<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the past six months, from April 1, 1998 through September 30, 1998, the
Fund's net assets grew from $30,659,536 to $39,746,837, an increase of 29.64%
and the number of shareholders grew 56.27% to 2,430. The Fund is registered in
50 states and the District of Columbia. Our broker-dealer network now totals
120 firms.
Performance Data Excluding 4.5% Maximum Up-Front Sales Charge*
For the six month period ended September 30, 1998, the Fund's total return was
- -21.79% versus a return of -23.87% for the Russell 2000 Index and -6.97% for
the S&P 500 Index. For the quarter ended September 30, 1998, the Fund's total
return was -20.25% versus a return of -20.15% for the Russell 2000 Index and -
9.95% for the S&P 500 Index. For the one year ending September 30, 1998, the
Fund's average annual return was -10.50% versus -19.02% for the Russell 2000
Index and +9.05% for the S&P 500 Index. Since inception, the Fund's average
annual return was +14.86% versus +9.10% for the Russell 2000 Index and +19.91%
for the S&P 500 Index.
The Fund's fiscal quarter which ended September 30, 1998 was particularly
difficult as the stock market was severely impacted by a confluence of events
which included: the global link of markets and economic problems in Japan,
Russia and South America and resultant flight out of equities; the
investigation of President Clinton and possible impeachment proceedings;
investment analysts lowering earnings expectations for the upcoming quarters
and concern about a possible recession in 1999; and concern that the Federal
Reserve System will not be sufficiently accommodative in the current
environment. The above factors impacted the small cap sector in excess of the
mid and large cap sectors.
Despite the above comments, there are several positive factors that are
expected to impact the equity markets going forward. They are: the bulk of
speculative excess has been removed from the equity markets and investor
expectations are at low levels; small cap equity valuations are at substantial
discounts to the mid and large cap stocks and are at 1990 and 1994 valuations;
interest rates are poised to decline; inflation is under control and the United
States now has a budget surplus as well as talk of an income tax reduction; and
given the substantially reduced equity valuations we would expect an increase
in the pace of corporate acquisitions.
In the past fiscal year, five of the Fund's holdings were subject to takeover
bids. While the takeovers are often a by-product of our stock selection
criteria, we do not count on this event taking place every quarter.
<PAGE>
With the Fund's assets in excess of $39 million, the growth of assets has
reduced the expense ratio from 2.45% for the year ended September 30, 1997, to
2.02% for the year ended September 30, 1998.
Our investment strategy, which emphasizes corporate spin-offs, stocks trading
below actual or perceived book-value, and companies emerging from bankruptcy,
continues to provide good investment opportunities. Corporate America continues
to undergo the above-mentioned restructuring which, on average, has afforded
several good opportunities per quarter. We remain fully invested and confident
in our strategy which seeks investment opportunities in securities subject to
indiscriminate selling by investors with low expectations.
Thank you for your continued commitment to the Fund.
Sincerely yours,
/s/ John L. Keeley, Jr.
John L. Keeley, Jr.
President
*Performance Data Including 4.5% Maximum Up-Front Sales Charge
For the six month period ended September 30, 1998, the Fund's total return was
- -25.30% versus a return of -23.87% for the Russell 2000 Index and -6.97% for
the S&P 500 Index. For the quarter ended September 30, 1998, the Fund's total
return was -23.84% versus a return of -20.15% for the Russell 2000 Index and -
9.95% for the S&P 500 Index. For the one year ending September 30, 1998, the
Fund's average annual return was -14.51% versus -19.02% for the Russell 2000
Index and +9.05% for the S&P 500 Index. Since inception, the Fund's average
annual return was +13.81% versus +9.10% for the Russell 2000 Index and +19.91%
for the S&P 500 Index.
Performance data quoted represents past performance and 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.
<PAGE>
Index Comparison
Quarterly Comparison of a Hypothetical $10,000 Investment
in the KSCVF*, S&P 500** and Russell 2000**
Average annual total returns***
for periods ended September 30, 1998
<TABLE>
<CAPTION>
SINCE COMMENCEMENT
12 MOS ENDED OF OPERATION
9/30/98 10/1/93 TO 9/30/98
------------ ------------------
<S> <C> <C>
KSCVF -10.50% +14.86%
KSCVF (includes
max 4 1/2%
front-end load) -14.51% +13.81%
S&P 500 Index +9.05% +19.91%
Russell 2000
Index -19.02% +9.10%
</TABLE>
* Performance graph includes deduction of the 4 1/2% front-end load.
