transactions
18 Not applicable
19 Purchasing and Redeeming Shares
20 Additional Tax Information
21 Distribution of Shares; Performance Information
22 Performance Information
23 Financial Statements
PART C (OTHER INFORMATION)
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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
ITEM LOCATION OR CAPTION
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30 Location of accounts and records
31 Management services
32 Undertaking
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KEELEY SMALL CAP VALUE FUND, INC.
PROSPECTUS
JANUARY 29, 1998
KEELEY SMALL CAP VALUE FUND, INC.
401 SOUTH LASALLE STREET, SUITE 1201
CHICAGO, ILLINOIS 60605
312-786-5050
888-933-5391
E-MAIL ADDRESS: [email protected]
WEB SITE ADDRESS: www.keeleyfunds.com
JANUARY 29, 1998
PROSPECTUS
KEELEY Small Cap Value Fund, Inc. (the "Fund") is a diversified, open-end
management investment company, commonly referred to as a mutual fund. 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.
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. AN
INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS AND REQUIRES CONSIDERATION OF SUCH
RISKS. IN ADDITION, AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS AND
REQUIRES CONSIDERATION OF FACTORS NOT TYPICALLY ASSOCIATED WITH INVESTMENT IN
SECURITIES. SEE "RISK FACTORS."
A Statement of Additional Information about the Fund, dated January 29,
1998, as may be supplemented from time to time, has been filed with the
Securities and Exchange Commission (the "SEC") 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 numbers
or addresses listed above. The Statement of Additional Information is
incorporated herein by reference in accordance with the SEC's rules. The SEC
maintains a Web Site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference and other information
regarding the Fund.
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
Shareholder Transaction and Operating Expense Table.........................3
Condensed Financial Information.............................................4
Financial Highlights........................................................4
Introduction................................................................5
Investment Objective........................................................5
Investment Policies and Strategies..........................................5
Investment Restrictions.....................................................6
Risk Factors................................................................6
Management of the Fund......................................................7
Portfolio Transactions and Brokerage........................................9
Portfolio Turnover..........................................................9
Distribution Plan..........................................................10
Purchase of Shares.........................................................10
Determination of Net Asset Value...........................................12
How to Redeem Shares.......................................................13
Exchange Privilege.........................................................15
Distributions and Taxes....................................................16
IRA Plans..................................................................17
Performance Information....................................................17
General Information........................................................17
Independent Accountants....................................................18
SHAREHOLDER TRANSACTION AND OPERATING EXPENSE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases (as a percentage of
offering price) <F1> 4.50%
Maximum Sales Load on Reinvested Dividends (as a
percentage of offering price) None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds as applicable) None
Redemption Fees (as a percentage of amount
redeemed, as applicable) <F2> None
Exchange Fees <F2> None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees (after expense reimbursement) 1.00%
12b-1 Fees <F3> 0.25%
Other Expenses 1.20%
-----
Total Fund Operating Expenses <F4> 2.45%
=====
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $69 $118 $170 $311
<F1> Sales charges are reduced for purchases of $50,000 or more. See "Purchase
of Shares."
<F2> The Fund's Transfer Agent charges a fee of $12 for each wire redemption and
$5 for each telephone exchange. At the discretion of the adviser or
transfer agent these fees may be waived.
<F3> The Rule 12b-1 Fee is an annual fee paid by the Fund (and indirectly by
shareholders). See "Distribution Plan." Over time, long-term shareholders
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").
<F4> 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%.
The Management Fee to be paid by the Fund is higher than that paid by many
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.
CONDENSED FINANCIAL INFORMATION
The following financial highlights have been audited in conjunction with the
audit of the financial statements of the KEELEY Small Cap Value Fund, Inc., by
independent certified public accountants since commencement of operations on
October 1, 1993. Such financial statements and the independent accountants'
report thereon are included in the Annual Report to Shareholders. Please call
1-888-933-5391 to obtain a copy.
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. The table should be read in
conjunction with the financial statements and related notes included in the
Fund's Annual Report to Shareholders. In addition to financial statements, the
Annual Report to Shareholders contains further information about performance of
the Fund.
YEAR YEAR YEAR COMMENCEMENT
ENDED ENDED ENDED OF OPERATIONS
9/30/97 9/30/96 9/30/95 TO 9/30/94 <F1>
------ ------- ------- -------------
Net asset value, beginning of period $14.52 $12.52 $10.26 $10.00
Income from investment operations:
Net investment loss (.25) (0.19) (0.13) (0.06)
Net realized and unrealized gains
on investments 7.77 2.22 2.39 0.32
------ ------ ------ ------
Total from investment operations 7.52 2.03 2.26 0.26
------ ------ ------ ------
Less distributions of net realized
gains (.56) (0.03) - -
------ ------ ------ ------
Net asset value, end of period $21.48 $14.52 $12.52 $10.26
====== ====== ====== ======
Total investment return <F2> 53.51% 16.23% 22.03% 2.60%
Supplemental data and ratios:
Net assets, end of period
(in 000s) $20,824 $10,815 $7,616 $4,503
Ratio of net expenses to
average net assets <F3> 2.45% 2.50% 2.50% 2.49%
Ratio of net investment loss
to average net assets <F3> (1.66)% (1.61)% (1.46)% (0.96)%
Portfolio turnover rate 36.40% 52.43% 70.59% 63.20%
Average commission rate paid
on portfolio investment
transactions $0.0494 $0.0501 N/A N/A
<F1> The Fund commenced operations on October 1, 1993.
<F2> Total Investment Return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the 4.5% sales load imposed on the
purchase of shares.
<F3> Without fees waived, the ratio of expenses to average net assets would have
been 2.45%, 2.94%, 3.94% and 5.98% for the years ended September 30, 1997,
1996, 1995 and 1994, respectively; and the ratio of net investment loss to
average net assets would have been (1.66)%, (2.05)%, (2.90)% and (4.45)%
for the years ended September 30, 1997, 1996, 1995 and 1994, respectively.
THE EXAMPLES CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED REPRESENTATIVE
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses that shareholders bear either
directly or indirectly. The information disclosed in the table under the heading
"Shareholder Transaction Expenses" is based on the maximum sales load now in
effect for the Fund. See "Purchase of Shares" and "How to Redeem Shares" for
more complete descriptions of those expenses, including a description of
available reductions in the sales charge. The Example shown is based on the
Total Fund Operating Expenses.
INTRODUCTION
This Prospectus provides the information which is necessary for a potential
investor to make an informed decision before purchasing shares of the Fund. The
money that an investor uses to purchase shares of the Fund will be pooled with
other shareholders' money and collectively invested, or "managed" by the
Investment Adviser in accordance with the Fund's investment objective. Other
parts of this Prospectus provide information concerning an investment in the
Fund such as the risks involved, the companies which provide services to the
Fund, the expenses of managing the Fund and the procedures by which shares of
the Fund may be purchased or redeemed. Please read this Prospectus carefully
before you invest or send money and keep it for your future reference.
INVESTMENT OBJECTIVE
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. This objective is fundamental and may not be
changed without a vote of the holders of the majority of the outstanding voting
securities of the Fund. The Fund's investment policies described below are not
fundamental and may be changed without shareholder approval. Additional
investment policies and investment restrictions are described in the Statement
of Additional Information. There can be no assurance that the Fund will achieve
its investment objective. The Fund seeks to achieve this objective by investing
primarily in companies which have a relatively small market capitalization, less
than $1 billion at time of investment. 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 category is
companies involved in various types of corporate reorganizations, such as spin-
offs, recapitalizations, and companies emerging from bankruptcy. From time to
time, the Fund may invest a significant portion of its net assets in this first
category. The second category is companies that are trading at prices at or
below actual or perceived book value and companies that are undergoing
substantial changes, such as significant changes in markets or technologies,
management and financial structure. The Adviser believes that this strategy
allows the Fund to purchase equity shares at relatively favorable market prices.
INVESTMENT POLICIES AND STRATEGIES
The Fund compares itself to both the Standard and Poor's Composite Stock
Index ("S&P 500") and the Russell 2000 Index ("Russell 2000"). Although the
portfolio is expected to have significant differences when compared to the S&P
500, it is included because it is a commonly recognized, broad-based stock
index. The Russell 2000 consists of smaller capitalized issues which may be a
more appropriate reflection of the Fund's portfolio holdings.
Although the Fund invests principally in common stocks, the Fund may invest
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 Appendix A attached 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.
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 and brokerage fees.
See the preceding "Financial Highlights" table for the Fund's portfolio turnover
rate.
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 shareholders. 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, represent 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. A complete listing of
the Fund's investment restrictions is located in the Statement of Additional
Information.
RISK FACTORS
There is no such thing as a guaranteed investment and no one can see into the
future. The risks inherent in investing in the Fund are similar to those of
investing directly in equity securities, that is, the value of the investment
may fluctuate in response to a variety of situations and factors. Accordingly,
the value of an investment in the Fund will fluctuate over time and may be
valued higher or lower at the time of redemption. The Fund is designed for long-
term investors who can accept the risks entailed in seeking capital appreciation
through investment primarily in common stocks. An investment in the Fund should
be only a part of an overall investment strategy.
The Adviser believes that under normal market conditions, the Fund will
invest primarily in common stocks. Generally, such securities will be issued by
publicly traded small-capitalization companies. Such issuers often have more
limited financial, managerial or other resources and may be subject to numerous
risks not normally associated with securities issued by publicly traded
companies with larger market capitalizations. Typically, smaller publicly traded
companies depend for their success on the management talents and efforts of one
person or a small group of persons, they frequently have smaller product lines
and market shares and are often more vulnerable to economic downturns. Such
companies may also experience substantial variations in operating results.
Additionally, many small capitalization public companies may not be well-known
to the investing public, may not have significant institutional ownership, and
may be followed by relatively few securities analysts, if any, which could
result in limited availability of information and chronic undervaluation.
Although many small-capitalization companies are traded on national securities
exchanges, many are traded in the over-the-counter market and may have fewer
market makers, a wider spread between quoted bid and asked prices, and lower
trading volumes. Such factors may result in comparatively greater price
volatility and less liquidity than the securities of larger public companies.
Fluctuations in the price of some of the stocks owned by the Fund could cause
the net asset value of the Fund to vary significantly. The Fund's focus on
companies undergoing substantial changes, those which the Adviser believes are
undervalued and those which are emerging from bankruptcy or other financial
restructuring may result in emphasizing in the Fund's portfolio the risks
associated with investments in smaller-capitalization companies. 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. 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.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Under the laws of the State of Maryland, the management and affairs of the
Fund are supervised by the Fund's Board of Directors. The Board of Directors
oversees and reviews the management of the Fund. The day-to-day operations of
the Fund are administered by the Officers of the Fund and by the Adviser,
pursuant to the terms of an Investment Advisory Agreement. The Board of
Directors reviews the various services provided by the Adviser to ensure that
the Fund's general investment policies are being carried out and administrative
services are being provided to the Fund in a satisfactory manner. Information
pertaining to the Board of Directors and Executive Officers is set forth in the
Statement of Additional Information.
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 continuously reviews, supervises, and administers the
Fund's investment program, subject to the supervision of, and policies
established by, the Board of Directors.
For its services, the Adviser receives from the Fund a fee, computed daily
and payable monthly, equal to an annual rate of 1.0% of the Fund's average daily
net assets. The rate of the advisory fee is higher than that paid by most mutual
funds. However, the Directors believe the advisory fee is appropriate for the
Fund in light of the Fund's investment objective and policies. 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 2.5% of net assets. 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 the State of
Illinois on December 28, 1981. John L. Keeley, Jr., President and Director of
the Fund, is the sole shareholder 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 incorporation on May 17, 1993. 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, 1997, the Adviser had total assets under management in excess of
$395 million. Officers of the Adviser are also Officers of the Fund.
CERTAIN SHAREHOLDERS
As of September 30, 1997, John L. Keeley, Jr., owned 275,318 shares of the
Fund, which represented 28.39% 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 Investment Company Act of 1940, to "control" 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, which is Firstar Trust Company, Milwaukee, Wisconsin.
Additionally, the Administrator 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 semi-annual reports to the
Securities and Exchange Commission and current shareholders, 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 of the Fund's average daily net assets, and 0.05% on the Fund's average
daily net assets in excess of $50 million. The minimum fee is $38,500 per year.
DISTRIBUTOR
Keeley Investment Corp. (the "Distributor") acts as general distributor of
the Fund's shares. Its address is: 401 South LaSalle Street, Suite 1201,
Chicago, Illinois 60605. The Distributor is a registered broker-dealer under the
Securities Exchange Act of 1934, member of the National Association of
Securities Dealers ("NASD"), and an affiliate of the Investment Adviser. Shares
of the Fund are continuously offered for sale through the Distributor and
through certain broker-dealers under contract. At December 31, 1997 both the
Distributor and the Fund were registered to do business in all fifty states and
the District of Columbia. The broker-dealer network marketing the Fund now
totals 73 firms.
CUSTODIAN, TRANSFER AGENT, AND ACCOUNTING SERVICES
Firstar Trust Company (the "Transfer Agent" or "Firstar"), P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, serves as Custodian, Transfer Agent, and
performs Accounting Services. As Custodian, Firstar provides for the safekeeping
of securities, cash, and other assets of the Fund.
As Transfer Agent, Firstar maintains the records of each shareholder's
account, answers shareholder inquiries concerning accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent and performs other shareholder service functions.
Pursuant to an Accounting Services Agreement, Firstar performs certain
accounting and pricing services for the Fund, including the daily calculation of
the Fund's net asset value per share.
FUND 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 to the extent necessary to ensure
that the Fund's operating expenses do not exceed 2.5% of the Fund's average
daily net assets. See the preceding section entitled "Investment Adviser."
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser will use its best efforts to obtain the best available price and
most favorable execution with respect to all transactions of the Fund. Subject
to policies established by the Board of Directors, however, the Fund may pay a
broker-dealer (other than the Adviser) a commission for effectuating a portfolio
transaction for the Fund in excess of the amount of commission another broker-
dealer would have charged if the Adviser determines, in good faith, that the
commission paid was reasonable in relation to the brokerage or research services
provided by such broker-dealer. In selecting and monitoring broker-dealers and
negotiating commissions, consideration will be given to a broker-dealer's
reliability, the quality of its execution services on a continuing basis and its
financial condition. All commissions paid are reviewed quarterly by the Board
of Directors.
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.
PORTFOLIO TURNOVER
The Fund may purchase and sell securities without regard to the length of
time the security is intended to be, or has been, held. A 100% turnover rate
occurs if, for example, all of the Fund's portfolio securities are replaced
during one year. High portfolio activity (100% or greater) increases the Fund's
transaction costs, including brokerage commissions. The Fund anticipates that
the portfolio turnover generally will not exceed 100% annually. For the fiscal
year ended September 30, 1997, the Fund's portfolio turnover rate was 36.40%.
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.
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. Additionally, 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 shareholders;
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 Plan 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.
PURCHASE OF 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., President and 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.
GENERAL
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. See "Direct Purchases by Wire Transfer," or "Direct
Purchase by Mail." For further information, reference is made to the section
"Distribution of Shares" in the Fund's Statement of Additional Information.
Purchases will be effectuated 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 the following section
entitled "Net Asset Value and Offering Price."
The minimum initial investment is $1,000. The minimum initial investment for IRA
accounts is $250. There is a $50 minimum investment requirement on subsequent
investments. 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.
The Distributor retains the entire sales charge when it makes sales directly
to the public. The Distributor has the right to increase the dealer reallowance.
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.
DIRECT PURCHASES BY WIRE TRANSFER
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, account number,
taxpayer identification or social security number, and address 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 1-
888-933-5391 to inform the Transfer Agent of the wire to ensure proper credit.
For initial investments the Purchase 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.
DIRECT PURCHASES BY MAIL
A Purchase Application is 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. 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 $20 processing fee. In addition, the investor
will be responsible for any losses suffered by the Fund as a result.
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). The Fund's applicable minimum initial
investment of $250 must be met before the AIP may be established. 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 $20 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
AIP may be terminated by the Fund at any time.
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 public 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 shareholder
prior to the modification or termination taking effect.
DETERMINATION OF NET ASSET VALUE
- -------------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
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:
Sales Charges Dealer Reallowance
as a Percentage of as a Percentage
Offering Net Amount of Offering
Amount of Single Transaction Price Invested 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%
- -------------------------------------------------------------------------------
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, Martin Luther King Jr. 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.
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 $25,000 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 $25,000, (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 or her 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 $25,000 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) shareholders 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,
(o) pension, profit sharing and retirement plans for employees of Directors and
employees of business entities owned and controlled by Directors of the Fund and
(p) customers of firms who do not solicit Fund business. 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.
HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
Payment for shares presented for repurchase or redemption by Selected Dealers
will be made within five business days after receipt by the Transfer Agent of a
written redemption request in proper order. Proper order means that the written
redemption request must: (1) identify the shareholder's account name and account
number; (2) state the number of shares or dollar amount to be redeemed; and, (3)
be signed by each registered owner exactly as the shares are registered.
Redemption proceeds may also be paid by wire upon request. The Transfer Agent
imposes a $12 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. If a shareholder sells his or her shares at a loss and reinvests
within 91 days, the loss attributable to any sales charge must be deferred for
the shareholder's total expenses. 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 shareholder, to
redeem shares in any account and send the proceeds to the owner, if the account
has a value of less than $250 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
shareholders. 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.
REDEMPTION BY MAIL
Shareholders may request the Fund redeem their shares by sending a written
request, signed by the registered owner(s), 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. Shareholders 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 $25,000 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. A redemption request made
within 15 days of an address change must be in writing and signed by each
registered holder of the account with signatures guaranteed by an "eligible
guarantor institution." 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 the
preceding section entitled "Determination of Net Asset Value."
EXPEDITED REDEMPTIONS THROUGH CERTAIN BROKER-DEALERS.
Certain broker-dealers who have sales agreements with the Distributor may
allow their customers to effectuate a redemption of shares of the Fund purchased
through such certain broker-dealer by notifying the broker-dealer of the amount
of shares to be redeemed. The broker-dealer is responsible for promptly placing
the redemption request with the Fund on the customer's behalf. Payment will be
made to the shareholder by check or wire sent to the broker-dealer. Broker-
dealers may charge a fee for their services in connection with the redemption,
but the Distributor and its affiliates will not charge any fee for such
redemption.
EXPEDITED TELEPHONE REDEMPTION AND EXCHANGE PRIVILEGES
Unless you have elected not to have telephone transaction privileges by
checking the box on the Purchase Application, the Fund offers telephone and
exchange expedited redemption procedures which allow a shareholder to redeem
Fund shares at their net asset value next determined following the Fund's
receipt of the redemption request. Shareholders may redeem, or exchange, shares
by telephoning the Transfer Agent at 1-888-933-5391. The Fund will employ
reasonable procedures to confirm that telephone instructions are genuine,
including requiring that payment be made only to the address registered on the
account or to the bank account designated. The Fund will not be liable for
following instructions communicated by telephone that are reasonably believed to
be genuine. The proceeds of a redemption will be paid by check mailed to the
shareholder's address of record or, if requested at the time of redemption, by
wire as designated on the Purchase Application.
EXCHANGE PRIVILEGE
All or part of the Fund shares owned by an investor may be exchanged for
shares in the Firstar 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
shareholder 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. Shareholders 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 $250 minimum, and each
shareholder is limited to a maximum of four exchanges in any 12-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. Unless you have elected not to have telephone
exchange privileges by checking the box on the purchase application, exchanges
may be made by telephone. There will be a $5 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. 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 computed 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 computed 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 ensure 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 shareholder for losses
suffered from any resulting unauthorized transaction. However, neither of the
Fund, Distributor, Transfer Agent nor any of their employees will be liable for
losses suffered by a shareholder which results from following telephone
instructions reasonably believed to be authentic after verification pursuant to
these procedures.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). Under such provisions,
the Fund will not be subject to federal income tax on the part of its net
investment income and its realized capital gains that it distributes.
Distributions (whether treated for tax purposes as ordinary income or capital
gains) to shareholders of the Fund are paid in additional shares of the Fund
with no sales charge, unless otherwise instructed in writing by a shareholder. A
shareholder 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 shareholder'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 shareholder annually of the amounts of
dividends from investment company taxable income and of net capital gain
distributions reinvested or paid in cash to the shareholder 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
shareholders. In order to avoid a 4% federal excise tax, the Fund intends to
distribute each year all of its net income and capital gains. Shareholders will
be taxed on distributions received from the Fund, regardless of whether received
in cash or reinvested in additional shares. Shareholders must treat
distributions, other than long-term capital gain distributions, as ordinary
income. Dividends designated as capital gain dividends are taxable to
shareholders as long-term capital gains regardless of how long the shareholder
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.
The forgoing is a general and abbreviated summary of the applicable federal
income tax provisions currently in effect. For complete information, reference
should be made to the pertinent code sections and treasury regulations. The code
and regulations are subject to change by legislative or administrative actions.
IRA PLANS
The Fund offers a variety of retirement plans that may allow investors to
shelter a portion of their income from taxes. Complete information including
application forms, descriptions of applicable service fees and certain limits on
contributions and withdrawals are available from the Transfer Agent or the Fund
upon request by calling 1-888-933-5391.
PERFORMANCE INFORMATION
The Fund may from time to time include figures indicating the Fund's
cumulative total return or average annual total return in advertisements or
reports to shareholders or prospective investors. Average annual total return
and cumulative 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 one, five or
ten years ending on the most recent calendar quarter (but not for a period
greater than the life of the Fund). Quotations of cumulative total return, which
are not annualized, represent historical earnings and asset value fluctuations.
Cumulative 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. Average annual total returns and
cumulative total returns are based on past performance which is not a guarantee
of future results.
Performance information for the Fund may be compared in reports and
promotional literature to: (a) the S&P 500, the Russell 2000, the Value Line
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, Inc., Morningstar, Inc., Value Line
Publishing, Inc., Micropal Data, Inc. or CDA Investment Technologies, Inc.; 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 cumulative total return, see
"Performance Information" in the Statement of Additional Information.
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,
and commenced operations on October 1, 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
Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202-5207 , under
a Custodian Agreement with the Fund. Firstar Trust Company 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 shareholders unless
required under the Investment Company Act of 1940. However, shareholders have
the right to require the Secretary of the Fund to call a shareholders' meeting
upon the written request of shareholders 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 shareholders 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 shareholders.
