<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>capitalswdef14a072103.txt
<TEXT>

                            SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant                      [X]
Filed by a Party other than the Registrant   [ ]
Check the appropriate box:

[ ]      Preliminary Proxy Statement
[ ]      Confidential,  for Use of the  Commission  Only (as  permitted  by Rule
         14a-6(e)(2))
[X]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to ss.240.14a-12

                          Capital Southwest Corporation
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]      No fee required.
[ ]      Fee  computed on table below per  Exchange  Act Rules  14a-6(i)(1)  and
         0-11.

         1)       Title  of  each  class  of  securities  to  which  transaction
                  applies:

                  --------------------------------------------------------------
         2)       Aggregate number of securities to which transaction applies:

                  --------------------------------------------------------------
         3)       Per  unit  price  or other  underlying  value  of  transaction
                  computed  pursuant  to  Exchange  Act Rule 0-11 (set forth the
                  amount on which the filing fee is calculated  and state how it
                  was determined):

                  --------------------------------------------------------------
         4)       Proposed maximum aggregate value of transaction:

                  --------------------------------------------------------------
         5)       Total fee paid:

                  --------------------------------------------------------------

[ ]      Fee paid previously with preliminary materials.

[ ]      Check box if any part of the fee is offset as provided by Exchange  Act
         Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee
         was paid  previously.  Identify  the  previous  filing by  registration
         statement number, or the Form or Schedule and the date of its filing.

         1)       Amount Previously Paid:

                  --------------------------------------------------------------
         2)       Form, Schedule or Registration Statement No.:

                  --------------------------------------------------------------
         3)       Filing Party:

                  --------------------------------------------------------------
         4)       Date Filed:


<PAGE>

                                                                    June 6, 2003


To the Shareholders of Capital Southwest Corporation:

         The Annual Meeting of Shareholders  of our Corporation  will be held on
Monday, July 21, 2003, at 10:00 a.m. in the North Dallas Bank Tower Meeting Room
(First Floor), 12900 Preston Road, Dallas, Texas.

         A  Notice  of  the  Annual  Meeting,  a  proxy  and a  proxy  statement
containing  information about matters to be acted upon are enclosed.  Holders of
Common  Stock are entitled to vote on the basis of one vote for each share held.
If you attend the Annual  Meeting,  you retain the right to vote in person  even
though you previously voted by the enclosed proxy.

         It is important that your shares be represented at the meeting  whether
or not you are personally in attendance.  Please review the proxy  statement and
sign,  date and return the enclosed proxy at your earliest  convenience.  I look
forward to meeting  with you and,  together  with our  directors  and  officers,
discussing the Corporation's business. I hope you will be present.

                                Very truly yours,


                                /s/ William R. Thomas
                                ---------------------
                                William R. Thomas
                                President and Chairman of the Board






<PAGE>

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD JULY 21, 2003

To the Shareholders of Capital Southwest Corporation:

         NOTICE IS HEREBY GIVEN that the Annual Meeting of the  Shareholders  of
Capital Southwest Corporation, a Texas corporation (the "Corporation"),  will be
held on Monday,  July 21, 2003, at 10:00 a.m.,  Dallas time, in the Meeting Room
(First Floor) of the North Dallas Bank Tower, 12900 Preston Road, Dallas, Texas,
for the following purposes:

1.       To elect  five  directors  to serve  until the next  Annual  Meeting of
         Shareholders or until their respective  successors shall be elected and
         qualified.

2.       To ratify the  appointment by the Audit  Committee of Ernst & Young LLP
         as independent auditors for the Corporation.

3.       To transact such other business as may properly come before the meeting
         or any adjournment thereof.

Only  holders  of  Common  Stock of the  Corporation  of  record at the close of
business  on June 2, 2003 will be  entitled  to notice  of,  and to vote at, the
meeting and any adjournment thereof.


         If you do not expect to attend in person,  please sign, date and return
the proxy in the  enclosed  envelope.  No postage is required for mailing in the
United States.



                                       By Order of the Board of Directors
                                       SUSAN K. HODGSON
                                       Secretary
Dallas, Texas
June 6, 2003


<PAGE>

                                 PROXY STATEMENT
                       FOR ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD JULY 21, 2003

         This proxy statement is furnished in connection  with the  solicitation
by the Board of Directors of Capital Southwest Corporation, a Texas corporation,
of proxies to be voted at the annual meeting of  shareholders to be held on July
21, 2003 or any adjournment  thereof. The date on which this proxy statement and
the enclosed form of proxy are first being sent or given to  shareholders of the
Corporation is on or about June 6, 2003.


                             PURPOSES OF THE MEETING


         The Annual Meeting of the  Shareholders  is to be held for the purposes
of (1) electing five persons to serve as directors of the Corporation  until the
next annual meeting of shareholders,  or until their respective successors shall
be elected and qualified;  (2) ratifying the  appointment by the Audit Committee
of  Ernst & Young  LLP as  independent  auditors  for the  Corporation;  and (3)
transacting  such other  business as may properly come before the meeting or any
adjournment thereof.

         To be elected a director,  each nominee must receive the favorable vote
of the holders of a majority of the shares of common stock  entitled to vote and
represented at the annual meeting. In order to ratify the appointment of Ernst &
Young LLP as independent  auditors for the Corporation for the year ending March
31,  2004,  the  ratification  proposal  must  receive the  favorable  vote of a
majority of the shares of common stock  entitled to vote and  represented at the
annual meeting.

                              VOTING AT THE MEETING

         The record date for holders of common stock  entitled to notice of, and
to vote at, the annual meeting of  shareholders is the close of business on June
2, 2003, at which time the  Corporation  had outstanding and entitled to vote at
the meeting 3,829,051 shares of common stock.

         The  presence,  in person or by proxy,  of the holders of a majority of
the  shares of common  stock  outstanding  and  entitled  to vote at the  annual
meeting is  necessary  to  constitute a quorum.  In deciding  all  questions,  a
shareholder shall be entitled to one vote, in person or by proxy, for each share
of common  stock held in its name at the close of business  on the record  date.
Shareholders who are present,  in person or by proxy, but abstain from voting on
any item will be counted as present at the  meeting,  but not voting on any such
item. Similarly, nominees (such as broker-dealers) who are present, in person or
by proxy,  but abstain or refrain  from  voting on any item,  will be counted as
present at the meeting, but not voting on any such item.