** S&P 500 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.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost $39,037,334) $40,134,356
Cash 73
Receivables for shares issued 105,825
Dividends and interest receivable 38,652
Prepaid expenses 12,040
-----------
Total Assets 40,290,946
-----------
LIABILITIES:
Payable to Adviser 31,557
Payables for securities purchased 433,894
Payables for shares redeemed 11,730
Other accrued expenses 66,928
-----------
Total Liabilities 544,109
-----------
NET ASSETS $39,746,837
===========
NET ASSETS CONSIST OF:
Capital stock $37,822,906
Accumulated net realized gain on investments 826,909
Unrealized net appreciation on investments 1,097,022
-----------
TOTAL NET ASSETS $39,746,837
===========
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 10,000,000
Issued and outstanding 2,170,884
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $18.31
===========
MAXIMUM OFFERING PRICE PER SHARE $19.17
===========
</TABLE>
See notes to the financial statements.
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 189,802
Interest income 72,891
-----------
262,693
-----------
EXPENSES:
Investment advisory fees 308,025
12b-1 fees 77,006
Administration fees 45,896
Transfer agent fees and expenses 41,156
Reports to shareholders 32,982
Professional fees 30,019
Federal and state registration fees 25,508
Fund accounting fees 24,286
Custody fees 22,908
Directors' fees 6,964
Amortization of organization costs 4,482
Other 3,129
-----------
Net expenses 622,361
-----------
Net investment loss (359,668)
-----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gain on investments 1,250,693
Decrease in net unrealized appreciation on investments (7,451,002)
-----------
Net loss on investments (6,200,309)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $(6,559,977)
===========
</TABLE>
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- -----------
<C> <S> <C> <C>
COMMON STOCKS 86.13%
BUILDING MATERIALS 1.61%
45,000 Homebase, Inc.* $ 300,938
12,500 Nortek, Inc.* 340,625
-----------
641,563
-----------
BUSINESS SERVICE 2.62%
28,000 R.H. Donnelley Corp. 346,500
13,500 NCR Corporation* 388,125
30,000 Nielsen Media Research, Inc. 307,500
-----------
1,042,125
-----------
COMMUNICATIONS AND MEDIA 8.49%
20,000 The Ackerley Group, Inc. 395,000
15,500 American Tower Corp., Class A* 395,250
17,500 Anacomp, Inc.* 229,687
5,000 Associated Group, Inc., Class A* 165,000
13,000 CBS Corp. 315,250
7,500 Cox Communications, Inc., Class A* 409,687
7,900 GC Companies, Inc.* 305,137
7,500 Media General, Inc., Class A 290,625
33,000 Paxson Communications* 303,188
72,500 Price Communications Corp.* 566,406
-----------
3,375,230
-----------
CONSUMER PRODUCTS 0.79%
20,500 Justin Industries, Inc. 315,188
-----------
CONSUMER SERVICE 1.92%
11,500 Chemed Corp. 322,719
18,000 Coinmach Laundry Corp.* 177,750
11,000 Pittway Corp., Class A 262,625
-----------
763,094
-----------
CONTAINERS 2.32%
15,500 Alltrista Corp.* 313,875
9,500 Greif Brothers Corp., Class A 313,500
10,500 Premark International, Inc. 294,656
-----------
922,031
-----------
ELECTRONICS 1.46%
18,000 Kollmorgen Corp. 281,250
9,000 Moog, Inc., Class B* 297,000
-----------
578,250
-----------
ENGINEERING AND CONSTRUCTION 2.57%
13,500 Commercial Intertech Corp. 248,906
12,000 Emcor Group, Inc.* 186,000
25,000 Ladish Co., Inc.* 220,312
34,000 Morrison Knudsen Corp.* 365,500
-----------
1,020,718
-----------
ENTERTAINMENT AND LEISURE 3.73%
13,000 Gaylord Entertainment 387,563
28,000 On Command Corp.* 238,000
9,000 SFX Entertainment, Inc., Class A* 280,125
72,500 WMS Industries, Inc.* 575,469
-----------
1,481,157
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- -----------
<C> <S> <C> <C>
ENVIRONMENTAL CONTROL 1.34%
99,000 Air & Water Technologies, Class A* $ 198,000
20,000 Cuno, Inc.* 335,000
-----------
533,000
-----------
FINANCE COMPANY 4.79%
