STOCK DIVIDEND FUND, INC.
Ticker Symbol: SDIVX
Growth and Income
8150 N. Central Expressway
For Information, Shareholder Services and Requests:
Toll Free 1-800-704-6072
For online Prospectus, Statement of Additional Information and
Reports to Shareholders: www.funddocuments.com
The Securities and Exchange Commission has not approved or disapproved of these securities, nor has the Commission determined that this Prospectus is complete or accurate. Any representation to the contrary is a criminal offense.
IRA ACCOUNTS 11
FOR MORE INFORMATION Cover
Shareholder Fees (fees paid directly from your investment):
Annual Fund Operating Expenses (Expenses that are deducted from Fund assets):
Distribution (12b-1) Fees None
Other Expenses** 0.00%
Total Annual Fund Operating Expenses 0.85%
* The Investment Advisor has contractually agreed to pay all operating expenses of the Fund except brokerage, interest, taxes, extraordinary legal and other extraordinary expenses. This agreement is renewed annually and may be terminated at any time upon 60 days prior written notice, without payment of penalty, by the Fund’s Board of Directors or by a vote of the majority of outstanding voting shares of the Fund.
** The Fund does not expect to incur any “Other Expenses”.
Example: This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the operating expenses of the Fund remain the same. Based on these assumptions your costs would be:
$87 $271 $471 $1,049
Portfolio Turnover Policy: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 38.45% of the average value of its portfolio. The Investment Advisor will attempt to keep turnover to a minimum.
a) changing stock market and economic conditions may cause total returns to
go down over short and even long periods of time.
b) the investment strategies may not prove to be effective.
c) periods of declining stock market prices may cause investing in common
stock securities by the public to fall out of favor, thereby causing the Fund to underperform or lose money.
d) changes in the tax treatment on stock dividends may adversely affect the
value of dividend paying stocks.
e) The Fund invests mainly in
Non-Diversification risk: The Fund is non-diversified which means that it may invest a relatively high percentage of its assets in a limited number of securities. As a result, the performance of the Fund may be more subject to the moves of an individual company. The Fund seeks only enough diversification in securities selection to maintain Federal non-taxable status under Sub-Chapter M of the Internal Revenue Code. See section “Tax
consequences” of this prospectus for information about requirements for Sub-Chapter M for the Fund.
Who should invest: This Fund is best suited for disciplined long-term investors who want to invest in a portfolio of dividend paying companies for growth and income.
Who should not invest: This Fund is not recommended for investors who are short term oriented and not tolerant of daily price fluctuations.
Risk/Return Bar Chart and Performance Table: The bar chart and table below provide an indication of the risks of investing in Stock Dividend Fund. The chart shows the changes in the Fund’s performance since inception. The table compares the Fund’s returns to a relative comparison benchmark. After-tax returns are calculated using historical highest federal tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an individual investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold Fund shares through tax-deferred accounts such as 401(k) plans or IRA’s. Past results are not an indication of future performance.
Annual Percentage Returns
-30% -20% -10% 0% 10% 20% 30%
2004* 0.68% X
2005 6.65% X
2006 21.19% X
2007 5.14% X
2008 (35.96)% X
2009 18.51% X
2010 18.43% X
2011 8.09% X
2012 13.80% X
2013 28.25% X
2014 (2.62)% X
2015 (16.79)% X
2016 36.37% X
2017 23.07% X
2018 (5.77)% X
2019 16.22% X
2020 (1.51)% X
2021 22.78% X
*Beginning operations December 27, 2004 through December 31, 2004.
During the entire period shown in the chart above, the highest return for a calendar quarter was 16.95% while the lowest return for a quarter was (28.31)%. These returns occurred in quarters ending September 30, 2009 and December 31, 2008, respectively.
Average Annual Total Returns
for the Year ended December 31, 2021
1 Year 5 Year 10 Year
Stock Dividend Fund
Return Before Taxes 22.78% 10.25% 10.12%
Return After Taxes on Distributions 17.86% 8.55% 8.63%
Return After Taxes on Distributions 17.60% 8.35% 8.15%
S&P 500 Index** 28.68% 18.45% 16.51%
**Includes dividend reinvestment compounding and no deduction for fees,
expenses or taxes)
Investment Advisor and Portfolio Manager: Adams Asset Advisors, LLC is the investment advisor to the Fund. Steven Adams owns Adams Asset Advisors, LLC and has also been the portfolio manager of the Fund since inception. Mr. Adams is responsible for day-to-day operation of the Fund. See the “MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE” section of this prospectus for additional information.