                                       1
<PAGE>

         Each  proxy  delivered  to  the  Corporation,  unless  the  shareholder
otherwise specifies therein,  will be voted FOR the election as directors of the
persons  nominated as directors and FOR the  ratification  of the appointment by
the  Audit  Committee  of the  Board  of  Directors  of  Ernst  &  Young  LLP as
independent  auditors.  In each case  where the  shareholder  has  appropriately
specified how the proxy is to be voted,  it will be voted in accordance with the
specification.  As to any other matter or business which may be properly brought
before the meeting,  a vote may be cast  pursuant to the  accompanying  proxy in
accordance  with the  judgment  of the  person or persons  voting the same,  but
neither  management nor the Board of Directors of the  Corporation  knows of any
such other matter or business. Any shareholder has the power to revoke its proxy
at any time  insofar  as it is then  not  exercised  by  giving  notice  of such
revocation, either personally or in writing, to the Secretary of the Corporation
or by the  execution  and  delivery  to the  Corporation  of a new  proxy  dated
subsequent to the original proxy.


                  STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         The following table sets forth certain  information with respect to the
beneficial ownership of common stock of the Corporation as of May 1, 2003 by (1)
each person, so far as is known to the management of the Corporation, who is the
beneficial  owner (as that term is defined in the rules and  regulations  of the
Securities and Exchange  Commission  ("SEC")) of more than 5% of the outstanding
common stock,  (2) each  executive  officer  listed in the Summary  Compensation
Table, (3) each director of the Corporation, and (4) all directors and executive
officers of the Corporation as a group.  Unless otherwise  indicated below, each
of the  persons  named in the table has sole  voting and  investment  power with
respect to the shares indicated to be beneficially owned.

          Name and Address                          Shares Owned        Percent
         of Beneficial Owner                        Beneficially        of Class
         -------------------                        ------------        --------

         William R. Thomas
         12900 Preston Rd., Suite 700
         Dallas, Texas 75230....................... 962,022  (1)(2)(3)    25.1%

         Third Avenue Management LLC
         622 Third Avenue, 32nd Floor
         New York, New York 10017.................. 372,897  (4)           9.7

         Artisan Partners Limited Partnership
         1000 North Water Street #1770
         Milwaukee, Wisconsin  53202............... 334,103  (5)           8.7










                                       2
<PAGE>

          Name and Address                          Shares Owned         Percent
         of Beneficial Owner                        Beneficially        of Class
         -------------------                        ------------        --------

         Gary L. Martin
         12900 Preston Rd., Suite 700
         Dallas, Texas  75230...................... 226,124  (2)(3)        5.9

         First Manhattan Company
         437 Madison Avenue
         New York, New York  10022................. 208,212  (6)           5.4

         Patrick F. Hamner......................... 132,958  (2)(3)        3.5

         Graeme W. Henderson.......................   4,700  (7)           0.1

         James M. Nolan............................   4,000                0.1

         William M. Ashbaugh.......................   1,500  (3)           -

         John H. Wilson............................   1,000                -

         All directors and executive officers
         as a group (8 persons)....................1,126,363 (8)          29.1

-----------
(1)      Mr. Thomas has sole voting and investment power with respect to 611,660
         shares,  which  include  75,948  shares  owned by his two  children and
         206,525 shares owned by Thomas  Heritage  Partners,  Ltd., in which Mr.
         Thomas has a 50.7%  limited  partnership  interest.  Mr. Thomas holds a
         majority  interest  in and is  President  and sole  manager  of  Thomas
         Heritage  Company,  LLC,  the sole general  partner of Thomas  Heritage
         Partners, Ltd.

(2)      Mr. Thomas is a trustee of certain  trusts  pursuant to employee  stock
         ownership plans for employees of the  Corporation and its  wholly-owned
         portfolio companies owning 256,218 shares, with the power as trustee to
         vote such shares.  Mr. Thomas also  participates in the power to direct
         the trustees in the voting of 88,144  shares owned by a trust  pursuant
         to a  pension  plan  for  employees  of  the  Corporation  and  certain
         wholly-owned portfolio companies of the Corporation.  Accordingly,  Mr.
         Thomas  has  shared  voting and  investment  power with  respect to the
         344,362 shares,  representing  9.0% of the outstanding  common stock of
         the Corporation,  owned by the aforementioned  trusts.  Under the rules
         and  regulations  of the SEC, Mr. Thomas is deemed to be the beneficial
         owner  of  such  344,362  shares,  which  are  included  in the  shares
         beneficially owned by Mr. Thomas.

         Mr.  Martin  serves  as  trustee,  with  Mr.  Thomas,  of  one  of  the
         aforementioned  trusts  owning 31,711  shares and  participates  in the
         power to direct the  trustees in the voting of 88,144  shares  owned by
         the other  aforementioned  trust.  Accordingly,  Mr.  Martin has shared
         voting and investment  power with respect to the 119,855 shares.  Under


                                       3
<PAGE>

         the rules and  regulations  of the SEC, Mr.  Martin is deemed to be the
         beneficial  owner of such  119,855  shares,  which are  included in the
         shares beneficially owned by Mr. Martin. Of the shares owned by a trust
         pursuant to the  aforementioned  employee stock ownership plans,  4,064
         were allocated to Mr. Martin, all of which were vested.

         Mr. Hamner, with Messrs.  Thomas and Martin,  participates in the power
         to direct the  trustees in the voting of 88,144  shares owned by one of
         the aforementioned  trusts. Under the rules and regulations of the SEC,
         Mr. Hamner is deemed to be the beneficial  owner of such 88,144 shares,
         which are included in the shares beneficially owned by Mr. Hamner.

(3)      Includes 1,500, 19,750,  14,000 and 6,000 shares subject to immediately
         exercisable stock options held by Messrs. Ashbaugh,  Hamner, Martin and
         Thomas, respectively.

(4)      As reported to the  Corporation by Third Avenue  Management  LLC, Third
         Avenue  or Martin J.  Whitman,  individually,  had  shared  voting  and
         dispositive  power with  respect to none of such  shares,  sole  voting
         power with respect to 365,427  shares and sole  dispositive  power with
         respect  to  372,897   shares  by   reasons  of   advisory   and  other
         relationships  with the persons who own the  shares.  Third  Avenue and
         Martin J. Whitman beneficially own 348,653 and 24,244, respectively, of
         such shares.

(5)      As reported to the Corporation by Artisan Partners Limited Partnership,
         Artisan  Partners  or  Artisan  Investment  Corporation  or  Andrew  A.
         Ziegler,  individually,  or Carlene Murphy Ziegler,  individually,  had
         sole voting and  dispositive  power with respect to none of such shares
         and shared voting and dispositive  power with respect to 334,103 shares
         by reasons of advisory and other relationships with the persons who own
         the  shares.  Artisan  Partners  is  an  investment  adviser;   Artisan
         Investment is the General Partner of Artisan Partners;  and Mr. Ziegler
         and Ms. Ziegler are the principal stockholders of Artisan Investment.