13,500 Alliance Bancorp 248,062
36,000 Boston Private Financial Holdings, Inc.* 319,500
25,000 Brookline Bancorp, Inc. 296,875
10,000 CFS Bancorp, Inc. 99,375
5,000 Finova Group, Inc. 249,687
29,500 Harbor Florida Bancshares, Inc. 304,219
27,000 Hudson River Bancorp, Inc.* 273,375
4,000 Lehman Brothers Holdings, Inc. 113,000
-----------
1,904,093
-----------
FINANCIAL SERVICES 3.38%
24,000 AG Services of America, Inc.* 342,000
4,500 Duff & Phelps Credit Rating Corp. 207,281
7,000 Federal Agricultural Mortgage Corp., Class C* 243,250
44,000 Phoenix Investment Partners, Ltd. 297,000
15,500 Pioneer Group, Inc. 255,750
-----------
1,345,281
-----------
FOOD, BEVERAGE AND TOBACCO 7.38%
12,000 Earthgrains Co. 371,250
42,200 ICH Corp.* 174,075
39,000 M & F Worldwide Corp.* 387,562
60,000 Nathans Famous, Inc.* 210,000
21,500 Ralcorp Holdings, Inc.* 301,000
25,000 Shells Seafood Restaurants, Inc.* 115,625
12,500 Sodexho Marriott Services, Inc. 375,000
20,500 Tasty Baking Co. 302,375
17,500 Vlasic Foods International, Inc.* 327,031
23,000 Whitman Corp. 366,563
-----------
2,930,481
-----------
FORESTRY 0.77%
17,000 Deltic Timber Corp. 306,000
-----------
FURNITURE/HOME APPLIANCES 0.76%
15,500 Furniture Brands International, Inc.* 302,250
-----------
HEALTHCARE PRODUCTS 0.19%
38,500 BEI Medical Systems Co., Inc.* 77,000
-----------
HOUSEHOLD PRODUCTS 2.42%
10,500 Chesapeake Corp. 364,219
11,500 Masco Corp. 283,187
21,000 U.S. Industries, Inc. 316,313
-----------
963,719
-----------
HOUSING 4.78%
16,000 Kaufman & Broad Home Corp. 375,000
16,500 Lennar Corp. 368,156
18,000 MDC Holdings, Inc. 331,875
15,500 Standard Pacific Corp. 218,937
10,000 U.S. Home Corp.* 293,750
25,000 Walter Industries, Inc.* 310,938
-----------
1,898,656
-----------
</TABLE>
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- -----------
<C> <S> <C> <C>
INSURANCE 5.76%
1,900 Alleghany Corp.* $ 355,300
11,000 American Financial Group, Inc. 356,125
9,000 Chicago Title Corp. 397,125
2,500 Equitable Companies, Inc. 103,437
19,500 Gainsco, Inc. 140,156
5,000 Landamerica Financial Group, Inc. 256,250
12,500 Superior National Insurance Group, Inc.* 200,000
7,500 Unitrin, Inc. 481,406
-----------
2,289,799
-----------
LODGING 2.52%
28,000 Choice Hotels International, Inc.* 355,250
12,000 Host Marriott Corp.* 152,250
26,000 Host Marriott Services Corp.* 237,250
26,500 Meristar Hotels & Resorts, Inc.* 72,875
41,000 Sunburst Hospitality Corp.* 184,500
-----------
1,002,125
-----------
MACHINERY 2.30%
8,800 Chicago Rivet & Machine Co. 223,300
8,000 Gardner Denver, Inc.* 113,000
31,000 Global Industrial Technologies, Inc.* 217,000
22,000 Unova, Inc.* 361,625
-----------
914,925
-----------
MANUFACTURING 3.94%
19,500 ACX Technologies, Inc.* 251,062
30,000 Griffon Corp.* 262,500
24,000 Hussmann International, Inc. 340,500
12,500 ITT Indsutries, Inc. 423,438
13,500 Thomas Industries, Inc. 289,406
-----------
1,566,906
-----------
OIL AND GAS--EQUIPMENT & SERVICES 1.96%
11,500 Evergreen Resources, Inc.* 253,000
47,000 Getty Petroleum Marketing, Inc.* 193,875
6,500 Plains Resources, Inc.* 109,688
25,000 RPC, Inc. 221,875
-----------
778,438
-----------
PHARMACEUTICALS AND HEALTHCARE 2.12%
17,500 Covance, Inc.* 453,906
22,000 Morrison Health Care, Inc. 390,500
-----------
844,406
-----------
PRINTING AND PUBLISHING 1.88%
4,000 Bowne & Co., Inc. 67,750
6,000 Meredith Corp. 192,000
15,500 Penton Media, Inc. 211,188
33,500 Primesource Corp. 276,375
-----------
747,313
-----------
RAILROAD 3.53%
12,000 Kansas City Southern Industries, Inc. 420,000
17,000 Katy Industries, Inc. 279,438
27,000 Providence and Worcester Railroad Co. 310,500
16,500 St. Joe Corp. 393,938
-----------
1,403,876
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- -----------
<C> <S> <C> <C>
REAL ESTATE 0.65%
18,500 Getty Realty Corp. $ 259,000
-----------
RETAIL 2.94%
7,500 Harcourt General, Inc. 362,813
21,000 Midas, Inc. 509,250