No meeting shall be called upon the request of shareholders to consider any
matter which is substantially the same as a matter voted upon at any special
meeting of the shareholders held during the preceding 12 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.
Shareholders will be provided 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. Shareholders who have questions about the Fund including
inquiries about investment or redemption procedures, should call the Fund at
1-888-933-5391, or contact their brokers.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., Milwaukee, Wisconsin, serve as Independent
Accountants to the Fund.
NO DEALER, SALESPERSON, 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.
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KEELEY Small Cap Value Fund, Inc.
===============================================================================
PURCHASE APPLICATION
Mail To: Overnight Express Mail To:
KEELEY Small Cap Value Fund, Inc. KEELEY Small Cap Value Fund, Inc.
c/o Firstar Trust Company Mutual Fund Services
P.O. Box 701 615 E. Michigan St., 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Use this application for individual, custodial, trust, profit sharing or pension
plan accounts. Do not use this form for KEELEY Small Cap Value Fund sponsored
IRA, Roth IRA or SEP IRA accounts. For any additional information, please call
KEELEY Small Cap Value Fund, Inc. at 1-888-933-5391.
- --------------------------------------------------------------------------------
A. INVESTMENT
___ KEELEY Small Cap Value Fund Please indicate the amount you wish to
invest $_____________________($250 minimum)
___ Portico Money Market Fund Please indicate the amount you wish to
invest $_____________________($100 minimum)
___ By check: Payable to KEELEY Small Cap Value Fund. Amount $________________
___ By wire: Call 1-888-933-5391. Indicate total amount and date of wire
$____________________________ Date_______________________________________
- --------------------------------------------------------------------------------
B. REGISTRATION
___ Individual
Name(First)___________________ (Initial)______ (Last)_____________________
Social Security Number______________________ Birthdate____________________
Citizen of ___ U.S. ___ Other _________________________________________
Country of tax residency
___ Joint Owner*
Name(First)___________________ (Initial)______ (Last)_____________________
Social Security Number______________________ Birthdate____________________
Citizen of ___ U.S. ___ Other _________________________________________
Country of tax residency
*Registration will be Joint Tenants With Rights Of Survivorship, unless
otherwise specified.
___ Transfer to Minor
Name of Custodian (only one permitted)
(First)___________________ (Initial)______ (Last)_________________________
Name of Minor (only one permitted)
(First)___________________ (Initial)______ (Last)_________________________
Minor's Social Security Number
Minor's Birthdate (Mo/Day/Yr)_____________________________________________
State of Residence________________________________________________________
Minor is citizen of ___ U.S. ___ Other ________________________________
Country of tax residency
___ Corporation/Trust**, Partnership*** or Other Entity***
Name of Trustee(s)-_______________________________________________________
(If to be included in registration)
Name of Trust/Corporation/Partnership_____________________________________
Social Security or Taxpayer Identification Number_________________________
Date of Agreement (Mo/Day/Yr)_____________________________________________
**Corporate Resolution is required.
***Additional documentation and certification may be required.
- --------------------------------------------------------------------------------
C. MAILING ADDRESS
Address_______________________________________________________________________
City/State/Zip________________________________________________________________
Daytime Phone Number_________________ Evening Phone Number____________________
___ Duplicate Confirmation to:
Name______________________________________________________________________
Address___________________________________________________________________
City/State/Zip____________________________________________________________
- --------------------------------------------------------------------------------
D. DISTRIBUTION OPTIONS
Capital gains and dividends will be reinvested if no option is selected.
Dividends and Dividends and
Capital Gains Capital Gains
Reinvested in Cash
---------- -------
___ KEELEY Small Cap Value Fund ___ ___
___ Portico Money Market Fund ___ ___
Unless otherwise indicated, cash distributions will be mailed to the address
in Section C.
- --------------------------------------------------------------------------------
E. TELEPHONE EXCHANGE (OPTIONAL)
___ Yes, I would like the telephone exchange feature available to me. This
allows exchanges between identically registered accounts in the
KEELEY Small Cap Value Fund and Portico Money Market Fund. A $250
minimum applies to exchanges. A $5 fee will be applied to any
telephone exchange.
- --------------------------------------------------------------------------------
F. AUTOMATIC INVESTMENT PLAN
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for checking accounts) or
a savings account deposit slip is required with your Application.
Please start my Automatic Investment Plan as described in the Prospectus
beginning: Month____________________________ Year_______________.
I hereby instruct Firstar Trust Company, Transfer Agent for the KEELEY Small
Cap Value Fund, to automatically transfer $____________________(minimum $50)
directly from my checking, NOW or savings account named below on the
____________of each month or the first business day thereafter. I understand
that I will be assessed a $20 fee if the automatic purchase cannot be made
due to insufficient funds, stop payment, or any other reason. Automatic
Investment Plan contributions to my IRA will be reported as current year
contributions.
Name(s) on Bank Account_______________________________________________________
Bank Name_________________________________ Account Number_____________________
Bank Address__________________________________________________________________
Bank Routing Number___________________________________________________________
Signature of Bank Account Owner_______________________________________________
Signature of Joint Owner______________________________________________________
- --------------------------------------------------------------------------------
G. RIGHTS OF ACCUMULATION
___I or my spouse currently have the following account(s) which may make me
eligible for sales charge discounts through Rights of Accumulation as
described in the Prospectus.
Account Number________________________ Account Number ____________________
- --------------------------------------------------------------------------------
H. SIGNATURE AND CERTIFICATION REQUIRED BY THE INTERNAL REVENUE SERVICE
I have received and read the Prospectus for the KEELEY Small Cap Value Fund
(the "Fund"). I understand the Fund's investment objectives and policies and
agree to be bound by the terms of the Prospectus. I am of legal age in my
state of residence and have full authority to purchase shares of the Fund and
to establish and use any related privileges.
Neither the Fund nor its Transfer Agent will be responsible for the
authenticity of transaction instructions received by telephone, provided that
reasonable security procedures have been followed. If an account has multiple
owners, the Fund may rely on the telephone instructions of any one account
owner.
By selecting the option in Section F, I hereby authorize the Fund to initiate
debits to my account at the bank indicated and for the bank to debit the same
to such account through the Automated Clearing House ("ACH") system.
UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER
OR TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT SOCIAL
SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT
TO BACKUP WITHHOLDING EITHER BECAUSE I AM EXEMPT FROM BACKUP WITHHOLDING, I
HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST
OR DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO
BACKUP WITHHOLDING. CERTIFICATION INSTRUCTIONS: I MUST CROSS OUT ITEM (2)
ABOVE IF THE IRS HAS PROVIDED NOTIFICATION THAT I AM CURRENTLY SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON MY TAX
RETURN. THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS
DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature of Owner*__________________________________ Date____________________
Signature of Joint Owner (if any)____________________ Date____________________
*If shares are to be registered in: (1) joint names, both persons should
sign; (2) a custodian for a minor, the custodian should sign; (3) a trust,
the trustee(s) should sign; or (4) a corporation or other entity, an officer
should sign and print name and title on the space provided below.
Print Name and Title of officer signing for a corporation or other entity
______________________________________________________________________________
- --------------------------------------------------------------------------------
I. DEALER INFORMATION
(Please be sure to complete representative's first name and middle initial.)
Dealer Name___________________________________________________________________
DEALER MAIN OFFICE
Address_______________________________________________________________________
City/State/Zip________________________________________________________________
Telephone Number______________________________________________________________
Representative Name (Last)_______________________(First)__________(Initial)___
REPRESENTATIVE BRANCH OFFICE
Address_______________________________________________________________________
City/State/Zip________________________________________________________________
Telephone Number_____________________ Rep's A.E. Number_______________________
1/98
Investment Adviser
KEELEY ASSET MANAGEMENT CORP.
401 South LaSalle Street, Suite 1201
Chicago, Illinois 60605
312-786-5000
800-621-5084
Distributor
KEELEY INVESTMENT CORP.
401 South LaSalle Street, Suite 1201
Chicago, Illinois 60605
312-786-5000
800-621-5084
Custodian, Transfer Agent and Dividend
Disbursing Agent
FIRSTAR TRUST COMPANY
Milwaukee, Wisconsin
888-933-5391
Independent Accountants
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
Counsel
SCHWARTZ & FREEMAN
Chicago, Illinois
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
January 29, 1998
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
expanded and supplemental information contained in the current prospectus of
KEELEY Small Cap Value Fund, Inc. (the "Fund") dated January 29, 1998 and should
be read in conjunction with the Fund's Prospectus and any additional supplements
to the Prospectus and the Fund's financial statements. Investors should note,
however, that a Statement of Additional Information is not itself a prospectus
and should be read carefully in conjunction with the Fund's Prospectus and
retained for future reference. The contents of this Statement of Additional
Information are incorporated by reference in the Prospectus in their entirety. A
copy of the Prospectus and Annual Report to Shareholders may be obtained free of
charge from the Fund at the address and telephone number listed above.
TABLE OF CONTENTS
Page
Introduction 3
General Information and History 3
Investment Objective, Policies, and Risk Considerations
Investment Objectives 3
Investment Policies and Risk Considerations 4
Investment Restrictions 6
Performance Information
Portfolio Turnover 8
Cumulative Total Return 8
Average Annual Total Return 9
Management of the Fund
Directors and Officers 10
Control Persons and Principal Holders of Securities 12
Investment Adviser 12
Administrative Services 13
Custodian, Transfer Agent and Dividend Disbursing Agent
Custodian 13
Transfer Agent and Dividend Disbursing Agent 14
Net Asset Value 14
Purchases and Redemption 15
Exchange Privilege 15
Taxation 15
Distribution of Shares 16
Plan of Distribution Pursuant to Rule 12b-1 17
Portfolio Transactions and Brokerage
Portfolio Transactions 18
Brokerage 18
Additional Information
Shareholder Meetings 19
Removal of Directors by Shareholders 20
Independent Public Accountants 20
Financial Statements and Reports 21
Appendix A: Description of Bond Ratings 22
INTRODUCTION
This Statement of Additional Information is designed to elaborate upon the
discussion of certain securities and investment techniques which are described
in the Prospectus. The more detailed information contained herein is intended
solely for investors who have read the Prospectus and are interested in a more
detailed explanation of certain aspects of the Fund's securities and investment
techniques. Captions and defined terms in the Statement of Additional
Information generally correspond to like captions and terms in the Prospectus.
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information or the Prospectus dated January 29, 1998, and, if given or made,
such information or representations may not be relied upon as having been
authorized by the Fund. This Statement of Additional Information does not
constitute an offer to sell securities in any state or jurisdiction in which
such offering may not lawfully be made. The delivery of the Statement of
Additional Information at any time shall not imply that there has been no change
in the affairs of the Fund since the date hereof.
GENERAL INFORMATION AND HISTORY
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. The Fund
commenced operations on October 1, 1993.
INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek capital appreciation by
following 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. 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 shareholder approval.
The Fund seeks to achieve this objective by investing primarily in companies
which have a relatively small market capitalization, less than $1 billion at
time of investment. 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 category is
companies involved in various types of corporate reorganizations, such as spin-
offs, recapitalizations, and companies emerging from bankruptcy. From time to
time, the Fund may invest a significant portion of its net assets in this first
category. The second category is companies that are trading at prices at or
below actual or perceived book value and companies that are undergoing
substantial changes, such as significant changes in markets or technologies,
management and financial structure. The Adviser believes that this strategy
allows the Fund to purchase equity shares at relatively favorable market prices.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
DEBT SECURITIES
The Fund may invest in debt securities, including debt securities that are
not rated or are rated below investment grade, commonly referred to as "junk
bonds" 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
Appendix A 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.
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 shareholders' 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 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. The Fund does not currently intend to enter into reverse repurchase
agreements.
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 shareholder 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). The Fund does not currently intend to sell
securities short even under the conditions described in Investment Restrictions
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.
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. 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.
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 shareholders, the Fund reserves the right to revoke the commitment
by terminating the sale of Fund shares in the state involved.
PERFORMANCE INFORMATION
PORTFOLIO TURNOVER
The portfolio turnover rate of the Fund is calculated by dividing the value of
the lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average of the value of portfolio securities owned by the Fund
during the fiscal year. A 100% portfolio turnover rate would occur, for
example, if all of the portfolio securities (other than short term securities)
were replaced once during the fiscal year. The portfolio turnover rate will
vary from year to year, depending on market conditions. Increased portfolio
turnover may result in greater brokerage commissions. For the fiscal year
ending September 30, 1997, the Fund's portfolio turnover rate was 36.40%.
CUMULATIVE TOTAL RETURN
Cumulative Total Return is computed by finding the cumulative compounded
rate of return over the period indicated in the advertisement that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
CTR = ERV - P
---------- * 100
P
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period; and,
P = initial payment of $1,000.
This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charges as expenses to all shareholder accounts.
The cumulative total return for the year ended September 30, 1997 was 46.65%.
AVERAGE ANNUAL TOTAL RETURN
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
The Fund imposes a maximum 4.50% sales charge and pays distribution
expenses equal to 0.25% of net assets. Income taxes payable by shareholders 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.
After deduction of initial sales charge, the Fund's average annual total
return for the one year ended September 30, 1997 was 46.65%. Because the Fund
commenced operations on October 1, 1993, no five-year or ten-year period average
annual total return figures are reported. Life of the Fund average annual total
return is reported in lieu of five and ten year figures based on the
commencement of operations of the Fund and ended September 30, 1997 was 20.86%.
MANAGEMENT OF THE FUND
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.<F1> Director and President Director, President and
401 South LaSalle Street Treasurer of Keeley Asset
Suite 1201 Management Corp and of
Chicago, Illinois 60605 Keeley Investment Corp.
Michael J. O'Brien<F2> Director President, O'Brien Bros.
53 West Jackson Boulevard Trading Co. (Commodities
Suite 1240 Trading), Registered
Chicago, Illinois 60604 Commodity Trading Advisor,
Commodity Pool Operator and
Introducing Broker
John F. Lesch<F3> Director Attorney, Nisen & Elliott,
200 West Adams Street a partnership
Suite 2500
Chicago, Illinois 60606
John G. Kyle<F4> Director Owner and operator, Shell
10 Skokie Highway Oil Service Stations and
Highland Park, Illinois Gasoline Distributor
60035
Elwood P. Walmsley<F4> Director Director of Sales, Miles
166 East Hillside Road Laboratories
Barrington, Illinois
60010
Mark Zahorik Vice President Vice President, Keeley
401 South LaSalle Street Asset Management Corp. and
Suite 1201 Keeley Investment Corp.
Chicago, Illinois 60605
Mary A. Ferrari Secretary Corporate Secretary, Keeley
401 South LaSalle Street Asset Management Corp. and
Suite 1201 Keeley Investment Corp.
Chicago, Illinois 60605 since 1992
Emily Viehweg Treasurer Assistant Treasurer, Keeley
401 South LaSalle Street Asset Management Corp.
Suite 1201 since 1994;
Chicago, Illinois 60605 Prior thereto, Portfolio
Assistant at Lincoln
Capital
Each of the above persons has held the position and engaged in the
principal occupation described above for more than five years.
<F1> John L. Keeley, Jr., is an "interested person" of the Fund as defined in
the 1940 Act.
<F2> Mr. O'Brien is a general partner in a limited partnership that
is a limited partner in an investment partnership 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.
<F3> 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 $11,000 for the last three years.
<F4> Mr. Kyle and Mr. Walmsley maintain brokerage accounts with
Keeley Investment Corp., the Fund's principal underwriter.
At September 30, 1997, the Directors and officers owned 284,563 shares,
representing 29.34% of the outstanding shares of the Fund.
The officers are "interested persons" of the Fund and are also officers of
Keeley Asset Management Corp., Keeley Investment Corp. or its Affiliates, and
receive compensation therefrom. They do not receive additional compensation for
services rendered to the Fund. The "Non-Interested" Directors of the Board
receive $500 for each meeting attended. The regular meetings of the Board are
held quarterly. For the fiscal year ended September 30, 1997, total fees paid
to the Directors aggregated $8,033.
Pension or Total
Retirement Compensation
Benefits From Registrant
Aggregate Accrued Estimated and Fund
Compensation As Part Annual Complex
Name of Person, From of Fund Benefits Upon Paid to
Position Registrant Expenses Retirement Directors
- ------------------ ------------ ---------- ---------- ---------
John L. Keeley, $0 $0 $0 $0
Jr., Director
Michael J. O'Brien, $2,000 $0 $0 $2,000
Director
John F. Lesch, $2,000 $0 $0 $2,000
Director
John G. Kyle, $2,000 $0 $0 $2,000
Director
Elwood P. Walmsley, $2,000 $0 $0 $2,000
Director
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For this purpose "control" means : (i) the beneficial ownership, either
directly or through one or more controlled companies, of more than 25% of the
voting securities of a company; (ii) the acknowledgment or assertion by either
the controlled or controlling party of the existence of control; or (iii) an
adjudication under the terms and conditions of the Investment Company Act of
1940 ("the Act"), which has become final, that control exists.
Beneficial owners of more than 25% of the Fund's outstanding shares as of
September 30, 1997, were John L. Keeley, Jr. who owned 275,318 shares of the
Fund's common stock. These shares represent 28.39% of the issued and outstanding
shares of common stock of the Fund.
INVESTMENT ADVISER
Keeley Asset Management Corp., organized in the State of Illinois on
December 28, 1981, is the Fund's investment adviser (the "Adviser"). John L.
Keeley, Jr. is the sole stockholder of the Adviser. Pursuant to an Investment
Advisory Agreement entered into between the Adviser and the Fund, the Adviser is
responsible for administering affairs and supervising the investment program for
the Fund. Under the terms of the Investment Advisory Agreement, the Adviser is
obligated to manage the Fund's portfolio in accordance with applicable laws and
regulations. The Adviser also furnishes to the Board of Directors, which has
overall responsibility for the business affairs of the Fund, periodic reports on
the investment performance of the Fund.
The Investment Advisory Agreement was re-approved by the Board of
Directors, including a majority of the Directors who are not parties to the
Agreement, or interested persons of such parties, at a meeting held on November
12, 1997. The Agreement will continue in effect indefinitely, provided such
continuance is approved annually by (i) the holders of a majority of the
outstanding voting securities of the Fund or by the Board, and (ii) a majority
of the Directors who are not parties to such Advisory Agreement or "interested
persons" (as defined in the Investment Company Act of 1940) of any such party.
The Agreement may be terminated upon sixty days written notice by either party
to the Agreement and will terminate automatically if assigned.
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.
The Investment Advisory Agreement also provides that the Adviser shall not be
liable to the Fund or its shareholders from or as a consequence of any act or
omission of the Adviser, or of any of the directors, officers, employees or
agents of the Adviser, in connection with or pursuant to this Agreement, except
by willful misfeasance, bad faith or gross negligence on the part of the Adviser
in the performance of its duties or by reason of reckless disregard by the
Adviser of its obligations and duties under this Agreement. For the year ended
September 30, 1997, the Adviser earned $142,919 in advisory fees. For the year
ended September 30, 1996, the Adviser earned $50,569 (net of fee waivers of
$40,643). 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.
ADMINISTRATIVE SERVICES
The Fund has entered into an Amended and Restated Administration Agreement
by and between the Fund and Sunstone Financial Group, Inc. ("Sunstone").
Sunstone acts as the Fund's administrative services agent pursuant to an
Agreement and is reimbursed for its costs associated with providing services to
the Fund thereunder. Such compensation will be fair and reasonable.
The Amended and Restated Agreement is renewable from year to year if the
Fund's Board of Directors (including a majority of the Fund's disinterested
Directors) approves the continuance of the Agreement. Sunstone or the Fund may
terminate the Administrative Services Agreement on sixty (60) days written
notice to either party. Amendments to the Agreement may be effectuated if
approved by the Board of Directors (Including a majority of the Fund's
disinterested Directors). Said Agreement is not assignable by the Fund without
written consent of Sunstone or written authorization of the Fund's Board of
Directors.
For the year ended September 30, 1997, the Administrator received $38,500
for services provided to the Fund.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
CUSTODIAN
Firstar Trust Company, (the "Custodian") 615 East Michigan Avenue,
Milwaukee, Wisconsin 53201-0701, is the custodian for the Fund. As Custodian to
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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Pursuant to a Transfer Agent Agreement (the "Agreement") Firstar Trust
Company ("Firstar") acts as the Transfer and Dividend Disbursing Agent for the
Fund. Firstar is compensated for the performance of duties listed in the
Agreement, which include but are not limited to the following: printing,
postage, forms, stationary, record retention, mailing, insertion, programming,
labels, shareholder lists, and proxy expenses. These fees and reimbursable
expenses may be changed from time to time subject to mutual written agreement
between Firstar and the Fund and with the approval of the Board of Directors.
Under this Agreement, Firstar receives orders for the purchase of shares;
processes purchase orders and issues the appropriate number of certificated or
uncertificated shares; processes redemption requests; pays money in accordance
with the instructions of redeeming shareholders; transfers shares; processes
exchanges between funds within the same family of funds; issues, cancels and
replaces lost, stolen, or destroyed certificates; transmits payments for
dividends and distributions; maintains current shareholder records; files U.S.
Treasury Department Form 1099s and other appropriate information required with
respect to dividends and distributions for all shareholders; provides
shareholder account information upon request; mails confirmations and statements
of account to shareholders for all purchases, redemptions and other confirmable
transaction as agreed upon with the Fund; and, monitors the total number of
shares sold in each state.
NET ASSET VALUE
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
January, 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 shareholder. 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.
On September 30, 1997, the net asset value per share of the Fund was
calculated as follows:
Net Assets $20,824,111
--------------- = $21.48 Net Asset Value Per Share
Share Outstanding 969,643
PURCHASES AND REDEMPTION OF SHARES
For information on purchase and redemption of shares, see "Purchase of
Shares" and "How to Redeem Shares" in the Fund's Prospectus. The Fund may
suspend the right of redemption of shares of the Fund for any period: (i) during
which the New York Stock Exchange is closed other than customary weekend and
holiday closing or during which trading on the New York Stock Exchange is
restricted; (ii) when the Securities and Exchange commission determines that a
state of emergency exists which may make payment or transfer not reasonable
practicable; (iii) as the Securities and Exchange Commission may by order permit
for the protection of the security holder of the Fund; or (iv) at any other time
when the Fund may, under applicable laws and regulations, suspend payment on the
redemption of its shares.