(6)      As reported to the  Corporation by First Manhattan Co., First Manhattan
         had sole voting and  dispositive  power with  respect to 1,000  shares,
         shared  voting  power  with  respect  to  196,987   shares  and  shared
         dispositive power with respect to 207,212 shares by reasons of advisory
         and other relationships with the persons who own the shares.

(7)      Includes 1,500 shares held by a retirement trust for the benefit of Mr.
         Henderson.

(8)      Includes (a) the shares owned by the partnership and trusts referred to
         in notes (1) and (2),  respectively,  to the above  table,  (b)  43,250
         shares  subject to  immediately  exercisable  stock options  (including
         those  referred to in note (3) to the above  table),  (c) 1,500  shares
         held in a  retirement  trust for the benefit of Mr.  Henderson  and (d)
         75,948 shares owned by immediate family members of Mr. Thomas.

                        PROPOSAL 1: ELECTION OF DIRECTORS

         Five directors are proposed to be elected at the meeting to serve until
the next annual meeting of  shareholders  or until their  respective  successors
shall be elected and qualified.  Each of the named persons currently serves as a
director of the Corporation.



                                       4
<PAGE>
<TABLE>
<CAPTION>

Nominees for Director
                                                                                          Other
                                          Term of                Principal            Directorships
                       Position(s)      Office and             Occupation(s)         Held by Director
                        held with        Length of              During Past            or Nominee
    Name and Age          Fund          Time Served               5 Years             for Director
--------------------  ----------        -----------         -------------------      ----------------
<S>                   <C>               <C>                 <C>                      <C>
Graeme W. Henderson     Director        One year;           Self-employed as
Age 69                                  director since      a private investor
                                        1976                and consultant

James M. Nolan          Director        One year;           Self-employed as
Age 69                                  director            a private investor
                                        since 1980          and consultant to the
                                                            telecommunications
                                                            industry

John H. Wilson          Director        One year;           President of U.S. Equity    Encore Wire
Age 60                                  director since      Corporation, a venture      Corporation and
                                        1988                capital investment firm     Palm Harbor
                                                                                        Homes, Inc.

The following  directors,  who are officers of the Corporation,  are "interested
persons" as defined in the Investment Company Act.

Gary L. Martin          Vice President  One year;           President of The
Age 56                  and Director    Vice President      Whitmore Manufacturing
                                        since 1984 and      Company and Vice
                                        director since      President of the
                                        1988                Corporation

William R. Thomas       President and   One year;           President and               Alamo Group
Age 74                  Chairman of     President since     Chairman of the Board       Inc., Encore Wire
                        the Board       1980, Chairman                                  Corporation, and
                                        since 1982 and                                  Palm Harbor
                                        director since 1972                             Homes, Inc.
</TABLE>

                MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

         The Board of  Directors of the  Corporation  has  established  an Audit
Committee and a  Compensation  Committee to assist the Board in carrying out its
duties. As provided in the Amended and Restated Audit Committee Charter attached
hereto as Exhibit A, the Audit  Committee  represents  the Board of Directors in
fulfilling its responsibility to shareholders  relating to: the integrity of the
Corporation's financial statements; the financial reporting process; the systems
of  internal  accounting  and  financial   controls;   the  performance  of  the


                                       5
<PAGE>


Corporation's independent auditors; the independent auditors' qualifications and
independence;  and the  Corporation's  compliance with ethics policies and legal
and regulatory requirements relating to financial statements and reporting.  The
Audit Committee engages the independent auditors, subject to ratification by the
Corporation's  shareholders,  and  approves  the  fee and  scope  of  audit  and
non-audit services. The Compensation Committee periodically reviews and approves
the  compensation,  employee  benefit plans and other fringe benefits paid to or
provided for officers and employees of the Corporation; reviews and approves the
annual  salaries and bonuses of the chief  executive  officer and other officers
and key employees of the  Corporation,  including  any stock options  granted to
such  officers or key  employees;  and reviews  and  recommends  to the Board of
Directors the fees for directors of the Corporation.  The Compensation Committee
also reviews and approves the  compensation of the chief  executive  officers of
certain  wholly-owned  portfolio  companies of the Corporation.  The Corporation
does not have a Nominating Committee.

         Messrs.  Graeme W.  Henderson,  James M.  Nolan and John H.  Wilson are
presently  members  of both the Audit and  Compensation  Committees.  During the
fiscal year of the  Corporation  ended March 31, 2003, six meetings of the Board
of Directors  were held.  In addition,  two meetings  (including  one  telephone
meeting) of the Compensation Committee and three meetings of the Audit Committee
were held.  Each of the directors  attended at least 75% of the aggregate of (1)
the total number of meetings of the Board of Directors  and (2) the total number
of meetings held by all committees on which he served.

         All three  members  of both the Audit  Committee  and the  Compensation
Committee  are  independent  as  defined  by Rule  4200(a)(14)  of the  National
Association of Securities Dealers, Inc. listing standards and Section 301 of the
Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley").

                          REPORT OF THE AUDIT COMMITTEE

         The Audit  Committee  consists  of three  members of the  Corporation's
Board of  Directors.  Each  member is an  independent  director  as  required by
Sarbanes-Oxley  and Nasdaq.  In addition,  the Board of Directors has determined
that Graeme W. Henderson is an Audit  Committee  Financial  Expert as defined by
SEC rules. The duties and  responsibilities of the Audit Committee are set forth
in the  Amended  and  Restated  Audit  Committee  Charter,  which  the  Board of
Directors  adopted on May 27,  2003.  A copy of the Amended and  Restated  Audit
Committee Charter is attached hereto as Exhibit A.
                                        ---------

         The Audit  Committee  oversees the  Corporation's  financial  reporting
process  on  behalf  of the  Board  of  Directors.  Management  has the  primary
responsibility for the financial statements and the reporting process, including
the  Corporation's  system of internal  control.  In  fulfilling  its  oversight
responsibilities,   the  Audit  Committee  reviewed  the  audited   consolidated
financial  statements  in  the  Annual  Report  with  management,   including  a
discussion  of the  quality,  not  just  the  acceptability,  of the  accounting
principles;  the  reasonableness  of the valuation of restricted  securities and
other  significant  judgments;  and the clarity of  disclosures in the financial
statements.