11,500 Zale Corp.* 294,688
-----------
1,166,751
-----------
SOFTWARE 0.83%
17,000 Wang Laboratories, Inc.* 329,375
-----------
TEXTILE AND APPAREL 1.49%
38,500 Cone Mills Corp.* 192,500
24,500 Shaw Industries, Inc. 398,125
-----------
590,625
-----------
TRANSPORTATION 3.87%
33,000 Avalon Holdings Corp., Class A* 280,500
58,500 Greyhound Lines, Inc.* 241,312
13,000 MotivePower Industries, Inc.* 303,875
12,500 Pittston Brink's Group 437,500
11,500 Sea Containers Ltd., Class A 276,719
-----------
1,539,906
-----------
UTILITIES 1.02%
50,000 Citizens Utilities Co., Class B* 406,250
-----------
TOTAL COMMON STOCKS 34,239,531
-----------
(cost $33,391,371)
WARRANTS 1.15%
5,500 Federated Department Stores Series C* 67,375
2,000 Fleet Financial Group, Inc.* 66,500
24,300 Jacor Communications* 115,425
5,000 Lone Star Industries, Inc.* 208,125
-----------
TOTAL WARRANTS 457,425
-----------
(cost $208,563)
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C> <C>
SHORT TERM INVESTMENTS 13.68%
$1,767,200 Firstar Bank Demand Note,
5.0937%, 10/1/98 1,767,200
1,877,400 General Mills Demand Note, 4.9487%, 10/1/98 1,877,400
1,767,900 Pitney Bowes Demand Note, 4.9487%, 10/1/98 1,767,900
24,900 Sara Lee Demand Note, 4.9437%,
10/1/98 24,900
-----------
TOTAL SHORT TERM INVESTMENTS 5,437,400
-----------
(cost $5,437,400)
TOTAL INVESTMENTS 100.96%
(cost $39,037,334) 40,134,356
Liabilities less Cash and
Other Assets (0.96)% (387,519)
-----------
NET ASSETS 100.00% $39,746,837
===========
</TABLE>
*NON-INCOME PRODUCING
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (359,668) $ (239,612)
Net realized gain on investments 1,250,693 909,527
Increase (decrease) in net unrealized
appreciation on investments (7,451,002) 6,072,957
----------- -----------
Net increase (decrease) in net assets
resulting from operations (6,559,977) 6,742,872
----------- -----------
DISTRIBUTIONS:
Net realized gains (1,025,487) (427,349)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 1,382,316 and 248,478
shares issued, respectively 30,360,643 4,114,707
Proceeds from 50,348 and 28,064 shares
of distributions reinvested,
respectively 1,013,504 413,943
Cost of 231,423 and 51,858 shares
redeemed, respectively (4,865,957) (835,366)
----------- -----------
Net increase from capital stock
transactions 26,508,190 3,693,284
----------- -----------
TOTAL INCREASE IN NET ASSETS 18,922,726 10,008,807
NET ASSETS:
Beginning of period 20,824,111 10,815,304
----------- -----------
End of period $39,746,837 $20,824,111
=========== ===========
</TABLE>
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1996 1995 1994(2)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (1)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 21.48 $ 14.52 $ 12.52 $10.26 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment loss (0.16) (0.25) (0.19) (0.13) (0.06)
Net realized and
unrealized gains
(losses) on
investments (2.00) 7.77 2.22 2.39 0.32
------- ------- ------- ------ ------
TOTAL FROM INVESTMENT
OPERATIONS (2.16) 7.52 2.03 2.26 0.26
------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Net realized gains (1.01) (0.56) (0.03) -- --
------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD $ 18.31 $ 21.48 $ 14.52 $12.52 $10.26
======= ======= ======= ====== ======
TOTAL RETURN (3) (10.50)% 53.51% 16.23% 22.03% 2.60%
SUPPLEMENTAL DATA AND
RATIOS:
Net assets, end of
period (in 000's) $39,747 $20,824 $10,815 $7,616 $4,503
Ratio of expenses to
average net assets 2.02% 2.45% 2.50% 2.50% 2.49%
Ratio of net investment
loss to average net
assets (1.17)% (1.66)% (1.61)% (1.46)% (0.96)%
Ratio of expenses to
average net assets(4) 2.02% 2.45% 2.94% 3.94% 5.98%
Ratio of net investment
loss to average net
assets(4) (1.17)% (1.66)% (2.05)% (2.90)% (4.45)%
Portfolio turnover rate 33.40% 36.40% 52.43% 70.59% 63.20%
</TABLE>
(1) Per share data is for a share outstanding throughout the period.