EXCHANGE PRIVILEGE
Investors may exchange shares of the Fund having a value of $1,000 or more
for shares of the Firstar 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.
TAXATION
The Fund intends to qualify annually and elects to be treated as a
regulated investment company under the Internal Revenue Code of 1986 (the
"Code").
To qualify as a regulated investment company, the Fund must, among other
things: (i) derive in each taxable year at least ninety percent (90%) of its
gross income from dividends, interest, payments with respect to securities loan,
and gains from the sale or other disposition of stock, securities or foreign
currencies or other income derived with respect to its business of investing in
such stock, securities or currencies; (ii) diversify its holdings so that, at
the end of each quarter of the taxable year, (a) at least fifty percent (50%) of
the market value of the Fund's assets are represented by cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than five percent (5%) of
the value of the Fund's total assets and 10 percent (10%) of the outstanding
voting securities of such issuer, and (b) not more than twenty-five percent
(25%) of the value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities of the securities of other
regulated investment companies); and (iii) distribute at least ninety percent
(90%) of its net investment income (which includes dividends, interest, and net
short-term capital gains in excess of and net long-term capital losses) each
taxable year.
As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on its net investment income and net capital gains (any net
long-term capital gains in excess of the sum of net short-term capital losses
and capital loss carryovers from prior years), if any, that it distributes to
shareholders. The Fund intends to distribute to its shareholders, at least
annually, substantially all of its net investment income and any net capital
gains. In addition, amounts not distributed by the Fund on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible four percent (4%) excise tax. To avoid the tax, the Fund must
distribute during each calendar year, (i) at least ninety-eight percent (98%) of
its ordinary income (not taking into account any capital gains or loses ) for
the calendar year, (ii) at least ninety-eight percent (98%) of its capital gains
in excess of its capital losses for the twelve-month period ending October 31 of
the calendar year, and (iii) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, the Fund intends to make these distributions in accordance with the
calendar year distribution requirement. A distribution will be treated as paid
during the calendar year if it is declared by the Fund before December 31 of the
year and paid by the Fund by January 31 of the following year. Such
distribution will be taxable to shareholders in the year the distributions are
declared, rather than the year in which the distributions are received.
DISTRIBUTION OF SHARES
Pursuant to an Underwriting Agreement by and between the Fund and Keeley
Investment Corp., shares of the Fund are distributed through Keeley Investment
Corp., (the "Distributor") a registered broker-dealer under the Securities Act
of 1934, member of the National Association of Securities Dealers, Inc. (NASD),
the Securities Investor Protection Corporation (SIPC), and an affiliate of the
Adviser.
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, 1997, 1996, and 1995 the Distributor
received $78,493, $52,077, and $45,543 in front-end sales commissions and paid
$21,622, $20,311 and $18,644, respectively of such proceeds to dealers as sales
concessions as described in the Prospectus.
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
A Plan pursuant to Rule 12b-1 of the Investment Company Act of 1940 (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 shareholders 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, 1997, 1996 and 1995 the Distributor
received $25,674, $18,354 and $10,667, respectively, pursuant to the Plan.
During the same periods, the Fund paid an additional $10,056, $3,780 and $2,357,
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 the 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 rules which 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 AND BROKERAGE
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.
BROKERAGE
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, 1996 and 1995, the Fund paid to brokers,
other than the Distributor, brokerage commissions totaling $860 and $1,429,
respectively, on transactions having a total market value of $275,750 and
$445,087 respectively. All of such brokers provided research services. No such
fees were paid by the Fund for the year ended September 30, 1997. For the years
ended September 30, 1997, 1996 and 1995 the Fund paid the Distributor brokerage
commissions of $29,580, $25,755 and $20,414, respectively, on transactions
involving the payment of commissions having a total market value of $9,278,125,
$8,491,525 and $5,878,662 respectively. Of the brokerage commissions paid by
the Fund for the years ended September 30, 1997, 1996 and 1995, 100%, 97% and
93%, 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 100%, 97% and 93%, respectively, of the total
market value of securities on which the Fund paid commissions. The above does
not include principal transactions when the Fund purchases securities directly
from NASD marketmakers on a principal basis.
ADDITIONAL INFORMATION
SHAREHOLDER MEETINGS
The Articles of Incorporation do not require that the Fund hold annual or
regular shareholder meetings. Meetings of the shareholders may be called by the
Board of Directors and held at such times the Directors, from time to time
determine, for the purpose of the election of Directors or such other purposes
as may be specified by the Directors.
REMOVAL OF DIRECTORS BY STOCKHOLDERS
The Fund's By-Laws contain procedures for the removal of Directors by its
stockholders. At any meeting of shareholders, duly called and at which a quorum
is present, the shareholders 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 shareholders for
the purpose of voting upon the question of removal of any Director. Whenever
ten or more shareholders 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 shareholders 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
shareholders as recorded on the books of the Fund; or (ii) inform such
applicants as to the approximate number of shareholders 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 shareholders 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 shareholders with reasonable promptness after the entry of such
order and the renewal of such tender.
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
The audited Financial Statements and accompanying Report of Independent
Accountants, Coopers & Lybrand L.L.P., Milwaukee, Wisconsin, as of the fiscal
year ending September 30, 1997, are incorporated herein by reference to the
Registrant's Annual Report to Shareholders filed with the U.S. Securities and
Exchange Commission on November 14, 1997. No other portion of the Annual Report
is so incorporated. Please call 1-888-933-5391 to obtain a copy of the most
recent Annual Report of the Fund at no charge.
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APPENDIX A
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
Investors Services, Inc. ("Moody's") and Standard and Poor's Ratings Group
("Standard and Poors").
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.
RATINGS BY STANDARD AND POORS
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 a 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.
- -------------------------------------------------------------------------------
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) FINANCIAL STATEMENTS:
--------------------
Contained in Part A:
Financial Highlights for each year since commencement of
operations of the Fund on October 1, 1993 through the period
ending September 30, 1997.
Contained in Part B:
The financial statements are incorporated by reference into Part
B from Registrants Annual Report to Shareholders filed November
14, 1997.
(b) EXHIBITS
--------
1. Articles of Incorporation of Keeley Small Cap Value Fund, Inc.
dated May 14, 1993, filed as an exhibit to Post-Effective
Amendment No. 4 to Form N-1A on January 28, 1997, File No.
33-63562, and incorporated herein by reference.
2.2 Amended Bylaws of Keeley Small Cap Value Fund, Inc., dated
December 2, 1996, filed as an Exhibit to Post-Effective Amendment
No. 4 to form N-1A on January 28, 1997, File No. 33-63562, and
incorporated herein by reference.
3. Voting Trust Agreement. Not Applicable.
4. Specimen Security. Not Applicable.
5. Investment Advisory Agreement by and between Keeley Small Cap
Value Fund, Inc. and Keeley Asset Management Corp., dated June 8,
1993, filed as an Exhibit to Post-Effective Amendment No. 4 to
Form N-1A on January 28, 1997, File No. 33-63562, and
incorporated herein by reference.
6.1 Underwriting Agreement by and between Keeley Small Cap Value
Fund, Inc. and Keeley Investment Corp., dated September 8, 1993,
filed as an Exhibit to Post-Effective Amendment No. 4 to Form
N-1A, on January 28, 1997, File No. 33-63562, and incorporated
herein by reference.
6.2 Form of Broker/Dealer Agreement by and between Keeley Asset
Management Corp. and selected Broker/Dealers, filed as an Exhibit
to Post-Effective Amendment No. 4 to Form N-1A on January 28,
1997, file No. 33-63562, and incorporated herein by reference.
7. Bonus, Profit Sharing, or Pension Plans. None.
8.1 Custodian Agreement by and between Keeley Small Cap Value Fund,
Inc. and First Wisconsin Trust Company, dated September 8, 1993,
filed as an Exhibit to Post-Effective Amendment No.4 to Form
N-1A, on January 28, 1997, File No. 33-63562, and incorporated
herein by reference.
8.2 Amended Custodian Agreement by and between Keeley Small Cap Value
Fund, Inc. and Firstar Trust Company (f/k/a first Wisconsin Trust
Company), amended as of November 14, 1997, to reflect a name
change, filed as an Exhibit hereto.
9.1 Fund Accounting Servicing Agreement by and between Keeley Small
Cap Value Fund, Inc. and Firstar Trust Company, dated September
8, 1993, filed as an Exhibit to Post-Effective Amendment No. 4
to Form N-1A, on January 28, 1997, file No. 33-63562, and
incorporated herein by reference.
9.2 Transfer Agent Agreement by and between Keeley Small Cap Value
Fund, Inc. and Firstar Trust Company dated September 8, 1993,
filed as an exhibit to Post-Effective Amendment No. 4 to Form
N-1A, on January 28, 1997, File No. 33-63562, and incorporated
herein by reference.
9.3 Administration Agreement by and between Keeley Small Cap Value
Fund and Sunstone Financial Group, Inc. dated September 8, 1993,
filed as an Exhibit to Post-Effective Amendment No. 4 to Form
N-1A, on January 28, 1997, file No. 33-63562, and incorporated
herein by reference.
9.4 Amended and Restated Administration Agreement by and between
Keeley Small Cap Value Fund, Inc. and Sunstone Financial Group,
Inc. dated August 12, 1997, filed as an Exhibit hereto
9.5 Distribution and Servicing Agreement by and between Keeley Small
Cap Value Fund and Portico Funds, Inc. dated October 1, 1993
filed as an Exhibit hereto.
9.6 Amended and Restated Distribution and Servicing Agreement by and
between Keeley Asset Management and Portico Funds, Inc., dated
June 26, 1995, filed as an Exhibit hereto.
10 Opinion and Consent of Schwartz & Freeman, dated May 17, 1993,
filed as an Exhibit to Post-Effective Amendment No. 4, to
Form N-1A, on January 28, 1997, File No. 33-63562, and
incorporated herein by reference.
11 Consent of Coopers & Lybrand, dated January 22, 1998, filed as an
Exhibit hereto.
12 All Financial Statements omitted from Item 23. None
13 Subscription Agreement by and between John L. Keeley, Jr. and
Keeley Small Cap Value Fund, Inc., dated August 31, 1993, filed
as an Exhibit to Post-Effective Amendment No. 4, to Form N-1A,
on January 28, 1997, File No. 33-63562, and incorporated herein
by reference.
14 Individual Retirement Account Disclosure Statement
Application and Transfer Form, amended as of January 1998,
to reflect regulatory changes, filed as an Exhibit hereto.
15.1 Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940 by and between Keeley Small Cap Value Fund, Inc. and Keeley
Investment Corp., adopted on September 8, 1993, filed as an
Exhibit to Post-Effective Amendment No. 4 to Form N-1A, on
January 28, 1997, and incorporated herein by reference.
15.2 Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 by and between Keeley Asset
Management and Portico Funds, Inc. adopted on October 1, 1993,
filed as an Exhibit hereto.
16 Schedule for Computation of Performance Data, filed as an Exhibit
hereto.
17 Financial Data Schedules of Keeley Small Cap Value Fund, Inc.,
filed hereto electronically as Exhibit 27 pursuant to Rule 401 of
Regulation S-T.
18 Plan pursuant to Rule 18f-3 under the Investment Company Act of
1940. Not applicable.
19.1 Power of Attorney dated December 8, 1997, filed as an Exhibit
hereto.
19.2 Power of Attorney, dated December 24, 1997, filed as an Exhibit
hereto.
19.3 Power of Attorney dated January 15, 1998, filed as an Exhibit
hereto.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
None
ITEM 26. NUMBERS OF HOLDERS OF SECURITIES
--------------------------------
(1) (2)
Number of Record Holders
Title of Class as of December 31, 1997
--------------------------------------------------------------------
Common Shares 1,291
(Par Value $0.01)
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 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
----------------------------------------------------
(a) The directors and officers of the Adviser, Keeley Asset Management Corp.,
and their business and other connections during the past two years are as
follows:
Name of Individual Business and Other Connections
John L. Keeley, Jr. Director, President and Vice President/Treasurer of
Keeley Asset Management Corp.; Director, President
and Treasurer of Keeley Investment Corp.
Barbara G. Keeley Vice President/Assistant Secretary of Keeley Asset
Management Corp.; Director and Assistant Secretary
of Keeley Investment Corp.
Mark E. Zahorik Vice President of Keeley Asset Management Corp. and
Keeley Investment Corp.
Mary A. Ferrari Secretary of Keeley Asset Management Corp. and
Keeley Investment Corp.
Emily Viehweg Assistant Treasurer of Keeley Asset Management Corp.
and Keeley Investment Corp.
ITEM 29. PRINCIPAL UNDERWRITERS
----------------------
(a) Keeley Investment Corp. serves as the Fund's Distributor.
(b) The Directors and Officers of Keeley Investment Corp. are as
follows:
Name Position and Offices with Keeley Investment Corp.
John L. Keeley, Jr. Director, President and Treasurer
Barbara G. Keeley Director and Assistant Secretary
Mark E. Zahorik Vice President
W. Terry Long Vice President
Christopher L. Keeley Assistant Vice President
Mary A. Ferrari Secretary
Emily Viehweg Assistant Treasurer
The principal address of each of the foregoing Directors and Officers
is: 401 South LaSalle Street, Suite 1201, Chicago, Illinois 60605.
(c) None
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The account books and other documents required to be maintained by
Registrant pursuant to Investment Company Act of 1940, Section 31(a),
et seq., and Rules thereunder will be maintained by Registrant at 401
South LaSalle Street, Suite 1201, Chicago, Illinois 60605;
Registrant's Custodian, Transfer Agent, and Accounting Services Agent,
Firstar Trust Company, 615 East Michigan Avenue, Milwaukee, Wisconsin,
53201-0701; and Registrant's Administrator, Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin, 53202.
ITEM 31. MANAGEMENT SERVICES
-------------------
None
ITEM 32. UNDERTAKINGS
------------
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakers to furnish each person to whom a
prospectus is delivered with a copy of Registrant's last 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 meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and) has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Chicago, and State of Illinois on the 28 day of
January, 1998.
KEELEY SMALL CAP VALUE FUND, INC.
By: /S/ JOHN L. KEELEY, JR.
----------------------------
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 Date Title
Michael D. O'Brien <F1> January 28, 1998 Director
John F. Lesch <F2> January 28, 1998 Director
John G. Kyle January 28, 1998 Director
Elwood P. Walmsley <F3> January 28, 1998 Director
/s/John L. Keeley, Jr. January 28, 1998 Director, President
John L. Keeley, Jr. (principal executive
and financial officer)
By: /S/ JOHN L. KEELEY, JR.
- ----------------------------
John L. Keeley, Jr.
Attorney in Fact
January 28, 1998
<F1> Pursuant to Power of Attorney Executed on January 15, 1998
<F2> Pursuant to Power of Attorney Executed on December 24, 1997
<F3> Pursuant to Power of Attorney Dated December 8, 1997
- -------------------------------------------------------------------------------
AMENDED CUSTODIAN AGREEMENT
THIS AGREEMENT made on November 12, 1997, between Keeley Small Cap Value Fund,
Inc., a Maryland Corporation (hereinafter called the "Fund"), and Firstar Trust
Company, (F/K/A First Wisconsin Trust Company), a corporation organized under
the laws of the State of Wisconsin (hereinafter called "Custodian"),
W I T N E S S E T H:
WHEREAS, the Fund desires that its securities and cash shall be hereafter held
and administered by Custodian pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the Fund
and Custodian agree as follows:
1. Definitions
-----------
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
President, a Vice President, the Secretary and the Treasurer of the Fund, or any
other persons duly authorized to sign by the Board of Directors.
The word "Board" shall mean Board of Directors of Keeley Small Cap Value
Fund, Inc.
2. Names, Titles and Signatures of the Fund's Officers
---------------------------------------------------
An officer of the Fund will certify to Custodian the names and signatures
of those persons authorized to sign the officers' certificates described in
Section 1 hereof, and the names of the members of the Board of Directors,
together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
---------------------------------
A. Custodian shall open and maintain a separate account or accounts in the
name of the Fund, subject only to draft or order by Custodian acting pursuant to
the terms of this Agreement. Custodian shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Fund. Custodian shall make payments of cash to, or for the
account of, the Fund from such cash only:
(a) for the purchase of securities for the portfolio of the Fund upon
the delivery of such securities to Custodian, registered in the name
of the Fund or of the nominee of Custodian referred to in Section 7
or in proper form for transfer;
(b) for the purpose or redemption of shares of the common stock of the
Fund upon delivery thereof to Custodian, or upon proper instructions
from the Keeley Small Cap Value Fund, Inc.;
(c) for the payment of interest, dividends, taxes, investment adviser's
fees or operating expenses (including, without limitation thereto,
fees for legal, accounting, auditing and custodian services and
expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund held by
or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of the
Board of Directors of the Fund.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c) or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received by Custodian for the account
of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal funds
available to the Fund as of specified times agreed upon from time to time by the
Fund and the custodian in the amount of checks received in payment for shares of
the Fund which are deposited into the Fund's account.
4. Segregated Accounts
-------------------
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, Etc. of Securities
--------------------------------------------------
Custodian shall have sole power to release or deliver any securities of the
Fund held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Fund upon receipt by
Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or otherwise become
payable;
(c) for examination by any broker selling any such securities in accordance
with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities alone or
other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise;
(e) upon conversion of such securities pursuant to their terms into other
securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary securities
for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of the Fund
upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d), (e),
(f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g) or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
-------------------------------------
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund; (b) collect interest and cash dividends received, with notice to
the Fund, for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the Fund, all necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect, inserting the Fund's
name on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so.
7. Registration of Securities
--------------------------
Except as otherwise directed by an officers' certificate, Custodian shall
register all securities, except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued hereunder or in any provision of
any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
8. Voting and Other Action
-----------------------
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
------------------------------------
The Fund shall pay or reimburse Custodian from time to time for any transfer
taxes payable upon transfers of securities made hereunder, and for all other
necessary and proper disbursements and expenses made or incurred by Custodian in
the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued hereunder, or under the laws of any state, to exempt
from taxation any exemptable transfers and/or deliveries of any such securities.
10.Concerning Custodian
--------------------
Custodian shall be paid as compensation for its services pursuant to this
Agreement such compensation as may from time to time be agreed upon in writing
between the two parties. Until modified in writing, such compensation shall be
as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon any
certificate herein described or certified copy of any resolution of the Board,
and may rely on the genuineness of any such document which it may in good faith
believe to have been validly executed.
The Fund agrees to indemnify and hold harmless Custodian and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Fund for such
items. In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Fund, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Fund shall be security therefore.
11.Subcustodians
-------------
Custodian is hereby authorized to engage another bank or trust company as a
Subcustodian for all or any part of the Fund's assets, so long as any such bank
or trust company is a bank or trust company organized under the laws of any
state of the United States, having an aggregate capital, surplus and undivided
profit, as shown by its last published report, of not less than Two Million
Dollars ($2,000,000) and provided further that, if the Custodian utilizes the
services of a Subcustodian, the Custodian shall remain fully liable and
responsible for any losses caused to the Fund by the Subcustodian as fully as if
the Custodian was directly responsible for any such losses under the terms of
the Custodian Agreement.
Notwithstanding anything contained herein, if the Fund requires the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Fund agrees to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such Subcustodian in regard to the Fund's assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
12.Reports by Custodian
--------------------
Custodian shall furnish the Fund periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Fund.
Custodian shall furnish to the Fund, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Fund.
13.Termination of Assignment
-------------------------
This Agreement may be terminated by the Fund, or by Custodian, on ninety
(90) days notice, given in writing and sent by registered mail to Custodian at
P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Fund at 401 South LaSalle
Street, Suite 1201, Chicago, Illinois 60605, as the case may be. Upon any
termination of this Agreement, pending appointment of a successor to Custodian
or a vote of the shareholders of the Fund to dissolve or to function without a
custodian of its cash, securities and other property, Custodian shall not
deliver cash, securities or other property of the Fund to the Fund, but may
deliver them to a bank or trust company of its own selection, having an
aggregate capital, surplus and undivided profits, as shown by its last published
report of not less than Two Million Dollars ($2,000,000) as a Custodian for the
Fund to be held under terms similar to those of this Agreement, provided,
however, that Custodian shall not be required to make any such delivery or
payment until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by Custodian or on
or against Custodian, and until full payment shall have been made to Custodian
of all its fees, compensation, costs and expenses, subject to the provisions of
Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of the
Fund, authorized or approved by a resolution of its Board of Directors.
14.Deposit of Securities in Securities Depositories
------------------------------------------------
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Fund approves by resolution the
use of such central securities clearing agency or securities depository.
15.Records
-------
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Fund pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Fund upon request and to preserve such records for the periods
prescribed in Rule 31a-2 under the Investment Company Act of 1960, as amended.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed
and their respective corporate seals to be affixed hereto as of the date first
above-written by their respective officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Firstar Trust Company
Attest:
/s/ Andrea Milroy /s/ James C. Tyler
- ------------------------- ----------------------------------
ASSISTANT SECRETARY VICE PRESIDENT
Attest: Keeley Small Cap Value Fund, Inc.
/s/ Mary A. Ferrari /s/ John Keeley, Jr.
