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 #M1120 Dallas, Texas 75206 (Address of principal executive offices) Laura S. Adams 8150 N. Central Expressway #M1120 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: December 31, 2008 Item 1. Report to Shareholders. SMALL CAP VALUE FUND, INC. ANNUAL REPORT DECEMBER 31, 2008 Small Cap Value Fund, Inc. 8150 N. Central Expressway #M1120 Dallas, Texas 75206 1-800-704-6072 Fund Symbol: SCAPX Dear shareholders of Small Cap Value Fund, Inc., The Fund began 2008 with a Net Asset Value per share of $19.90 and ended with a Net Asset Value per share of $11.62, after declaring and distributing a dividend of $.032 per share. The total return of the Fund for 2008 was (41.49%) versus (30.99%) for the S&P 600 and (34.15%) for the Russell 2000 Small Cap Value Index. The Fund?s share price declined during the year as the crisis in credit and mortgage markets resulted in multiple bank failures and a standstill to lending, especially to smaller companies. Our Fund underperformed despite the fact that the underlying portfolio had virtually no direct exposure to the financial sector, however, retail and other consumer related businesses had equivalent or greater declines. We attribute this general decline to the tightening of credit available to smaller companies, a virtual shutdown of bank lending to private equity firms and flight of capital to larger companies and cash by investors. Our Fund continues to own many companies that have little or no net debt on their balance sheets and valuations that are very compelling. We feel that as credit markets stabilize capital will flow back into the type of securities in our portfolio. Unfortunately, it is unpredictable as to when, or if, this will happen. The top holdings and industry group exposures of the Fund as of 12/31/08 are listed below. We look forward to better results in 2009. Sincerely, Steven Adams Portfolio Manager SMALL CAP VALUE FUND, INC. Top Ten Holdings and Asset Allocation December 31, 2008 Top Ten Holdings* (% of Net Assets) ViroPharma Inc. 10.87% Steve Madden, Ltd. 7.64% Universal Forest Products, Inc. 7.25% Western Refining, Inc. 7.01% Finish Line Inc. 6.77% Odyssey Healthcare Inc. 6.21% Deluxe Corp. 6.01% BeBe stores 4.68% Cooper Tire Rubber 4.42% Coventry Health Care Inc. 3.85% ------ 64.71% Asset Allocation (% of Net Assets) Pharmaceutical Preparation 10.87% Women?s Clothing Stores 9.21% Sawmills and Planing Mills 7.74% Women?s Footwear 7.64% Petroleum Refining 7.01% Shoe Stores 6.77% Home Health Care Services 6.21% Computer Processing and Data Prep and Processing Systems 6.01% Fabricated Rubber Products 4.42% Life Insurance							 3.85% Drilling Oil and Gas Wells 3.55% Footwear 3.50% Railroad Equipment 3.49% Electronic Computers 3.46% Computer Integrated Systems Design 3.26% Misc. Fabricated Wire Products 2.41% Heavy Construction Equipment Rental and Leasing 2.33% Rubber and Plastics Footwear 1.97% Arrangement of Transportation of Freight and Cargo 1.74% Primary Batteries, Dry and Wet 1.42% Lumber and Other Building Materials Dealers 1.38% Gypsum Products 0.74% Industrial Organic Chemicals 0.57% Other Assets less liabilities, net 0.45% ------- 						 100.00% *Portfolio holdings are subject to change and are not recommendations of individual stocks SMALL CAP VALUE FUND, INC. EXPENSES DECEMBER 31, 2008 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 on June 30, 2008 and held for the entire six month period to December 31, 2008. 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 June 30, 2008, June 30, 2008 December 31, 2008 December 31, 2008 ----------------- ------------- ----------------- Actual $ 1,000 $ 655 $ 3.96 Hypothetical** $ 1,000 $ 1,020 $ 4.84 *Expenses are equal to the Fund's annualized expense ratio of 0.95%, multiplied by the average account value over the period, multiplied by 184 days/365 days to reflect the one-half year period. ** Hypothetical return assumes 5% return before expenses. SMALL CAP VALUE FUND, INC. PERFORMANCE SUMMARY The graph below represents the changes in value for an initial $10,000 investment in the Small Cap Value Fund from its inception(the beginning of investment operations), December 16, 2005 through December 31, 2008. These changes are then compared to a $10,000 investment in the S&P 600 Small Cap Index for the same period. Returns shown include the reinvestment of all dividends. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. Inception Year End Year End Year End Year End (12/16/05) 2005 2006 2007 2008 --------- ------- ------- -------- --------- Small Cap Value Fund $10,000 $ 9,891 $ 12,340 $ 10,010 $ 5,862 S&P 600 Small Cap Index $10,000 $ 9,879 $ 11,409 $ 11,374 $ 7,849 $13,000| $12,000| # $11,000| * * $10,000| # * # * # $ 9,000| $ 8,000| * $ 7,000| $ 6,000| # _________________________________________________ Inception 2005 2006 2007 2008 (12/16/2005) # = Small Cap Value Fund * = S&P 600 Small Cap Index Compounded 15 Day Annual Annual Annual Average Return Return Return Return Annual 2005 2006 2007 2008 Return ------ ------ ------ ------ --------- Small Cap Value Fund (1.09%) 24.76% (18.87%) (41.49)% (16.09)% S&P 600 Index (1.21%) 15.49% ( 0.30%) (30.99)% ( 7.79)% SMALL CAP VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2008 ASSETS Investment securities, at value (cost $28,610,879) $ 16,230,216 Accrued interest receivable 565 Dividends receivable 6,185 ----------- Total assets 16,236,966 ----------- LIABILITIES Advisory fees payable 11,986 ----------- Total liabilities 11,986 ----------- NET ASSETS ? Equivalent to $11.62 per share based on 1,396,113 shares of common stock issued and outstanding; 100,000,000 shares authorized, $0.001 par value $ 16,224,980 	 ============ NET ASSETS CONSIST OF: Common stock				 $ 1,396 Paid-in capital 33,892,093 Net unrealized depreciation of investments (12,380,663) Net undistributed realized (5,287,846) losses - ------------ Net assets $ 16,224,980 ============ See accompanying notes to these financial statements. SMALL CAP VALUE FUND, INC. SCHEDULE OF INVESTMENTS DECEMBER 31, 2008 DESCRIPTION SHARES VALUE - ----------- ------ ------------ COMMON STOCKS ? 99.56% Railroad Equipment ?3.49% FreightCar America				 31000	 $ 566,370 Heavy Construction Equipment ?2.33% Rental and Leasing H & E Equipment (a)				 49005		 377,829 Misc. Fabricated Wire Products?2.41% Insteel Industries 			 34600		 390,634 Sawmills and Planing Mills? 7.74% Louisiana-Pacific (a)			 51330 80,075 Universal Forest Products			 43700	 1,175,967 Arrangement of Transportation of ?1.74% Freight and Cargo Pacer International				 27000		 281,610 Gypsum Products? 0.74% USG Corp (a)					 15000	 120,600 Women?s Clothing Stores?9.21% Bebe stores 101710 759,774 Charlotte Russe Holding Inc (a)		 41000	 266,090 Dress Barn (a)					 43700 469,338 Life Insurance-3.85% Coventry Health Care Inc (a)		 42000 624,960 Lumber and Other Building?1.38% Materials Dealers Builders FirstSource (a)			 146313 	 223,859 Fabricated Rubber Products?4.42% Cooper Tire Rubber 			 116500	 717,640 Shoe Stores?6.77% Finish Line					 196100 1,098,160 Footwear?3.50% Kenneth Cole					 44855 317,573 K-Swiss 21935 250,059 - - Continued - SMALL CAP VALUE FUND, INC. SCHEDULE OF INVESTMENTS, continued DECEMBER 31, 2008 DESCRIPTION SHARES VALUE - ----------- ------ ------------ Women?s Footwear?7.64% Steve Madden(a) 58150 $ 1,239,758 Rubber and Plastics Footwear?1.97% Skechers USA(a)				 24870 318,833 Computer Processing and Data Prep?6.01% and Processing Systems Deluxe CP				 65200 975,392 Industrial Organic Chemicals?0.57% Aventine Renewable Energy(a) 	 142000 	 92,300 Drilling Oil and Gas Wells?3.55% Patterson-UTI Energy				 23350		 268,759 Pioneer Drilling(a)				 55030 306,517 Petroleum Refining?7.01% Western Refining Inc 146655 1,138,043 Home Health Care Services?6.21% Odyssey Healthcare(a)			 108980 	 1,008,065 Pharmaceutical Preparation?10.87% ViroPharma(a) 					 135470	 1,763,819 Primary Batteries, Dry and Wet?1.42% China BAK Battery(a)				 142200 230,364 Computer Integrated Systems Design?3.26% Cogent(a)					 39000 529,230 Electronic Computers?3.46% Rackable Systems(a)				 142500 561,450 -------- Total common stocks (cost $28,533,731) $ 16,153,068 ------------ - - Continued - SMALL CAP VALUE FUND, INC. SCHEDULE OF INVESTMENTS, continued DECEMBER 31, 2008 Value SHORT-TERM INVESTMENTS ? 0.48% ------- Schwab Money Market Fund-current interest at 0.90% 			 $ 77,148 -------- Total short-term investments (cost $77,148) 77,148 -------- Total investment securities ? 