Tax Information: Dividends and capital gain distributions that you receive from the Fund, whether reinvested in Fund shares or paid in cash, are taxable to you at either ordinary income or capital gains rates unless you are investing through a tax-free plan. See “TAX INFORMATION” section of this prospectus for additional information.
Dallas, TX, 75206. Laura S. Adams is a Member of the Investment Advisor and is also President of the Fund. Steven Adams, Laura’s husband, is portfolio
manager of the Fund. Mr. Adams has a BSME from U.T. Austin and MBA from
Dartmouth’s Tuck School. Prior to joining Adams Asset Advisors, LLC in March 2005, Mr. Adams worked as a Private Wealth Advisor at Goldman Sachs for over 10 years and then at Merrill Lynch as Senior Vice President, Investments for over 7 years.
The Investment Advisor will provide the following services to the Fund:
1. Continuous review of the portfolio.
2. Recommend to the Fund when and to what extent which securities the Fund should purchase or sell according to the Fund’s investment methodology.
3. Pay the salaries of Fund employees who may be officers or directors or employees of the Investment Advisor. There are currently no salaried employees of the Fund and none are contemplated at this time.
4. Pay all operating expenses of the Fund, except brokerage fees and commissions, taxes, interest, extraordinary legal and other extraordinary expenses.
5. Be the transfer agent of the Fund by handling all share purchases and redemptions.
On April 19, 2004 the Directors of the Fund approved an advisory contract with the Advisor. This Agreement will continue on a year to year basis provided that approval is voted on at least annually by specific approval of the Board of Directors of the Fund or by vote of the holders of a majority of the outstanding voting securities of the Fund. In either event, it must also be approved by a majority of Directors of the Fund who are neither parties to the agreement or interested persons as defined in the Investment Company Act of 1940 at a meeting called for the purpose of voting on such approval.
Contract Terms: Under the Agreement, the Advisor will furnish investment direction on the basis of an ongoing review using the appropriate methodology to determine when and what securities will be purchased or disposed by designated Fund personnel. The Agreement may be terminated at any time, without payment of penalty, by the Board of Directors or by vote of a majority of the outstanding voting securities of the Fund on not more than 60 days written notice to the Advisor. In the event of its assignment, the Agreement will terminate automatically. Ultimate decisions as to the investment policy and as to individual purchases and sales of securities are made by the Officers and Directors of the Fund. For these services, the Fund has agreed to pay a fee of 0.85% per year on the net assets of the Fund. This fee is computed daily based on the last calculation of net asset value of the Fund and is payable monthly.
The Advisor is required to follow the investment strategy of the Fund in managing the portfolio. The Advisor paid the initial organizational costs of the Fund. The Advisor is a registered transfer agent and will provide transfer agent services to the Fund as described in the Statement of Additional Information (SAI). The Advisor is currently registered as an investment advisor with the SEC.
A discussion regarding the basis for the Board of Director's approval of the
Agreement between the Fund and the Adviser is available in the Fund's Annual
Report to Shareholders.
Steven Adams is Managing
Member of the Investment Advisor and also Portfolio Manager of the Fund. Mr. Adams has a BSME from U.T. Austin and an
Custody of Investments: The Fund will operate under Rule 17f(2) and its amendments under the Investment Company Act of 1940. Securities and similar investments of the Fund will be maintained with an entity whose functions and physical facilities are supervised by Federal or State authority. The Fund will maintain Fidelity Bond coverage in an amount sufficient to insure custodial activities.
Description of Common Stock: The authorized capitalization of the Fund consists of 100,000,000 shares of Stock Dividend Fund, Inc. common stock of $0.001 par value per share. Each share has equal dividend, distribution and liquidation rights. There are no conversion or preemptive rights applicable to any shares of the Fund. All shares once issued in book format (no certificates) are fully paid and non-assessable.