- ------------------------- ----------------------------------
AMENDED AND RESTATED
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 12th day of August, 1997, by and between
KEELEY Small Cap Value Fund, Inc., a Maryland corporation (the "Fund"), and
Sunstone Financial Group, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Fund is an open-end, management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund and the Administrator desire to amend and restate their
agreement pursuant to which the Administrator provides administrative services
for the Fund.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment
-----------
The Fund hereby appoints the Administrator as administrator of the Fund for
the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. Services as Administrator
-------------------------
(a) Subject to the direction and control of the Fund's Board of Directors
and utilizing information provided by the Fund and its agents, the Administrator
will: (1) provide office space, facilities, equipment and personnel to carry
out its services hereunder; (2) compile data for and prepare with respect to
the Fund timely Notices to the Securities and Exchange Commission (the
"Commission") required pursuant to Rule 24f-2 under the Act of 1940 and Semi-
Annual Reports on Form N-SAR; (3) prepare for execution by the Fund and file
all federal income and excise tax returns and state income tax returns (and such
other required tax filings as may be agreed to by the parties) other than those
required to be made by the Fund's custodian and transfer agent; (4) prepare
compliance filings relating to the registration of the securities of the Fund
pursuant to state securities laws with the advice of the Fund's counsel; (5)
prepare the Annual and Semi-Annual Reports required pursuant to Section 30(d)
under the Act; (6) assist to the extent requested by the Fund with the
preparation of the Registration Statement for the Fund (on Form N-1A or any
replacement therefor) and any amendments thereto, and proxy materials; (7)
monitor the Fund's expense accruals and cause all appropriate expenses to be
paid from Fund assets on proper authorization from the Fund; (8) monitor the
Fund's status as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended, from time to time; (9) assist in the
acquisition of the Fund's fidelity bond required by the Act, monitor the amount
of the bond and make the necessary Commission filings related thereto; (10)
from time to time as the Administrator deems appropriate, check the Fund's
compliance with the policies and limitations of the Fund relating to the
portfolio investments as set forth in the Prospectus, Statement of Additional
Information, By-laws and Articles of Incorporation (but this function shall not
relieve the Fund's investment adviser of its primary day-to-day responsibility
for assuring such compliance); (11) maintain, and/or coordinate with the other
service providers the maintenance of, the accounts, books and other documents
required pursuant to Rule 31a-1(a) and (b) under the Act; and (12) generally
assist in the Fund's administrative operations. In addition, the Administrator
will monitor the Fund's arrangements with respect to services provided pursuant
to any plan of distribution including reporting to the Board of Directors with
respect to the amounts paid or payable by the Fund from time to time under the
plan and the nature of the services provided, and maintaining appropriate
records in connection with its monitoring duties. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder.
(b) The Directors of the Fund shall cause the officers, adviser,
distributor, legal counsel, independent accountants, custodian and transfer
agent for the Fund to cooperate with the Administrator and to provide the
Administrator, upon request, with such information, documents and advice
relating to the Fund as is within the possession or knowledge of such persons,
in order to enable the Administrator to perform its duties hereunder. In
connection with its duties hereunder, the Administrator shall be entitled to
rely, and shall be held harmless by the Fund when acting in reliance, upon the
instruction, advice, information or any documents relating to the Fund provided
to the Administrator by any of the aforementioned persons. Fees charged by such
persons shall be a Fund expense. The Administrator shall be entitled to rely on
any document which it reasonably believes to be genuine and to have been signed
or presented by the proper party. The Administrator shall not be held to have
notice of any change of authority of any officer, agent or employee of the Fund
until receipt of written notice thereof from the Fund.
(c) In compliance with the requirements of Rule 31a-3 under the Act, the
Administrator hereby agrees that all records which it maintains for the Fund are
the property of the Fund and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Administrator further agrees
to preserve for the periods prescribed by Rule 31a-2 under the Act the records
described in (a) above which are maintained by the Administrator for the Fund.
(d) The Fund acknowledges that this Agreement, and the Administrator's
monitoring and other functions hereunder, does not relieve the Fund's Board of
its oversight responsibilities under the Act and applicable corporate law, or
the investment adviser's responsibilities, for compliance matters including but
not limited to compliance with the Act, the Internal Revenue Code of 1986, as
amended, and the policies and limitations of the Fund relating to the portfolio
investments as set forth in the Prospectus and Statement of Additional
Information.
3. Fees; Delegation; Expenses
--------------------------
(a) In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Administrator a fee, computed daily and payable
monthly, at the annual rate of fifteen one-hundredths of one percent (0.15%) on
the first $50,000,000 of the Fund's average daily net assets and five one-
hundredths of one percent (0.05%) on the Fund's average daily net assets in
excess of $50,000,000. In addition, the Fund will reimburse the Administrator
its reasonable out-of-pocket expenses. Out-of-pocket expenses include, but are
not limited to, travel, lodging and meals in connection with travel on behalf of
the Fund, programming and related expenses (previously incurred or to be
incurred by Administrator) in connection with providing electronic transmission
of data between the Administrator and the Funds' other service providers,
brokers, dealers and depositories, and photocopying, postage and overnight
delivery expenses. The minimum annual fee to be paid by the Fund to the
Administrator hereunder (exclusive of out-of-pocket expenses) shall be $38,500
per year. Fees shall be paid at a rate that would aggregate at least the
applicable minimum fee.
(b) For the purpose of determining fees payable to the Administrator, net
asset value shall be computed in accordance with the Fund's Prospectus and
resolutions of the Fund's Board of Directors. The fee for the period from the
day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Should the Fund be
liquidated, merged with or acquired by another fund, any accrued fees shall be
immediately payable.
(c) The Administrator will from time to time employ or associate itself
with such person or persons as the Administrator may believe to be particularly
fitted to assist it in the performance of this Agreement. Such person or
persons may be officers and employees who are employed by both the Administrator
and the Fund. The compensation of such person or persons shall be paid by the
Administrator and no obligation shall be incurred on behalf of the Fund in such
respect.
(d) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise provided
herein. Other costs and expenses to be incurred in the operation of the Fund,
including, but not limited to: taxes; interest; brokerage fees and commissions,
if any; salaries, fees and expenses of officers and Directors; Commission fees
and state Blue Sky fees; advisory and administration fees; charges of
custodians, transfer agents, dividend disbursing and accounting services agents;
security pricing services; insurance premiums; outside auditing and legal
expenses; costs of organization and maintenance of corporate existence;
typesetting, printing and mailing of prospectuses, statements of additional
information, supplements, notices and proxy materials for regulatory purposes
and for distribution to current shareholders; typesetting, printing, mailing and
other costs of shareholder reports; expenses incidental to holding meetings of
the Fund's shareholders and Directors; fund accounting fees including pricing of
portfolio securities; and any extraordinary expenses; will be borne by the Fund
or its investment adviser. Expenses incurred for distribution of fund shares,
including the typesetting, printing and mailing of prospectuses for persons who
are not shareholders of the Fund, will be borne by the Fund, its investment
adviser, or its distributor.
4. Proprietary and Confidential Information
----------------------------------------
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Fund all records and other
information relative to the Fund and prior, present or potential shareholders of
the Fund (and clients of said shareholders), and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where the Administrator may be exposed to civil or criminal proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
5. Limitation of Liability
-----------------------
(a) The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Notwithstanding any other provision of this
Agreement, the Fund shall indemnify and hold harmless the Administrator from and
against any and all claims, demands, losses, expenses and liabilities (whether
with or without basis in fact or law) of any and every nature which the
Administrator may sustain or incur or which may be asserted against the
Administrator by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder (i) in accordance with the
foregoing standards, or (ii) in reliance upon the instruction, advice,
information or documents provided to the Administrator by any party described in
Section 2(b).
(b) In the event the Fund may be asked to indemnify or hold the
Administrator harmless, the Fund shall be advised of all pertinent facts
concerning the situation in question and the Administrator shall use all
reasonable care to notify the Fund promptly concerning any situation which
presents or appears likely to present the probability of such a claim for
indemnification, but failure to do so shall not affect the rights hereunder.
(As used in Sections 5(a) and 5(b) hereof, the term "Administrator" shall
include directors, officers, employees and other corporate agents of the
Administrator as well as the corporation itself).
6. Term
----
(a) This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue in effect until
August 12, 1998. Thereafter, if not terminated, this Agreement shall continue
automatically in effect for successive annual periods, unless written notice not
to renew is given by the non-renewing party to the other party at least sixty
days prior to the expiration of the then-current term; provided such continuance
is specifically approved at least annually (i) by the Fund's Board of Directors
or (ii) by a vote of a majority (as defined in the Act) of the outstanding
voting securities of the Fund, and in either event the continuance is also
approved by the majority of the Fund Directors who are not interested persons
(as defined in the Act) of any party to this Agreement.
(b) This Agreement may be terminated at any time (i) upon mutual consent
of the parties, or (ii) by either party upon not less than ninety (90) days'
written notice to the other party (which notice may be waived by the party
entitled to the notice).
(c) The terms of this Agreement shall not be waived, altered, modified,
amended or supplemented in any manner whatsoever except by a written instrument
signed by the Administrator and the Fund.
7. Non-Exclusivity
---------------
The services of the Administrator rendered to the Fund are not deemed to be
exclusive. The Administrator may render such services and any other services to
others, including other investment companies. The Fund recognizes that from
time to time directors, officers and employees of the Administrator may serve as
directors, trustees, officers and employees of other corporations or trusts
(including other investment companies), that such other entities may include the
name of the Administrator as part of their name and that the Administrator or
its affiliates may enter into investment advisory or other agreements with such
other corporations or trusts.
8. Governing Law; Invalidity
-------------------------
This Agreement shall be governed by Wisconsin law. To the extent that the
applicable laws of the State of Wisconsin, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control,
and nothing herein shall be construed in a manner inconsistent with the Act or
any rule or order of the Commission thereunder. Any provision of this Agreement
which may be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability in any jurisdiction and shall not
invalidate or render unenforceable such provision in any other jurisdiction.
9. Notices
-------
Any notice required or to be permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202, Attention Miriam
M. Allison, and notice to the Fund shall be sent to Keeley Investment Corp., 401
South LaSalle Street, Suite 1201, Chicago, Illinois, 60605, Attention John
Keeley.
10. Entire Agreement
----------------
This Agreement constitutes the entire Agreement of the parties hereto.
11. Counterparts
------------
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
KEELEY SMALL CAP VALUE FUND, INC.
/s/ John Keeley, Jr.
By: __________________________________
SUNSTONE FINANCIAL GROUP, INC.
/s/ Mim Allison
By:__________________________________
President
DISTRIBUTION AND SERVICING AGREEMENT
Gentlemen:
We wish to enter into this Distribution and Servicing Agreement ("Agreement")
with you concerning the provision of distribution services (and, to the extent
provided below, support services) to your clients ("Clients") who may from time
to time acquire and beneficially own shares of Common Stock of Portico Money
Market Fund ("Shares") offered by Portico Funds, Inc.
The terms and conditions of this Agreement are as follows:
SECTION 1. You will provide reasonable assistance in connection with the
distribution of Shares to Clients as requested from time to time by our
distributor, which assistance may include forwarding sales literature and
advertising provided by our distributor for Clients. In addition, you agree to
provide the following support services to Clients who may from time to time
acquire and beneficially own Shares*: (i) processing dividend and distribution
payments from us on behalf of Clients; (ii) providing information periodically
to Clients showing their positions in Shares; (iii) arranging for bank wires;
(iv) responding to Client inquiries relating to the services performed by you;
(v) providing subaccounting with respect to Shares beneficially owned by Clients
or the information to us necessary for subaccounting; (vi) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semiannual financial statements and dividend, distribution
and tax notices) to Clients; (vii) assisting in processing purchase, exchange
and redemption requests from Clients and in placing such orders with our service
contractors; (viii) assisting Clients in changing dividend options, account
designations and addresses; and (ix) providing such other similar services as we
may reasonably request to the extent you are permitted to do so under applicable
statutes, rules and regulations.
SECTION 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the afore-
mentioned assistance and services to Clients.
SECTION 3. Neither of you nor any of your officers, employees or agents are
authorized to make any representations concerning us or the Shares except those
contained in our then current prospectuses and statements of additional
information for Shares, copies of which will be supplied by us to you, or in
such supplemental literature or advertising as may be authorized by us in
writing.
- ---------------
* Services may be modified or omitted in the particular case and items
renumbered.
SECTION 4. For all purposes of this Agreement, you will be deemed to be an
independent contractor and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
SECTION 5. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the annual rate of .20% of the average daily net asset value of the
Shares beneficially owned by your Clients for whom you are the dealer of record
or holder of record or with whom you have a servicing relationship (the
"Clients' Shares"), which fee will be computed daily and payable monthly. For
purposes of determining the fees payable under this Section 5, the average daily
net asset value of the Clients' Shares will be computed in the manner specified
in our Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. The fee rate stated above may be prospectively
increased or decreased by us, in our sole discretion, at any time upon notice to
you. Further, we may, in our discretion and without notice, suspend or withdraw
the sale of Shares, including the sale of Shares to you for the account of any
Client or Clients. All fees payable to Portico Funds under this Agreement with
respect to the Shares of a particular Fund shall be borne by and be payable
entirely out of the assets allocable to, said Shares; and no other class of
Shares of any other Fund offered by Portico Funds shall be responsible for such
fees.
SECTION 6. Any person authorized to direct the disposition of monies paid or
payable by us pursuant to this Agreement will provide to our Board of Directors,
and our Directors will review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provisions to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
SECTION 7. We may enter into other similar Agreements with any other person or
persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent, warrant
and agree that: (i) the compensation payable to you hereunder, together with
any other compensation you receive from Clients for services contemplated by
this Agreement, will not be excessive or unreasonable under the laws and
instruments governing your relationships with Clients; and (ii) you will provide
to Clients a schedule of any fees that you may charge to them relating to the
investment of their assets in Shares. In addition, you understand that this
Agreement has been entered into pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Act"), and is subject to the provisions of said Rule,
as well as any other applicable rules or regulations promulgated by the
Securities and Exchange Commission.
SECTION 9. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until February 28, 1993, and thereafter
will continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by us in a manner
described in Section 12. This Agreement is terminable with respect to the
Shares of any Fund, without penalty, at any time by us (which termination may be
by a vote of a majority of the Disinterested Directors as defined in Section 12
or by vote of the holders of a majority of the outstanding Shares of such Fund)
or by you upon notice to the other party thereto. This Agreement will also
terminate automatically in the event of its assignment (as defined in the Act).
SECTION 10. All notice and other communications to either you or us will be
duly given if mailed, telegraphed, telexed, or transmitted by similar
telecommunications device to the appropriate address stated herein.
SECTION 11. This Agreement will be construed in accordance with the laws of the
State of Wisconsin.
SECTION 12. This Agreement has been approved by vote of a majority of (i) our
Board of Directors and (ii) those Directors who are not "interested persons" (as
defined in the Investment Company Act of 1940) of us and have no direct or
indirect financial interest in the operation of the Distribution and Service
Plan adopted by us or in any agreement related thereto cast in person at a
meeting called for the purpose of voting on such approval ("Disinterested
Directors").
If you agree to be legally bound by the provisions of this Agreement, please
sign a copy of this letter where indicated below and promptly return it to us,
c/o Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202.
Very truly yours,
PORTICO FUNDS, INC.
/s/ Mim Allison 10-20-93
By: ______________________________ __________________
(Authorized Officer) Date
Accepted and Agreed to:
Keeley Asset Management
/s/ John Keeley, Jr. 10-1-93
By: ______________________________ __________________
(Authorized Officer) Date
DISTRIBUTION AND SERVICING AGREEMENT
Gentlemen:
We wish to enter into this Distribution and Servicing Agreement ("Agreement")
with you concerning the provision of distribution services (and, to the extent
provided below, support services) to your clients ("Clients") who may from time
to time acquire and beneficially own shares of Series A Common Stock of any Fund
except the Institutional Money Market Fund offered by Portico Funds, Inc.
The terms and conditions of this Agreement are as follows:
SECTION 1. You will provide reasonable assistance in connection with the
distribution of Series A Shares to Clients as requested from time to time by our
distributor, which assistance may include forwarding sales literature and
advertising provided by our distributor for Clients. In addition, you agree to
provide the following support services to Clients who may from time to time
acquire and beneficially own Series A Shares*: (i) processing dividend and
distribution payments from us on behalf of Clients; (ii) providing information
periodically to Clients showing their positions in Series A Shares; (iii)
arranging for bank wires; (iv) responding to Client inquiries relating to the
services performed by you; (v) providing subaccounting with respect to Series A
Shares beneficially owned by Clients or the information to us necessary for
subaccounting; (vi) if required by law, forwarding shareholder communications
from us (such as proxies, shareholder reports, annual and semiannual financial
statements, and dividend, distribution and tax notices) to Clients; (vii)
assisting in processing purchase, exchange and redemption requests from Clients
and in placing such orders with our service contractors; (viii) assisting
Clients in changing dividend options, account designations, and addresses; and
(ix) providing such other similar services as we may reasonably request to the
extent you are permitted to do so under applicable statutes, rules and
regulations.
SECTION 2. You will provide such office space and equipment, telephone
facilities, and personnel (which may be any part of the space, equipment, and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
assistance and services to Clients.
SECTION 3. Neither you nor any of your officers, employees, or agents are
authorized to make any representations concerning us or the Series A Shares
except those contained in our then current prospectuses and statements of
additional information for Series A Shares, copies of which will be supplied by
us to you, or in such supplemental literature or advertising as may be
authorized by us in writing.
- -------------------------------
* Services may be modified or omitted in the particular case and items
renumbered.
SECTION 4. For all purposes of this Agreement, you will be deemed to be an
independent contractor and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify, and hold us harmless from and against any
and all direct or indirect liabilities or losses resulting from requests,
directions, actions, or inactions of or by you or your officers, employees, or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer, or registration of Series A Shares (or orders relating to the same) by
or on behalf of Clients. You and your employees will, upon request, be
available during normal business hours to consult with us or our designees
concerning the performance of your responsibilities under this Agreement.
SECTION 5. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the annual rate of .20 of 1% of the average daily net asset value of the
Series A Shares beneficially owned by your Clients for whom you are the dealer
of record or holder of record or with whom you have a servicing relationship
(the "Clients' Series A Shares"), which fee will be computed daily and average
daily and payable monthly. For purposes of determining the fees payable under
this Section 5, the average daily net asset value of the Clients' Series A
Shares will be computed in the manner specified in our Registration Statement
(as the same is in effect from time to time) in connection with the computation
of the net asset value of Series A Share for purposes of purchases and
redemptions. The fee rate stated above may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of Series A Shares, including the sale of Series A Shares to you for the
account to any Client or Clients. All fees payable by Portico Funds under this
Agreement with respect to the Series A Shares of a particular Fund shall be
borne by, and be payable entirely out of the assets allocable to, said Series A
Shares; and no other Fund or series of Shares offered by Portico Funds shall be
responsible for such fees.
SECTION 6. Any person authorized to direct the disposition of monies paid or
payable by us pursuant to this Agreement will provide to our Board of Directors,
and our Directors will review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provisions to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
SECTION 7. We may enter into other similar Agreements with any other person or
persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent,
warrant, and agree that: (i) the compensation payable to you hereunder,
together with any other compensation you receive from Clients for services
contemplated by this Agreement, will not be excessive or unreasonable under the
laws and instruments governing your relationships with Clients; and (ii) you
will provide to Clients a schedule of any fees that you may charge to them
relating to the investment of their assets in Series A Shares. In addition, you
understand that this Agreement has been entered into pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Act"), and is subject to the
provisions of said Rule, as well as any other applicable rules or regulations
promulgated by the Securities and Exchange Commission.
SECTION 9. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until February 28, 1996, and thereafter
will continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by us in the manner
described in Section 12. This Agreement is terminable with respect to the
Series A Shares of any Fund, without penalty, at any time by us (which
termination may be by a vote of a majority of the outstanding Series A Shares of
such Fund) or by you upon notice to the other party hereto. This Agreement will
also terminate automatically in the event of its assignment (as defined in the
Act).
SECTION 10. All notice and other communications to either you or us will be
duly given if mailed, telegraphed, telexed, or transmitted by similar
telecommunications device to the appropriate address stated herein.
SECTION 11. This Agreement will be construed in accordance with the laws of the
State of Wisconsin.
SECTION 12. This Agreement has been approved by vote of a majority of (i) our
Board of Directors and (ii) those Directors who are no "interested person" (as
defined in the Investment company Act of 1940) of us and have no direct or
indirect financial interest in the operation of the Distribution and Service
Plan adopted by us or in any agreement related thereto cast in person at a
meeting called for the purposes of voting on such approval ("Disinterested
Directors").
If you agree to be legally bound by the provisions of this Agreement, please
sign a copy of this Agreement where indicated below and promptly return it to
us.
PORTICO FUNDS, INC.
/s/ Mary Ellen Stanek 6/01/95
By: ______________________ ____________________
(Authorized Officer) Date
Accepted and Agreed to:
KEELEY INVESTMENT CORPORATION
/s/ John Keeley, Jr.
By: ______________________ ____________________
Authorized Officer Date
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. 5 to the
Registration Statement on Form N-1A of KEELEY Small Cap Value Fund, Inc. of
our report dated October 17, 1997 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, 1997 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.
/S/ COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
January 22, 1998
KEELEY SMALL CAP VALUE FUND, INC.
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT & CUSTODIAL ACCOUNT
AGREEMENT
GENERAL INFORMATION
Please read the following information together with the Individual Retirement
Account Custodial Agreement and the Prospectus(es) for the fund(s) you select
for investment of IRA contributions.
GENERAL PRINCIPLES
1. ARE THERE DIFFERENT TYPES OF IRAS?
Yes. Upon creation of an IRA, you must designate whether the IRA will be a
Traditional IRA, a Roth IRA, or an Education IRA. (In addition, there are SEP-
IRAs and SIMPLE IRAs, which are discussed in the Disclosure Statement for
Traditional IRAs).
- - In a Traditional IRA, amounts contributed to the IRA may be tax deductible
at the time of contribution. Distributions from the IRA will be taxed at
distribution except to the extent that the distribution represents a return of
your own contributions for which you did not claim (or where not eligible to
claim) a deduction.
- - In a Roth IRA, amounts contributed to your IRA are taxed at the time of
contribution, but distributions from the IRA are not subject to tax if you
have held the IRA for certain minimum periods of time (generally, until age
59 1/2 but in some cases longer).
- - In an Education IRA, you contribute to an IRA maintained on behalf of a
beneficiary and do not receive a current deduction. However, if amounts are
used for certain educational purposes, neither you nor the beneficiary of the
IRA are taxed upon distribution.
Each type of IRA is a custodial account created for the exclusive benefit of the
beneficiary you (or your spouse) in the case of the Traditional IRA and Roth
IRA, and a named beneficiary in the case of an Education IRA. Firstar Trust
Company serves as custodian of the IRA. Your, your spouse's or your
beneficiary's (as applicable) interest in the account is nonforfeitable.
2. CAN I REVOKE MY ACCOUNT?
This account may be revoked any time within seven calendar days after it is
established by mailing or delivering a written request for revocation to:
Keeley Small Cap Value Fund, Inc., c/o Firstar Trust Company, 615 East Michigan
Street, 3rd Floor, Milwaukee, Wisconsin 53202, Attention: Mutual Fund
Department. If the revocation is mailed, the date of the postmark (or the date
of certification if sent by certified or registered mail) will be considered the
revocation date. Upon proper revocation, a full refund of the initial
contribution will be issued, without any adjustments for items such as
administrative fees or fluctuations in market value. You may always revoke your
account after this time, but the amounts distributed to you will be subject to
the tax rules applicable upon distribution from an IRA account as discussed
below. (While current regulations technically only extend the right to revoke to
Traditional IRAs, it has been assumed that that right applies to all Roth and
Education IRAs as well and such IRAs will thus be administered consistent with
that interpretation until the IRS issues guidance to the contrary.)
