UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act File Number 811-07760
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) (Zip code)
Copy to:
John L. Keeley, Jr. Stephen E. Goodman
Keeley Asset Management Corp. Meltzer Purtill & Stelle LLC
401 South LaSalle Street 1515 East Woodfield Road
Suite 1201 Schaumburg, Illinois 60173
Chicago, Illinois 60605
(Name and address of agents for service)
Registrant's telephone number, including area code: (312)786-5000
Date of fiscal year end: September 30
Date of reporting period: September 30, 2004
Item 1. Reports to Stockholders
The following is a copy of the report transmitted to shareholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940 (the "Act") (17 CFR
270.30e-1)
LETTER TO SHAREHOLDERS
Dear Shareholder,
During the past six months from April 1, 2004 through September 30, 2004, the
Fund's net assets grew to $206,976,451 and the number of shareholders was
7,033. For the six month period ending September 30, 2004, the portfolio
turnover was 16.27% and the expense ratio declined to 1.66%. The Fund's
portfolio is widely diversified with investments in 123 companies. The Fund is
registered for sale in all 50 states and the District of Columbia. Our broker
dealer network totals over 200 broker dealers and trust entities.
We are pleased to announce that in September the Fund was named to the Forbes
Honor Roll 2004. The criteria for inclusion on the 10-member honor roll are
stringent. Funds selected must perform well over four market cycles beginning
1/31/94; must demonstrate superior capital preservation in down markets; must
practice wide portfolio diversification and must demonstrate long-term
continuity of management.
As of this date, the Fund was rated five of five stars by Morningstar among 75
Small Blend funds for the 10-year period. The KEELEY Small Cap Value Fund, Inc.
received four of five stars for the three year period (among 352 funds) and
four of five stars (among 255 funds) for the five year period. Morningstar
ratings reflect historical risk adjusted performance as of 9/30/04 and are
subject to change every month. Morningstar ratings are based on a risk adjusted
return measure that accounts for variation in a Fund's monthly performance
(including the effects of sales charges and redemption fees), placing more
emphasis on downward variations and rewarding consistent performance. The
overall rating is a weighted average of the three-, five-, and 10-year returns.
The top 10% are labeled five stars, the next 22.5% are labeled four stars, the
next 35% are labeled three stars, the next 22.5% are labeled two stars and the
bottom 10% one star.
There are risks associated with an investment in small-cap mutual funds, such
as smaller product lines and market shares, and limited available information.
You should consider the investment objectives, risks and charges and expenses
of the investment company carefully before investing. For further details
regarding such risks, including information on fees and expenses please refer
to the Fund's prospectus. Read the Prospectus carefully before investing.
Performance Data Excluding 4.5% Maximum Up-Front Sales Charge
For the quarter ended September 30, 2004, the Fund's total return was 3.54%
versus a return of -2.86% for the Russell 2000 Index and -1.87% for the S&P 500
Index. For the one year ending September 30, 2004, the Fund's average annual
return was 36.45% versus 18.77% for the Russell 2000 Index and 13.87% for the
S&P 500 Index. For the five year period the Fund's average annual return was
14.21% versus 7.41% for the Russell 2000 Index and -1.31% for the S&P 500
Index. Since inception, October 1, 1993, the Fund's average annual return was
14.68% versus 9.19% for the Russell 2000 Index and 10.39% for the S&P 500
Index. Performance Data does not reflect the deduction of the sales load or
fee, and that, if reflected, the load or fee would reduce the performance
quoted.
Performance data quoted represents past performance and does not guarantee
future results. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost and the current performance may be lower or
higher than the performance data quoted. You may call toll-free at
888-933-5391, or visit our website at www.keeleyfunds.com to obtain performance
data current to the most recent month end.
In the six months ended September 30, 2004, the stock market continued its
advance begun in April 2003. During the period, the Fund's asset base increased
helped in part by premium takeover bids to four portfolio holdings (Caesars
Entertainment, Evergreen Resources, Prime Hospitality Corp and Texas Genco
Holdings Inc.). Throughout August and September, the stock market's course
appeared to be dictated by trading in the oil market. For instance, in the
first weeks of August, oil prices rose to an all time high approaching $50 a
barrel and the equity markets sold-off as a result. By late August, the oil
markets began to correct, and a relief rally in the equity markets ensued. This
pattern repeated itself in September.
In spite of the moderating factors of high oil prices and slower economic
growth, the Federal Reserve increased short term interest rates by 1/4 point at
both their August 10th and September 21st meetings. However, the case for
further Fed tightening is now in question given the pressure that higher oil
prices are putting on business expansion and consumer spending.
Looking ahead, there are a number of concerns for investors, namely:
. A slowdown in the U.S. economy
. High energy prices
. The escalation of violence in the Middle East and the intractable
situation in Iraq underscores the fragile state of affairs in this region
As we begin the Fund's 12th year of operation, the equity markets have taken a
number of these risks into account. In addition, GDP growth is still forecast
to average over 3% for the second half of the year. Stock market breadth has
been strong and broad-based as a result. Within this environment, we remain
committed to our value driven strategy which buys stocks of relatively unknown
(spin-offs) and out-of-favor (below actual or perceived book-value) companies.
