Dear Fellow Shareholder,

Despite economic and political turmoil, equity markets performed well across the board in September of 2013 and over the trailing twelve months. The September gains reversed losses in August and also resulted in positive overall quarterly performance with a number of major indexes moving further into record territory. After disturbing the markets in May and June with comments that they may taper Quantitative Easing (QE), the Fed surprised investors with an announcement that it would not reduce its asset purchases in the near-term. The announcement removed fears that a continued rise in interest rates may stall the economic recovery, as seen by the market’s negative reaction to the sharp rise in the 10-year Treasury rate in August of 2013. Investors were also comforted by improving fundamentals both domestically and abroad. The Eurozone may finally be emerging from its prolonged recession and a number of economic reports in the U.S. continue to show progress. Specifically, initial unemployment claims dropped to a multiyear low early in September and the housing market continued to improve, as evidenced by prices rising 12.4 percent year-over year, which along with the stock market’s strength, has created a positive wealth effect for consumers. In response to this general economic improvement, consumer confidence increased at the end of September, and the index of leading economic indicators ticked up as well, suggesting that, absent the effects of politics, the recovery in the real economy was continuing. Our portfolios that focus on corporate restructuring (Keeley Small Cap Value, Keeley Small-Mid Cap Value, Keeley Mid Cap Value, Keeley All Cap Value, and Keeley Alternative Value) have all experienced a productive investment cycle with respect to their opportunity sets, and many of our holdings have posted impressive results in recent quarters. Although we acknowledge an improving economy has boosted the outlook for our more cyclical holdings, our research has guided us toward many areas that seemed undervalued with low expectations. At the core, we are a bottom- up research driven investment firm that generates ideas through our investment philosophy involving corporate restructuring (corporate spin-offs, companies emerging from bankruptcy, event-driven/special situations, savings & loan and insurance conversions). Corporate restructuring is designed to provide superior growth in a slow growth economy. It is often the case that when conducting our bottom-up security analysis on company-specific restructuring ideas, we are led to identify industry specific themes. For example, for much of 2012 and early in 2013, the Funds benefited from exposure to the recovery in housing. However, it was our focus on corporate spin-offs that led us to the housing recovery theme. We invested in Walter Investment Management Corp. (WAC), a mortgage servicer that was formed when it was spun out from Walter Energy and merged with GreenTree; Lender Processing Services (LPS), a mortgage and consumer loan processor that was spun out from Fidelity National Information Services and subsequently acquired by Fidelity National Financial; PHH Corp. (PHH), a mortgage and fleet management services company that was previously spun out of Cendant Corp.; Fortune Brands Home and Security (FBHS), a manufacturer of home and security products that was split off from Beam Inc.; and CoreLogic Inc. (CLGX), a provider of property, financial and consumer information services, which was spun off from First American.

We believe that a significant reason these companies were spun-off was to unlock the inherent value that was buried underneath poor investment sentiment and extreme uncertainty with respect to housing. The degree of undervaluation and negativity prompted us to take a closer look at the industry as a whole and ascertain exactly what was occurring. Was there something more going on here? Were there any catalysts to spark a recovery, and if so, who would benefit? We may have been drawn to housing through our focus on spin-offs, but recognizing the turnaround/industry restructuring that was taking place led us to invest directly in homebuilders such as Toll Brothers (TOL) and Pulte Group (PHM), which provided the greatest contribution to the Funds’ performance.

Despite our optimism for many of these stocks, the recent move in interest rates did cause us to exit or trim some of our holdings in this area. We experienced strong returns and felt that we should realize some profit and move those dollars to areas we believe have greater upside from current levels. We continue to hold many of the indirect housing plays mentioned above, and we still believe that they possess excellent long-term potential. The investment in housing-related stocks not only sheds some light on positions that have positively impacted our shareholders over the past year, but also demonstrates aspects of our investment process and how we believe it may provide superior investment returns.

Another area that is intriguing to us is the North American energy sector which looks to have a number of interesting catalysts currently. While the energy sector is at present only a modest overweight in the portfolios, we have been encouraged by several trends taking place for a number of years. These positive developments are also having an impact that goes far beyond the energy sector itself. Many believe that the U.S. will become energy independent and possibly a net exporter of natural gas and oil (currently restricted by law) in the next decade. This opinion is based primarily on the development of new drilling techniques (i.e. horizontal drilling, and high pressure fracking) that have enabled companies to access oil and natural gas reserves in shale formations that were previously not economically viable. The ability to tap into this acreage is a game-changer in our view and is already having a tremendous impact on the economy. Employment rates in these mostly rural areas surrounding the shale basins are very high and companies thus find hiring extremely competitive. Strong labor markets tend to create strong local economies. Oil States International (OIS) has been able to capitalize on this trend by providing housing and other services to oil service workers that are in demand in the area. CST Brands (CST) operates gas stations in Texas, but it is increasingly looking to broaden its product offering beyond fuel. Rail companies like Union Pacific (UNP), Canadian Pacific (CP), Kansas City Southern (KSU) and Genesee and Wyoming (GWR) have also benefited substantially. Given that shale areas are rural and often lacking infrastructure, substantial investment must be made to support drilling and production activities. Without pipelines in place, railroads have been the primary takeaway mechanism for moving production to the various clusters of refining capacity around the United States. In order to serve this demand, massive investment in railcars has been needed. Trinity Rail (TRN), Greenbrier (GBX), and Wabtec (WAB) all benefit from increased production of specialized sand, pipe and oil rail cars. On the production side, Bonanza Creek (BCEI), Gulfport Energy (GPOR), and Goodrich Petroleum (GDP) have all grown production significantly in their operating basins. While the initial move has rewarded them for proving out that their acreage contains significant hydrocarbons, the next step is optimizing production. In this stage, they are increasing/decreasing the number of frac stages, experimenting with longer lateral well lengths, and altering the amount and type of proppant they use (mostly sand to keep an induced fracture open). These actions have lowered their drilling costs and increased the

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