3. HOW WILL MY ACCOUNT BE INVESTED?
Contributions made to an IRA will be invested, at your election, in one or more
of the regulated investment companies for which Keeley Asset Management Corp.
serves as investment advisor or any other regulated investment company
designated by Firstar Trust. No part of the IRA may be invested in life
insurance contracts; further, the assets of the IRA may not be commingled with
other property.
Information about the shares of each mutual fund available for investment by
your IRA must be furnished to you in the form of a prospectus governed by rules
of the Securities and Exchange Commission. Please refer to the prospectus for
detailed information concerning your mutual fund. You may obtain further
information concerning IRAs from any District Office of the Internal Revenue
Service.
Fees and other expenses of maintaining the account may be charged to you or the
account. The Custodian's current fee schedule is included as part of these
materials. The fee schedule may be changed from time to time.
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT FOR TRADITIONAL IRAS
1. AM I ELIGIBLE TO CONTRIBUTE TO A TRADITIONAL IRA?
Employees with compensation income and self-employed individuals with earned
income are eligible to contribute to a Traditional IRA. (For convenience, all
future references to compensation are deemed to mean "earned income" in the case
of a self-employed individual.) Employers may also contribute to Traditional
IRAs established for the benefit of their employees. In addition, you may
establish a Traditional IRA to receive rollover contributions and transfers from
the trustee or custodian of another Traditional IRA or the custodian or trustee
of certain other retirement plans.
2. WHEN CAN I MAKE CONTRIBUTIONS?
You may make regular contributions to your Traditional IRA any time up to and
including the due date for filing your tax return for the year, not including
extensions. You may continue to make regular contributions to your Traditional
IRA up to (but not including) the calendar year in which you reach age 70 1/2.
(If you are over age 70 1/2 but your spouse has not yet attained that age,
contributions to your spouse's Traditional IRA may continue so long as you and
your spouse, based on a joint tax return, have sufficient compensation income.)
Employer contributions to a Simplified Employee Pension Plan or a SIMPLE Plan
may be continued after you attain age 70 1/2. Eligible rollover contributions
and transfers may be made at any time, including after you reach age 70 1/2.
3. HOW MUCH MAY I CONTRIBUTE TO A TRADITIONAL IRA?
You may make annual contributions to a Traditional IRA in any amount up to 100%
of your compensation for the year or $2,000, whichever is less. The $2,000
limitation is reduced by contributions you make to a Roth IRA, but is not
reduced by contributions to an Educational IRA for the benefit of another
taxpayer. Qualifying rollover contributions and transfers are not subject to
these limitations.
In addition, if you are married and file a joint return, you may make
contributions to your spouse's Traditional IRA. However, the maximum amount
contributed to both your own and to your spouse's Traditional IRA may not exceed
100% of your combined compensation or $4,000, whichever is less. The maximum
amount that may be contributed to either your Traditional IRA or your spouse's
Traditional IRA is $2,000. Again, these dollar limits are reduced by any
contributions you or your spouse make to a Roth IRA, but are not affected by
contributions either of you make to an Education IRA for the benefit of another
taxpayer.
If you are the beneficiary of an Education IRA, certain additional limits may
apply to you. Please contact your tax advisor for more information.
4. CAN I ROLLOVER OR TRANSFER AMOUNTS FROM OTHER IRAS OR EMPLOYER PLANS?
You are allowed to "roll over" a distribution or transfer your assets from one
Traditional IRA to another without any tax liability. Rollovers between
Traditional IRAs may be made once per year and must be accomplished within 60
days after the distribution. Also, under certain conditions, you may roll over
(tax-free) all or a portion of a distribution received from a qualified plan or
tax-sheltered annuity in which you participate or in which your deceased spouse
participated. However, strict limitations apply to such rollovers, and you
should seek competent advice in order to comply with all of the rules governing
rollovers.
Most distributions from qualified retirement plans will be subject to a 20%
withholding requirement. The 20% withholding can be avoided by electing a
"direct rollover" of the distribution to a Traditional IRA or to certain other
types of retirement plans. You should receive more information regarding these
withholding rules and whether your distribution can be transferred to a
Traditional IRA from the plan administrator prior to receiving your
distribution. (Note that legislation pending as of this printing would deny your
ability to rollover a hardship distribution from an employer's plan to your
IRA.)
5. ARE MY CONTRIBUTIONS TO A TRADITIONAL IRA TAX DEDUCTIBLE?
Although you may make a contribution to a Traditional IRA within the limitations
described above, all or a portion of your contribution may be nondeductible. No
deduction is allowed for a rollover contribution (including a "direct rollover")
or transfer. For "regular" contributions, the taxability of your contribution
depends upon your tax filing status, whether you (and in some cases your spouse)
are an "active participant" in an employer-sponsored retirement plan, and your
income level.
If you are not married (including a taxpayer filing under the "head of
household" status), the following rules apply:
- - If you are not an "active participant" in an employer-sponsored retirement
plan, you may make a fully deductible contribution to a Traditional IRA (up to
the contribution limits described above).
- - If you are an "active participant" in an employer-sponsored retirement
plan, you may make a fully deductible contribution to a Traditional IRA (up to
the contribution limits described above) if your adjusted gross income (as
defined below) does not exceed $30,000 for 1998. If your 1998 adjusted gross
income is between $30,000 and $40,000, your deduction will be limited as
described below. If your adjusted gross income exceeds $40,000, your
contribution will not be deductible. After 1998, the deductibility of a
contribution is as follows:
Eligible To Make A Eligible To Make A Not Eligible To
Deductible Partially Deductible Make A Deductible
Contribution If AGI Contribution If Contribution If
Year Less Than Or Equal To AGI Between AGI Over
---- --------------------- ------------ ---------
1999 $31,000 $31,001 - $40,999 $41,000
2000 $32,000 $32,001 - $41,999 $42,000
2001 $33,000 $33,001 - $42,999 $43,000
2002 $34,000 $34,001 - $43,999 $44,000
2003 $40,000 $40,001 - $49,999 $50,000
2004 $45,000 $45,001 - $54,999 $55,000
2005 and thereafter $50,000 $50,001 - $59,999 $60,000
If you are married, the following rules apply:
- - If you and your spouse file a joint tax return and neither you nor your
spouse is an "active participant" in an employer-sponsored retirement plan,
you and your spouse may make a fully deductible contribution to a Traditional
IRA (up to the contribution limits described above).
- - If you and your spouse file a joint tax return and both you and your spouse
are "active participants" in employer-sponsored retirement plans, you and your
spouse may make fully deductible contributions to a Traditional IRA (up to the
contribution limits described above, if your 1998 combined adjusted gross
income (as defined below) does not exceed $50,000. If your 1998 adjusted gross
income is between $50,000 and $60,000, your deduction will be limited as
described below. If your adjusted gross income exceeds $60,000, your
contribution will not be deductible. After 1998, the deductibility of a
contribution is as follows:
Eligible To Make A Eligible To Make A Not Eligible To
Deductible Partially Deductible Make A Deductible
Contribution If AGI Contribution If Contribution If
Year Less Than Or Equal To AGI Between AGI Over
---- --------------------- ------------ ---------
1999 $51,000 $51,001 - $60,999 $61,000
2000 $52,000 $52,001 - $61,999 $62,000
2001 $53,000 $53,001 - $62,999 $63,000
2002 $54,000 $54,001 - $63,999 $64,000
2003 $60,000 $60,001 - $69,999 $70,000
2004 $65,000 $65,001 - $74,999 $75,000
2005 $70,000 $71,001 - $79,999 $80,000
2006 $75,000 $75,001 - $84,999 $85,000
2007 and thereafter $80,000 $80,001 - $99,999 $100,000
- - If you and your spouse file a joint tax return and only one of you is an
"active participant" in an employer-sponsored retirement plan, special rules
apply. If your spouse is the "active participant", a fully deductible
contribution can be made to your IRA (up to the contribution limits described
above) if your combined adjusted gross income does not exceed $150,000. If
your combined adjusted gross income is between $150,000 and $160,000, your
deduction will be limited as described below. If your combined adjusted gross
income exceeds $160,000, your contribution will not be deductible. Your
spouse, as an active participant in an employer-sponsored retirement plan, may
make a fully deductible contribution to a Traditional IRA if your 1998
combined adjusted gross income does not exceed $50,000 (with a partial
deduction being available if 1998 combined adjusted gross income is between
$50,000 and $60,000). Conversely, if you are an "active participant" and your
spouse is not, a contribution to your Traditional IRA will be deductible if
your 1998 combined adjusted gross income does not exceed $50,000 (with a
partial deduction being available if 1998 combined adjusted gross income is
between $50,000 and $60,000). After 1998, the $50,000 and $60,000 amounts are
adjusted in the manner described in the preceding table; the $150,000 and
$160,000 amounts are not adjusted.
- - If you are married and file a separate return and are not an "active
participant" in an employer-sponsored retirement plan, you may make a fully
deductible contribution to a Traditional IRA (up to the contribution limits
described above). If you are married and filing separately and are an "active
participant" in an employer-sponsored retirement plan, you may not make a
fully deductible contribution to a Traditional IRA. A partial deduction is
available if your 1998 adjusted gross income is less than $10,000. This amount
is not adjusted for cost-of-living changes or otherwise.
An employer-sponsored retirement plan includes any of the following types of
retirement plans:
- a qualified pension, profit-sharing, or stock bonus plan established in
accordance with IRC 401(a) or 401(k);
- a Simplified Employee Pension Plan (SEP) (IRC 408(k));
- a deferred compensation plan maintained by a governmental unit or agency;
- tax-sheltered annuities and custodial accounts (IRC 403(b) and 403(b)(7));
- a qualified annuity plan under IRC Section 403(a); or
- a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE
Plan).
Generally, you are considered an "active participant" in a defined contribution
plan if an employer contribution or forfeiture was credited to your account
during the year. You are considered an "active participant" in a defined benefit
plan if you are eligible to participate in a plan, even though you elect not to
participate. You are also treated as an "active participant" if you make a
voluntary or mandatory contribution to any type of plan, even if your employer
makes no contribution to the plan.
For purposes of these rules, adjusted gross income (1) is determined without
regard to the exclusions from income arising under Section 135 (exclusion of
certain savings bond interest), Section 137 (exclusion of certain employer
provided adoption expenses) and Section 911 (certain exclusions applicable to
U.S. citizens or residents living abroad) of the Code, (2) is not reduced for
any deduction that you may be entitled to for IRA contributions, and (3) takes
into account the passive loss limitations under Section 469 of the Code and any
taxable benefits under the Social Security Act and Railroad Retirement Act as
determined in accordance with Section 86 of the Code.
Please note that the deduction limits are not the same as the contribution
limits. You can contribute to your Traditional IRA in any amount up to the
contribution limits described above (the lesser of $2,000 or 100 percent of your
compensation income). The amount of your contribution that is deductible for
federal income tax purposes is based upon the rules described in this section.
If you (or where applicable, your spouse) is an "active participant" in an
employer-sponsored retirement plan, you can use the following steps to calculate
whether your contribution will be fully or partially deductible:
(a) Subtract the applicable income limit from your adjusted gross income
as determined above. (For example, if you are a single taxpayer, your 1998
income limit is $30,000.) If the result is $10,000 or more (after 2006,
$20,000 or more for a married individual filing jointly), you can only make
a nondeductible contribution to your Traditional IRA.
(b) Divide the above figure by $10,000 (after 2006, $20,000 for a married
individual filing jointly), and multiply that percentage by $2,000.
(c) Subtract the dollar amount (result from (b) above) from $2,000 to
determine the amount that is deductible.
If the deduction limit is not a multiple of $10 then it should be rounded up to
the next $10. If you are eligible to make any deductible contribution, you may
make a $200 minimum deductible contribution.
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the contribution limitations described in
paragraph (3) above. To the extent that your contribution exceeds the deductible
limits, it will be nondeductible. However, earnings on all IRA contributions are
tax deferred until distribution.
6. WHAT IF I MAKE AN EXCESS CONTRIBUTION?
Contributions that exceed the allowable maximum for federal income tax purposes
are treated as excess contributions. A nondeductible penalty tax of 6% of the
excess amount contributed will be added to your income tax for each year in
which the excess contribution remains in your account.
7. HOW DO I CORRECT AN EXCESS CONTRIBUTION?
If you make a contribution in excess of your allowable maximum, you may correct
the excess contribution and avoid the 6% penalty tax for that year by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for the tax year for which the
contribution was made. Any earnings on the withdrawn excess contribution may be
subject to a 10% early distribution penalty tax if you are under age 59 1/2. In
addition, in certain cases an excess contribution may be withdrawn after the
time for filing your tax return. Finally, excess contributions for one year may
be carried forward and applied against the contribution limitation in succeeding
years.
8. CAN A SIMPLIFIED EMPLOYEE PENSION PLAN BE USED IN CONJUNCTION WITH A
TRADITIONAL IRA?
A Traditional IRA may also be used in connection with a Simplified Employee
Pension Plan established by your employer (or by you if you are self-employed).
In addition, if your SEP Plan as in effect on December 31, 1996 permitted salary
reduction contributions, you may elect to have your employer make salary
reduction contributions. Several limitations on the amount that may be
contributed apply. First, salary reduction contributions (for plans that are
eligible) may not exceed $10,000 per year (certain lower limits may apply for
highly compensated employees). The $10,000 limit applies for 1998 and is
adjusted periodically for cost of living increases. Second, the combination of
all contributions for any year (including employer contributions and, if your
SEP Plan is eligible, salary reduction contributions) cannot exceed 15 percent
of compensation (disregarding for this purpose compensation in excess of
$160,000 per year). The $160,000 compensation limit applies for 1998 and is
adjusted periodically for cost of living increases. A number of special rules
apply to SEP Plans, including a requirement that contributions generally be made
on behalf of all employees of the employer (including for this purpose a sole
proprietorship or partnership) who satisfy certain minimum participation
requirements. It is your responsibility and that of your employer to see that
contributions in excess of normal IRA limits are made under and in accordance
with a valid SEP Plan.
9. CAN A SAVINGS AND INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS
("SIMPLE") BE USED IN CONJUNCTION WITH A TRADITIONAL IRA?
A Traditional IRA may also be used in connection with a SIMPLE Plan established
by your employer (or by you if you are self-employed). When this is done, the
IRA is known as a SIMPLE IRA, although it is similar to a Traditional IRA with
the exceptions described below. Under a SIMPLE Plan, you may elect to have your
employer make salary reduction contributions of up to $6,000 per year to your
SIMPLE IRA. The $6,000 limit applies for 1998 and is adjusted periodically for
cost of living increases. In addition, your employer will contribute certain
amounts to your SIMPLE IRA, either as a matching contribution to those
participants who make salary reduction contributions or as a non-elective
contribution to all eligible participants whether or not making salary reduction
contributions. A number of special rules apply to SIMPLE Plans, including (1) a
SIMPLE Plan generally is available only to employers with fewer than 100
employees, (2) contributions must be made on behalf of all employees of the
employer (other than bargaining unit employees) who satisfy certain minimum
participation requirements, (3) contributions are made to a special SIMPLE IRA
that is separate and apart from your other IRAs, (4) if you withdraw from your
SIMPLE IRA during the two-year period during which you first began participation
in the SIMPLE Plan, the early distribution excise tax (if otherwise applicable)
is increased to 25 percent; and (5) during this two-year period, any amount
withdrawn may be rolled over tax-free only into another SIMPLE IRA (and not to a
Traditional IRA (that is not a SIMPLE IRA) or to a Roth IRA). It is your
responsibility and that of your employer to see that contributions in excess of
normal IRA limits are made under and in accordance with a valid SIMPLE Plan.
10. WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM A TRADITIONAL IRA?
You may at any time request distribution of all or any portion of your account.
However, distributions made prior to your attainment of age 59 1/2 may be
subject to an additional 10 percent penalty tax. Once you reach your "required
beginning date" (see paragraph 11 below), distribution of your account may be
made in any one of three methods:
(a) a lump-sum distribution,
(b) installments over a period not extending beyond your life expectancy
(as determined by actuarial tables), or
(c) installments over a period not extending beyond the joint life
expectancy of you and your designated beneficiary (as determined by
actuarial tables).
You may also use your account balance to purchase an annuity contract, in which
case your custodial account will terminate.
11. WHEN MUST DISTRIBUTIONS FROM A TRADITIONAL IRA BEGIN?
You must begin receiving the assets in your account no later than April 1
following the calendar year in which you reach age 70 1/2 (your "required
beginning date"). In general, the minimum amount that must be distributed each
year is equal to the amount obtained by dividing the balance in your Traditional
IRA on the last day of the prior year (or the last day of the year prior to the
year in which you attain age 70 1/2) by your life expectancy, the joint life
expectancy of you and your beneficiary, or the specified payment term, whichever
is applicable. A federal tax penalty may be imposed against you if the required
minimum distribution is not made for the year you reach age 70 1/2 and for each
year thereafter. The penalty is equal to 50% of the amount by which the actual
distribution is less than the required minimum.
Unless you or your spouse elects otherwise, your life expectancy and/or the life
expectancy of your spouse will be recalculated annually. (The election, if you
choose to make it, must be made by your required beginning date.) Once you
reach your required beginning date, an election not to recalculate life
expectancy(ies) is irrevocable and will apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
If you have two or more Traditional IRAs, you may satisfy the minimum
distribution requirements by receiving a distribution from one of your
Traditional IRAs in an amount sufficient to satisfy the minimum distribution
requirements for your other Traditional IRAs. You must still calculate the
required minimum distribution separately for each Traditional IRA, but then such
amounts may be totaled and the total distribution taken from one or more of your
individual Traditional IRAs.
Distribution from your Traditional IRA must satisfy the special "incidental
death benefit" rules of the Internal Revenue Code. These provisions set forth
certain limitations on the joint life expectancy of you and your beneficiary. If
your beneficiary is not your spouse, your beneficiary will be generally
considered to be no more than 10 years younger than you for the purpose of
calculating the minimum amount that must be distributed.
12. ARE THERE DISTRIBUTION RULES THAT APPLY AFTER MY DEATH?
Yes. If you die before receiving the balance of your Traditional IRA,
distribution of your remaining account balance is subject to several special
rules. If you die on or after your required beginning date, distribution must
continue in a method at least as rapid as under the method of distribution in
effect at your death. If you die before your required beginning date, your
remaining interest will, at the election of your beneficiary or beneficiaries,
(i) be distributed by December 31 of the year in which occurs the fifth
anniversary of your death, or (ii) commence to be distributed by December 31 of
the year following your death over a period not exceeding the life or life
expectancy of your designated beneficiary or beneficiaries.
Two additional distribution options are available if your spouse is the
beneficiary: (i) payments to your spouse may commence as late as December 31 of
the year you would have attained age 70 1/2 and be distributed over a period
not exceeding the life or life expectancy of your spouse, or (ii) your spouse
can simply elect to treat your Traditional IRA as his or her own, in which case
distributions will be required to commence by April 1 following the calendar
year in which your spouse attains age 70 1/2.
13. HOW ARE DISTRIBUTIONS FROM A TRADITIONAL IRA TAXED FOR FEDERAL INCOME TAX
PURPOSES?
Amounts distributed to you are generally includable in your gross income in the
taxable year you receive them and are taxable as ordinary income. To the extent,
however, that any part of a distribution constitutes a return of your
nondeductible contributions, it will not be included in your income. The amount
of any distribution excludable from income is the portion that bears the same
ratio as your aggregate nondeductible contributions bear to the balance of your
Traditional IRA at the end of the year (calculated after adding back
distributions during the year). For this purpose, all of your Traditional IRAs
are treated as single Traditional IRA. Furthermore, all distributions from a
Traditional IRA during a taxable year are to be treated as one distribution. The
aggregate amount of distributions excludable from income for all years cannot
exceed the aggregate nondeductible contributions for all calendar years.
No distribution to you or anyone else from a Traditional IRA can qualify for
capital gains treatment under the federal income tax laws. Similarly, you are
not entitled to the special five- or ten-year averaging rule for lump-sum
distributions that may be available to persons receiving distributions from
certain other types of retirement plans. All distributions are taxed to the
recipient as ordinary income except the portion of a distribution that
represents a return of nondeductible contributions. Historically, so-called
"excess distributions" to you as well as "excess accumulations" remaining in
your account as of your date of death were subject to additional taxes. These
additional taxes no longer apply.
You must indicate on distribution requests whether or not federal income taxes
should be withheld. Redemption requests not indicating an election not to have
federal income tax withheld will be subject to withholding.
Any distribution that is properly rolled over will not be includable in your
gross income.
14. ARE THERE PENALTIES FOR EARLY DISTRIBUTION FROM A TRADITIONAL IRA?
Distributions from your Traditional IRA made before age 59 1/2 will be subject
(in addition to ordinary income tax) to a 10% nondeductible penalty tax unless
(i) the distribution is a return of nondeductible contributions, (ii) the
distribution is made because of your death, disability, or as part of a series
of substantially equal periodic payments over your life expectancy or the joint
life expectancy of you and your beneficiary, (iii) the distribution is made for
medical expenses in excess of 7.5% of adjusted gross income or is made for
reimbursement of medical premiums while you are unemployed, (iv) the
distribution is made to pay for certain higher education expenses for you, your
spouse, your child, your grandchild, or the child or grandchild of your spouse,
(v) subject to various limits, the distribution is used to purchase a first home
or, in limited cases, a second or subsequent home for you, your spouse, or your
or your spouse's child, grandchild or ancestor, or (vi) the distribution is an
exempt withdrawal of an excess contribution. The penalty tax may also be avoided
if the distribution is rolled over to another individual retirement account. See
paragraph 9 above for special rules applicable to distributions from a SIMPLE
IRA.
15. WHAT IF I ENGAGE IN A PROHIBITED TRANSACTION?
If you engage in a "prohibited transaction," as defined in section 4975 of the
Internal Revenue Code, your account will be disqualified, and the entire balance
in your account will be treated as if distributed to you and will be taxable to
you as ordinary income. Examples of prohibited transactions are:
(a) the sale, exchange, or leasing of any property between you and your
account,
(b) the lending of money or other extensions of credit between you and
your account,
(c) the furnishing of goods, services, or facilities between you and your
account.