This lack of Wall Street coverage and sponsorship allows us to buy stock at a
discount to our assessment of fair market value.
Thank you for your continued commitment to the Fund.
Sincerely,
/s/ John L. Keeley, Jr.
John L. Keeley, Jr.
President
Performance Data Including 4.5% Maximum Up-Front Sales Charge
For the quarter ended September 30, 2004, the Fund's total return was -1.14%
versus a return of -2.86% for the Russell 2000 Index and -1.87% for the S&P 500
Index. For the one year ending September 30, 2004, the Fund's average annual
return was 30.33% versus 18.77% for the Russell 2000 Index and 13.87% for the
S&P 500 Index. For the five year period the Fund' s average annual return was
13.17% versus 7.41% for the Russell 2000 Index and -1.31% for the S&P 500
Index. Since inception, October 1, 1993, the Fund's average annual return was
14.20% versus 9.19% for the Russell 2000 Index and 10.39% for the S&P 500 Index.
[CHART]
Investments by Sector
As a Percentage of Equities
Basic Materials 5.5%
Communications 3.9%
Consumer Cyclical 14.3%
Consumer Non-cyclical 6.1%
Diversified 0.9%
Energy 17.8%
Financial 17.6%
Industrial 27.3%
Technology 0.6%
Utilities 6.0%
A description of the Fund's proxy voting policies and procedures and a
record of the Fund's proxy votes for the year ended June 30, 2004 are
available (i) without charge, upon request, by calling toll free
1-888-933-5391; (ii) on the Fund's website at http://www.keeleyfunds.com;
and (iii) on the Securities and Exchange Commission's (SEC) website at
http://www.sec.gov.
The Fund will file its complete schedule of portfolio holdings with the
SEC for the first and third quarters of each fiscal year on Form N-Q. The
Fund's Form N-Q will be available on the EDGAR database on the SEC's website
at http://www.sec.gov. These Forms may also be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Information about the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. The information may also be obtained by calling
1-888-933-5391.
Index Comparison
Comparison of a Hypothetical $10,000 Investment
In the KSCVX*, S&P 500(R)** and Russell 2000**
[CHART]
KSCVX S&P 500 Russell 2000
--------- --------- ------------
10/1/1993 9,551.00 10,000.00 10,000.00
SEP 1994 9,799.43 10,368.60 10,267.48
SEP 1995 11,957.98 13,452.66 12,666.45
SEP 1996 13,898.50 16,187.93 14,329.94
SEP 1997 21,335.98 22,735.56 19,085.72
SEP 1998 19,097.00 24,792.00 15,456.00
SEP 1999 22,173.00 31,686.00 18,404.00
SEP 2000 24,254.00 35,895.00 22,709.00
SEP 2001 25,527.00 26,339.00 17,893.00
SEP 2002 26,184.00 20,943.00 16,229.00
SEP 2003 31,579.00 26,053.00 22,152.00
SEP 2004 43,092.00 29,666.00 26,309.00
From 10/1/93 (commencement of operations) through 9/30/04
Average annual total returns ***
For the periods ended September 30, 2004
Since Commencement
12 months ended 5 years ended 10 years ended of Operations
9/30/2004 9/30/2004 9/30/2004 10/1/1993 to 9/30/2004
--------------- ------------- -------------- ----------------------
KSCVX +36.45% +14.21% +15.96% +14.68%
KSCVX (includes
max 4 1/2% front-end load) +30.33% +13.17% +15.43% +14.20%
S&P 500(R) Index +13.87% -1.31% +11.09% +10.39%
Russell 2000 Index +18.77% +7.41% +9.87% +9.19%
* Performance graph includes deduction of 4 1/2% front end load.
** The S&P 500(R) Index is a broad market-weighted index dominated by blue-chip
stocks. The Russell 2000 Index is comprised of the smallest 2000 companies
in the Russell 3000 Index. The Russell 3000 Index is comprised of the 3000
largest U.S. companies based on market capitalization. All Indexes are
unmanaged and returns include reinvested dividends.
***PERFORMANCE DATA quoted represents past performance which is not predictive
of future performance. The investment return and principal value of shares
will fluctuate and when redeemed, may be worth more or less than their
original cost.
KEELEY Small Cap Value Fund, Inc.
Expense Example
For the Six Months Ended September 30, 2004
(Unaudited)
As a shareholder of the KEELEY Small Cap Value Fund, Inc. (the "Fund"), you
incur two types of costs: (1) transaction costs, including sales charges
(loads) on purchase payments; and (2) ongoing costs, including management fees;
distribution (12b-1) fees; and other Fund expenses. This Example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period from April 1, 2004 to September 30,
2004 (the "period").
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
the ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs could have been higher.
Expenses Paid During the Period
Expenses paid during
Beginning account value Ending account value the period ended
April 1, 2004 September 30, 2004 September 30, 2004*
----------------------- -------------------- --------------------
Actual $1,000.00 $1,074.40 $8.61
Hypothetical (5% return before expenses) 1,000.00 1,016.70 8.37
* Expenses are equal to the Fund's annualized expense ratio of 1.66% for the
period, multiplied by the average account value over the period, multiplied
by 183/366 (to reflect the one-half year period).