                                       6
<PAGE>

         The Audit Committee reviewed with the independent  auditors (KPMG LLP),
who are responsible for expressing an opinion on the conformity of those audited
financial  statements  with  generally  accepted  accounting  principles,  their
judgments as to the quality,  not just the  acceptability,  of the Corporation's
accounting  principles  and such other  matters as are  required to be discussed
with the Audit Committee under generally accepted auditing standards.  The Audit
Committee  discussed  with the  independent  auditors  (KPMG  LLP)  the  matters
required to be discussed by Statement on Auditing  Standards No. 61, as amended.
In addition,  the Audit Committee discussed with the independent  auditors (KPMG
LLP) the auditors'  independence from management and the Corporation,  including
the matters in the written  disclosures and letter received from the independent
auditors (KPMG LLP) as required by the Independence Standards Board Standard No.
1, and considered  the  compatibility  of non-audit  services with the auditors'
independence.

         The  Audit  Committee  discussed  with  the  Corporation's  independent
auditors  (KPMG  LLP) the  overall  scope and plans for their  audit.  The Audit
Committee also met with the  independent  auditors (KPMG LLP),  with and without
management  present,  to discuss the results of their audit, their evaluation of
the Corporation's internal controls and the overall quality of the Corporation's
financial reporting.

         Based on the  reviews  and  discussions  referred  to above,  the Audit
Committee  recommended  to the Board of Directors  (and the board has  approved)
that the audited  consolidated  financial  statements  be included in the Annual
Report on Form 10-K for the fiscal year ended March 31, 2003 for filing with the
SEC.

         On April 24, 2003,  the Audit  Committee  voted  unanimously to dismiss
KPMG LLP and,  subject to ratification  by the  Corporation's  shareholders,  to
appoint Ernst & Young LLP to serve as the Corporation's independent auditors for
the fiscal year ending March 31, 2004.

                                         Audit Committee
                                         Graeme W. Henderson, Chairman
                                         James M. Nolan
                                         John H. Wilson

                      REPORT OF THE COMPENSATION COMMITTEE

         The goals of the  Corporation's  compensation  program  are to attract,
retain and motivate  competent  executive  officers who have the  experience and
ability to contribute to the success of the Corporation's  investment management
activities.  The  individual  judgments made by the  Compensation  Committee are
subjective  and are based largely on the  recommendations  of the  Corporation's
chief  executive  officer and the  Compensation  Committee's  perception of each
executive's  contribution to both the past  performance and the long-term growth
potential  of the  Corporation.  The  principal  elements  of  compensation  for
executive officers are base salary,  discretionary bonus payments, stock options
granted under the Stock Option Plan and  contributions  pursuant to the Employee
Stock Ownership Plan.



                                       7
<PAGE>

         Base salaries were  determined  by the  Compensation  Committee in July
2002 for each of the  executive  officers on an  individual  basis,  taking into
consideration individual contributions to the Corporation's performance,  length
of tenure with the Corporation, compensation levels for comparable positions and
internal  equities  among  positions.  In  addition  to base  salaries,  certain
executive  officers  received bonus payments in March 2003, the amounts of which
were determined by the Compensation Committee on a discretionary basis.

         In July 2002, the Compensation Committee established the base salary of
the Corporation's  chief executive  officer,  William R. Thomas, at $250,000 per
annum,  a  continuation  of the level  established  in July 1993. At Mr. Thomas'
request,  he was not  awarded  a  year-end  bonus  in  March  2003 or in the two
preceding years.

         No stock  options were  granted  during the fiscal year ended March 31,
2003.  On  that  date,  options  to  purchase  a total  of  82,500  shares  were
outstanding, representing a 2.1% fully-diluted equity interest.

         An  additional  equity  incentive  is  provided  by  the  Corporation's
Employee Stock Ownership Plan, to which the Corporation contributed 5.0% of each
participating  employee's  covered  compensation for the fiscal year ended March
31, 2003.

                                         Compensation Committee
                                         James M. Nolan, Chairman
                                         Graeme W. Henderson
                                         John H. Wilson

                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Compensation of Directors

         In addition to reimbursement of travel expenses for attendance at board
meetings,  a director  who is not an  employee  of the  Corporation  receives an
annual  fee of $16,000  for  service  as a  director  and $6,000 for  service as
chairman of a committee of the Board of Directors.  In addition,  a director who
is not an  employee  of the  Corporation  receives  $1,000  for each  directors'
meeting  attended  (excluding  telephone  meetings) and $500 for each  committee
meeting  attended,  subject to a maximum of $6,000 per year in aggregate meeting
fees. Directors' meetings are normally held on a quarterly basis.

Compensation Committee Interlocks and Insider Participation

         None of the Corporation's  executive officers served as a member of the
Compensation  Committee  of the Board of Directors or as a director of any other
entity,  one of whose executive  officers served as a member of the Compensation
Committee of the Corporation's Board of Directors.



                                       8
<PAGE>
<TABLE>
<CAPTION>

Summary Compensation Table

         The  following  table  sets forth  summary  information  regarding  the
compensation  (excluding Mr. Thomas'  retirement  benefit  described on page 13)
earned by or paid to William R.  Thomas,  President  and  Chairman of the Board;
Gary L. Martin, Vice President;  Patrick F. Hamner, Vice President;  and William
M. Ashbaugh,  Vice President,  all of whom are officers of the Corporation whose
total  compensation  earned during the fiscal year ended March 31, 2003 exceeded
$100,000.


                                                                               Long-term
                                                                             Compensation
                                                                         ---------------------
                                           Annual Compensation                  Awards
                                  ------------------------------------   ---------------------
     Name and          Fiscal                           Other Annual     Securities Underlying    All Other
Principal Position      Year      Salary      Bonus    Compensation(1)        Options (#)       Compensation(2)
------------------      ----      ------      -----    ---------------   ---------------------  ---------------
<S>                     <C>      <C>         <C>          <C>                   <C>              <C>
William R. Thomas       2003     $250,000   $     -       $10,000               6,000            $      -
   Chairman of the      2002      250,000    10,417         8,500               6,000                   -
   Board and President  2001      250,000    10,417        12,750               6,000                   -

Gary L. Martin          2003      183,750    12,135             -              14,000                   -
   Vice President       2002      178,800    17,077             -              14,000                   -
                        2001      172,500    16,683             -              14,000                   -

Patrick F. Hamner       2003      183,750    27,708             -              34,000              10,000
   Vice President       2002      172,500    37,500             -              34,000               8,500
                        2001      145,000    42,250             -              24,000              12,750

William M. Ashbaugh     2003      167,500    27,083             -              15,000               9,729
   Vice President       2002       96,410    14,222             -              15,000                   -
                        2001            -         -             -                   -                   -
</TABLE>

---------------------
(1)      Represents  amounts  accrued  for each  executive  officer in lieu of a
         contribution to his account in an ESOP.

