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, 2007
Item 1. Report to Shareholders.
SMALL CAP VALUE FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2007
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.,
As of June 30, 2007, the Net Asset Value of the Fund was 27.44, up from
24.58 at the beginning of the year. This resulted in a gain of 11.68%
for the first half of the year, versus a gain of 8.56% for the S&P 600
Index.
We continue to see exceptional investment opportunities in the small
cap area and thus are very optimistic and excited about the potential
of the Fund.
Sincerely,
Steven Adams
Portfolio Manager
SMALL CAP VALUE FUND, INC.
EXPENSES
JUNE 30, 2007
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, 2007.
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, 2006
December 31, 2006 June 30, 2007 to June 30, 2007
----------------- ------------- -----------------
Actual $ 1,000 $ 1,058.40 $ 4.99
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, 2007
ASSETS
Investment securities, at
value(cost $19,860,085) $21,385,283
Cash 70,038
Accrued interest 113
Dividends receivable 17,026
-----------
Total assets 21,472,460
-----------
LABILITIES
Advisory fees payable 16,934
-----------
Total liabilities 16,934
-----------
NET ASSETS ?
(Equivalent to $27.44 per
share based on 782,006 shares
of common stock issued and outstanding;
100,000,000 shares authorized,
$0.001 par value $ 21,455,526
============
NET ASSETS CONSIST OF:
Common stock $ 782
Paid-in capital 19,457,520
Net unrealized appreciation
of investments 1,522,789
Undistributed net investment income 4,282
Undistributed net realized gain on
investments 470,153
- ------------
Net assets $ 21,455,526
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS (Unaudited)
JUNE 30, 2007
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
COMMON STOCKS ? 99.67%
Capital Goods ? 32.05%
Arkansas Best Corp 14400 561,168
A.S.V., Inc 39700 686,016
FreightCar America 16000 765,440
Georgia Gulf Corp 37750 683,652
H&E Equipment Services 29005 804,599
Insteel Industries 34600 622,800
Louisiana Pacific 23500 444,620
Olin Corp 35400 743,400
Olympic Steel 13000 372,580
Schnitzer Steel Industries 6237 299,002
Universal Forest Products 13000 549,380
Worthington Industries 15000 324,750
--------
6,875,407
Consumer Discretionary ? 22.16%
Building Materials Holding Corp 68300 969,177
Cavco Industries 2918 109,483
Furniture Brands 37000 525,400
Gevity 30996 599,153
Jakks Pacific 11163 314,127
Labor Ready 10017 231,493
LoJack Corp 12300 274,167
Mesa Air Corp 114512 756,924
Pier One Imports 60600 514,494
Polaris Industries 8495 460,089
--------
4,754,507
Consumer Staples ? 4.30%
Belo Corp 6600 135,894
ExpressJet Holdings 102000 609,960
Journal Register 39300 176,064
--------
921,918
Energy ? 7.06%
Patterson UTI Energy 23350 612,003
Pioneer Drilling 20030 298,647
Stone Energy 17600 602,976
--------
1,513,626
Healthcare/Pharmaceutical ? 4.64%
Hi-Tech Pharmacal 55977 668,365
Odyssey Healthcare 27586 327,170
--------
995,535
- - Continued -
SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS, continued
JUNE 30, 2006
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
Technology/Telecommunications ? 29.56%
China BAK Battery 142200 $ 558,846
Cogent Inc 39000 572,910
EarthLink 50750 379,102
Genesis Microchip 60000 561,600
Komag 45100 1,438,239
OmniVision 49800 901,878
Palm Inc. 20569 329,513
Rackable Systems 82500 1,019,700
Western Digital 30000 580,500
--------
6,342,288
--------
Total common stocks (cost $19,860,085) 21,385,281
--------
SHORT-TERM INVESTMENTS ? 0.33%
Schwab Value Advantage Money Fund
70,038
--------
Total short-term investments (cost $70,038 ) 70,038
--------
Total investment securities ? 100.00% (cost $19,930,123) 21,455,319
Other assets less liabilities ? 0.00% 207
--------
Net assets ? 100.00% $ 21,455,526
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
STATEMENT OF OPERATIONS (Unaudited)
For the Period December 31, 2006 through June 30, 2007
INVESTMENT INCOME:
Dividends $ 68,119
Interest 3,532
Accrued Interest 113
------------
Total investment income 71,764
EXPENSES ?