KEELEY Small Cap Value Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2004
ASSETS:
Investments at value (cost $157,066,828) $208,241,963
Cash 68
Receivable for shares issued 6,216,797
Dividends and interest receivable 155,594
Prepaid expenses 18,833
------------
Total Assets 214,633,255
------------
LIABILITIES:
Payable for investments purchased 7,188,629
Payable for shares redeemed 135,804
Payable to Adviser 151,120
Accrued 12b-1 fees 38,104
Other accrued expenses 143,147
------------
Total Liabilities 7,656,804
------------
NET ASSETS $206,976,451
============
NET ASSETS CONSIST OF:
Capital stock $147,666,083
Undistributed net realized gain on
investments 8,135,233
Net unrealized appreciation on investments 51,175,135
------------
NET ASSETS $206,976,451
============
CAPITAL STOCK, $0.01 par value
Authorized 100,000,000
Issued and outstanding 6,096,389
NET ASSET VALUE AND
REDEMPTION PRICE PER SHARE $ 33.95
============
MAXIMUM OFFERING PRICE PER
SHARE ($33.95 / 0.955) $ 35.55
============
KEELEY Small Cap Value Fund, Inc.
STATEMENT OF OPERATIONS
For The Year Ended September 30, 2004
INVESTMENT INCOME:
Dividend income (net of $2,748 of foreign
withholding taxes) $ 1,375,798
Interest income 29,385
-----------
Total Investment Income 1,405,183
-----------
EXPENSES:
Investment advisory fees 1,307,148
12b-1 fees 326,787
Transfer agent fees and expenses 121,181
Administration fees 115,358
Professional fees 98,624
Custody fees 43,312
Fund accounting fees 37,313
Federal and state registration fees 33,042
Directors' fees 27,942
Reports to shareholders 24,435
Other 10,135
-----------
Total Expenses 2,145,277
-----------
NET INVESTMENT LOSS (740,094)
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 8,580,664
Change in net unrealized appreciation on
investments 29,818,413
-----------
Net Gain on Investments 38,399,077
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $37,658,983
===========
See notes to the financial statements.
KEELEY Small Cap Value Fund, Inc.
SCHEDULE OF INVESTMENTS
September 30, 2004
Number
of Shares Value
--------- -----------
COMMON STOCKS 98.61%
Aerospace/Defense 0.64%
35,000 Moog, Inc., Class B* $ 1,330,000
-----------
Auto Parts and Equipment 1.45%
130,000 Tenneco Automotive, Inc.* 1,703,000
135,000 Titan International, Inc. 1,296,000
-----------
2,999,000
-----------
Coal 0.87%
62,000 Massey Energy Co. 1,793,660
-----------
Commercial Services 1.26%
80,000 Interactive Data Corp.* 1,505,600
65,000 MoneyGram International, Inc. 1,110,200
-----------
2,615,800
-----------
Communications and Media 1.61%
95,000 Gray Television, Inc. 1,130,500
46,500 Gray Television, Inc., Class A 518,010
96,000 Journal Communications, Inc. 1,683,840
-----------
3,332,350
-----------
Computer Services 0.64%
150,000 Tyler Technologies, Inc.* 1,326,000
-----------
Consumer Products 1.53%
55,500 The Brink's Co. 1,674,435
100,000 Water Pik Technologies, Inc.* 1,490,000
-----------
3,164,435
-----------
Distribution / Wholesale 1.10%
94,000 WESCO International, Inc.* 2,279,500
-----------
Diversified Manufacturing 4.13%
61,000 Crane Co. 1,764,120
90,000 EnPro Industries, Inc.* 2,172,600
170,000 GP Strategies Corp.* 1,266,500
79,000 Griffon Corp.* 1,666,900
180,000 Jacuzzi Brands, Inc.* 1,674,000
-----------
8,544,120
-----------
Electric 5.88%
102,000 Allegheny Energy, Inc.* 1,627,920
445,000 Aquila, Inc.* 1,388,400
150,000 CenterPoint Energy, Inc. 1,554,000
177,000 CMS Energy Corp.* 1,685,040
85,000 Duquesne Light Holdings, Inc. 1,526,600
67,500 Florida Public Utilities Co. 1,157,625
195,000 Reliant Energy, Inc.* 1,819,350
70,000 Westar Energy, Inc. 1,414,000
-----------
12,172,935
-----------
Energy--Alternative Sources 0.58%
65,700 Danielson Holdings Corp.* 400,113
105,000 KFX, Inc.* 809,550
-----------
1,209,663
-----------
Number
of Shares Value
--------- -----------
Engineering and Construction 0.88%
61,000 Chicago Bridge & Iron Co. N.V. $ 1,829,390
-----------
Entertainment 0.83%
124,000 Pinnacle Entertainment, Inc.* 1,711,200
-----------
Finance Company 9.15%
88,500 BankAtlantic Bancorp, Inc. 1,621,320
115,000 Bank Mutual Corp. 1,380,000
60,000 Citizens First Bancorp, Inc. 1,505,400
41,000 CIT Group, Inc. 1,532,990
30,000 Harbor Florida Bancshares, Inc. 933,000
190,000 LaBranche & Co., Inc. 1,605,500
100,000 NewAlliance Bancshares, Inc. 1,435,000
