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: 811-21782
Small Cap Value Fund, Inc.
(Exact name of registrant as specified in charter)
8150 N. Central Expressway #101 Dallas, Texas 75206
(Address of principal executive offices)
Laura S. Adams
8150 N. Central Expressway #101 Dallas, Texas 75206
(Name and address of agent for service)
Registrants telephone number, including area code: 800-704-6072
Date of fiscal year end: December 31
Date of Reporting Period: June 30, 2006
Item 1. Report to Shareholders.
SMALL CAP VALUE FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2006
Small Cap Value Fund, Inc.
8150 N. Central Expressway #101
Dallas, Texas 75206
1-800-704-6072
Dear shareholders of Small Cap Value Fund, Inc.,
The Fund began investment operations on December 16, 2005 and on
December 31, 2005 had a Net Asset Value per share of $19.87.
As of June 30, 2006, the Net Asset Value was 21.75, resulting in a gain
of 9.81% for the first half of the year, versus a gain of 7.12% for the
S&P 600 Index. Laura S. Adams and her family currently own 100% of the
shares of the Fund. We look forward to our first full year of
operation in 2006.
Sincerely,
Laura S. Adams
President
SMALL CAP VALUE FUND, INC.
EXPENSES
JUNE 30, 2006
As a shareholder of the Fund you incur ongoing costs including
management fees and other operating 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. This example is based on an investment of
$1,000 invested at the beginning of the period and held for the entire
period to June 30, 2006.
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 at the beginning of
the period, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,500
account value divided by $1,000 equals 8.5), then multiply this result
by the number in the first line under the heading "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 to 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), redemption fees, or exchange fees.
Therefore, the second line of the table is useful in comparing ongoing
costs only.
Expenses Paid
Beginning Ending During Period*
Account Value Account Value December 31, 2005
December 31, 2005 June 30, 2006 to June 30, 2006
----------------- ------------- -----------------
Actual $ 1,000 $ 1,094.61 $ 4.93
Hypothetical** $ 1,000 $ 1,020.08 $ 4.76
*Expenses are equal to the Fund's annualized expense ratio of 0.95%,
multiplied by the average account value over the period, multiplied by
181 days/365 days to reflect the one-half year period
** Hypothetical return assumes 5% return before expenses.
SMALL CAP VALUE FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2006
ASSETS
Investment securities, at
value(cost $1,035,368) $ 1,114,511
Cash 3,869
Accrued Interest 4
Dividends receivable 225
-----------
Total assets 1,118,609
-----------
LABILITIES
Advisory fees payable 837
-----------
Total liabilities 837
-----------
NET ASSETS -
(Equivalent to $21.75 per
share based on 51,387 shares
of common stock issued and outstanding;
100,000,000 shares authorized,
$0.001 par value $ 1,117,772
============
NET ASSETS CONSIST OF:
Common stock $ 51
Paid-in capital 1,038,579
Net unrealized appreciation
of investments 79,142
- ------------
Net assets $ 1,117,772
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS (Unaudited)
JUNE 30, 2006
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
COMMON STOCKS - 99.71%
Consumer Discretionary - 27.09%
Bebe stores 4500 69,390
4 Kids Entertainment 4000 64,840
Marine Products 6200 60,326
Nu Skin Ent 2650 39,353
Tempur Pedic 5100 68,901
--------
302,810
Consumer Staples - 27.01% --------
Deluxe Corp 2100 36,701
RSA SEC Inc. 5700 154,470
Sanderson Farms 2100 58,779
Valassis Communications 2200 51,898
--------
301,855
Financial - 8.32% --------
Advance America 5300 92,962
--------
92,962
Healthcare/Pharmaceutical - 9.72% --------
Amerigroup 3500 108,642
--------
108,642
--------
- - Continued -
SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS, continued
JUNE 30, 2006
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
Technology/Telecommunications - 27.58%
DTS Inc. 4800 $ 93,504
Innovative Solutions & Support 5300 74,518
Leadis Technology 1250 69,000
Plantronics 2300 51,083
Sigmatel Inc 4900 20,139
--------
308,244
--------
Total common stocks (cost $1,035,368) 1,114,511
--------
SHORT-TERM INVESTMENTS - 0.35%
Schwab Value Advantage Money Fund
Bears interest at 4.5% 3,869 3,869
--------
Total short-term investments (cost $3,869 ) 3,869
--------
Total investment securities - 100.00% (cost $1,039,237) 1,118,380
Other assets less liabilities - 0.00% (608)
--------
Net assets - 100.00% $ 1,117,772
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
STATEMENT OF OPERATIONS (Unaudited)
For the Period December 31, 2005 through June 30, 2006
INVESTMENT INCOME:
Dividends $ 5,135
Interest 53
------------
Total investment income 5,188
EXPENSES -
Advisory fees 5,211
----
Net investment income (23)
------------
GAINS ON INVESTMENTS -
Net realized gain on investments 0
Net change in unrealized depreciation of securities 96,936
------------
Net realized gain and
Unrealized loss on investments 96,936
- ------------
Net increase in net assets resulting from operations $ 96,936
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
For the Period December 31, 2005 through June 30, 2006