100.04% (cost $28,610,879) 16,230,216 Other assets less liabilities ? (0.04)% (5,236) -------- Net assets ? 100.00% $ 16,224,980 ============ (a) Non-dividend paying security See accompanying notes to these financial statements. SMALL CAP VALUE FUND, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008 INVESTMENT INCOME: Dividends $ 241,875 Interest 19,424 ------------ Total investment income 261,299 ------------ EXPENSES ? Advisory fees 216,468 ------------ Net investment income 44,831 ------------ LOSS ON INVESTMENTS ? Net realized loss on investments (5,287,846) Net change in unrealized depreciation of securities (5,915,150) ------------ Net realized loss and unrealized loss on investments (11,202,996) - ------------ Net decrease in net assets resulting from operations $(11,158,165) ============ See accompanying notes to these financial statements. SMALL CAP VALUE FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS Year Ended Year Ended Dec. 31, 2008 Dec. 31, 2007 INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income(loss) $ 44,831 $ (621) Net realized gain(loss) on investments (5,287,846) 55,055 Net change in unrealized depreciation of securities 		 (5,915,150) (6,848,675) 				 ----------- ------------ Net decrease in net assets resulting from operations (11,158,165) (6,794,241) DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (44,831) - Net realized gains - (54,434) ----------- ------------ Total Distributions (44,831) (54,434) CAPITAL SHARE TRANSACTIONS-NET 854,232 27,342,811 ----------- ------------ TOTAL INCREASE(DECREASE) IN NET ASSETS (10,348,764) 20,494,136 NET ASSETS, beginning of year 26,573,744 6,079,608 ----------- ------------ NET ASSETS, end of year $16,224,980 $26,573,744 =========== ============ 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 YEAR YEAR YEAR PERIOD ENDED ENDED ENDED ENDED 2008 2007 2006 2005(a) -------- -------- -------- -------- Net asset value, beginning of period $ 19.90 $ 24.58 $ 19.87 $ 20.21 -------- -------- -------- -------- Income from investment operations: Net investment income 0.32 (0.01) 0.35 0.07 Net realized and unrealized gains (losses)on (8.28) (4.64) 4.57 (0.34) investments -------- -------- -------- -------- Total income (loss)from investment operations	 (7.96) (4.64) 4.92 (0.27) -------- -------- -------- -------- Less distributions from: Net investment income (0.32) (0.04) (0.13) (0.07) Net realized gains (0.00) (0.00) (0.08) (0.00) -------- -------- --------- --------- (0.32) (0.04) (0.21) (0.07) -------- -------- -------- -------- Net asset value, end of period $ 11.62 $ 19.90 $ 24.58 $ 19.87 ======== ======== ======== ======== Total Return (c) (41.49)% (18.87)% 24.76% (1.09)% Net assets, end, of period (in 1,000?s) $16,225 $26,574 $6,080 $1,021 Ratio of expenses to 0.94% 0.95% 0.85% 0.95% average net assets (b) Ratio of net investment 0.20% 0.00% 1.42% (8.02)% income to average net assets Portfolio turnover 23.30% 72.70% 24.65% 0.00% rate (annualized) (a) Calculation of per share data and ratios represents the period from December 16, 2005 (date investment operations commenced) through December 31, 2005. (b) The Fund?s actual expenses are calculated daily at 0.95% of net asset value (NAV). (c) Total return has not been annualized for the period ended Dec. 31, 2005. 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 statement 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 continue 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 December 31, 2008, 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. New Accounting Pronouncements Effective March 30, 2008, the Fund adopted Financial Accounting Standards Board (FASB) Interpretation No.48(FIN 48), 'Accounting for Uncertainty in Income Taxes'. FIN 48 requires the evaluation of tax positions taken on previously filed tax returns or expected to be taken on future returns. These positions must meet a 'more likely than not' standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained upon examination. In evaluating whether a tax position has met the recognition threshold, the Fund must presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions not deemed to meet the ?more-likely-than-not? threshold are recorded as a tax expense in the current year. FIN 48 requires the Fund to analyze all open tax years, as defined by the Statute of Limitations, for all major jurisdictions. Open tax years are those that are open for exam by taxing authorities. Major jurisdiction for the Fund include Federal. As of December 31, 2008, open Federal tax years include the tax years ended December 31, 2006 through December 31, 2008. The Fund has no examination in progress. The Fund has reviewed all open tax years and major jurisdictions and concluded that the adoption of FIN 48 resulted in no effect to the Fund?s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year-end December 31, 2008. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. SMALL CAP VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund's own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below. Level 1 - quoted prices in active markets for identical investments. Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The following table summarizes the valuation of the Fund's investments by the above fair value hierarchy levels as of December 31, 2008: Investments Other in Financial Level Securities Instruments * ----- ---------- ----------- Level 1 $16,230,216 $ 0 Level 2 0 0 Level 3 0 0 ----------- ------------ Total $16,230,216 $ 0 =========== ============ * Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures forwards and swap contracts, which are valued at the unrealized appreciation depreciation on the instrument. As of December 31, 2008, the Fund did not own any other financial instruments. SMALL CAP VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS 3.	CAPITAL SHARE TRANSACTIONS Capital Share transactions in the Fund?s $0.001 par value common stock were as follows: Year Ended Year Ended December 31, 2008 December 31, 2007 ------------------- --------------------- Shares Amount Shares Amount Shares sold 56,980 $ 810,797 1,084,998 $27,288,377 Shares issued in reinvestment of dividends	 3,992 44,831 2,731 54,434 ------ -------- --------- ---------- Net increase 		 60,972 855,628 1,087,729 27,342,811 Beginning of year 1,335,141 33,037,861 247,412 5,695,050 ------ -------- ------- ---------- End of year 1,396,113 $33,893,489 1,335,141 $33,037,861 				=========	========== ========= ========== 4.	INVESTMENT TRANSACTIONS The cost of purchases and proceeds from sales of investment securities, excluding short-term investments, aggregated $6,626,011 and $5,410,253, respectively, for the year ended December 31, 2008. There were no differences between the financial reporting basis and the income tax basis in the cost or net unrealized appreciation (depreciation) of the Fund?s investments as of December 31, 2008. As of December 31, 2008 and 2007, the aggregate unrealized appreciation and depreciation of investment securities was as follows: Description 2008 2007 - ----------- ------- ------ Unrealized appreciation $ 610,048 $ 779,746 Unrealized depreciation (12,990,711) (7,243,863) ------------ ----------- Net unrealized depreciation $ (12,380,663) $ (6,464,117) ============ ============ 5.	DISTRIBUTION TO SHAREHOLDERS On December 30, 2008 a distribution of $0.032 per share aggregating $44,831 was paid to the shareholders of record on that date from net investment income. 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 different than if they were autonomous. SMALL CAP VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS The Fund has an investment advisory 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 management fee for 2008, as computed pursuant to the investment advisory agreement, totaled $216,468, of which $11,986 was payable on December 31, 2008. The Advisor acts as the transfer agent for the Fund, with Fidelity Investments as the sub-transfer agent. There are no fees associated with these services. The Fund acts as its own custodian, effective September 1, 2008, per requirements of Rule 17f-2. There are no fees associated with these services. 