The Keeley Funds are a family of three actively managed value mutual funds that invest in smaller companies going through corporate change such as spin-offs, recapitalizations, and bankruptcy emergences. They now operate as the Keeley Gabelli Funds following a May 2025 partnership between GAMCO Investors and Teton Advisors, with the Chicago-based Keeley research team still running the portfolios under the Gabelli distribution umbrella.1GlobeNewswire. Gabelli Announces Partnership with Keeley Asset and Wealth Management Services Tickers did not change, strategies did not change, and the current prospectus is dated January 28, 2026.
If you already owned shares, you now see “Keeley Gabelli” in the fund name on your statement. If you’re a new investor, you’ll find the funds listed under those updated names on brokerage platforms.
The Three Funds
Each fund is offered in Class A (retail) and Class I (institutional) shares.2Gabelli. Keeley Funds, Inc. Prospectus The investment approach across all three is bottom-up value investing in companies the market has mispriced because of transition or complexity, with a tilt toward small- and mid-cap names where analyst coverage is thinner.
Keeley Gabelli SMID Cap Value Fund (KSMVX / KSMIX)
This is the flagship restructuring strategy. The fund invests at least 80% of net assets in small- and mid-cap equities and is benchmarked to the Russell 2500 Value Index, which as of December 31, 2025 covered market caps from roughly $18 million to $70.6 billion.3Gabelli. Keeley Funds, Inc. Prospectus – Keeley Gabelli SMID Cap Value Fund The prospectus explicitly targets spin-offs, acquisitions, recapitalizations, and companies emerging from bankruptcy. No dividend requirement applies.
Keeley Gabelli Small Cap Dividend Fund (KSDVX / KSDIX)
This fund puts at least 80% of its net assets in dividend-paying small-cap stocks and is benchmarked to the Russell 2000 Value Index.4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus The dividend screen tends to dampen volatility by selecting companies with established cash flow, giving the fund a more conservative profile than the SMID Cap fund.
Keeley Gabelli Mid Cap Dividend Fund (KMDVX / KMDIX)
This fund narrows to dividend-paying mid-cap companies and seeks capital appreciation with an income component. Total net assets stood at approximately $121 million as of January 2026.
A fourth fund, the KEELEY All Cap Value Fund (KACVX), existed historically but does not appear in the current Keeley Gabelli prospectus. If you hold shares in that one, contact Gabelli directly for its status.
How to Buy Shares
You can purchase Keeley Gabelli funds directly from the fund company or through a brokerage account at firms such as Fidelity or Schwab that list the funds. Direct orders go through SS&C GIDS as transfer agent, by mail (The Keeley Funds, P.O. Box 219204, Kansas City, MO 64121-9204), phone (800-422-3554), internet, bank wire, or ACH.4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus You can buy or redeem on any day the New York Stock Exchange is open.
The minimum initial investment is $2,500 for Class A shares.4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus Class I shares require $1 million, which effectively limits them to institutions and high-net-worth investors.5Gabelli. Keeley Gabelli Small Cap Dividend Fund – Class I The funds work in both taxable brokerage accounts and tax-advantaged retirement accounts such as Traditional and Roth IRAs. If you buy through a broker, check whether the platform adds its own transaction fee on top of what the fund charges.
Fees and Expenses
Costs break down into two categories, and the share class you choose drives most of the difference.
Sales Load
Class A shares carry a 4.50% front-end sales charge. For every $100 invested, $4.50 goes to the load before anything reaches the portfolio.4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus Breakpoint discounts are available if you and your family invest at least $50,000 in the fund. Class I shares have no sales load, but the $1 million minimum is a barrier for most retail investors.
Neither share class charges a deferred sales load or a redemption fee, and there is no minimum holding period.4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus
Annual Expense Ratios
The expense ratio covers management, distribution (12b-1), and administrative fees. After contractual fee waivers in place through February 28, 2027, the net expense ratios are:
- Small Cap Dividend Fund: 1.29% (Class A) and 1.04% (Class I)4Gabelli. Keeley Gabelli Small Cap Dividend Fund Summary Prospectus
- SMID Cap Value Fund: 1.43% (Class A) and 1.18% (Class I)3Gabelli. Keeley Funds, Inc. Prospectus – Keeley Gabelli SMID Cap Value Fund
These are on the higher end compared with passively managed index funds, which is typical for actively managed small-cap value strategies. A 0.25% 12b-1 fee on Class A shares accounts for most of the gap between the two share classes. Whether the active management justifies the premium depends on long-term performance against the benchmark, which varies by fund and time period.
Taxes in a Brokerage Account vs. a Retirement Account
Where you hold these funds changes how much you keep. Actively managed value funds tend to trade more frequently than index funds and therefore pass more taxable distributions through to shareholders.
Capital Gains Distributions
When the portfolio managers sell securities at a profit, net capital gains are distributed to shareholders, usually near year-end. You owe tax in the year of the distribution whether you reinvest it or take cash. Short-term gains (on securities the fund held less than a year) are taxed as ordinary income, which can reach 37%. Long-term gains are taxed at 0%, 15%, or 20% depending on your taxable income.
For 2026, the 0% long-term rate applies to single filers with taxable income up to $49,450 and married couples filing jointly up to $98,900. The 15% rate runs from there to $545,500 (single) and $613,700 (joint). The 20% rate applies above those thresholds.
Dividend Distributions
The two dividend-focused funds pass through income from the dividends their portfolio companies pay. Qualified dividends are taxed at the long-term capital gains rates, but only if you held your fund shares for at least 61 days within the 121-day window around the ex-dividend date. Dividends that fail that holding test are taxed as ordinary income.
Net Investment Income Tax
An additional 3.8% net investment income tax applies to higher earners. It hits the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly).6Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax Both capital gains and dividend distributions from mutual funds count toward net investment income.
Retirement Accounts
Holding these funds inside a Traditional IRA, Roth IRA, or other qualified account removes all of the above from your current tax bill. Distributions inside the account are not taxable in the year they occur, and qualified Roth withdrawals come out tax-free. Given how often actively managed value funds generate distributions, the shelter is particularly useful with these strategies.
Risks Specific to the Keeley Strategy
Every mutual fund carries market risk. The ones below are worth calling out because they go beyond what you’d see in a broad-market index fund.
- Small-cap volatility. Small- and mid-cap stocks move more sharply than large caps on any given piece of news, and these funds will test your patience if you check prices often.
- Liquidity risk. Smaller companies trade fewer shares per day, which can make it harder for the fund to enter or exit positions without moving the price. During market stress, that gets worse rather than better.
- Restructuring uncertainty. The strategy deliberately targets companies in transition. A turnaround thesis that fails to play out means the stock stays cheap or gets cheaper.
- Interest rate sensitivity. Rising rates pressure small-cap valuations by increasing borrowing costs for debt-dependent companies and by making fixed income more attractive on a relative basis.
- Concentration risk. A focused portfolio of event-driven picks means a few bad outcomes have a bigger effect on total return than they would in a diversified index.
These funds generally fit better as a satellite allocation inside a diversified portfolio than as a core equity position. A holding period of at least five to seven years gives the strategy enough time to work through its rough stretches.