50,000 Piper Jaffray Companies, Inc.* 1,979,500
62,000 PrivateBancorp, Inc. 1,671,520
70,000 TierOne Corp. 1,614,200
285,000 Van der Moolen Holding N.V. 1,881,000
31,000 Wintrust Financial Corp. 1,775,680
-----------
18,935,110
-----------
Financial Services 2.10%
45,000 Jefferies Group, Inc. 1,551,150
67,000 Waddell & Reed Financial, Inc. 1,474,000
72,000 Westwood Holdings Group, Inc. 1,323,360
-----------
4,348,510
-----------
Food, Beverage and Tobacco 3.14%
140,000 Del Monte Foods Co.* 1,468,600
70,000 Flowers Foods, Inc. 1,809,500
35,000 The J. M. Smucker Co. 1,554,350
46,000 Ralcorp Holdings, Inc.* 1,660,600
-----------
6,493,050
-----------
Forestry 1.78%
45,000 Deltic Timber Corp. 1,790,550
124,000 Longview Fibre Co. 1,891,000
-----------
3,681,550
-----------
Furniture/Home Appliances 0.85%
70,000 Furniture Brands International, Inc. 1,755,600
-----------
Healthcare Products 0.85%
59,000 Sybron Dental Specialties, Inc.* 1,751,710
-----------
Holdings Company-Diversified 0.93%
34,000 Leucadia National Corp. 1,926,100
-----------
Housing 4.28%
180,000 Champion Enterprises, Inc.* 1,852,200
135,000 Fleetwood Enterprises, Inc.* 2,049,300
89,000 Levitt Corp. 2,087,940
56,000 Texas Industries, Inc. 2,880,640
-----------
8,870,080
-----------
See notes to the financial statements.
KEELEY Small Cap Value Fund, Inc.
SCHEDULE OF INVESTMENTS
September 30, 2004
Number
of Shares Value
--------- -----------
Insurance 5.03%
115,000 Conseco, Inc.* $ 2,030,900
64,500 Crawford & Co. 432,150
45,000 Fidelity National Financial, Inc. 1,714,500
240,000 Meadowbrook Insurance Group,
Inc.* 1,168,800
42,000 Old Republic International Corp. 1,051,260
147,000 The Phoenix Companies, Inc. 1,531,740
33,000 Principal Financial Group, Inc. 1,187,010
31,000 Unitrin, Inc. 1,288,670
-----------
10,405,030
-----------
Lodging 2.80%
68,000 Aztar Corp.* 1,802,000
39,000 Choice Hotels International, Inc. 2,246,010
90,000 Marcus Corp. 1,752,300
-----------
5,800,310
-----------
Manufacturing 19.53%
86,000 Allegheny Technologies, Inc. 1,569,500
54,000 Ametek, Inc. 1,637,280
75,000 Bucyrus International, Inc.* 2,520,000
95,000 CIRCOR International, Inc. 1,852,500
48,000 Commercial Metals Co. 1,906,560
87,000 Compass Minerals International, Inc. 1,931,400
77,000 Flowserve Corp.* 1,861,860
78,000 Gardner Denver, Inc.* 2,150,460
49,000 Joy Global, Inc. 1,684,620
70,000 Lindsay Manufacturing Co. 1,878,100
46,000 Manitowoc Co., Inc. 1,631,160
118,000 Methode Electronics, Inc., Class A 1,509,220
120,000 Oregon Steel Mills, Inc.* 1,995,600
96,000 Regal-Beloit Corp. 2,322,240
120,000 Ryerson Tull, Inc. 2,060,400
77,000 Sauer-Danfoss, Inc. 1,315,160
52,000 Terex Corp. * 2,256,800
67,000 Thomas & Betts Corp. 1,796,940
59,000 The Timken Co. 1,452,580
98,000 Wabtec Corp. 1,831,620
56,000 Watts Water Technologies, Inc. 1,503,600
152,500 Wolverine Tube, Inc.* 1,761,375
-----------
40,428,975
-----------
Oil and Gas--Equipment &
Services 2.62%
58,000 FMC Technologies, Inc.* 1,937,200
150,000 Key Energy Services, Inc.* 1,657,500
122,500 Willbros Group, Inc.* 1,826,475
-----------
5,421,175
-----------
Oil and Gas--Exploration &
Production 13.48%
100,000 Chesapeake Energy Corp. 1,583,000
53,000 Cimarex Energy Co.* 1,851,820
92,000 Comstock Resources, Inc.* 1,924,640
225,000 El Paso Corp. 2,067,750
60,000 Encore Acquisition Co.* 2,070,000
55,000 Goodrich Petroleum Corp.* 731,500
156,000 Harvest Natural Resources, Inc.* 2,589,600
Number
of Shares Value
---------- ------------
Oil and Gas--Exploration &
Production (continued)
150,000 KCS Energy, Inc.* $ 2,086,500
147,500 Magnum Hunter Resources, Inc.* 1,702,150
90,000 Plains Exploration & Production
Co.* 2,147,400
61,000 Quicksilver Resources, Inc.* 1,992,870
112,500 Range Resources Corp. 1,967,625
66,000 Remington Oil & Gas Corp.* 1,732,500
45,000 Spinnaker Exploration Co.* 1,576,800
155,000 Williams Cos., Inc. 1,875,500
------------
27,899,655
------------
Printing and Publishing 2.26%
86,000 Journal Register Co.* 1,625,400
25,000 Meredith Corp. 1,284,500
36,000 Pulitzer, Inc. 1,778,400
------------
4,688,300
------------
Real Estate--Operation &
Development 1.04%
45,000 The St. Joe Co. 2,149,650
------------
Retail 4.16%
97,000 Dillard's, Inc. 1,914,780
48,000 IHOP Corp. 1,834,080
105,000 ShopKo Stores, Inc.* 1,828,050
96,000 The Steak n Shake Co.* 1,639,680
67,500 Triarc Companies, Inc. 771,525