Voting Rights: Each holder of Fund shares has voting rights equal to the number of shares held. Voting rights are non-cumulative. Therefore, the holders of a majority of shares of common stock can elect all directors of the Fund if they so choose, although holders of remaining shares are still able to cast their votes.
When and How do We Price: At a minimum, the Fund is priced on any day that there is a request for redemption or purchase of Fund shares when the New York Stock Exchange is open, and also on the last day of the month. The net asset value of the Fund is determined after 4:15 p.m. using the closing prices (presently 4:00 p.m.) for common stock securities on days that the New York Stock Exchange is open. For options securities, the last offered price will be used from major pricing services based on the closing time of the Chicago Board Options Exchange (presently 4:15 p.m.) The net asset value is the price of each share and is determined by dividing the value of Fund owned securities, plus any cash and other assets less all liabilities, by the number of shares outstanding. All Fund price calculations will be carried to two decimal places.
Market Value of Securities: Last sale prices will be used to price securities that are listed on a national exchange or over-the-counter market. Securities that have not recently traded are valued at the last bid price in such market. Securities for which current market quotations are not readily available will be valued at fair value as determined in good faith by the Fund’s Board of Directors.
Fair Value Pricing. Fair Value pricing will be used only when market prices are unavailable. As an example, if trading is halted on one of the Fund’s portfolio securities while market prices are available for other securities, the Board will determine a fair value for that holding so that the NAV can be calculated for the Fund.
The offering price of shares offered by the Fund is at the net asset value per share next determined after receipt of the purchase order by the Fund and is computed in the manner described in the above section “Pricing of Fund Shares”. Purchase orders must be received prior to the close of the New York Stock Exchange (presently 4:00 p.m.) in order to receive the net asset value pricing for that day. Otherwise, the offering price for the order will be at the next calculation of net asset value. The Fund reserves the right, at its sole discretion, to terminate the offering of shares made by this Prospectus at any time and to reject purchase applications when, in the judgement of management such termination or rejection is in the best interest of the Fund.
Initial Investments: Initial purchase of shares of the
Fund must be made through a brokerage firm or other financial institution that
has agreed to facilitate purchase of the shares. Currently, the only firm with such an agreement
is Fidelity Investments. The account
must be opened through Adams Asset Advisors, LLC, the Advisor to the Fund. Fidelity Investments charges a small
transaction fee for each purchase order.
To receive a prospectus and Fidelity Investments account application
please call 1-800-704-6072 or write to:
Stock Dividend Fund, Inc., 8150 N. Central Expressway #M1120,
The minimum initial purchase of shares, unless waived by the Fund, is $100,000, which is due on the next business day after purchase date.
Subsequent Purchases: Subsequent purchases may be made by mail or phone through the Fidelity Investments account and funds are due the next business day after purchase date. The minimum is $100 and Fidelity transaction costs apply.
Purchasing Shares from Broker-dealers, Financial Institutions
Some broker-dealers may sell shares of the Fund. Broker-dealers may charge investors a fee either at the time of purchase or redemption. The fee, if charged, is retained by the broker-dealer and not remitted to the Fund or the Advisor.
The Fund may enter into agreements with broker-dealers, financial institutions or other service providers (“Servicing Agents”) that may include the Fund as an investment alternative in the programs they offer or administer. Servicing Agents may:
1. Become shareholders of record of the Fund. This means all requests to purchase additional shares and all redemption requests must be sent through the Servicing Agent. This also means that purchases made through Servicing Agents may not be subject to the minimum purchase requirements of the Fund.
2. Use procedures and impose restrictions that may be in addition to, or different from, those applicable to investors purchasing shares as previously described.
3. Charge fees to their customers for the services they provide them.
If you decide to purchase shares through Service Agents, please carefully review the program materials provided to you by the Servicing Agent. Purchases and redemptions will be affected at the net asset value next calculated after receipt of a tender by the Service Agent.
Name as of 12/31/21 Ownership as of 12/31/21 Class
Laura S. Adams 92,835 >$1,000,000 7.84%
President & Director*
Steven Adams 92,835 >$1,000,000 7.84%
Jennifer T. Lapeyre 0 $ 0-$ 10,000 0.00%
Vicky L. Hubbard 0 $ 0- $ 10,000 0.00%
*Laura S. Adams, President and an “interested” Director of the Fund and her husband, Steven Adams, Portfolio Manager of the Fund, control these shares through family related accounts.