If you are under age 59 1/2, you may also be subject to the 10% penalty tax on
early distributions.
16. WHAT IF I PLEDGE MY ACCOUNT?
If you use (pledge) all or part of your Traditional IRA as security for a loan,
then the portion so pledged will be treated as if distributed to you and will be
taxable to you as ordinary income during the year in which you make such pledge.
The 10% penalty tax on early distributions may also apply.
17. HOW ARE CONTRIBUTIONS TO A TRADITIONAL IRA REPORTED FOR FEDERAL TAX
PURPOSES?
Deductible contributions to your Traditional IRA may be claimed as a deduction
on your IRS Form 1040 for the taxable year contributed. If any nondeductible
contributions are made by you during a tax year, such amounts must be reported
on Form 8606 and attached to your Federal Income Tax Return for the year
contributed. If you report a nondeductible contribution to your Traditional IRA
and do not make the contribution, you will be subject to a $100 penalty for each
overstatement unless a reasonable cause is shown for not contributing. Other
reporting will be required by you in the event that special taxes or penalties
described herein are due. You must also file Form 5329 with the IRS for each
taxable year in which the contribution limits are exceeded, a premature
distribution takes place, or less than the required minimum amount is
distributed from your Traditional IRA.
18. HOW ARE EARNINGS ON MY ACCOUNT CALCULATED AND ALLOCATED?
The method of computing and allocating annual earnings is set forth in Article
VIII, Section 1 of the Individual Retirement Account Custodial Agreement. The
growth in value of your IRA is neither guaranteed nor projected.
Your Individual Retirement Account Plan has been approved as to form by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form of the Plan and does not represent a
determination of the merits of the Plan as adopted by you. You may obtain
further information with respect to your Individual Retirement Account from any
district office of the Internal Revenue Service.
19. INCOME TAX WITHHOLDING
You must indicate on distribution requests whether or not federal income taxes
should be withheld. Redemption requests not indicating an election not to have
federal income tax withheld will be subject to withholding.
20. OTHER INFORMATION
Information about the shares of each mutual fund available for investment by
your IRA must be furnished to you in the form of a prospectus governed by rules
of the Securities and Exchange Commission. Please refer to the prospectus for
detailed information concerning your mutual fund. You may obtain further
information concerning IRAs from any District Office of the Internal Revenue
Service.
Fees and other expenses of maintaining your account may be charged to you or
your account. The Custodian's current fee schedule is included below.
Annual maintenance fee per account............$ 12.50*
Transfer to successor trustee................. 15.00
Distribution to a participant................. 15.00
(exclusive of systematic withdrawal plans)
Refund of excess contribution................. 15.00
Federal wire fee ............................. 12.00
*capped at $25.00 per social security number.
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TRADITIONAL INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an Individual Retirement
Account (under Section 408(a) of the Internal Revenue Code) between the
Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in Section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
Section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of Section 408(m)) except as otherwise permitted by Section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section 1.401(a)(9)-
2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under Paragraph 3, or to the surviving spouse under Paragraph 4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date, April 1 following
the calendar year end in which the Depositor reaches age 70 1/2. By that date,
the Depositor may elect, in a manner acceptable to the Custodian, to have the
balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor
lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of
the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
Paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor
or, if the Depositor has not so elected, at the election of the beneficiary
or beneficiaries, either:
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries starting
by December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually have
been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under Paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with Paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under Section 408(i) and
Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) and related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations.
ARTICLE VIII
1. INVESTMENT OF ACCOUNT ASSETS
(a)All contributions to the custodial account shall be invested in the
shares of the Keeley Small Cap Value Fund, Inc. or, if available, any other
series of Keeley Small Cap Value Fund, Inc. or other regulated investment
companies for which [Investment Advisor] serves as investment advisor or
designates as being eligible for investment ("Investment Company"). Shares of
stock of an Investment Company shall be referred to as "Investment Company
Shares." To the extent that two or more funds are available for investment,
contributions shall be invested in accordance with the Depositor's investment
election.
(b)Each contribution to the custodial account shall identify the
Depositor's account number and be accompanied by a signed statement directing
the investment of that contribution. The Custodian may return to the
Depositor, without liability for interest thereon, any contribution which is
not accompanied by adequate account identification or an appropriate signed
statement directing investment of that contribution.
(c)Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to the
public. All distributions received on Investment Company Shares, including
both dividend and capital gain distributions, held in the custodial account
shall be reinvested in like shares. If any distribution of Investment Company
Shares may be received in additional like shares or in cash or other
property, the Custodian shall elect to receive such distribution in
additional like Investment Company Shares.
(d)All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its nominee. The Depositor shall
be the beneficial owner of all Investment Company Shares held in the
custodial account and the Custodian shall not vote any such shares, except
upon written direction of the Depositor, timely received, in a form
acceptable to the Custodian. The Custodian agrees to forward to the Depositor
each prospectus, report, notice, proxy and related proxy soliciting materials
applicable to Investment Company Shares held in the custodial account
received by the Custodian.
(e)The Depositor may, at any time, by written notice to the Custodian, in
a form acceptable to the Custodian, redeem any number of shares held in the
custodial account and reinvest the proceeds in the shares of any other
Investment Company upon the terms and within the limitations imposed by then
current prospectus of such other Investment Company in which the Depositor
elects to invest. By giving such instructions, the Depositor will be deemed
to have acknowledged receipt of such prospectus. Such redemptions and
reinvestments shall be done at the price and in the manner such shares are
then being redeemed or offered by the respective Investment Companies.
2. AMENDMENT AND TERMINATION
(a)Keeley Asset Management Corp., the investment advisor for Keeley Small Cap
Value Fund, Inc., may amend the Custodial Account (including retroactive
amendments) by delivering to Custodian and to the Depositor written notice of
such amendment setting forth the substance and effective date of the
amendment. The Custodian and the Depositor shall be deemed to have consented
to any such amendment not objected to in writing by the Custodian or
Depositor as applicable within thirty (30) days of receipt of the notice,
provided that no amendment shall cause or permit any part of the assets of
the custodial account to be diverted to purposes other than for the exclusive
benefit of the Depositor or his or her beneficiaries.
(b)The Depositor may terminate the custodial account at any time by
delivering to the Custodian a written notice of such termination.
(c)The custodial account shall automatically terminate upon distribution
to the Depositor or his or her beneficiaries of its entire balance.
3. TAXES AND CUSTODIAL FEES
Any income taxes or other taxes levied or assessed upon or in respect of the
assets or income of the custodial account and any transfer taxes incurred shall
be paid from the custodial account. All administrative expenses incurred by the
Custodian in the performance of its duties, including fees for legal services
rendered to the Custodian, in connection with the custodial account, and the
Custodian's compensation shall be paid from the custodial account, unless
otherwise paid by the Depositor or his or her beneficiaries. Sufficient shares
will be liquidated from the custodial account to pay such fees and expenses.
The Custodian's fees are set forth in a schedule provided to the Depositor.
Extraordinary charges resulting from unusual administrative responsibilities not
contemplated by the schedule will be subject to such additional charges as will
reasonably compensate the Custodian. Fees for refund of excess contributions,
transferring to a successor trustee or custodian, or redemption/reinvestment of
Investment Company Shares will be deducted from the refund or redemption
proceeds and the remaining balance will be remitted to the Depositor, or
reinvested or transferred in accordance with the Depositor's instructions.
4. REPORTS AND NOTICES
(a)The Custodian shall keep adequate records of transactions it is
required to perform hereunder. After the close of each calendar year, the
Custodian shall provide to the Depositor or his or her legal representative a
written report or reports reflecting the transactions effected by it during
such year and the assets and liabilities of the Custodial Account at the
close of the year.
(b)All communications or notices shall be deemed to be given upon receipt
by the Custodian at: Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 or the Depositor at his or her most recent address shown
in the Custodian's records. The Depositor agrees to advise the Custodian
promptly, in writing, of any change of address.
5. DESIGNATION OF BENEFICIARY
The Depositor may designate a beneficiary or beneficiaries to receive benefits
from the custodial account in the event of the Depositor's death. In the event
the Depositor has not designated a beneficiary, or if all beneficiaries shall
predecease the Depositor, the following persons shall take in the order named:
(a)The spouse of the Depositor;
(b)If the spouse shall predecease the Depositor or if the Depositor does
not have a spouse, then to the Depositor's estate.
The Depositor may also change or revoke any previously made designation of
beneficiary. A designation or change or revocation of a designation shall be
made by written notice in a form acceptable to and filed with the Custodian,
prior to the complete distribution of the balance in the custodial account. The
last such designation on file at the time of the Depositor's death shall govern.
If a beneficiary dies after the Depositor, but prior to receiving his or her
entire interest in the custodial account, the remaining interest in the
custodial account shall be paid to the beneficiary's estate.
6. MULTIPLE INDIVIDUAL RETIREMENT ACCOUNTS
In the event the Depositor maintains more than one individual retirement account
(as defined in Section 408(a)) and elects to satisfy his or her minimum
distribution requirements described in Article IV above by making a distribution
for another individual retirement account in accordance with Paragraph 6
thereof, the Depositor shall be deemed to have elected to calculate the amount
of his or her minimum distribution under this custodial account in the same
manner as under the individual retirement account from which the distribution is
made.
7. INALIENABILITY OF BENEFITS
The benefits provided under this custodial account nor the assets held therein
shall be subject to alienation, assignment, garnishment, attachment, execution
or levy of any kind and any attempt to cause such benefits or assets to be so
subjected shall not be recognized except to the extent as may be required by
law.
8. ROLLOVER CONTRIBUTIONS AND TRANSFERS
The Custodian shall have the right to receive rollover contributions and to
receive direct transfers from other custodians or trustees. All contributions
must be made in cash or check.
9. CONFLICT IN PROVISIONS
To the extent that any provisions of this Article VIII shall conflict with the
provisions of Articles IV, V and/or VII, the provisions of this Article VIII
shall govern.
10. APPLICABLE STATE LAW
This custodial account shall be construed, administered and enforced according
to the laws of the State of Wisconsin.
11. RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign at any time upon thirty (30) days notice in writing to
the Investment Company. Upon such resignation, the Investment Company shall
notify the Depositor, and shall appoint a successor custodian under this
Agreement. The Depositor or the Investment Company at any time may remove the
Custodian upon 30 days written notice to that effect in a form acceptable to and
filed with the Custodian. Such notice must include designation of a successor
custodian. The successor custodian shall satisfy the requirements of section
408(h) of the Code. Upon receipt by the Custodian of written acceptance of such
appointment by the successor custodian, the Custodian shall transfer and pay
over to such successor the assets of and records relating to the Custodial
Account. The Custodian is authorized, however, to reserve such sum of money as
it may deem advisable for payment of all its fees, compensation, costs and
expenses, or for payment of any other liability constituting a charge on or
against the assets of the Custodial Account or on or against the Custodian, and
where necessary may liquidate shares in the Custodial Account for such payments.
Any balance of such reserve remaining after the payment of all such items shall
be paid over to the successor Custodian. The Custodian shall not be liable for
the acts or omissions of any predecessor or successor custodian or trustee.
12. LIMITATION ON CUSTODIAN RESPONSIBILITY
The Custodian will not under any circumstances be responsible for the timing,
purpose or propriety of any contribution or of any distribution made hereunder,
nor shall the Custodian incur any liability or responsibility for any tax
imposed on account of any such contribution or distribution. Further, the
custodian shall not incur any liability or responsibility in taking or omitting
to take any action based on any notice, election, or instruction or any written
instrument believed by the Custodian to be genuine and to have been properly
executed. The Custodian shall be under no duty of inquiry with respect to any
such notice, election, instruction, or written instrument, but in its discretion
may request any tax waivers, proof of signatures or other evidence which it
reasonably deems necessary for its protection. The Depositor and the successors
of the Depositor including any executor or administrator of the Depositor shall,
to the extent permitted by law, indemnify the Custodian and its successors and
assigns against any and all claims, actions or liabilities of the Custodian to
the Depositor or the successors or beneficiaries of the Depositor whatsoever
(including without limitation all reasonable expenses incurred in defending
against or settlement of such claims, actions or liabilities) which may arise in
connection with this Agreement or the Custodial Account, except those due to the
Custodian's own bad faith, gross negligence or willful misconduct. The Custodian
shall not be under any duty to take any action not specified in this Agreement,
unless the Depositor shall furnish it with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian, or to
defend or engage in any suit with respect hereto unless it shall have first
agreed in writing to do so and shall have been fully indemnified to its
satisfaction.
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT FOR ROTH (AMERICAN DREAM)
IRAS
1. AM I ELIGIBLE TO CONTRIBUTE TO A ROTH IRA?
Anyone with compensation income whose adjusted gross income does not exceed the
limits described below is eligible to contribute to a Roth IRA. You may also
establish a Roth IRA to receive rollover contributions or transfers from another
Roth IRA or, in some cases, from a Traditional IRA. You may not roll amounts
into a Roth IRA from other retirement plans such as an employer-sponsored
qualified plan. However, current law does not appear to prohibit a rollover from
a qualified plan into a Traditional IRA and then from the Traditional IRA into a
Roth IRA.
2. WHEN CAN I MAKE CONTRIBUTIONS?
You may make annual contributions to your Roth IRA any time up to and including
the due date for filing your tax return for the year, not including extensions.
Unlike a Traditional IRA, you may continue to make regular contributions to your
Roth IRA even after you attain age 70 1/2. In addition, rollover contributions
and transfers (to the extent permitted as discussed below) may be made at any
time, regardless of your age.
3. HOW MUCH MAY I CONTRIBUTE TO A ROTH IRA?
You may make annual contributions to a Roth IRA in any amount up to 100% of your
compensation for the year or $2,000, whichever is less. The $2,000 limitation is
reduced by any contributions made by you or on your behalf to any other
individual retirement plan (such as a Traditional IRA). (Legislation pending as
of this printing clarifies that, for this purpose, the term "individual
retirement plan" does not include SEP IRAs or SIMPLE IRAs.) However, your
annual contribution limitation is not reduced by contributions you make to an
Education IRA that covers someone other than yourself. Qualifying rollover
contributions and transfers are not subject to these limitations.
In addition, if you are married and file a joint return, you may make
contributions to your spouse's Roth IRA. However, the maximum amount contributed
to both your own and to your spouse's Roth IRA may not exceed 100% of your
combined compensation or $4,000, whichever is less. The maximum amount that may
be contributed to either your Roth IRA or your spouse's Roth IRA is $2,000.
Again, these dollar limits are reduced by any contributions made by or on behalf
of your or your spouse you or your spouse to any other individual retirement
plan (such as a Traditional IRA), except that the limit is not reduced for
contributions either of you make to an Education IRA for someone other than
yourselves.
As noted in paragraph (1), your eligibility to contribute to a Roth IRA depends
on your adjusted gross income (as defined below). The amount that you may
contribute to a Roth IRA is reduced proportionately for adjusted gross income as
calculated above which exceeds the applicable dollar amount. The applicable
dollar amount is $95,000 for a taxpayer filing as an individual or head of
household and $150,000 for a taxpayer filing as a married individual filing a
joint tax return. The applicable dollar limit for a taxpayer filing as a married
individual filing a separate return is $0. If your adjusted gross income as
calculated above exceeds the applicable dollar amount by $15,000 or less
($10,000 or less in the case of a married individual filing jointly), you may
make a contribution to a Roth IRA. The amount you may contribute, however, will
be less than $2,000. (Legislation pending as of this printing would change the
phaseout range for a married individual filing separately to $0 to $10,000.)
Note that the amount you may contribute to a Roth IRA is not affected by your
participation in an employer-sponsored retirement plan.
For this purpose, your adjusted gross income (1) is determined without regard to
the exclusions from income arising under Section 135 (exclusion of certain
savings bond interest), Section 137 (exclusion of certain employer provided
adoption expenses) and Section 911 (certain exclusions applicable to U.S.
citizens or residents living abroad) of the Code, (2) is reduced by the amount
paid under an endowment contract described in Section 408(b) of the Code which
is properly allocated to the cost of life insurance, (3) takes into account the
passive loss limitations under Section 469 of the Code and any taxable benefits
under the Social Security Act and Railroad Retirement Act as determined in
accordance with Section 86 of the Code, (4) does not take into account income
from rollovers of Traditional IRAs, and (5) does take into account the deduction
for a Traditional IRA. (Legislation pending as of this printing indicates that
the deduction for a contribution to a Traditional IRA would not be taken into
account for determining your adjusted gross income.)
To determine the amount you may contribute to a Roth IRA (assuming you have at
least $2,000 of income), use the following calculations:
(a)Subtract the amount contributed on your behalf to all Traditional IRAs
and employer-sponsored individual retirement plans from $2,000. This amount
is known as the "maximum potential contribution."
(b)Subtract the applicable dollar amount from your adjusted gross income
as determined above. If the result is $15,000 or more ($10,000 or more in the
case of a married individual filing jointly), you cannot make a contribution
to a Roth IRA.
(c)Divide the above figure by $15,000 ($10,000 in the case of a married
individual filing jointly), and multiply that percentage by the maximum
possible contribution.
(d)Subtract the dollar amount (result from c) above) from the maximum
possible contribution to determine the amount you may contribute to a Roth
IRA.
(Legislation pending as of this printing indicates that you are eligible to make
a contribution to a Roth IRA of the lesser of: (i) $2,000 (assuming you have at
least $2,000 of income) less contributions to all other individual retirement
accounts or (ii) $2,000 minus the quantity $2,000 times the fraction determined
in part c))
If the contribution limit is not a multiple of $10 then it should be rounded up
to the next $10. If you are eligible to make any contribution, you may make a
minimum $200 contribution.
Your contribution to a Roth IRA is not reduced by any amount you contribute to
an Education IRA for the benefit of someone other than yourself. If you are the
beneficiary of an Education IRA, additional limits may apply to you. Please
contact your tax advisor for more information.
4. CAN I ROLLOVER OR TRANSFER AMOUNTS FROM OTHER IRAS?
You are allowed to "roll over" a distribution or transfer your assets from one
Roth IRA to another without any tax liability. Rollovers between Roth IRAs are
permitted once per year and must be accomplished within 60 days after the
distribution. In addition, if you are a single, head of household or married
filing jointly taxpayer and your adjusted gross income is not more than
$100,000, you may roll over amounts from another individual retirement plan
(such as a Traditional IRA) to a Roth IRA. Such amounts are subject to tax as if
they were additional income to you for the year, but are not subject to the 10%
penalty tax. (However, under legislation pending as of this printing, if the
amount rolled over is distributed before the end of the five-tax-year period
beginning with the beginning of the tax year of the rollover, a 10% penalty tax
will apply to the taxed portion of the rollover.)
If you roll over amounts from a Traditional IRA to a Roth IRA during 1998, you
may take advantage of special tax treatment. Under the special rules, you may
take your rollover into income as if one quarter of the amount rolled over was
distributed to you in 1998 and one quarter of the amount was distributed to you
in each of the following three years.
(Legislation pending as of this printing indicates that if you die prior to
taking all four amounts into income, the remaining amounts are included in
income for the year of your death unless you have a spouse and your spouse
elects to take those amounts into the spouse's income over the remaining
period.)
Subject to the foregoing limits, you may also directly convert a Traditional IRA
to a Roth IRA with similar tax results.
Furthermore, if you have made contributions to a Traditional IRA during the year
in excess of the deductible limit, you may convert those nondeductible IRA
contributions to contributions to a Roth IRA (subject to the contribution limit
for a Roth IRA).
You may not roll over amounts to a Roth IRA from a qualified retirement plan or
any other retirement plan that is not an individual retirement plan.
5. WHAT IF I MAKE AN EXCESS CONTRIBUTION?
Contributions that exceed the allowable maximum for federal income tax purposes
are treated as excess contributions. A nondeductible penalty tax of 6% of the
excess amount contributed will be added to your income tax for each year in
which the excess contribution remains in your account.
6. HOW DO I CORRECT AN EXCESS CONTRIBUTION?
If you make a contribution in excess of your allowable maximum, you may correct
the excess contribution and avoid the 6% penalty tax for that year by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for the tax year for which the
contribution was made. Any earnings on the withdrawn excess contribution may
also be subject to the 10% early distribution penalty tax if you are under age
59 1/2 or have not satisfied the five-year requirement described below. In
addition, although you will still owe penalty taxes for one or more years,
excess contributions may be withdrawn after the time for filing your tax return.
Finally, excess contributions for one year may be carried forward and applied
against the contribution limitation in succeeding years.
(Legislation pending as of this printing would permit an individual who is
partially or entirely ineligible for a Roth IRA to transfer amounts of up to
$2,000 to a nondeductible Traditional IRA (subject to reduction for amounts
remaining in the Roth IRA and for other Traditional IRA contributions).)
7. WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM A ROTH IRA?
You may at any time request distribution of all or any portion of your account.
However, distributions made prior to your attainment of age 59 1/2 (or in some
cases within five years of establishing your account) may produce adverse tax
consequences.
8. WHEN MUST DISTRIBUTIONS FROM A ROTH IRA BEGIN?
Unlike Traditional IRAs, there is no requirement that you begin distribution of
your account at any particular age.
9. ARE THERE DISTRIBUTION RULES THAT APPLY AFTER MY DEATH?
Your account must be distributed after your death in accordance with rules
similar to those that apply to distributions from a Traditional IRA. Thus,
although the IRS has not issued guidance it is expected that the rules will
require that your remaining interest in your Roth IRA will, at the election of
your beneficiary or beneficiaries, (i) be distributed by December 31 of the year
in which occurs the fifth anniversary of your death, or (ii) commence to be
distributed by December 31 of the year following your death over a period not
exceeding the life or life expectancy of your designated beneficiary or
beneficiaries.
It is expected that two additional distribution options will be available if
your spouse is the beneficiary: (i) payments to your spouse may commence as
late as December 31 of the year you would have attained age 70 1/2 and be
distributed over a period not exceeding the life or life expectancy of your
spouse, or (ii) your spouse can simply elect to treat your Roth IRA as his or
her own, in which case distributions will be required to commence by April 1
following the calendar year in which your spouse attains age 70 1/2.
10. HOW ARE DISTRIBUTIONS FROM A ROTH IRA TAXED FOR FEDERAL INCOME TAX
PURPOSES?