54,000 Triarc Companies, Inc., Class B 619,380
------------
8,607,495
------------
Transportation 3.21%
65,000 AMERCO* 2,464,800
116,000 Kansas City Southern* 1,759,720
95,000 Laidlaw International, Inc.* 1,562,750
77,000 Providence and Worcester
Railroad Co. 848,540
------------
6,635,810
------------
Total Common Stocks
(cost $152,931,028) 204,106,163
------------
Principal
Amount
----------
SHORT-TERM INVESTMENTS 2.00%
$4,135,800 US Bank Demand Note, 1.59% 4,135,800
------------
Total Short-Term Investments
(cost $4,135,800) 4,135,800
------------
Total Investments 100.61%
(cost $157,066,828) 208,241,963
Liabilities less Other Assets (0.61)% (1,265,512)
------------
NET ASSETS 100.00% $206,976,451
============
* Non-income producing
Percentages are based on net assets.
See notes to the financial statements.
KEELEY Small Cap Value Fund, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, 2004 September 30, 2003
------------------ ------------------
OPERATIONS:
Net investment loss $ (740,094) $ (529,407)
Net realized gain (loss) on investments 8,580,664 (427,684)
Change in net unrealized appreciation on investments 29,818,413 15,815,545
------------ ------------
Net increase in net assets resulting from operations 37,658,983 14,858,454
------------ ------------
DISTRIBUTIONS:
Net realized gains -- (3,967,366)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 3,106,257 and 1,965,978 shares issued, respectively 98,624,637 43,684,699
Proceeds from 0 and 178,807 shares of distributions reinvested, respectively -- 3,774,671
Cost of 646,573 and 1,424,485 shares redeemed, respectively (19,777,694) (31,774,288)
------------ ------------
Net increase from capital stock transactions 78,846,943 15,685,082
------------ ------------
TOTAL INCREASE IN NET ASSETS 116,505,926 26,576,170
NET ASSETS:
Beginning of year 90,470,525 63,894,355
------------ ------------
End of year $206,976,451 $ 90,470,525
============ ============
See notes to the financial statements.
KEELEY Small Cap Value Fund, Inc.
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30, September 30,
2004 2003 2002 2001 2000
------------- ------------- ------------- ------------- -------------
PER SHARE DATA (1)
Net asset value, beginning of year $ 24.88 $ 21.91 $ 22.43 $ 21.82 $ 20.85
Income from investment operations:
Net investment loss (0.12) (0.15) (0.21) (0.20) (0.14)
Net realized and unrealized gains on
investments 9.19 4.43 0.85 1.32 2.00
-------- ------- ------- ------- -------
Total from investment operations 9.07 4.28 0.64 1.12 1.86
-------- ------- ------- ------- -------
Less distributions:
Net realized gains -- (1.31) (1.16) (0.51) (0.89)
-------- ------- ------- ------- -------
Net asset value, end of year $ 33.95 $ 24.88 $ 21.91 $ 22.43 $ 21.82
======== ======= ======= ======= =======
Total return (2) 36.45% 20.61% 2.57% 5.25% 9.39%
Supplemental data and ratios:
Net assets, end of year (in 000's) $206,976 $90,471 $63,894 $57,784 $53,570
Ratio of expenses to average net assets 1.64% 1.75% 1.72% 1.80% 1.86%
Ratio of net investment loss to average net
assets (0.57)% (0.68)% (0.90)% (0.90)% (0.64)%
Portfolio turnover rate 29.63% 38.83% 45.31% 43.61% 44.84%
(1)Per share data is for a share outstanding throughout the year.
(2)The total return calculation does not reflect the sales load imposed on the
purchase of shares (see Note 7).
See notes to the financial statements.
KEELEY Small Cap Value Fund, Inc.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2004
1. ORGANIZATION
The KEELEY Small Cap Value Fund, Inc. (the "Fund") was incorporated on
May 17, 1993 as a Maryland corporation and is registered as a diversified
open-end investment company under the Investment Company Act of 1940 (the
"1940 Act").
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. These policies are in conformity with accounting principles
generally accepted in the United States of America ("GAAP"). The
presentation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates and assumptions.
a) Investment Valuation--Securities which are traded on a recognized stock
exchange are valued at the last sale price each day on the securities
exchange on which such securities are primarily traded or at the last sale
price on a national securities exchange. Exchange-traded securities for
which there were no transactions are valued at the current bid prices.