(2)      Represents  amounts  contributed to the ESOP accounts of each executive
         officer.

         The  aggregate  amount  of  perquisites  and  other  personal  benefits
provided to Messrs. Thomas, Martin, Hamner and Ashbaugh was less than 10% of the
total of annual salary and bonus of such officers.

         In accordance with the Corporation's  established  policy, its officers
and employees are required to remit to the Corporation all compensation received
for serving as a director of any portfolio company of the Corporation.





                                       9
<PAGE>
<TABLE>
<CAPTION>

Additional Compensation Information

         The following table sets forth additional compensation  information for
the  fiscal  year  ended  March  31,  2003  for each of the  three  highest-paid
executive  officers  whose  compensation  exceeded  $60,000  and for  all  other
directors (Graeme W. Henderson,  James M. Nolan and John H. Wilson), who are not
employees of the Corporation.

                                             Pension or Retirement
                             Aggregate        Benefits Accrued as   Estimated Annual
                         Compensation from   Part of Corporation's    Benefits Upon
Name and Position         the Corporation         Expenses             Retirement
-----------------        -----------------   ---------------------  ----------------
<S>                         <C>                      <C>                   <C>
William R. Thomas           $260,000 (1)             (3)                   (4)
     Director, Chairman
     and President

Gary L. Martin               195,885 (1)             (3)                   (4)
     Director and Vice
     President

Patrick F. Hamner            221,458 (1)             (3)                   (4)
     Vice President

Graeme W. Henderson           28,000 (2)            None                  None
     Director

James M. Nolan                28,000 (2)            None                  None
     Director

John H. Wilson                21,000 (2)            None                  None
     Director
</TABLE>

-------------------
(1)      See "Option  Exercises  and Fiscal  Year End  Values"  for  information
         regarding  stock  options  exercised  during  or held at the end of the
         fiscal  year  ended  March  31,  2003.  See   "Retirement   Plans"  for
         information  on  the  Corporation's   Retirement  Plan  and  Retirement
         Restoration  Plan. See "Stock  Ownership Plan" for a description of the
         Corporation's  Employee Stock Ownership Plan and "Summary  Compensation
         Table" for amounts contributed to each officer's ESOP account.

(2)      Directors who are not employees of the  Corporation  are compensated as
         described under "Compensation of Directors" and are not participants in
         the Corporation's Retirement Plan or Employee Stock Ownership Plan.

(3)      As  described  in note 8 to the  Corporation's  Consolidated  Financial
         Statements,  the Retirement Plan was overfunded and therefore generated
         a benefit  for the year  ended  March 31,  2003.  After  deducting  the
         expense of the unfunded Retirement  Restoration Plan, the Corporation's
         net benefit  attributable to both plans was $387,923 for the year ended
         March 31,  2003.  The  Corporation's  net benefit is not  allocated  to
         individual plan participants.



                                       10
<PAGE>
<TABLE>
<CAPTION>

(4)      Individual  retirement benefits are based on formulas relating benefits
         to  average  final  compensation  and years of  credited  service.  See
         "Retirement  Plans" which  includes  both a table of  estimated  annual
         retirement  benefits  and a  description  of  the  retirement  benefits
         currently payable to Mr. Thomas.

Option Grants

         No common stock options were granted during the fiscal year ended March
31, 2003.

Option Exercises and Fiscal Year End Values

         The  following  table  discloses,  for the  named  executive  officers,
information  regarding stock options  exercised  during,  or held at the end of,
fiscal 2003.

                                                     Number of Securities            Value of Unexercised
                                                   Underlying Unexercised            In-the-Money Options
                       Shares                        Options at 3/31/03                 at 3/31/03 (2)
                    Acquired on     Value      ---------------------------------  --------------------------
Name                Exercise (#) Realized (1)  Exercisable(#)  Unexercisable(#)   Exercisable  Unexercisable
----                ------------ ------------  --------------  -----------------  -----------  -------------
<S>                 <C>          <C>           <C>             <C>                <C>          <C>
William R. Thomas       -            -            6,000               -           $      -      $      -

Gary L. Martin          -            -           14,000               -            175,350             -

Patrick F. Hamner       -            -           19,750           14,250           175,350             -

William M. Ashbaugh     -            -            1,500           13,500                 -             -
</TABLE>

----------
(1)      Value  realized is  calculated  as the fair market value on the date of
         exercise,  net of  the  option  exercise  price,  but  before  any  tax
         liabilities or transaction costs.

(2)      Value of unexercised  options is calculated at the closing market price
         on March 31,  2003  ($48.15),  net of the option  exercise  price,  but
         before any tax liabilities or transaction costs.

Retirement Plans

         The  foregoing  Summary   Compensation   Table  does  not  include  any
contribution,  payment or accrual under a qualified non-contributory  retirement
plan (the  "Retirement  Plan")  maintained by the Corporation and certain of its
wholly-owned  portfolio companies,  as such amounts cannot readily be separately
or individually calculated.  Messrs. Ashbaugh, Hamner and Martin now participate
in the Retirement Plan, and Mr. Thomas is currently receiving retirement benefit


                                       11
<PAGE>

payments.  An eligible  employee  or his  survivor  will be  entitled  under the
Retirement  Plan to  receive,  upon  retirement,  death or  disability,  monthly
payments based upon formulas  relating  benefits to salary and years of credited
service,  which is generally  determined by averaging the five consecutive years
of highest  compensation  prior to retirement.  Salaries and bonuses  (excluding
other annual compensation)  reported in the foregoing Summary Compensation Table
are  substantially  identical to  compensation  covered by the  Retirement  Plan
("Covered Compensation").

         The  following  table sets forth,  for  purposes of  illustration,  the
estimated  annual  retirement  benefit  payable under the  Retirement  Plan as a
straight  life annuity upon  retirement  to  participants  of specified  Covered
Compensation  and years of credited  service who are fully vested (five years of
service).  Messrs.  Ashbaugh,  Hamner  and  Martin  had 1,  21,  and  30  years,
respectively,  of  credited  service  under  the  plan  as of May 1,  2003.  All
calculations assume retirement in 2003 at age 65 (normal retirement age).