Advisory fees 67,482
------
Net investment income 4,282
------------
GAINS ON INVESTMENTS ?
Net realized gain on investments 470,153
Net change in unrealized appreciation of securities 1,138,231
------------
Net realized gain and
Unrealized loss on investments 1,608,384
- ------------
Net increase in net assets resulting from operations $ 1,612,666
============
See accompanying notes to these financial statements.
SMALL CAP VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
Six Months Ended Year Ended
June 30, 2007 Dec. 31, 2006
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 4.282 $ 31,880
Net realized gain on investments 470,153 20,521
Net change in unrealized appreciation
of securities 1,138,231 402,352
----------- ------------
Net increase in net assets
resulting from operations 1,612,666 454,753
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income 0 (31,880)
Net realized gains 0 (20,521)
----------- ------------
Total Distributions 0 (52,401)
CAPITAL SHARE TRANSACTIONS 13,763,253 4,656,402
----------- ------------
TOTAL INCREASE IN NET ASSETS 15,375,919 5,058.754
NET ASSETS, beginning of period 6,079,608 1,020,854
----------- ------------
NET ASSETS, end of period 21,455,526 $ 6,079,608
=========== ============
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
(Unaudited)
6 Mo. Ended YEAR ENDED PERIOD ENDED
6/30/07 12/31/06 12/31/05(a)
---------- --------- --------
Net asset value,
beginning of period $ 24.58 $ 19.87 $ 21.21
-------- --------- --------
Income from investment
operations:
Net investment income 0.01 0.35 0.07
Net realized and unrealized
gains on investments 2.85 4.57 (0.34)
-------- --------- --------
Total income from
investment operations 2.86 4.92 (0.27)
Less distributions from:
Net investment income 0.00 (0.13) (0.07)
Net realized gains 0.00 (0.08) (0.00)
-------- --------- --------
0.00 (0.21) (0.07)
Net asset value,
end of period $ 27.44 $ 24.58 $ 19.87
======== ========= ========
Total Return(d) 11.68%% 24.76% (1.09)%
Net assets, end of period $21,455,526 $ 6,079,608 $1,020,854
Ratio of expenses to 0.88% 0.85% 0.95%(b)
average monthly net assets (c)
Ratio of net investment income 0.93% 1.42% (8.02)%
to average monthly net assets (b)
Portfolio turnover rate(annualized) 36.95%% 24.65% 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, 2007, 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, 2006
through June 30, 2007
-------------------
Shares Amount
Shares sold 534,594 $13,763,253
Shares issued in
reinvestment of
dividends 0 0
------ --------
Net increase 534,594 13,763,253
Beginning of period 247,412 5,695,050
------- ----------
End of period 782,006 $19,458,303
======= ===========
4. INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investment
securities, excluding short-term investments, aggregated
$15,995,061 and $2,598,213, respectively, for the period December
31, 2006 to June 30, 2007. 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, 2007.
As of June 30, 2007, the aggregate unrealized appreciation and
depreciation of investment securities was as follows:
Unrealized appreciation
$
2,242,490
Unrealized depreciation
(719,701)
Net unrealized appreciation
$
1,522,789
SMALL CAP VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
5. DISTRIBUTION TO SHAREHOLDERS
There have been no distributions in 2007 through June 30, 2007.
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.
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-Cain Waters, Alpha Hedge
Age 43 Tolleson Wealth Mgmt Fund, Stock
prior, Self Emp Tax Dividend Fund
Consultant prior
Melissa D. Gordon, Director 1 Yr Pathologist, North Alpha Hedge
M.D. Dallas Pathology Fund, Stock
Age 43 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-Not applicable for semi-annual reports.
(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 8/01/07
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 8/01/07