Securities traded on only over-the-counter markets are valued on the basis
of last sale price, or closing over-the-counter bid prices when there is no
last sale price available. Debt securities (other than short-term
obligations) are valued by a service that used electronic data processing
methods, avoiding exclusive reliance on exchange or over-the-counter prices.
Debt securities purchased within 60 days of their stated maturity date are
valued at amortized cost, which approximates fair value. Securities for
which quotations are not readily available are valued at fair value as
determined in good faith pursuant to policies and procedures adopted by the
Board of Directors. For each investment that is fair valued, the Fund
considers, to the extent applicable, various factors including, but not
limited to, the financial condition of the company, comparable companies in
the public market, the nature and duration of the cause for a quotation not
being readily available and other relevant factors.
b) Federal Income and Excise Taxes--It is the Fund's policy to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all investment company net taxable
income and net capital gains to shareholders in a manner which results in no
tax cost to the Fund. Therefore, no federal income or excise tax provision
is recorded.
c) Distributions to Shareholders--Dividends from net investment income, if
any, will be declared and paid annually. Distributions of net realized
gains, if any, will be declared and paid annually. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may periodically
make reclassifications among certain of its capital accounts as a result of
the characterization of certain income and realized gains determined
annually in accordance with federal tax regulations that may differ from
generally accepted accounting principles. Where appropriate,
reclassifications between net asset accounts are made for such differences
that are permanent in nature.
KEELEY Small Cap Value Fund, Inc.
NOTES TO THE FINANCIAL STATEMENTS (continued)
September 30, 2004
d) Other--Investment transactions are recorded on the trade date. The Fund
determines the gain or loss realized from investment transactions by
comparing the identified original cost of the security lot sold with the net
sale proceeds. Dividend income is recognized on the ex-dividend date and
interest income is recognized on an accrual basis.
e) Guarantees and Indemnifications--In the normal course of business, the
Fund enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims against the Fund
that have not yet occurred. Based on experience, the Fund expects the risk
of loss to be remote.
3. INVESTMENT ADVISORY AGREEMENT
The Fund has an agreement with Keeley Asset Management Corp. (the
"Adviser"), with whom certain officers and directors of the Fund are
affiliated, to furnish investment advisory services to the Fund. Under the
terms of this agreement, the Fund pays the Adviser a monthly fee at the
annual rate of 1.00% of the Fund's average daily net assets. Under the
investment advisory agreement, if the aggregate annual operating expenses
(excluding interest, taxes, brokerage commissions and other costs incurred
in connection with the purchase or sale of portfolio securities, and
extraordinary items) exceed 2.50% of the Fund's average daily net assets,
the Adviser will reimburse the Fund for the amount of such excess.
4. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan is designed to reimburse Keeley
Investment Corp. (the "Distributor"), with whom certain officers and
directors of the Fund are affiliated, for certain promotional and other
sales related costs and to permit the Fund to compensate other dealers of
its shares. Unreimbursed amounts may be carried forward and paid in a
subsequent year, to the extent that total expenses under the plan do not
exceed 0.25% of the average daily net assets of the Fund. The Fund paid to
the Distributor and each dealer a monthly fee at the annual rate of 0.25% of
the average daily net assets of Fund shares beneficially owned by the
Distributor's and each dealer's existing brokerage clients. For the period
from October 1, 2003 to September 30, 2004, the Fund paid $107,354 of
distribution fees to the Distributor.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the period from October 1, 2003 to September
30, 2004, were $118,109,362 and $38,465,516, respectively. For the period
from October 1, 2003 to September 30, 2004, the Fund paid $468,702 of
brokerage commissions on trades of securities to the Distributor.
KEELEY Small Cap Value Fund, Inc.
NOTES TO THE FINANCIAL STATEMENTS (continued)
September 30, 2004
6. FEDERAL INCOME TAX INFORMATION
At September 30, 2004, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes were as follows:
Cost of Investments $157,076,962
============
Gross Unrealized Appreciation $ 53,148,989
Gross Unrealized Depreciation (1,983,988)
------------
Net Unrealized Appreciation on Investments $ 51,165,001
============
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal years ended
September 30, 2004 and 2003 were as follows:
2004 2003
---- ----------
Long-Term Capital Gains $-- $3,967,366
As of September 30, 2004 the components of accumulated earnings on a tax
basis were as follows:
Undistributed Long-Term Capital Gain $ 8,145,367
Net Unrealized Appreciation on Investments 51,165,001
-----------
Total Accumulated Earnings $59,310,368
===========
The Fund utilized $28,076 of its capital loss carryforwards and $379,213
of post-October losses during the year ended September 30, 2004. The Fund
hereby designates $8,145,367 as a long-term capital gain distribution for
the purpose of the dividends paid deduction (unaudited).
7. OFFERING PRICE PER SHARE
The public offering price is the net asset value plus a sales charge,
which varies in accordance with the amount of the purchase up to a maximum
of 4.5%.
The Distributor retains the entire sales charge when it makes sales
directly to the public. Otherwise, when sales are made through dealers, the
Distributor receives a portion of the related sales charge. For the period
from October 1, 2003 to September 30, 2004, the Fund was advised that the
Distributor received $145,408 of sales charges. Sales charges are not an
expense of the Fund and are not reflected in the financial statements of the
Fund.