Shares may be purchased for an Individual Retirement Account (“IRA”), including simple IRA’s, Roth IRA’s, and SEP’s. All IRA type investments must be made as described in “PURCHASE OF FUND SHARES”, “Initial Investments”.
Purchase of Fund shares through business retirement plans is available to the owners, officers and employees who participate in the retirement plans. The accounts must be opened with Fidelity Investments as previously described under “Initial Investments”.
The Fund assesses a 2.00% early redemption fee for shares held less than one year. The “first-in, first-out” method is used to determine the holding period by comparing the date of the redemption with the earliest dates of the share purchased. Any fees assessed due to early redemption are retained by the Fund. The Fund reserves the right to waive the redemption fee if management concludes that the original purchase was made in good faith.
Endorsement Requirements: The Fund will only issue book entry shares and will redeem pursuant to a shareholder request all or any part of the shares of any shareholder that tenders a request for redemption. The brokerage firm or advisor that places your order may require a properly guaranteed endorsement, also known as a signature guarantee, from an eligible guarantor institution. A signature guarantee is an assurance by the above mentioned financial institution that a signature and person who signed the signature are the same individual.
Redemption Price: The redemption price is the net asset value per share next determined after notice is received by the Fund for redemption of shares. The Fund must receive notice prior to the closing of the New York Stock Exchange (presently 4:00 p.m.) in order to receive pricing at the net asset value on that day. Otherwise, redemption will be done at the next calculation of Fund net asset value. The proceeds received by the shareholder may be more or less than his/her cost of such shares, depending upon the net asset value per share at the time of redemption and the difference should be treated by the shareholder as a capital gain or loss for federal and state income tax purposes.
Redemption Payment: Payment by the Fund will be made within four business days after redemption, regardless of whether markets are stressed or non-stressed, as the Fund holds only highly liquid securities. However, the Fund may suspend the right of redemption or postpone the date of payment if: The New York Stock Exchange is closed for other than customary weekend or holiday closings, or when trading on the New York Stock Exchange is restricted as determined by the Securities and Exchange Commission or when the Securities and Exchange Commission has determined that an emergency exists, making disposal of fund securities or valuation of net assets not reasonably practicable. The Fund intends to make payments in cash, however, the Fund reserves the right to make payments in kind. It should be noted that
shareholders will incur brokerage costs when selling the securities received as part of an in kind distribution and also may incur potential tax liabilities. Shareholders would also have continuing market risk by holding these securities. The Fund does not intend to issue in kind redemptions using illiquid securities.
FREQUENT PURCHASES AND REDEMPTION OF FUND SHARES
The Fund is not intended to provide a means of speculating on short-term market movements. Frequent short-term trading by investors has the potential to make the Fund more difficult to manage efficiently, cause increased brokerage commissions, create unplanned tax burdens for some shareholders, and may dilute the value of Fund shares for long-term investors. The Fund does not have, and will not have, any arrangements with any person or entity to permit frequent purchases or redemptions of shares. The Fund reserves the right to reject any purchase at any time, and will exercise this right at the first signs of any “market timing” activities by any shareholder.
Reinvestments: The Fund will automatically use the taxable dividend and capital gains distributions for purchase of additional shares for the shareholders at net asset value as of the close of business on the distribution date.
Cash Payouts: A shareholder may, at any time, by letter or forms supplied by the Fund direct the Fund to pay dividend and/or capital gains distribution, if any to such shareholder in cash.
Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as amended, the Fund, by paying out substantially all of its investment income and realized capital gains and meeting certain other tests, intends to be relieved of federal income tax on the amounts distributed to shareholders. Not qualifying under Subchapter M of the Internal Revenue Code would cause the Fund to be considered a personal holding company subject to normal corporate income taxes. This would reduce the value of shareholder holdings by the amount of taxes paid. Any subsequent dividend distribution of earnings of the Fund after taxes would still be taxable as received by shareholders.