(2) The Fund commenced operations on October 1, 1993.
(3) The total return calculation does not reflect the 4.50% sales load imposed
on the purchase of shares.
(4) During the period, certain fees were waived. If such fee waivers had not
occurred, the ratios would have been as indicated.
See notes to the financial statements.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
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 generally accepted accounting principles
("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 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 which are 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 by the Board of Directors.
b) Federal Income Taxes - No provision for federal income taxes has been
made since the Fund has complied to date with the provisions under
Subchapter M of the Internal Revenue Code available to regulated investment
companies and intends to continue to so comply.
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 timing and characterization of certain income and realized gain
distributions determined annually in accordance with federal tax regulations
that may differ from generally accepted accounting principles. Accordingly,
at September 30, 1998, reclassifications were recorded from accumulated net
investment losses to reduce capital stock by $327,739 and accumulated net
realized gain on investments by $31,929.
d) Other - Investment transactions are recorded on the trade date for
financial statement purposes. The Fund determines the gain or loss realized
from investment transactions by comparing the 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.
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
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 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%, 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 employ other dealers of its
shares. Unreimbursed amounts may be carried forward and paid in a subsequent
year. The Fund paid to the Distributor and each dealer a monthly fee at the
rate of 0.25% per annum of the aggregate daily net asset value of the Fund
shares beneficially owned by the Distributor's and each dealer's existing
brokerage clients. For the period from October 1, 1997 to September 30,
1998, the Fund paid $49,520 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, 1997 to September
30, 1998, were $29,717,942 and $9,667,733, respectively. For the period from
October 1, 1997 to September 30, 1998, the Fund paid $92,801 of brokerage
commissions on trades of securities to the Distributor.
At September 30, 1998, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $39,102,954,
were as follows:
<TABLE>
<S> <C>
Appreciation $5,781,854
Depreciation (4,750,452)
----------
Net appreciation on
investments $1,031,402
==========
</TABLE>
<PAGE>
KEELEY SMALL CAP VALUE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
6.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 as follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER REALLOWANCE
AMOUNT OF SINGLE AS A PERCENTAGE OF AS A PERCENTAGE OF AS A PERCENTAGE OF
TRANSACTION OFFERING PRICE NET AMOUNT INVESTED OFFERING PRICE
- ---------------- ------------------ ------------------- ------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than
$100,000 4.00% 4.17% 3.50%
$100,000 but less than
$250,000 3.00% 3.09% 2.50%
$250,000 but less than
$500,000 2.50% 2.56% 2.00%
$500,000 and over 2.00% 2.04% 1.50%
</TABLE>
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, 1997 to September 30, 1998, the Fund was advised that the
Distributor received $206,745 of sales charges.
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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors 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, 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, 1998, the results of its operations
for the year then ended and of the changes in its net assets for each of the
two years then ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which 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, 1998 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 16, 1998
<PAGE>
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<PAGE>
Investment Adviser
KEELEY ASSET MANAGEMENT CORP.
Chicago, Illinois
Distributor
KEELEY INVESTMENT CORP.
Chicago, Illinois
Custodian
FIRSTAR BANK MILWAUKEE, N.A.
Milwaukee, Wisconsin
800-338-1579
Transfer Agent and Dividend DisbursingAgent
FIRSTAR MUTUAL FUND SERVICES, LLC
Milwaukee, Wisconsin
800-338-1579
Auditors
PRICEWATERHOUSECOOPERS, LLP
Milwaukee, Wisconsin
Counsel
SCHWARTZ & FREEMAN
Chicago, 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, 1998