As specified in the Fund's Prospectus, reduced sales charges are
available through a right of accumulation and certain sales of Fund shares
can be made at net asset value per share.
8. RELATED PARTY TRANSACTION
As of September 30, 2004, one director of the Fund beneficially owned
443,977 shares of the Fund, which represents 7.3% of the Fund's outstanding
shares.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
KEELEY Small Cap Value Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of KEELEY Small Cap Value Fund, Inc.
(the "Fund") at September 30, 2004, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2004 by correspondence with the
custodian, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCooper LLP
November 12, 2004
KEELEY Small Cap Value Fund, Inc.
Directors and Officers
Independent Directors
Term of Office* Principal Occupation(s) Number of Portfolios
Name, Address and Position(s) and Length of During the Past Overseen Within the
Age Held with Fund Time Served Five Years Fund Complex
- --- -------------- ------------------ --------------------------------------- --------------------
Jerome J. Director Served as Director Vice President of Finance for Grayhill, 1
Klingenberger since 1999 Inc. (electronic components and
561 Hillgrove Ave. control systems)
LaGrange, IL 60525
Age: 49
John G. Kyle Director Served as Director Owner and operator of Shell Oil 1
10 Skokie Hwy since 1993 Services Stations and Gasoline
Highland Park, IL Distributor
60035
Age: 63
John F. Lesch Director Served as Director Attorney with Nisen & Elliott, LLC 1
200 W. Adams Street since 1993
Suite 2500
Chicago, IL 60606
Age: 64
Sean Lowry Director Served as Director Executive Vice President of Pacor 1
401 South LaSalle since 1999 Mortgage Corp.
Street
Suite 605
Chicago, IL 60605
Age: 50
Elwood P. Walmsley Director Served as Director Owner of J. FitzWoody's Lakeshore 1
100 Cobblestone since 1999 Grill, since 2002 and Director of Sales
Court for H.B. Taylor Company (food
Twin Lakes, WI 53181 services), since 2003; Prior thereto,
Age: 63 National Account Executive for
Haarmann & Reimer, Division of
Bayer International, since 1999
Interested Directors and Officers
Term of Office* Principal Occupation(s) Number of Portfolios
Name, Address and Position(s) and Length of During the Past Overseen Within the
Age Held with Fund Time Served Five Years Fund Complex
- --- -------------- ------------------ --------------------------------------- --------------------
John L. Keeley, Jr. Director and Served as Director President and Treasurer of Keeley 1
401 South LaSalle President and President Investment Corp. and President of
Street since 1993 Keeley Asset Management Corp.
Suite 1201
Chicago, IL 60605
Age: 64
Mark Zahorik Vice President Served as Vice Vice President of Keeley Asset N/A
401 South LaSalle President since Management Corp. and Keeley
Street 1997 Investment Corp.
Suite 1201
Chicago, IL 60605
Age: 42
Mary A. Ferrari Secretary Served as Corporate Secretary of Keeley Asset N/A
401 South LaSalle Secretary since Management Corp. and Keeley
Street 1996 Investment Corp.
Suite 1201
Chicago, IL 60605
Age: 45
Emily Viehweg Treasurer Served as Treasurer of Keeley Asset N/A
401 South LaSalle Treasurer since Management Corp. since 2001 and
Street 1997 Assistant Treasurer of Keeley Asset
Suite 1201 Management Corp. and of Keeley
Chicago, IL 60605 Investment Corp. since 1996
Age: 38
Other Directorships
Name, Address and Held Outside
Age the Fund Complex
- --- -------------------
Jerome J. None
Klingenberger
561 Hillgrove Ave.
LaGrange, IL 60525
Age: 49
John G. Kyle None
10 Skokie Hwy
Highland Park, IL
60035
Age: 63
John F. Lesch None
200 W. Adams Street
Suite 2500
Chicago, IL 60606
Age: 64
Sean Lowry None
401 South LaSalle
Street
Suite 605
Chicago, IL 60605
Age: 50
Elwood P. Walmsley None
100 Cobblestone
Court
Twin Lakes, WI 53181
Age: 63
Interested Directors and Officers
Other Directorships
Name, Address and Held Outside
Age the Fund Complex
- --- -------------------
John L. Keeley, Jr. Marquette National
401 South LaSalle Corp.
Street
Suite 1201
Chicago, IL 60605
Age: 64
Mark Zahorik N/A
401 South LaSalle
Street
Suite 1201
Chicago, IL 60605
Age: 42
Mary A. Ferrari N/A
401 South LaSalle
Street
Suite 1201
Chicago, IL 60605
Age: 45
Emily Viehweg N/A
401 South LaSalle
Street
Suite 1201
Chicago, IL 60605
Age: 38
* Each director serves an indefinite term until the election of a successor.
Each Officer serves an indefinite term, renewed annually, until the election of
a successor.
The Statement of Additional Information includes additional information about
the Directors and is available upon request, without charge, by
calling 1-888-933-5391.
Investment Adviser
KEELEY ASSET MANAGEMENT CORP.
Chicago, Illinois
Distributor
KEELEY INVESTMENT CORP.