Tax Distribution: Fund distributions (capital gains & dividend income), whether received by shareholders in cash or reinvested in additional shares of the Fund, may be subject to federal income tax payable by shareholders. Distribution of any long-term capital gains realized by the Fund will be taxable to the shareholder as long-term capital gains, regardless of the length of time Fund shares have been held by the investor. All income realized by the Fund, including short-term capital gains, will be taxable to the shareholder as ordinary income, except for amounts designated as “qualified dividends” on form 1099-Div. Dividends from net income will be made during the year at the discretion of the Board of Directors. Dividends
received shortly after purchase of Fund shares by an investor will have the effect of reducing the per share net asset value of his/her shares by the amount of such dividends or distributions. This may be considered a return of capital, but the dividend is still subject to federal income and state taxes.
Federal Withholding: The Fund is required by federal law to withhold 30% of reportable payments (which may include dividends, capital gains, distributions and redemptions) paid to shareholders who have not complied with IRS regulation. In order to avoid this withholding requirement, you must certify on a W-9 tax form that your Social Security or Taxpayer Identification Number provided is correct and that you are not currently subject to back-up withholding.
PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
2021 2020 2019 2018 2017
----- ------ ------ ------ ------
Net asset value,
beginning of year $27.67 $28.98 $26.01 $29.93 $26.61
------ ------ ------ ------ ------
Income (loss)from investment
Net investment income 0.86 0.83 0.76 0.71 0.70
Net realized and
(loss)on investments 5.41 (1.28) 3.46 (2.51) 5.44
---- ------ ----- ----- -----
investment operations 6.27 (0.45) 4.22 (1.80) 6.14
---- ------ ----- ----- -----
Less distributions from:
Net investment income (0.86) (0.83) (0.76) (0.71) (0.75)
Net realized gains (5.16) (0.03) (0.49) (1.41) (2.07)
----- ------ ------ ------ ------
Total distributions (6.02) (0.86) (1.25) (2.12) (2.82)
----- ------ ------ ------ ------
Net asset value,
end of year $27.92 $27.67 $28.98 $26.01 $29.93
------ ------ ------ ------ ------
Total Return 22.78% (1.51)% 16.22% (5.77)% 23.07
Net assets, end of
year(in 1000's) $33,037 $28,482 $33,105 $28,273 $32,385
Ratio of expenses to
assets(a) 0.85% 0.87% 0.85% 0.86% 0.85%
Ratio of net investment
income to average net
assets 2.63% 3.15% 2.74% 2.24% 2.37%
rate (annualized) 38.45% 34.06% 14.41% 28.64% 41.45%
(a) The Fund's actual expenses are calculated daily at 0.85% of net
asset value (NAV).
The accompanying notes are an integral part of these financial statements
Regulation S-P: The
A. Information We Collect - Information we receive from you on application or forms include; your name, address, social security number or tax ID number, W9 status, phone number and citizenship status. Information about your transactions with us include; your account number, account balances and transaction histories.
B. Disclosure Statement - We only disclose personal information about any current or former shareholder of the Fund as required by law. And, since we handle regular transactions internally the number of employees that even see your information is limited. We also require all of the Fund’s brokers, and our Investment Advisor that acts as the Fund's transfer agent to adopt the regulations of Regulation S-P, as specified above by the Fund.
Several additional sources of information are available to you: The Statement of Additional Information (SAI), incorporated into this Prospectus by reference, contains additional and more detailed information about the Fund’s policies and operations. Annual and semi-annual reports list current Fund holdings, detailed financial statements, and discussion of market conditions and strategies that significantly affected the Fund’s performance.
Call the Fund at 1-800-704-6072 or write to the address below to request free copies of the SAI and the Fund’s annual and semi-annual reports, or to request other information about the Fund. Documents are also available at www.funddocuments.com.
You may also obtain information about the Fund (including the Statement of Additional Information and other reports) from the Securities and Exchange Commission on their Internet site at http://www.sec.gov, or at their Public Reference Room in Washington, D.C., or by calling the Securities and Exchange Commission at 1-202-551-8090, or by sending a written request and duplicating fee to the Public Reference Section of the SEC, Washington, D.C. 20549-0102. Email at email@example.com
PLEASE READ THIS PROSPECTUS
In this prospectus we present the objectives, risks and strategy of the Fund. Please keep it for future reference.
STOCK DIVIDEND FUND, INC.
SEC file number: 811-21576
Fund Symbol: SDIVX
8150 N. Central Expressway
Dallas, Texas 75206