Total Covered                        Estimated Annual Benefits
Compensation                            Based on Service of
                    15 Years     20 Years     25 Years     30 Years     35 Years
                    ------------------------------------------------------------
$125,000........... $ 31,338     $ 41,784     $ 52,230     $ 62,676     $ 73,122
 150,000...........   38,463       51,284       64,105       76,926       89,747
 175,000...........   45,588       60,784       75,980       91,176      106,372
 200,000...........   52,713       70,284       87,855      105,426      122,997
 225,000..........    59,838       79,784       99,730      119,676      139,622
 250,000..........    66,963       89,284      111,605      133,926      156,247
 300,000..........    81,213      108,284      135,355      162,426      189,497
 350,000...........   95,463      127,284      159,105      190,926      222,747
 400,000...........  109,713      146,284      182,855      219,426      255,997

         Certain of the  amounts  in the above  table are  subject to  reduction
because  applicable  federal  regulations  limit the  amount of annual  benefits
payable to certain  higher-paid  participants  under a tax-qualified  retirement
plan such as the  Retirement  Plan. The extent of such  reductions  will vary in
individual  cases  according  to  circumstances  existing  at the  time  pension
payments commence. Consequently, the Corporation and certain of its wholly-owned
portfolio  companies  have adopted an unfunded  benefit  equalization  plan (the
"Retirement  Restoration  Plan") to compensate  employees of the Corporation and
chief executive officers of certain of the Corporation's  wholly-owned portfolio
companies for the loss of retirement  benefits  resulting from such limitations.
This Retirement  Restoration Plan provides for the payment, upon retirement,  of
the  difference  between  the  maximum  annual  payment  permissible  under  the
Retirement  Plan  pursuant  to federal  limitations  and the amount  which would
otherwise have been payable.

         Mr. Thomas is entitled to a substantially  increased annual  retirement
benefit as a result of his service  beyond the normal  retirement  age and to an
additional annual  retirement  benefit as a result of his credited service prior
to April 1972 under a retirement benefit formula of the Corporation's Retirement
Plan which was modified for credited service subsequent to April 1972.  Although


                                       12
<PAGE>

Mr. Thomas is a full-time employee of the Corporation,  Section 401(a)(9) of the
Internal  Revenue  Code  required  that he begin  receiving  monthly  retirement
benefit  payments on April 1, 2000 because of his age and ownership of more than
5% of the  Corporation's  common stock.  Retirement  benefits  payable (for life
only) to Mr. Thomas under the Retirement  Plan and Retirement  Restoration  Plan
total $440,342 per annum.

Stock Ownership Plan

         The Corporation maintains an Employee Stock Ownership Plan ("ESOP") for
its employees and one of its  wholly-owned  portfolio  companies in which Mssrs.
Ashbaugh and Hamner participate. The Whitmore Manufacturing Company maintains an
ESOP for its  employees,  in which Mr. Martin  participates.  Employees who have
completed one year of credited service,  as defined in the plan, are eligible to
participate in the ESOP.  Contributions  to the ESOP are  discretionary,  within
limits  established by the Internal Revenue Code. Funds contributed to the trust
established  under the ESOP are applied by the trustees to the purchase,  in the
open market at prevailing market prices,  of common stock of the Corporation.  A
participant's interest in contributions to the ESOP fully vests after five years
of credited service, and such vested interest is distributed to a participant at
retirement,  death or total  disability,  or after a one year  break in  service
resulting from  termination of employment for any other reason.  See note (2) to
the table under "Stock Ownership of Certain Beneficial Owners".

          COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires  officers and directors of the Corporation and persons who beneficially
own  more  than  10% of the  Corporation's  common  stock  to  file  reports  of
securities  ownership  and  changes in such  ownership  with the SEC.  Officers,
directors  and greater  than 10%  beneficial  owners also are  required by rules
promulgated  by the SEC to furnish  the  Corporation  with copies of all Section
16(a)  forms they file.  Based  solely upon a review of the copies of such forms
furnished to the Corporation,  or written representations that no Form 5 filings
were required, the Corporation believes that each of its officers, directors and
greater  than 10%  beneficial  owners  complied  with all Section  16(a)  filing
requirements applicable to them during the year ended March 31, 2003.

                              AUDIT AND OTHER FEES

         The following  table  presents  fees for  professional  audit  services
rendered  by KPMG  LLP for  the  audit  of the  Corporation's  annual  financial
statements  for the fiscal years ended March 31, 2003 and 2002,  and fees billed
for other services rendered by KPMG LLP.



                                       13
<PAGE>

                                              2003               2002
                                           ----------         ----------
Audit Fees                                 $   53,000         $   40,500

Audit-Related Fees                                -0-                -0-
                                           ----------         ----------
   Audit and Audit-Related Fees            $   53,000         $   40,500


Tax Fees(1)                                     4,000              3,900

All Other Fees                                    -0-                -0-
                                           ----------         ----------
   Total Fees                              $   57,000         $   44,400
                                           ==========         ==========

----------
(1)      Tax fees  consisted  of fees for tax  compliance,  tax  advice  and tax
         planning.

         The Audit  Committee  considered the services  rendered by KPMG LLP and
the fees paid to them and  concluded  that the  services  were  compatible  with
maintaining KPMG's independence.





























                                       14
<PAGE>
<TABLE>
<CAPTION>

                                PERFORMANCE GRAPH

         The  following  graph  compares  the  Corporation's   cumulative  total
stockholder  return during the last five years (based on the market price of the
common  stock and  assuming  reinvestment  of all  dividends  and tax credits on
retained  long-term  capital  gains) with the Total  Return Index for the Nasdaq
Stock  Market  (U.S.  Companies)  and with the Total  Return  Index  for  Nasdaq
Financial  Stocks,  both of which  indices have been  prepared by the Center for
Research in Security Prices at the University of Chicago.



                Comparison of Five Year Cumulative Total Returns


[Graph omitted]



         Nasdaq Total Return (U.S.)   Nasdaq Financial Stocks    Capital Southwest Corporation
<C>              <C>                        <C>                          <C>
1998             100.000                    100.000                      100.000
1999             135.079                     90.111                       78.234
2000             250.991                     85.390                       60.219
2001             100.601                     94.442                       72.295
2002             101.323                    117.516                       77.197
2003              74.374                    108.966                       54.609
</TABLE>
























                                       15
<PAGE>

         PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

         The  Audit  Committee  has  appointed  the firm of Ernst & Young LLP as
independent  auditors  for the fiscal year ending  March 31,  2004.  In order to
ratify the  appointment  of Ernst & Young LLP as  independent  auditors  for the
Corporation  for the year ending March 31, 2004,  the proposal  must receive the
favorable vote of a majority of the shares  entitled to vote and  represented at
the annual meeting.