Chicago, Illinois
Custodian
U.S. BANK, N.A.
Milwaukee, Wisconsin
800-338-1579
Transfer Agent and Dividend Disbursing Agent
U.S. BANCORP FUND SERVICES, LLC
Milwaukee, Wisconsin
800-338-1579
Independent Registered Public Accounting Firm
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
Counsel
MELTZER, PURTILL & STELLE LLC
Schaumburg, Illinois
Performance information is historical and is no guarantee of future results.
The investment return and principal value of shares will fluctuate and when
redeemed, may be worth more or less than the investor's original cost. This
material may only be used when preceded or accompanied by the Fund's prospectus.
401 South LaSalle Street . Suite 1201 . Chicago . Illinois . 60605
(312) 786-5050 . (800) 533-5344 . (312) 786-5003
KEELEY SMALL CAP VALUE FUND, INC.
ANNUAL REPORT
SEPTEMBER 30, 2004
Item 2. Code of Ethics
(a) The registrant has not adopted a code of ethics, as of the end of the period
covered by this report, that applies to the registrant's principal executive
officer and principal financial officer, or persons performing similar functions
which conforms to all of the definitions of a "code of ethics" for purposes of
this item. However, the registrant does have in place a code of ethics which
goes beyond the requirement of rule 17(j)-1, which addresses, among other
things, conflicts of interest which may result from personal securities
transactions and dealings with third parties, and certain outside activities In
the judgment of management of the registrant, that code of ethics, as adopted,
is reasonably designed to deter wrongdoing and promote ethical conduct, internal
reporting and accountability for adherence to that code. The registrant's
existing code of ethics, as so adopted, does not directly address issues of
disclosure in reports that the registrant files with the Commission and other
public communication or compliance with applicable governmental laws, rules and
regulations. There are two people in the registrant's organization who would be
required to be covered under any code of ethics adopted by the registrant which
would meet the definition of a code of ethics in this item. Those persons are
John Keeley, the president of the registrant, and Emily Viehweg, the treasurer
of the registrant. Both John Keeley and Emily Viehweg are subject to the
registrant's existing code. In the judgment of the registrant, the small size of
the registrant's and adviser's staff who are involved in matters which would be
covered by any such code of ethics as defined in this item, and the use and
involvement of a third party service provider (administrator), independent
auditors and outside counsel in those activities makes an additional code of
ethics unnecessary. A copy of the registrant's existing code of ethics (which,
however, does not meet all of the definitions of a "code of ethics" as defined
in this item) is attached hereto as Exhibit (a).
(b) Not Applicable
(c) Not Applicable
Item 3. Audit Committee Financial Expert
The registrant's board of directors has determined that the registrant has at
least one audit committee financial expert serving on its audit committee. That
audit committee financial expert is Mr. Jerome Klingenberger. Mr. Klingenberger
is one of the members of the board of directors and is "independent" for
purposes of this Item. Since the registrant does not have a separate audit
committee, the entire board of directors constitutes the audit committee, and as
a member of the board of directors, Mr. Klingenberger is a member of the audit
committee for purposes of this Item.
Item 4. Principal Accountant Fees and Services
The aggregate fees for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
are listed below.
(a) Audit fees.
Fiscal year ended September 30, 2004 $20,000
Fiscal year ended September 30, 2003 $18,800
(b) Audit-related fees.
None.
(c) Tax fees.
Fiscal year ended September 30, 2004 $3,600
Fiscal year ended September 30, 2003 $3,500
(d) All other fees.
None.
(e)
(1) It is the policy of the registrant's Board of Directors to pre-approve
all audit and non-audit services at a regularly scheduled meeting of the Board
of Directors.
(2) During 2004, all of the audit and non-audit services provided by the
registrant's principal accountant were pre-approved by the registrant's Board of
Directors.
(f) None.
(g) None.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
The schedule of investments in securities of unaffiliated issuers is included as
part of the report to shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Purchases of Equity Securities of Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 9. Submissions of Matters to a Vote of Security Holders
As of the end of the period covered by this report, the registrant had not
adopted any procedures by which shareholders may recommend nominees to the
registrant's Board of Directors.
Item 10. Controls and Procedures
(a) The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information relating to
the registrant is made known to them by others, particularly during the period
in which this report is being prepared. The registrant's certifying officers
have determined that the registrant's disclosure controls and procedures are
effective based on their evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 11. Exhibits
(a)(1) Code of Ethics - Filed as an attachment to this filing (the code, as
filed, does not meet the definition of a "Code of Ethics" as defined in this
Form N-CSR).
(a)(2) Certification for each principal executive and principal financial
officer of the registrant as required by Rule 30a-2 under the Act (17 CFR
270.30a-2(a)) - Filed as an attachment to this filing.
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) - Filed as an attachment to this filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
KEELEY Small Cap Value Fund, Inc.
By: /s/ John L. Keeley, Jr.
-------------------------------
John L. Keeley, Jr.
President
Date: November 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John L. Keeley, Jr.
-------------------------------
John L. Keeley, Jr.
President
Date: November 23, 2004
By: /s/ Emily Viehweg
-------------------------------
Emily Viehweg
Treasurer
Date: November 23, 2004