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. Quarterly Filing of Portfolio Holdings The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund?s Form N-Q?s are available on the SEC?s website at http://www.sec.gov, and can also be reviewed and copied at the SEC?s public reference room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. SMALL CAP VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Approval of Investment Advisory Contract The Board of Directors, including all Directors that are independent, held a separate, in-person meeting, specifically called for the purpose of reviewing and re-approving the Advisory Agreement on February 19, 2008. In approving the Advisory Agreement for 2008, the Directors considered the following: 1)	Nature, extent and quality of services provided by the Advisor ? The Directors reviewed the nature, quality and scope of current services provided by the Advisor under the Advisory Agreement. This includes portfolio management, supervision of Fund operations, compliance and regulatory matters. 2)	Investment performance ? The Directors reviewed the performance of the Fund, as compared to market benchmarks. This review focused on investment strategy and long term performance potential. 3)	Cost of services to the Fund and profitability of the Advisor ? The Directors considered the Fund?s management fee and total expense ratio relative to industry averages. The Directors determined that the Advisor is receiving a fee that is in line with fees charged for separate accounts and that the Advisor is operating profitably, is viable and should remain an ongoing entity. 4)	Economies of Scale ? The Directors considered information regarding economies of scale with respect to management of the Fund and noted that the Fund and its shareholders are already experiencing and benefitting from an expense ratio that would be expected from that of funds with significantly larger asset bases. 5)	Conclusions ? Based on the above review and discussions, the Directors concluded that it is in the best interest of the Fund and the shareholders to approve the Advisory Agreement. Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors of the Fund. Information pertaining to the Directors of the Fund are set forth below. The SAI of the Fund includes additional information about the Directors of the Fund and is available, without charge, by calling 800-704-6072. Each Director may be contacted by writing to that Director c/o Small Cap Value Fund, Inc., 8150 N. Central Expressway, #101, Dallas, Texas 75206. INDEPENDENT DIRECTORS Name and Age Position Term Principal Occupation Other Public Past five years Directorships - ------------------- -------- ---- --------------------- ------------- Vicky L. Hubbard Director 1 Yr Private Investor Stock Age 51 Since 2000 Dividend Fund, Inc. Yolawnde F. Malone Director 1 Yr Tax Mngr-Tolleson Stock Age 45 Wealth Mgmt, Self Emp Dividend Fund, Tax Consultant prior Inc. Melissa D. Gordon, Director 1 Yr Pathologist, North Stock M.D. Dallas Pathology Dividend Fund, Age 45 Inc. INTERESTED DIRECTORS Laura S. Adams Director, 1 Yr President of Fund, Stock Age 47 President Managing Member of Dividend Fund, Secretary Adams Asset Advisors, Inc. Treasurer Private investor prior Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Small Cap Value Fund, Inc. We have audited the accompanying statement of assets and liabilities of Small Cap Value Fund, Inc., including the schedule of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended and for the period from December 16, 2005 (the date the investment operations commenced) through December 31, 2005. These financial statements and financial highlights are the responsibility of the Fund?s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Small Cap Value Fund, Inc. as of December 31, 2008, the results of its operations for the year then ended, the changes in net assets for the two years in the period ended, and the financial highlights for the three years in the period then ended and for the period from December 16, 2005 (the date the investment operations commenced) through December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. PMB Helin Donovan, LLP Austin, Texas February 26, 2009 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 open end investment companies) 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 2/26/09 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 2/26/09