         A representative of KPMG LLP,  independent auditors for the fiscal year
ended March 31, 2003, is expected to be present at the annual  meeting.  He will
have the  opportunity  to make a statement,  and will be available to respond to
appropriate questions.

                  SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING

         Any  shareholder  proposal  to be  considered  by the  Corporation  for
inclusion in the proxy material for the 2004 annual meeting of shareholders must
be received by the Secretary of the  Corporation  at 12900  Preston Road,  Suite
700,  Dallas,  Texas 75230, no later than February 2, 2004. Mere submission of a
proposal  for  consideration  does not  guarantee  its  inclusion  in the  proxy
material or presentation at the meeting.  All shareholder  proposals are subject
to the rules promulgated under the federal securities laws.

                       EXPENSES OF SOLICITATION OF PROXIES

         In  addition  to the use of the  mails,  proxies  may be  solicited  by
personal  interview and telephone by directors,  officers and other employees of
the Corporation, who will not receive additional compensation for such services.
The Corporation will also request  brokerage  houses,  nominees,  custodians and
fiduciaries to forward  soliciting  materials to the beneficial  owners of stock
held of record by them and will reimburse such persons for forwarding materials.
The cost of soliciting proxies will be borne by the Corporation.

                                  ANNUAL REPORT

         The Annual Report to Shareholders  covering the fiscal year ended March
31, 2003 accompanies this proxy statement, but is not deemed a part of the proxy
soliciting material.

         A copy of the fiscal 2003 Form 10-K  report  filed with the SEC will be
mailed to shareholders  without charge upon written request to Susan K. Hodgson,
Secretary, Capital Southwest Corporation, 12900 Preston Road, Suite 700, Dallas,
Texas 75230.

         A copy of the Form 10-K will be available via the Internet at our world
wide  website  (www.capitalsouthwest.com)  and the EDGAR  version of such report
will be available at the SEC's world wide website (www.sec.gov).

         Any complaint  regarding  accounting,  internal  accounting controls or
auditing matters should be mailed to John H. Wilson,  Audit Committee member, at
1500  Three  Lincoln  Centre,  5430  LBJ  Freeway,  Dallas,  TX  75240.  Written
complaints may be submitted anonymously.



                                       16
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------
                          CAPITAL SOUTHWEST CORPORATION
                             AUDIT COMMITTEE CHARTER

ORGANIZATION

This  charter   ("Charter")  governs  the  operations  of  the  Audit  Committee
("Committee"), which shall review and reassess the Charter at least annually and
obtain the approval of the board of  directors  ("Board") of the Charter and any
changes thereto.  The Committee shall be members of, and appointed by, the Board
and shall  comprise at least three  directors,  each of whom are  independent of
management  and the  Corporation.  Members of the Committee  shall be considered
independent as long as they accept no consulting, advisory or other compensatory
fees from the  Corporation  (other than directors' fees from the Corporation and
its portfolio  companies),  are not affiliated persons of the Corporation or its
subsidiaries,  and meet the independence  requirements of the Sarbanes-Oxley Act
of 2002 and The Nasdaq Stock Market  listing  standards.  All committee  members
shall be  financially  literate,  and at least  one  member  shall be an  "audit
committee financial expert," as defined by SEC regulations.

PURPOSE

The Committee shall provide  assistance to the Board in fulfilling its oversight
responsibility   to  the   shareholders   relating  to:  the  integrity  of  the
Corporation's financial statements; the financial reporting process; the systems
of  internal  accounting  and  financial   controls;   the  performance  of  the
Corporation's independent auditors; the independent auditors' qualifications and
independence;  and the  Corporation's  compliance with ethics policies and legal
and regulatory requirements relating to financial statements and reporting.

In discharging its oversight role, the Committee is empowered to investigate any
matter  brought  to its  attention  with  full  access  to all  books,  records,
facilities  and  personnel  of the  Corporation  and  the  authority  to  engage
independent  counsel and other advisers as it determines  necessary to carry out
its duties.

DUTIES AND RESPONSIBILITIES

The primary  responsibility  of the  Committee  is to oversee the  Corporation's
financial reporting process on behalf of the Board and report the results of its
activities to the Board. While the Committee has the responsibilities and powers
set  forth  in this  Charter,  it is not the  duty of the  Committee  to plan or
conduct audits or to determine that the Corporation's  financial  statements are
complete and accurate and are in accordance with generally  accepted  accounting
principles.  Management is responsible  for the  preparation,  presentation  and
integrity of the Corporation's  financial statements and for the appropriateness
of the  accounting  principles  and  reporting  policies  that  are  used by the
Corporation.   The  independent   auditors  are  responsible  for  auditing  the
Corporation's financial statements and for reviewing the Corporation's unaudited
interim financial statements.

The Committee,  in carrying out its responsibilities,  believes its policies and
procedures should remain flexible, in order to best react to changing conditions


                                      A-1
<PAGE>

and  circumstances.  The Committee  should take  appropriate  actions to set the
overall  corporate "tone" for quality financial  reporting,  sound business risk
practices and ethical behavior.  The following shall be the principal duties and
responsibilities  of the  Committee.  These  are set  forth as a guide  with the
understanding that the Board may supplement the duties and  responsibilities  as
appropriate.

Subject to shareholder ratification, the Committee shall be directly responsible
for appointment of the  independent  auditors.  If  circumstances  warrant,  the
Committee may terminate  such  appointment.  The  Committee is  responsible  for
determining the independent  auditors'  compensation  and for oversight of their
work, including resolution of disagreements  between management and the auditors
regarding  financial  reporting.  The Committee shall  pre-approve all audit and
non-audit services provided by the independent auditors and shall not engage the
independent  auditors to perform the specific non-audit  services  proscribed by
law or regulation. The Committee may delegate pre-approval authority to a member
of the Committee.  The decisions of any committee member to whom pre-approval is
delegated must be presented to the Committee at its next scheduled meeting.

At least  annually,  the  Committee  shall  obtain  and  review a report  by the
independent auditors describing:

         o        The firm's internal quality control procedures.

         o        Any material issues raised by the most recent internal quality
                  control review, or peer review, of the firm, or by any inquiry
                  or investigation by governmental or professional  authorities,
                  within  the  preceding  five  years,  respecting  one or  more
                  independent  audits  carried  out by the  firm,  and any steps
                  taken to deal with any such issues.

         o        All  relationships  between the  independent  auditors and the
                  Corporation.

The Committee  shall  pre-approve the  Corporation's  hiring of any employees or
former employees of the independent  auditors in full compliance with applicable
SEC regulations and The Nasdaq Stock Market listing standards.

