STOCK DIVIDEND FUND, INC.
Ticker Symbol: SDIVX
PROSPECTUS
Growth and Income
8150 N. Central Expressway
Suite #M1120
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.
Principal
Investment Strategies 4
Investment
Advisor and Portfolio Manager 7
Purchase
and Sale of Fund Shares 7
MANAGEMENT,
ORGANIZATION, AND CAPITAL STRUCTURE 7
Purchasing
Shares from Broker-dealers and Others 10
OFFICERS
AND DIRECTORS OF THE FUND 11
IRA ACCOUNTS 11
PENSION,
PROFIT SHARING AND 401K PLANS 11
FREQUENT
PURCHASE AND REDEMPTION OF FUND SHARES 12
DIVIDENDS
AND DISTRIBUTIONS 13
FOR
MORE INFORMATION Cover
FUND SUMMARY
Fees and Expenses: The
following table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
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
2022 0.67% 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, 2022
1 Year 5 Year
10 Year
Stock
Dividend Fund
Return Before Taxes 0.67% 5.91% 8.71%
Return After Taxes on Distributions (0.36)% 4.24%
7.39%
Return After Taxes on Distributions (0.39)% 4.74% 7.01%
And
S&P 500 Index** (18.11)% 9.41 12.54%
**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.
Purchase
and
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.
Investment Advisor:
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
MBA from
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.
Legal
Proceedings: As of the date of this Prospectus, there was no pending or
threatened litigation involving the Fund or the Investment Advisor.
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.
Fractional
Shares: Fractional shares to three decimal places are offered by the Fund.
Purchasing
Shares from Broker-dealers, Financial Institutions
and Others
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.
OFFICERS
AND DIRECTORS OF THE FUND
Management
Ownership: Directors and Officers of the
Fund and their ownership:
Fund Shares
Owned
Name as of 12/31/22 Ownership as of 12/31/22 Class
Laura
S. Adams 97,837
>$1,000,000 8.17%
President & Director*
Steven
Adams 97,837
>$1,000,000 8.17%
Portfolio Manager*
Jennifer
T. Lapeyre 0 $
0-$ 10,000
0.00%
Director
Vicky
L. Hubbard 0 $ 0-
$ 10,000 0.00%
Director
*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”.
PENSION,
PROFIT SHARING AND 401K PLANS
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.
FINANCIAL HIGHLIGHTS
PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
ENDED:
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
2022 2021 2020 2019 2018
----- ------ ------ ------ ------
Net asset value,
beginning of year $27.92 $27.67 $28.98 $26.01 $29.93
------ ------ ------ ------ ------
Income (loss)from investment
operations:
Net investment income 0.84 0.86 0.83 0.76 0.71
Net realized and
unrealized gain
(loss)on investments (0.67) 5.41 (1.28) 3.46 (2.51)
---- ------ ----- ----- -----
Total from
investment operations 0.17 6.27 (0.45) 4.22 (1.80)
---- ------ ----- ----- -----
Less distributions from:
Net investment income (0.85) (0.86) (0.83) (0.76) (0.71)
Net realized gains (0.57) (5.16) (0.03) (0.49) (1.41)
----- ------ ------ ------ ------
Total distributions (1.42) (6.02) (0.86) (1.25) (2.12)
----- ------ ------ ------ ------
Net asset value,
end of year $26.67 $27.92 $27.67 $28.98 $26.01
------ ------ ------ ------ ------
Total Return 0.67% 22.78% (1.51)% 16.22% (5.77)%
Net assets, end of
year(in 1000's) $31,846 $33,037 $28,482 $33,105 $28,273
Ratio of expenses to
average net
assets(a) 0.86% 0.85% 0.87% 0.85% 0.86%
Ratio of net investment
income to average net
assets 2.97% 2.63% 3.15% 2.74% 2.24%
Portfolio turnover
rate (annualized) 28.97% 38.45% 34.06% 14.41% 28.64%
(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 publicinfo@sec.gov
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
Suite M1120
Dallas, Texas 75206
1-800-704-6072