Amounts distributed to you are generally excludable from your gross income if
they (i) are paid after you attain age 59 1/2, (ii) are made to your
beneficiary after your death, (iii) are attributable to your becoming disabled,
(iv) subject to various limits, are made for the purchase of a first home (or
for a second or subsequent home in certain limited cases) for you, your spouse,
or your or your spouse's children, grandchildren, or parents, or (v) are rolled
over to another Roth IRA.
Regardless of the foregoing, if you or your beneficiary receive a distribution
within the five-taxable-year period starting with the beginning of the year to
which your initial contribution to your Roth IRA applies, the earnings on your
account are includible in taxable income. In addition, if you roll over funds to
your Roth IRA from another individual retirement plan (such as a Traditional IRA
or another Roth IRA into which amounts were rolled from a Traditional IRA), the
portion of a distribution attributable to rolled-over amounts which exceeds the
amounts taxed in connection with the conversion to a Roth IRA is includible in
income (and subject to penalty tax) if it is distributed prior to the end of the
five-tax-year period beginning with the start of the tax year during which the
rollover occurred. (Under legislation pending at the date of this printing, an
amount taxed in connection with a rollover would be subject to a 10% penalty tax
if it is distributed before the end of the five-tax-year period. The pending
legislation also suggests that if an individual makes multiple taxable rollovers
to the same Roth IRA, the five-year period runs from the date of the most recent
rollover.)
In any event, any part of a distribution to you that constitutes a return of
your contributions will not be included in your taxable income. Amounts
distributed to you are treated as coming first from your nondeductible
contributions. (Legislation pending as of this printing clarifies that the next
portion of a distribution is treated as coming from amounts which have been
rolled over from a Traditional IRA and are subject to the four-year recognition
treatment described above. Next, amounts are treated as coming from other
rollovers from a Traditional IRA. Any remaining amounts are treated as
distributed last.) Any portion of your distribution which does not meet the
criteria for exclusion from gross income is also subject to a 10% penalty tax.
Note that to the extent a distribution would be taxable to you, neither you nor
anyone else can qualify for capital gains treatment for amounts distributed from
your account. Similarly, you are not entitled to the special five- or ten-year
averaging rule for lump-sum distributions that may be available to persons
receiving distributions from certain other types of retirement plans. Rather,
the taxable portion of any distribution is taxed to you as ordinary income. Your
Roth IRA is not subject to taxes on excess distributions or on excess amounts
remaining in your account as of your date of death.
You may be required to indicate on distribution requests whether or not federal
income taxes should be withheld on the taxable portion (if any) of a
distribution from a Roth IRA. Redemption requests not indicating an election not
to have federal income tax withheld will be subject to withholding with respect
to the taxable portion (if any) of a distribution to the extent required under
federal law. (Note that legislation pending as of this printing clarifies that,
for federal tax purposes, Roth IRAs are taxed separately from Traditional IRAs,
Roth IRAs with rollovers are taxed separately from Roth IRAs without rollovers,
and Roth IRAs with rollovers with different five-year periods are taxed
separately.)
11. ARE THERE PENALTIES FOR EARLY DISTRIBUTION FROM A ROTH IRA?
As indicated above, earnings on your contributions that are distributed before
certain events are subject to various taxes.
12. WHAT IF I ENGAGE IN A PROHIBITED TRANSACTION?
If you engage in a "prohibited transaction," as defined in section 4975 of the
Internal Revenue Code, your account could lose its tax-favored status. Examples
of prohibited transactions are:
(a)the sale, exchange, or leasing of any property between you and your
account,
(b)the lending of money or other extensions of credit between you and
your account,
(c)the furnishing of goods, services, or facilities between you and your
account.
13. WHAT IF I PLEDGE MY ACCOUNT?
If you use (pledge) all or part of your Roth IRA as security for a loan, your
account may lose its tax-favored status.
14. HOW ARE CONTRIBUTIONS TO A ROTH IRA REPORTED FOR FEDERAL TAX PURPOSES?
As of the date of this printing, the Internal Revenue Service had not issued
forms for reporting information related to contributions to and distributions
from a Roth IRA.
15. HOW ARE EARNINGS ON MY ACCOUNT CALCULATED AND ALLOCATED?
The method of computing and allocating annual earnings is set forth in the Roth
Individual Retirement Account Custodial Agreement. The growth in value of your
IRA is neither guaranteed nor projected.
16. IS THERE ANYTHING ELSE I SHOULD KNOW?
Your Roth Individual Retirement Account Plan has been approved as to form by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form of the Plan and does not represent a
determination of the merits of the Plan as adopted by you. You may obtain
further information with respect to your Roth Individual Retirement Account from
any district office of the Internal Revenue Service. The statute provides that
Roth IRAs are to be treated the same as Traditional IRAs for most purposes. As
the IRS clarifies its interpretation of the statute, revised or updated
information will be provided.
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ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing a Roth IRA (under Section
408A of the Internal Revenue Code) between the depositor and the custodian.
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except
in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will be
accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married depositor who files separately, between $0 and $10,000. In the
case of a conversion, the custodian will not accept IRA Conversion Contributions
in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if
the depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m) except as otherwise permitted by section 408(m)(3),
which provides an exception for certain gold, silver, and platinum coins, coins
issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the depositor dies before his or her entire interest is distributed to
him or her and the grantor's surviving spouse is not the sole beneficiary, the
entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a)Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b)Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of the
depositor's death.
If distributions do not begin by the date described in (b), distribution method
(a) will apply.
2. In the case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's date
of death, such spouse will then be treated as the depositor.
ARTICLE VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under section 408(i) and
408A(d)(3)(E), regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service and
the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This Agreement will be amended from time to time to comply with the provisions
of the Code, related regulations, and other published guidance. Other amendments
may be made with the consent of the persons whose signatures appear below.
ARTICLE IX
1. INVESTMENT OF ACCOUNT ASSETS.
(a)All contributions to the custodial account shall be invested in the
shares of any regulated investment company ("Investment Company") for which
Keeley Asset Management Corp. serves as investment advisor, or any other
regulated investment company designated by the investment advisor. Shares
of stock of an Investment Company shall be referred to as "Investment
Company Shares."
(b)Each contribution to the custodial account shall identify the
depositor's account number and be accompanied by a signed statement directing
the investment of that contribution. The custodian may return to the
depositor, without liability for interest thereon, any contribution which is
not accompanied by adequate account identification or an appropriate signed
statement directing investment of that contribution.
(c)Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to the
public. All distributions received on Investment Company Shares held in the
custodial account shall be reinvested in like shares. If any distribution of
Investment Company Shares may be received in additional like shares or in
cash or other property, the custodian shall elect to receive such
distribution in additional like Investment Company Shares.
(d)All Investment Company Shares acquired by the custodian shall be
registered in the name of the custodian or its nominee. The depositor shall
be the beneficial owner of all Investment Company Shares held in the
custodial account and the custodian shall not vote any such shares, except
upon written direction of the depositor. The custodian agrees to forward to
the depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held in the
custodial account received by the custodian.
(e)The depositor may, at any time, by written notice to the custodian,
redeem any number of shares held in the custodial account and reinvest the
proceeds in the shares of any other Investment Company. Such redemptions and
reinvestments shall be done at the price and in the manner such shares are
then being redeemed or offered by the respective Investment Companies.
2. AMENDMENT AND TERMINATION.
(a)The custodian may amend the Custodial Account (including retroactive
amendments) by delivering to the depositor written notice of such amendment
setting forth the substance and effective date of the amendment. The
depositor shall be deemed to have consented to any such amendment not
objected to in writing by the depositor within thirty (30) days of receipt
of the notice, provided that no amendment shall cause or permit any part of
the assets of the custodial account to be diverted to purposes other than for
the exclusive benefit of the depositor or his or her beneficiaries.
(b)The depositor may terminate the custodial account at any time by
delivering to the custodian a written notice of such termination.
(c)The custodial account shall automatically terminate upon distribution
to the depositor or his or her beneficiaries of its entire balance.
3. TAXES AND CUSTODIAL FEES.
Any income taxes or other taxes levied or assessed upon or in respect of the
assets or income of the custodial account and any transfer taxes incurred shall
be paid from the custodial account. All administrative expenses incurred by
the custodian in the performance of its duties, including fees for legal
services rendered to the custodian, and the custodian's compensation shall be
paid from the custodial account, unless otherwise paid by the depositor or his
or her beneficiaries.
The custodian's fees are set forth in a schedule provided to the depositor.
Extraordinary charges resulting from unusual administrative responsibilities not
contemplated by the schedule will be subject to such additional charges as will
reasonably compensate the custodian. Fees for refund of excess contributions,
transferring to a successor trustee or custodian, or redemption/reinvestment of
Investment Company Shares will be deducted from the refund or redemption
proceeds and the remaining balance will be remitted to the depositor, or
reinvested or transferred in accordance with the depositor's instructions.
4. REPORTS AND NOTICES.
(a)The custodian shall keep adequate records of transactions it is
required to perform hereunder. After the close of each calendar year, the
custodian shall provide to the depositor or his or her legal representative a
written report or reports reflecting the transactions effected by it during
such year and the assets and liabilities of the Custodial Account at the
close of the year.
(b)All communications or notices shall be deemed to be given upon receipt
by the custodian at 615 E. Michigan St., Milwaukee, WI 53202 or the depositor
at his most recent address shown in the custodian's records. The depositor
agrees to advise the custodian promptly, in writing, of any change of
address.
5. DESIGNATION OF BENEFICIARY.
The depositor may designate a beneficiary or beneficiaries to receive benefits
from the custodial account in the event of the depositor's death. In the event
the depositor has not designated a beneficiary, or if all beneficiaries shall
predecease the depositor, the following persons shall take in the order named:
(a)The spouse of the depositor;
(b)If the spouse shall predecease the depositor or if the depositor does
not have a spouse, then to the personal representative of the depositor's
estate.
6. INALIENABILITY OF BENEFITS.
The benefits provided under this custodial account shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any kind
and any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent as may be required by law.
7. ROLLOVER CONTRIBUTIONS AND TRANSFERS.
Subject to the restrictions in Article I, the custodian shall have the right to
receive rollover contributions and to receive direct transfers from other
custodians or trustees. All contributions must be made in cash or check.
8. CONFLICT IN PROVISIONS.
To the extent that any provisions of this Article VIII shall conflict with the
provisions of Articles V, VI and/or VIII, the provisions of this Article IX
shall govern.
9. APPLICABLE STATE LAW.
This custodial account shall be construed, administered and enforced according
to the laws of the State of Wisconsin.
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INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT FOR EDUCATION IRAS
1. WHO IS ELIGIBLE FOR AN EDUCATION IRA?
Anyone may contribute to an Education IRA regardless of his or her relationship
to the beneficiary. The beneficiary of an Education IRA must be under age 18 at
the time a contribution is made to an Education IRA on his or her behalf. An
Education IRA may also be established to receive rollover contributions or
transfers from another Education IRA.
Education IRAs are subject to limitations based on the status of the contributor
as well as the status of the beneficiary. For purposes of this discussion,
except as noted, the term "beneficiary" is used to refer to an individual whose
education is to be financed, in part or in whole, through an Education IRA.
2. WHEN CAN I MAKE CONTRIBUTIONS TO AN EDUCATION IRA?
You may make contributions to an Education IRA for the calendar year regardless
of your age; however, you may not make a contribution to an Education IRA after
the beneficiary attains age 18. In addition, rollover contributions and
transfers (as discussed below) may be made at any time, regardless of the age of
the beneficiary.
3. HOW MUCH MAY I CONTRIBUTE TO AN EDUCATION IRA?
The total of all contributions made to all Education IRAs that cover a
particular beneficiary may not exceed $500 in a taxable year. It is the joint
responsibility of the contributor and the beneficiary to verify that excess
contributions are not made on behalf of a particular beneficiary. Qualifying
rollover contributions and transfers are not subject to these limitations. Note
that special rules apply to contributions to Education IRAs for purposes of gift
and estate taxes.
In addition, if your adjusted gross income (or combined income if you file a
joint tax return) as modified below exceeds certain limits, you are not eligible
to make a contribution to an Education IRA. For this purpose your adjusted
gross income is increased by amounts excluded under Section 911 (certain
exclusions applicable to U.S. citizens or residents living abroad), Section 931
(certain exclusions applicable to U.S. citizens or residents living in Guam,
American Samoa, or the Northern Mariana Islands), and Section 933 (certain
exclusions applicable to U.S. citizens and residents living in Puerto Rico) of
the Code.
The amount you may contribute to an Education IRA for a particular beneficiary
is reduced proportionately for adjusted gross income (as modified above) which
exceeds the applicable dollar amount. The applicable dollar amount is $95,000
for an individual, a married individual filing a separate tax return, or a head
of household and $150,000 for a married individual filing a joint tax return.
(These amounts are not adjusted for cost-of-living changes or otherwise.) If
your adjusted gross income as modified above exceeds the applicable dollar
amount by $15,000 or less ($10,000 or less in the case of a married individual
filing jointly), you may make a contribution to an Education IRA. The amount
you may contribute, however, will be less than $500.
To determine the amount you may contribute to an Education IRA, use the
following calculations:
(a)Subtract the applicable dollar amount from your adjusted gross income
as modified above. If the result is $15,000 or more ($10,000 or more in the
case of a married individual filing jointly), you may not make a contribution
to an Education IRA.
(b)Divide the above figure by $15,000 ($10,000 in the case of a married
individual filing jointly), and multiply that percentage by $500.
(c)Subtract the dollar amount (result from (b) above) from $500 to
determine the amount that you may contribute to an Education IRA.
In addition to the limitations described above, the $500 may be reduced by other
amounts contributed to an individual retirement plan for the benefit of a
particular beneficiary, but is not affected by the adjusted gross income of the
beneficiary.
If the beneficiary of the Education IRA also maintains a Traditional or Roth
IRA, his or her overall contributions to other individual retirement plans may
be limited. Please contact your tax advisor for more information.
4. CAN I ROLLOVER OR TRANSFER AMOUNTS FROM ANOTHER EDUCATION IRA?
Amounts may be "rolled over" from one Education IRA to another Education IRA
benefiting the same beneficiary. In addition, amounts may be rolled over
without any tax liability to benefit (i) the spouse of the beneficiary, (ii) an
ancestor of the beneficiary, (iii) a descendant of the beneficiary, of the
beneficiary's parents, or of the beneficiary's spouse, or (iv) the spouse of a
lineal descendant of an individual described in (iii). Rollovers between
Education IRAs may be made once per year and must be accomplished within 60 days
after the distribution.
5. WHAT IF I MAKE AN EXCESS CONTRIBUTION?
Contributions that exceed the allowable maximum for federal income tax
purposes are treated as excess contributions. A nondeductible penalty tax of 6%
of the excess amount contributed must be paid for each year in which the excess
contribution remains in the beneficiary's account.
6. HOW DO I CORRECT AN EXCESS CONTRIBUTION?
If a contribution in excess of the allowable maximum is made, it may be
corrected to avoid the 6% penalty tax for that year by withdrawing the excess
contribution and its earnings on or before the date, including extensions, for
filing the tax return for the contributor's tax year for which the contribution
was made. (Legislation pending as of this printing would use the beneficiary's
tax year rather than the contributor's.) Any earnings on the withdrawn excess
contribution will be taxable in the year the excess contribution was made and
will be subject to a 10% tax penalty.
7. WHAT FORM OF DISTRIBUTION ARE AVAILABLE FROM AN EDUCATION IRA?
Distributions may be made as a lump sum of the entire account, or distributions
of a portion of the account may be as requested.
8. WHEN MUST DISTRIBUTIONS FROM AN EDUCATION IRA BEGIN?
There is no requirement that a beneficiary begin distribution of an Education
IRA account at any particular age. (Legislation pending as of the date of this
printing would in general require distribution within 30 days of the earlier of
the beneficiary's death or attainment of age 30 and would deem distribution to
occur for any amounts not distributed within such time.)
9. ARE THERE DISTRIBUTION RULES THAT APPLY AFTER DEATH?
Special rules apply in the case of the divorce or death of a beneficiary of an
Education IRA. (In particular, under legislation pending as of this printing,
any balances to the credit of a beneficiary must be distributed to his or her
beneficiary within 30 days of death.)
10. HOW ARE DISTRIBUTIONS FROM AN EDUCATION IRA TAXED FOR FEDERAL INCOME TAX
PURPOSES?
Amounts distributed are generally excludable from gross income if they do not
exceed the beneficiary's "qualified higher education expenses" for the year or
are rolled over to another Education IRA. "Qualified higher education expenses"
generally include the cost of tuition, fees, books, supplies, and equipment for
enrollment at (i) accredited post-secondary educational institutions offering
credit toward a bachelor's degree, an associate's degree, a graduate-level or
professional degree or another recognized post-secondary credential and (ii)
certain vocational schools. In addition, room and board may be covered if the
beneficiary is at least a "half-time" student. This amount may be reduced by
certain scholarships, qualified state tuition programs, HOPE, Lifetime Learning
tax credits, and other amounts paid on the beneficiary's behalf. To the extent
payments during the year exceed such amounts, they are partially taxable and
partially nontaxable similar to payments received from an annuity. Any taxable
portion of a distribution is subject to a 10% penalty tax in addition to income
tax unless the distribution is due to the death or disability of the beneficiary
or made on account of scholarship received by the beneficiary. A beneficiary
may elect to waive the exclusion from gross income for qualified higher
education expenses and treat the entire distribution as if it were a payment
from an annuity.
To the extent a distribution is taxable, capital gains treatment does not apply
to amounts distributed from the account. Similarly, the special five- and ten-
year averaging rules for lump-sum distributions do not apply to distributions
from an Education IRA. The taxable portion of any distribution is taxed as
ordinary income except the portion of a distribution that represents a return of
nondeductible contributions.
The recipient of a distribution may need to indicate on certain distribution
requests whether or not federal income taxes should be withheld. Redemption
requests not indicating an election not to have federal income tax withheld will
be subject to withholding with respect to the taxable portion (if any) of the
distribution to the extent required under federal law.
11. WHAT IF A PROHIBITED TRANSACTION OCCURS?
If a "prohibited transaction," as defined in section 4975 of the Internal
Revenue Code, occurs, the Education IRA could be disqualified. Rules similar to
those that apply to Traditional IRAs will apply.
12. WHAT IF THE EDUCATION IRA IS PLEDGED?
If all or part of the Education IRA is pledged as security for a loan, rules
similar to those that apply to Traditional IRAs will apply. In general, those
rules provide that the amount pledged is treated as distributed.
13. HOW ARE CONTRIBUTIONS TO AN EDUCATION IRA REPORTED FOR FEDERAL TAX PURPOSES?
As of the date of this Disclosure Statement, the Internal Revenue Service had
not issued forms for reporting information related to contributions to and
distributions from an Education IRA.
14. HOW ARE EARNINGS ON AN EDUCATION IRA CALCULATED AND ALLOCATED?
The method of computing and allocating annual earnings is expected to be set
forth in an IRS pre-approved Education Individual Retirement Account Custodial
Agreement. The growth in value of the IRA is neither guaranteed nor projected.
15. IS THERE ANYTHING ELSE I SHOULD KNOW?
As the IRS clarifies its interpretation of the Education IRA provisions of the
Code, revised or updated information will be provided to you.
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EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an Education IRA (under
Section 530 of the Internal Revenue Code) between the beneficiary and the
custodian.
1. Except in the case of a rollover contribution described in section
530(d)(5) the custodian will accept only cash contributions and only up to a
maximum amount of $500 for any tax year of the benefit.
2. The amount a particular contributor may contribute toward the $500 limit
described in Article I is gradually reduced to $0 between certain levels of
adjusted gross income (AGI). For a single contributor or a married contributor
filing separately, the $500 annual contribution is phased out between AGI of
$95,000 and $110,000; for a married contributor who files jointly, between AGI
of $150,000 and $160,000. Adjusted gross income is defined in section 530(c)(2).
3. The beneficiary's interest in the balance in the custodial account if
nonforfeitable.
4. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)).
5. If the beneficiary dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed to the estate of
the beneficiary within 30 days.
6.(a)The depositor agrees to provide the custodian with information
necessary for the custodian to prepare any reports required under the
Internal Revenue Code or guidance published by the Internal Revenue
Service.
(b)The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
7.This Agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. If
and when the Internal Revenue Service issues a Model Form Custodial Account,
such Model Form shall be substituted for this document.
8.(a)Investment of Account Assets.
i. All contributions to the custodial account shall be invested in the
shares of any regulated investment company ("Investment Company") for which
Keeley Asset Management Corp. serves as investment advisor, or any other
regulated investment company designated by the investment advisor. Shares
of stock of an Investment Company shall be referred to as "Investment
Company Shares."
ii. Each contribution to the custodial account shall identify the
contributor's name and social security number and the beneficiary's account
number and shall be accompanied by a signed statement directing the
investment of that contribution into the beneficiary's account. The
custodian may return to the contributor, without liability for interest
thereon, any contribution which is not accompanied by such information and
such appropriate signed statement directing investment of that
contribution.
iii. Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to
the public. All distributions received on Investment Company Shares held in
the custodial account shall be reinvested in like shares.
iv. All Investment Company Shares acquired by the custodian shall be
registered in the name of the custodian or its nominee. The beneficiary
shall be the beneficial owner of all Investment Company Shares held in the
custodial account and the custodian shall not vote any such shares, except
upon written direction of the beneficiary (or if the beneficiary is a
minor, the party legally responsible for the beneficiary). The custodian
agrees to forward to the beneficiary (or if the beneficiary is a minor, the
party legally responsible for the beneficiary) each prospectus, report,
notice, proxy and related proxy soliciting materials applicable to
Investment Company Shares held in the custodial account received by the
custodian.
v. The beneficiary (or if the beneficiary is a minor, the party legally
responsible for the beneficiary) may, at any time, by written notice to the
custodian, redeem any number of shares held in the custodial account and
reinvest the proceeds in the shares of any other Investment Company. Such
redemptions and reinvestments shall be done at the price and in the manner
such shares are then being redeemed or offered by the respective Investment
Companies.
vi. To the extent a party legally responsible for the beneficiary makes or
has power to make decisions as to the investment of the beneficiary's
account, that party acknowledges that such decisions are binding and
nonvoidable.