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ (23)
Net realized gain on investments 0
Net change in unrealized appreciation
of securities 96,936
------------
Net decrease in net assets
resulting from operations 96,913
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income 0
Net realized gains 0
------------
Total Distributions 0
CAPITAL SHARE TRANSACTIONS-NET 0
------------
TOTAL INCREASE IN NET ASSETS 96,936
NET ASSETS, beginning of period 1,020,854
------------
NET ASSETS, end of period $ 1,117,772
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD ENDED:
(Unaudited)
12/31/2005- Inception (12/16/05)-
06/30/2006 12/31/2005 (a)
----------- ------------
Net asset value,
beginning of period $ 19.87 $ 20.21
--------- ----------
Income from investment
operations:
Net investment income 0.00 0.07
Net unrealized gain/(loss)
on investments 1.88 (0.34)
--------- ----------
Total gain/(loss) from
investment operations 1.88 (0.27)
Less distributions from:
net investment income 0.00 (0.07)
net realized gains 0.00 (0.00)
--------- ----------
0.00 (0.07)
Net asset value,
end of period $ 21.75 $ 19.87
========= =========
Total Return 9.81 (1.09)% (d)
Net assets, end of period $ 1,117,772 $ 1,020,854
Ratio of expenses to 0.94% 0.95%(b)
average monthly net assets (c)
Ratio of net investment gain/loss 0.00% (8.02)%(b)
to average monthly net assets
Portfolio turnover rate 0.00% 0.00%
(a) Calculation of per share data and ratios represents the period
from December 16, 2005 (date investment operations commenced)
through December 31, 2005.
(b) Per share data has been annualized using the average number of
shares outstanding.
(c) The Fund's actual expenses are calculated daily at 0.95% of net
asset value (NAV).
(d) Total return has not been annualized.
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Small Cap Value Fund, Inc. the "Fund") was incorporated in the
State of Texas on June 16, 2005 and is registered under the
Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The investment objective of the
Fund is to achieve growth by investing primarily in small
capitalization common stocks. The Fund had no operations until
June 24, 2005, when it sold 7,500 shares of its common stock to its
original shareholder, Mrs. Laura S. Adams. Investment operations
commenced on December 16, 2005. The effective date of the Fund's
Registration under the Securities Act of 1933 was October 27, 2005.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting
period. Actual results could differ from these estimates.
Security Valuation
Securities listed on a national securities exchange or in the over-
the-counter market are valued at the last quoted sales price on the
day of valuation, or if no quoted sales price was reported on that
date, the last quoted bid price. Short-term investments are valued
at cost which approximates fair value. Securities for which
quotations are not readily available are valued at their estimated
fair value as determined in good faith by the Fund's Board of
Directors.
Securities Transactions and Investment Income
Securities transactions are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses
are determined on a specific identification basis of the securities
sold. Unrealized gains and losses resulting from the appreciation
and depreciation of securities carrying values are included in the
statements of operations.
Distribution of Income and Gains
The Fund declares and pays dividends annually from net investment
income and from net realized gains, if any. Distributions from
realized gains for book purposes may include short-term capital
gains, which are included in ordinary income for tax purposes.
SMALL CAP VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Federal Income Taxes
The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including
any realized gains on investments, to its shareholders. Therefore,
no federal income tax provision is required.
Net investment income (loss), net realized gains (losses) and the
cost of investments in securities may differ for financial
statement and income tax purposes. The character of distributions
from net investment income or net realized gains may differ from
their ultimate characterization for income tax purposes. At June
30, 2006, there were no material differences. Also, due to the
timing of dividend distributions, the year in which amounts are
distributed may differ from the year that the income or realized
gains were recorded by the Fund.
3. CAPITAL SHARE TRANSACTIONS
Capital Share transactions in the Fund's $0.001 par value common
stock were as follows:
Period from
December 31, 2005
through June 30, 2006
-------------------
Shares Amount
Shares sold 0 $ 0
Shares issued in
reinvestment of
dividends 0 0
------ --------
Net increase 0 0
Beginning of period 51,387 1,038,648
------- --------
End of period 51,387 $ 1,038,648
====== =========
4. INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investment
securities, excluding short-term investments, aggregated $0.00 and
$0.00, respectively, for the period December 31, 2005 to June 30,
2006. There were no differences between the financial reporting
basis and the income tax basis in the cost or net unrealized
depreciation of the Fund's investments as of June 30, 2006.