The Committee shall discuss with the independent  auditors the overall scope and
plans for their audit,  including the adequacy of staffing.  Also, the Committee
shall  discuss with  management  and the  independent  auditors the adequacy and
effectiveness   of  the  accounting  and  financial   controls,   including  the
Corporation's  policies and  procedures to assess,  monitor and manage  business
risk, and ethical compliance programs.

Periodically,  the  Committee  shall meet  separately  with  management  and the
independent  auditors  to  discuss  issues  and  concerns  warranting  Committee
attention.   The  Committee  shall  provide   sufficient   opportunity  for  the
independent  auditors to meet privately  with the members of the Committee,  and
shall review with the  independent  auditors any audit problems or  difficulties
and management's response.

The Committee shall receive regular reports from the independent auditors on the
critical  policies  and  practices  of  the  Corporation,  and  all  alternative
treatments  of  financial   information  within  generally  accepted  accounting
principles that have been discussed with management.


                                       A-2
<PAGE>

The  Committee  shall review  management's  assertion on its  assessment  of the
effectiveness of internal  controls as of the end of the most recent fiscal year
and the independent auditors' report on management's assertion.

The Committee,  or its  designated  member,  shall review the interim  financial
statements  and  disclosures  under  Management's  Discussion  and  Analysis  of
Financial   Condition  and  Results  of  Operations   with  management  and  the
independent  auditors prior to the filing of the Corporation's  Quarterly Report
on Form 10-Q. Also, the Committee,  or its designated member,  shall discuss the
results  of  the  quarterly   review  and  any  other  matters  required  to  be
communicated  to the  Committee  by the  independent  auditors  under  generally
accepted auditing  standards.  The Committee,  or its designated  member,  shall
review and discuss net asset value press releases.

The Committee  shall review with  management  and the  independent  auditors the
financial statements and disclosures under Management's  Discussion and Analysis
of  Financial  Condition  and  Results  of  Operations  to be  included  in  the
Corporation's  Annual Report on Form 10-K (or the annual report to  shareholders
if distributed prior to the filing of Form 10-K), including their judgment about
the  quality,  not  just  the  acceptability,   of  accounting  principles,  the
reasonableness  of the valuation of restricted  securities and other significant
judgments and the clarity of the disclosures in the financial statements.  Also,
the  Committee  shall  discuss  the  results of the  annual  audit and any other
matters required to be communicated to the Committee by the independent auditors
under generally accepted auditing standards.

The  Committee  shall  establish  procedures  for  the  receipt,  retention  and
treatment  of  complaints  received  by the  Corporation  regarding  accounting,
internal  accounting  controls  or  auditing  matters;   and  the  confidential,
anonymous  submission  by employees  of the  Corporation  of concerns  regarding
questionable accounting or auditing matters and unethical,  irregular or illegal
business conduct.

The Committee  shall  receive  corporate  attorneys'  reports of evidence of any
material violation of securities laws or breaches of fiduciary duty.

The Committee shall submit its report to be included in the Corporation's annual
proxy statement, as required by SEC regulations.

The Committee  shall report  regularly to the Board and maintain  minutes of its
meetings.

The Committee  shall perform an evaluation of its  performance at least annually
to determine whether it is functioning effectively.





                                       A-3


<PAGE>


                                                                      APPENDIX A


                          Capital Southwest Corporation
            PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- JULY 21, 2003

                    THIS PROXY IS SOLICITED ON BEHALF OF THE
                     BOARD OF DIRECTORS OF THE CORPORATION.

         The  undersigned  (1)  acknowledges  receipt  of the  Notice  of Annual
Meeting of Shareholders of Capital Southwest  Corporation,  a Texas corporation,
(the  "Corporation") to be held on Monday,  July 21, 2003, at 10:00 a.m., Dallas
time,  in the  Meeting  Room (1st floor) of the North  Dallas Bank Tower,  12900
Preston Road,  Dallas,  Texas, and the Proxy Statement in connection  therewith;
and (2) appoints James M. Nolan,  William R. Thomas and John H. Wilson, and each
of them, his proxies with full power of substitution, for and in the name, place
and stead of the  undersigned,  to vote upon and act with  respect to all of the
shares  of  Common  Stock  of  the  Corporation  standing  in  the  name  of the
undersigned,  or with respect to which the  undersigned  is entitled to vote and
act at the meeting and at any adjournment  thereof,  and the undersigned directs
that this proxy be voted:

                (Continued and to be signed on the reverse side)


--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE __
--------------------------------------------------------------------------------


1.  Election of Directors:             NOMINEES:

___  FOR ALL NOMINEES                  ( )  Graeme W. Henderson
                                       ( )  Gary L. Martin
___  WITHOLD AUTHORITY                 ( )  James M. Nolan
     FOR ALL NOMINEES                  ( )  William R. Thomas
                                       ( )  John H. Wilson
___  FOR ALL EXCEPT
     (See instructions below)

INSTRUCTION:  To withhold authority to vote for any individual nominee(s),  mark
"FOR  ALL  EXCEPT"  and  fill in the  circle  next to each  nominee  you wish to
withhold, as shown here:( )


2.   Proposal  to ratify  the  appointment  of Ernst & Young LLP as  independent
     auditors for the Corporation.

3.   In the  discretion  of the  proxies,  on any other matter that may properly
     come  before  the  meeting  or,  subject  to the  conditions  in the  Proxy
     Statement, any adjournment thereof.


     This proxy when  properly  executed  will be voted in the manner  directed.
Unless  otherwise  marked,  this  proxy  will be voted for the  election  of the
persons named at the left hereof and for the proposal described in (2) above.

     If more than one of the proxies  named herein shall be present in person or
by substitute at the meeting or at any adjournment  thereof, the majority of the
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.

     The  undersigned  hereby revokes any proxy or proxies  heretofore  given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that the proxies,  their substitutes,  or any of them, may lawfully do by virtue
hereof.

PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.

________________________________________________________________________________
To change the address on your account,  please check the box
at right and indicate  your new address in the address space  ____
above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.



Signature of  Shareholder:______________________________  Date: ________________
Signature of Shareholder: ______________________________  Date: ________________

NOTE:Please sign exactly as your name or names appear on this Proxy. When shares
     are held  jointly,  each holder  should  sign.  When  signing as  executor,
     administrator, attorney, trustee or guardian, please give title as such. If
     the signer is a duly authorized officer of a corporation,  please give full
     title. If signer is a partnership, please sign by authorized person.


</TEXT>
</DOCUMENT>