(b)Amendment and Termination.
i. The custodian may amend the Custodial Account (including retroactive
amendments) by delivering to the beneficiary (or if the beneficiary is a
minor, the party legally responsible for the beneficiary) written notice
of such amendment setting forth the substance and effective date of the
amendment. The beneficiary shall (or if the beneficiary is a minor, the
party legally responsible for the beneficiary) be deemed to have consented
to any such amendment not objected to in writing by the beneficiary (or if
the beneficiary is a minor, the party legally responsible for the
beneficiary) within thirty (30) days of receipt of the notice, provided
that no amendment shall cause or permit any part of the assets of the
custodial account to be diverted to purposes other than for the exclusive
benefit of the beneficiary or his or her beneficiaries.
ii. The beneficiary (or if the beneficiary is a minor, the party legally
responsible for the beneficiary) may terminate the custodial account at any
time by delivering to the custodian a written notice of such termination.
iii. The custodial account shall automatically terminate upon distribution
to the beneficiary or his or her beneficiaries or estate of its entire
balance.
(c)Taxes and Custodial Fees. Any income taxes or other taxes levied or
assessed upon or in respect of the assets or income of the custodial account
and any transfer taxes incurred shall be paid from the custodial account. All
administrative expenses incurred by the custodian in the performance of its
duties, including fees for legal services rendered to the custodian, and the
custodian's compensation shall be paid from the custodial account, unless
otherwise paid by the beneficiary or his or her beneficiaries.
The custodian's fees are set forth in a schedule provided to the
beneficiary. Extraordinary charges resulting from unusual administrative
responsibilities not contemplated by the schedule will be subject to such
additional charges as will reasonably compensate the custodian. Fees for
refund of excess contributions, transferring to a successor trustee or
custodian, or redemption/reinvestment of Investment Company Shares will be
deducted from the refund or redemption proceeds and the remaining balance will
be remitted to the beneficiary, or reinvested or transferred in accordance
with the beneficiary's (or if the beneficiary is a minor, the party legally
responsible for the beneficiary) instructions.
(d)Reports and Notices.
i. The custodian shall keep adequate records of transactions it is required
to perform hereunder. After the close of each calendar year, the custodian
shall provide to the beneficiary or his or her legal representative a
written report or reports reflecting the transactions effected by it during
such year and the assets and liabilities of the Custodial Account at the
close of the year.
ii. All communications or notices shall be deemed to be given upon receipt
by the custodian at 615 E. Michigan St., Milwaukee, WI 53202 or the
beneficiary (or if the beneficiary is a minor, the party legally
responsible for the beneficiary) at his most recent address shown in the
custodian's records. The beneficiary (or if the beneficiary is a minor, the
party legally responsible for the beneficiary) agrees to advise the
custodian promptly, in writing, of any change of address.
e. Inalienability of Benefits. The benefits provided under this custodial
account shall not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind and any attempt to cause such
benefits to be so subjected shall not be recognized except to the extent as
may be required by law.
f. Rollover Contributions and Transfers. The custodian shall have the right to
receive rollover contributions and to receive direct transfers from other
custodians or trustees. All contributions must be made in cash or check.
g Conflict in Provisions. To the extent that any provisions of this Article
VII shall conflict with the provisions of Articles I through VI, the
provisions of this Article VII shall govern.
h. Applicable State Law. This custodial account shall be construed,
administered and enforced according to the laws of the State of Wisconsin.
KEELEY SMALL CAP VALUE FUND, INC.
401 South La Salle Street
Suite 1201
Chicago, IL 60605
MUTUAL FUND SERVICES
615 EAST MICHIGAN STREET
P.O. BOX 701
MILWAUKEE, WI 53201-0701
800-338-1579
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KEELEY SMALL CAP VALUE FUND, INC.
===============================================================================
IRA APPLICATION
Mail To: Overnight Express Mail To:
KEELEY Small Cap Value Fund, Inc. KEELEY Small Cap Value Fund, Inc.
c/o Firstar Trust Company c/o Firstar Trust Company
Mutual Fund Services Mutual Fund Services
P.O. Box 701 615 E. Michigan St., 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Please use this Application only for registration of a new IRA, Roth IRA or SEP-
IRA account. To obtain additional Applications or for help in completing this
Application please call 1-888-933-5391.
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A. REGISTRATION
Name (First) ____________________(Initial)_____(Last)________________________
Social Security Number__________________ Birthdate (Mo/Day/Yr)_______________
(Must be of legal age)
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B. MAILING ADDRESS
Address______________________________________________________________________
City/State/Zip_______________________________________________________________
Daytime Phone Number___________________Evening Phone Number__________________
___ Duplicate Confirmation to:
Name (First) __________________(Initial)_____(Last)______________________
Address__________________________________________________________________
City/State/Zip___________________________________________________________
- --------------------------------------------------------------------------------
C. BENEFICIARY DESIGNATION (Optional*)
Name (First) ____________________(Initial)_____(Last)________________________
Social Security Number__________________ Birthdate (Mo/Day/Yr)_______________
(Must be of legal age)
Relationship_________________________________________________________________
Address______________________________________________________________________
City/State/Zip_______________________________________________________________
Daytime Phone Number__________________ Evening Phone Number__________________
- -------------------------------------------------------------------------------
D. TYPE OF IRA (Please select only one of the following account types.)
___ Individual Retirement Account ($250 minimum)
___ Rollover IRA (No minimum)
___ Roth Conversion IRA ($250 minimum)
___ Roth IRA ($250 minimum)
___ SEP-IRA (IRS Form 5305-SEP is required with your Application.)
One application for each employee.
___ Spousal IRA Account for non-income earning spouse ($250 minimum.)
One application must be completed for each individual.
- --------------------------------------------------------------------------------
E. TYPE OF CONTRIBUTION
(Please select one of the following types of contributions.)
___ Yearly Contribution for Tax Year_________________ (If prior year, must be
mailed on or before April 15th.)
___ Transfer (Assets are a direct transfer from previous Custodian.) Please
attach IRA Transfer Form.
___ Rollover from previous IRA (You had physical receipt of assets for less
than 60 days.)
___ Direct Rollover of Assets from your employer-sponsored plan (You did not
have receipt of assets.) Please indicate previous account type:
___ Corporate ___ Pension Plan ___ Profit Sharing Plan ___ 401(k)
___ 403(b) ___ Other (please specify)______________________________
- -------------------------------------------------------------------------------
F. YOUR INVESTMENT INSTRUCTIONS
Fill in the amount to be invested in each Fund. (Minimum investment is $100
for the Firstar Money Market Funds; no minimum for the KEELEY Small Cap
Value Fund.)
Amount
____________________________________________________________________________
___ KEELEY Small Cap Value Fund $
____________________________________________________________________________
___ Firstar Money Market Fund $
____________________________________________________________________________
(Please remember to sign the reverse side.) -over-
- --------------------------------------------------------------------------------
G. TELEPHONE EXCHANGE PRIVILEGE* (Optional)
___ Check this box to allow telephone exchanges between identically
registered KEELEY Small Cap Value Fund and Firstar Money Market Fund
accounts. A $250 minimum applies to exchanges.
*A $5 fee will be applied to any Telephone Exchange.
- --------------------------------------------------------------------------------
H. RIGHTS OF ACCUMULATION
___ I or my spouse currently have the following account(s) which may make me
eligible for sales charge discounts through Rights of Accumulation as
described in the Prospectus.
Account Number_______________________Account Number______________________
- --------------------------------------------------------------------------------
I. SPOUSAL CONSENT (If applicable)
Consent of Spouse: Spousal consent is required in community property and
marital property states where an IRA Depositor wishes to name a beneficiary
other than, or in addition to, his/her spouse. A Depositor's spouse who
resides in a community property or marital property state must sign the
consent below.
I hereby consent to and join in the designation of beneficiary above. I give
the Depositor any interest I have in the funds deposited in this account.
Signature of Spouse (If applicable)_____________________ Date ______________
- -------------------------------------------------------------------------------
J. ACKNOWLEDGEMENT AND SIGNATURE
I adopt the KEELEY Small Cap Value Fund IRA, appointing Firstar Trust
Company to act as Custodian and to perform administrative services specified
in the IRA Custodial Agreement. I have received and read the Prospectus for
the Fund(s) in which I am making my contribution, and have read and
understand the IRA Custodial Agreement and Disclosure Statement. I certify
under penalties of perjury that my Social Security Number (listed in Section
A) is correct and that I am of legal age. If I am opening this IRA with a
distribution from an employer-sponsored retirement plan or another
individual retirement account, I certify that the distribution qualifies as
a rollover contribution. I understand that the Custodian will charge fees
that are shown in the disclosure statement and they may be separately billed
or collected by redeeming sufficient shares from each portfolio account
balance. I will supply the Internal Revenue Service with information as to
any taxable year as required.
I have read, accept and incorporate the Custodial Agreement herein, by
reference. I appoint Firstar Trust Company or its successors, as Custodian
of the account(s).
YOUR SIGNATURE ______________________________ Date __________________________
- --------------------------------------------------------------------------------
K. ACCEPTANCE
Custodian Authorization: Firstar Trust Company hereby accepts its
appointment as Custodian of the above IRA account and upon receipt of
assets, will deposit such assets in a KEELEY Small Cap Value Fund IRA or a
Firstar Money Market IRA on behalf of the Depositor authorizing this
transfer or direct rollover.
FIRSTAR TRUST COMPANY
- --------------------------------------------------------------------------------
L. DEALER INFORMATION
(Please be sure to complete representative's first name and middle initial.)
Dealer Name_________________________________________________________________
DEALER MAIN OFFICE__________________________________________________________
Address_____________________________________________________________________
City/State/Zip______________________________________________________________
Telephone Number____________________________________________________________
Representative Name (Last)__________________(First)__________(Initial)______
REPRESENTATIVE BRANCH OFFICE
Address_____________________________________________________________________
City/State/Zip______________________________________________________________
Telephone Number______________________ Rep's A.E. Number____________________
1/98
- --------------------------------------------------------------------------------
KEELEY SMALL CAP VALUE FUND, INC.
===============================================================================
IRA TRANSFER FORM
Mail To: Overnight Express Mail To:
KEELEY Small Cap Value Fund, Inc. KEELEY Small Cap Value Fund, Inc.
c/o Firstar Trust Company c/o Firstar Trust Company
Mutual Fund Services Mutual Fund Services
P.O. Box 701 615 E. Michigan St., 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Important phone number for the KEELEY Small Cap Value Fund information,
prices and literature 1-888-933-5391.
- --------------------------------------------------------------------------------
A. INSTRUCTIONS
Use this Form when transferring funds from an existing IRA to a KEELEY Small
Cap Value Fund IRA.
If you are establishing a new account, you must also fill out a KEELEY Small
Cap Value Fund IRA Application.
INVESTORS ARE REMINDED THAT:
- Your current Custodian/Trustee may require that you obtain a signature
guarantee to process this transfer.
- A signature guarantee may be obtained by a domestic commercial bank, trust
company, a member firm of a national securities exchange, or a savings and
loan association. A signature guarantee by a notary public will NOT be
accepted.
- --------------------------------------------------------------------------------
B. INVESTOR INFORMATION
Name (First) ____________________ (Initial)_____ (Last)______________________
Social Security Number_______________________________________________________
Address______________________________________________________________________
City/State/Zip_______________________________________________________________
Daytime Phone Number__________________ Evening Phone Number__________________
- --------------------------------------------------------------------------------
C. PLEASE TRANSFER MY IRA FROM:
Name of current Custodian ___________________________________________________
(bank, savings and loan, mutual fund, etc.)
Address _____________________________________________________________________
City/State/Zip ______________________________________________________________
Account or Certificate of Deposit (CD) Number* ______________________________
*Transfer: ___ Immediately ___ At maturity
Maturity Date (if applicable) _______________________________________________
- --------------------------------------------------------------------------------
D. PLEASE CHECK ONE:
___ Invest in my existing KEELEY Small Cap Value Fund IRA,
account number __________________________________________________________
___ Open a new*
___ IRA ___ SEP-IRA ___ Roth IRA ___ Roth Conversion IRA**
Year Established_____________
___ Simple IRA (Year in which traditional
IRA was converted to a
___ KEELEY Small Cap Value Fund Roth IRA)
___ Firstar Money Market Fund
* If you are opening a new account, this Form must be accompanied by a
completed IRA Application.
** Only available to individuals with single or joint Adjusted Gross Income of
$100,000 or less.
- --------------------------------------------------------------------------------
E. CONVERSION OF TRADITIONAL IRA TO ROTH IRA
___ Check here if you are distributing assets from a Traditional IRA with
the intention of establishing a Conversion Roth IRA.
- --------------------------------------------------------------------------------
F. SPECIAL NOTE
___ I am over 70 1/2 and the minimum required distribution for the current
calendar year has been withheld from the assets being transferred.
- --------------------------------------------------------------------------------
G. SIGNATURE (Exactly as registered.)
To current Custodian:
Please consider this your authority to sell ___ all of my assets
$________________________________ of my assets in the account identified in
Section C above and prepare a check to KEELEY Small Cap Value Fund. It is my
intention to transfer these assets to the above-named fund(s) for which
Firstar Trust Company acts as Custodian.
Please send the check representing the assets, along with a copy of this Form
to the address below. Send check to:
Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
I certify that I have received and read the Prospectus for the Fund(s) into
which I am transferring my IRA. Thank you for your prompt handling.
Your Signature__________________________________________ Date________________
Signature Guarantee (if required by current Custodian)_______________________
- --------------------------------------------------------------------------------
H. ACCEPTANCE
Custodian Authorization: Firstar Trust Company hereby accepts its appointment
as Custodian of the above IRA account and upon receipt of assets, will
deposit such assets in a KEELEY Small Cap Value Fund IRA or a Firstar Money
Market IRA on behalf of the Depositor authorizing this transfer or direct
rollover.
FIRSTAR TRUST COMPANY
1/98
PORTICO FUNDS, INC.
DISTRIBUTION AND SERVICE PLAN
This Distribution and Service Plan (the "Plan") has been adopted by the Board of
Directors of Portico Funds, Inc. in conformance with Rule 12b-1 under the
Investment Company Act of 1940 (the "Act").
SECTION 1. Upon the recommendation of Sunstone Financial Group, Inc.
("Sunstone"), the distributor and administrator of Portico Funds, Inc. ("Portico
Funds"), any officer of Portico Funds is authorized to execute and deliver, in
the name and on behalf of Portico Funds, written agreements based on the form
attached hereto as Appendix A or any other form duly approved by the Board of
Directors ("Agreements") with securities dealers, financial institutions and
other industry professionals that are shareholders or dealers of record or which
have a servicing relationship with the beneficial owners of Shares of Portico
Funds ("Shareholder Organizations"). Pursuant to such Agreements, Shareholder
Organizations shall provide distribution and support services as set forth
therein to their clients who acquire and beneficially own Shares of any Fund
offered by Portico Funds in consideration of a fee, computed monthly in the
manner set forth in the Agreements, at an annual rate of up to .25% of the
average daily net asset value of the Shares beneficially owned by such clients.
Firstar Trust Company and its affiliates are eligible to become Shareholder
Organizations and to receive fees under this Plan.
SECTION 2. Sunstone shall monitor the arrangements pertaining to Portico Funds'
Agreements with Shareholder Organizations in accordance with the terms of
Sunstone's administration agreement with Portico Funds. Sunstone shall not,
however, be obliged by this Plan to recommend, and Portico Funds shall not be
obliged to execute, any Agreement with any qualifying Shareholder Organization.
SECTION 3. So long as this Plan is in effect, Sunstone shall provide to Portico
Funds' Board of Directors, and the Directors shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and the purposes
for which such expenditures were made.
SECTION 4. This Plan shall become effective immediately with respect to each
particular Fund upon the approval of the Plan (and the form of Agreement
attached hereto) by (a) a majority of the Board of Directors, including a
majority of the Directors who are not "interested persons," as defined in the
Act, of Portico Funds and have no direct or indirect financial interest in the
operation of this Plan or in any Agreement related to this Plan (the
"Disinterested Directors"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan (and form of
Agreement), and (b) a majority (as defined in the Act) of the outstanding Shares
of such Fund.
SECTION 5. Unless sooner terminated, this Plan shall continue until February
29, 1995 and thereafter shall continue automatically for successive annual
periods, provided such continuance is approved at least annually in the manner
set forth in Section 4(a).
SECTION 6. This Plan may be amended at any time with respect to any Fund by the
Board of Directors, provided that (a) any amendment to increase materially the
costs (whether for distribution or any other purpose) which such Fund may bear
pursuant to this Plan shall be effective only upon the favorable vote of a
majority (as defined in the Act) of the outstanding Shares of such Fund, and (b)
any material amendment of the terms of this Plan shall become effective only
upon the approvals set forth in Section 4(a).
SECTION 7. This Plan is terminable at any time with respect to any Fund by (a)
vote of a majority of the Disinterested Directors, or (b) vote of a majority (as
defined in the Act) of the Shares of such Fund.
SECTION 8. While this Plan is in effect, the selection and nomination of those
Directors who are not "interested persons" (as defined in the Act) of Portico
Funds shall be committed to the discretion of such non-interested Directors.
SECTION 9. All expenses incurred by Portico Funds with respect to the Shares of
a particular Fund in connection with Agreements and the implementation of this
Plan shall be borne entirely by such Fund.
SECTION 10. This Plan was originally adopted by Portico Funds as of February
25, 1988, and last readopted as of February 15, 1991.
KEELEY SMALL CAP VALUE FUND, INC. EXHIBIT 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
TOTAL RETURN
For the one year period ended September 30, 1997
Total Return = (Ending Redeemable Value/Initial Value) -1
Total return = 46.65%
46.65% = (1,466.45/1,000) -1
For the period from October 1, 1993 (commencement of operations)
to September 30, 1997
Cumulative Total Return = (Ending Redeemable Value/Initial Value) -1
Total return = 113.36%
113.36% = (2,133.56/1,000) -1
1/n
Total Return = (Ending Redeemable Value/Initial Value) -1
Total return = 11.60%
1/4
20.86% = (2,133.56/1,000) -1
POWER OF ATTORNEY
KEELEY SMALL CAP VALUE FUND, INC.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, members of the Board
of Directors of the Keeley Small Cap Value Fund, Inc. (the "Fund"), hereby
constitute and appoint John L. Keeley, Jr. and Mark E. Zahorik, and each of
them, their true and lawful attorney and agent to do any and all acts and things
to execute, including in electronic format, any and all instruments which said
attorney and agent may deem necessary or desirable to enable the Fund to comply
with the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, and any rules, regulations and requirements of
United States Securities and Exchange Commission thereunder in connection with
the registration under said Acts, including specifically, but without limiting,
the generality of the foregoing power and authority to sign the name of the
undersigned in their capacity as members of the Board of Directors to
Registration Statements and Amendments to Registration Statements filed with the
United States Securities and Exchange Commission with respect to shares issued
by the Fund and to any and all instruments or documents filed as part of, or in
connection with, said amendments to the Registration Statement; and the
undersigned hereby ratify and confirm all that said attorney and agent shall do
or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have subscribed to these presents,
this eighth day of December, 1997.
/s/ John G. Kyle
_________________________________
John G. Kyle
/s/ Elwood P. Walmsley
_________________________________
Elwood P. Walmsley
POWER OF ATTORNEY
KEELEY SMALL CAP VALUE FUND, INC.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, members of the Board
of Directors of the Keeley Small Cap Value Fund, Inc. (the "Fund"), hereby
constitute and appoint John L. Keeley, Jr. and Mark E. Zahorik, and each of
them, their true and lawful attorney and agent to do any and all acts and things
to execute, including in electronic format, any and all instruments which said
attorney and agent may deem necessary or desirable to enable the Fund to comply
with the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, and any rules, regulations and requirements of
United States Securities and Exchange Commission thereunder in connection with
the registration under said Acts, including specifically, but without limiting,
the generality of the foregoing power and authority to sign the name of the
undersigned in their capacity as members of the Board of Directors to
Registration Statements and Amendments to Registration Statements filed with the
United States Securities and Exchange Commission with respect to shares issued
by the Fund and to any and all instruments or documents filed as part of, or in
connection with, said amendments to the Registration Statement; and the
undersigned hereby ratify and confirm all that said attorney and agent shall do
or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have subscribed to these presents,
this 24th day of December, 1997.
/s/ John F. Lesch
________________________
John F. Lesch
POWER OF ATTORNEY
KEELEY SMALL CAP VALUE FUND, INC.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, members of the Board
of Directors of the Keeley Small Cap Value Fund, Inc. (the "Fund"), hereby
constitute and appoint John L. Keeley, Jr. and Mark E. Zahorik, and each of
them, their true and lawful attorney and agent to do any and all acts and things
to execute, including in electronic format, any and all instruments which said
attorney and agent may deem necessary or desirable to enable the Fund to comply
with the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, and any rules, regulations and requirements of
United States Securities and Exchange Commission thereunder in connection with
the registration under said Acts, including specifically, but without limiting,
the generality of the foregoing power and authority to sign the name of the
undersigned in their capacity as members of the Board of Directors to
Registration Statements and Amendments to Registration Statements filed with the
United States Securities and Exchange Commission with respect to shares issued
by the Fund and to any and all instruments or documents filed as part of, or in
connection with, said amendments to the Registration Statement; and the
undersigned hereby ratify and confirm all that said attorney and agent shall do
or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have subscribed to these presents,
this 15th day of January, 1998.
/s/ Michael J. O'Brien
________________________
Michael J. O'Brien
<TABLE> <S> <C>
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<NAME> KEELEY SMALL CAP VALUE FUND, INC.
<S> <C>
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<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 12,299,032
<INVESTMENTS-AT-VALUE> 20,847,056
<RECEIVABLES> 78,580
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<NET-ASSETS> 20,824,111
<DIVIDEND-INCOME> 110,646
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<EXPENSES-NET> (354,813)
<NET-INVESTMENT-INCOME> (239,612)
<REALIZED-GAINS-CURRENT> 909,527
<APPREC-INCREASE-CURRENT> 6,072,957
<NET-CHANGE-FROM-OPS> 6,742,872
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (427,349)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 248,478
<NUMBER-OF-SHARES-REDEEMED> (51,858)
<SHARES-REINVESTED> 28,064
<NET-CHANGE-IN-ASSETS> 10,008,807
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 142,919
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 354,813
<AVERAGE-NET-ASSETS> 14,462,078
<PER-SHARE-NAV-BEGIN> 14.52
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> 7.77
<PER-SHARE-DIVIDEND> 0
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