As of June 30, 2006, the aggregate unrealized appreciation and
depreciation of investment securities was as follows:
Unrealized appreciation
$
202,272
Unrealized depreciation
(123,130)
Net unrealized appreciation
$
79,142
SMALL CAP VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
5. DISTRIBUTION TO SHAREHOLDERS
On December 31, 2005 a distribution of $0.07 per share aggregating
$3,552 was paid to the shareholders of record on that date from net
investment income and net realized gains. There have been no
distributions in 2006 through June 30, 2006.
6. ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund and the Advisor are under common control and the existence
of that control may create operating results and financial position
significantly different than if they were autonomous.
The Fund has entered into an agreement with Adams Asset Advisors,
LLC (the "Advisor") to provide investment advisory services to the
Fund. Laura S. Adams is the managing member of the Advisor and is
an officer, director and shareholder of the Fund. Under the terms
of the agreement, the Fund will pay the Advisor a monthly fee at
the annual rate of 0.95% of the Fund's average daily net assets.
The fee is computed daily and payable monthly. The Advisor has
contractually agreed to pay all operating expenses of the Fund,
except brokerage fees and commissions, interest, taxes and
extraordinary expenses. As of June 30, 2006, Laura S. Adams and
her family owned 100% of the common stock of the Fund.
The Advisor acts as the transfer agent for the Fund.
Proxy Voting Information
Small Cap Value Fund, Inc. management is responsible for exercising the
voting rights associated with the securities held by the Fund. A
description of our philosophy on fulfilling this responsibility is
available without charge, upon request, by calling 1-800-704-6072.
Board of Directors Information
INDEPENDENT DIRECTORS
Name and Age Position Term Principal Occupation Other Public
Past five years Directorships
- ------------------- -------- ---- --------------------- -------------
Vicky L. Hubbard Director 1 Yr Homemaker since 2000, Alpha Hedge
Age 47 Technology Mngr prior Fund, Stock
Dividend Fund
Yolawnde F. Malone Director 1 Yr Tax Mngr-Tolleson Alpha Hedge
Age 41 Wealth Mgmt, Self Emp Fund, Stock
Tax Consultant prior Dividend Fund
Melissa D. Gordon, Director 1 Yr Pathologist, North Alpha Hedge
M.D. Dallas Pathology Fund, Stock
Age 42 Dividend Fund
INTERESTED DIRECTORS
Laura S. Adams Director, 1 Yr President, Adams Alpha Hedge
Age 45 President Asset Advisors and Fund, Stock
Secretary Index Plus Fund Dividend Fund
Treasurer since 2002, Private
Investor prior
Item 2. Code of Ethics. The registrant, as of the end of the period
covered by this report, has adopted a code of ethics that applies to
all officers and employees of the Fund. The registrant has not made
any amendments to its code of ethics or granted any waivers or
exceptions to the code during the covered period.
Item 3. Audit Committee Financial Expert. The entire Board of
Directors, in effect, acts as the audit committee. The Board has two
financial experts serving on the Board. Laura Adams and Yolawnde
Malone are the financial experts. Mrs. Adams is an "interested"
Director and Mrs. Malone is an "independent" Director.
Item 4. Principal Accountant fees and services. As part of the
Registrants contract with the Investment Advisor of the Fund, the
Investment Advisor is responsible for paying all accountant and related
audit fees as part of the Advisory fee paid by the Fund.
Item 5. Audit Committee of listed Registrants. (Not applicable for
semi-annual reports)
Item 6. Schedule of Investments. Schedule of Investments is included
as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of proxy voting policies and procedures for closed-
end management investment companies. (Not applicable)
Item 8. Portfolio Managers of Closed-End Management Investment
Companies. Not Applicable to open-end investment companies.
Item 9. Purchase of equity securities by closed-end management
investment companies. (Not applicable)
Item 10. Submission of Matters to a vote of security holders. (None)
Item 11. Controls and Procedures
a) The Fund's president has concluded that the Fund's disclosure
controls and procedures are sufficient to ensure that information
required to be disclosed by the Fund in this Form N-CSR was
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and
forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the
report.
b) There were no significant changes or corrective actions with
regard to deficiencies or material weaknesses in the Fund's internal
controls or in other factors that could significantly affect the
Fund's internal controls subsequent to the date of their evaluation.
Item 12. Exhibits.
a) (1)Code of Ethics-Filed with Form N-CSR and is hereby incorporated
by reference
(2)Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002- Attached
b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002- Attached
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.
Small Cap Value Fund
By /s/ Laura S. Adams
- --------------------------------------
Laura S. Adams
President
Principal Executive Officer and Principal Financial Officer
Date 8/17/06
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 dates indicated.
Small Cap Value Fund
By /s/ Laura S. Adams
- --------------------------------------
Laura S. Adams
President
Principal Executive Officer and Principal Financial Officer
Date 8/17/06