<PAGE>
INVESTMENT ADVISER
Value Line, Inc.
220 East 42nd Street, New York, NY 10017-5891
DISTRIBUTOR
Value Line Securities, Inc.
220 East 42nd Street, New York, NY 10017-5891
CUSTODIAN BANK
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company c/o NFDS
P.O. Box 419729, Kansas City, MO 64141-6729
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas, New York, N.Y. 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF DIRECTORS
Jean Bernhard Buttner
Leo R. Futia John W. Chandler
Charles E. Reed Paul Craig Roberts
OFFICERS
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
David T. Henigson
VICE PRESIDENT
SECRETARY/TREASURER
Alan N. Hoffman Stephen Grant
VICE PRESIDENT VICE PRESIDENT
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY/TREASURER SECRETARY/TREASURER
This report is issued for the information of shareholders. It is not authorized
for distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Fund (obtainable from the Distributor).
VLF511207
--------------------
ANNUAL REPORT
DECEMBER 31, 1995
--------------------
VALUE LINE
LEVERAGED
GROWTH
INVESTORS,
INC.
[LOGO]
VALUE LINE
MUTUAL FUNDS
<PAGE>
[LOGO] TO OUR VALUE LINE LEVERAGED
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to report that Value Line Leveraged Growth Investors, Inc.
(the"Fund") posted outstanding performance results for 1995, among our best
ever. The table below indicates those results for the second half of 1995 and
for the full year ended December 31, 1995, compared to results of the Lipper
Capital Appreciation Fund Index (a benchmark closely matching Leveraged Growth
Investors in objectives and style) and the Standard & Poor's 500 Composite
Index.
- --------------------------------------------------------------------
PERFORMANCE COMPARISON
SIX MONTHS 12 MONTHS
ENDED ENDED
12/31/95 12/31/95
--------- ---------
Value Line Leveraged
Growth Investors, Inc. . . . . . . .12.22% 37.06%
Lipper Capital
Appreciation Fund Index. . . . . . .12.05% 30.34%
Standard & Poor's
Composite Index. . . . . . . . . . .14.40% 37.44%
- --------------------------------------------------------------------
As is evident, your Fund significantly outperformed the Capital Appreciation
Index for the full year. For most of 1995, your Fund's performance also led the
S&P 500; but the sell-off in technology stocks during the fourth quarter
resulted in a better late-year performance by the S&P 500 Index.
In almost all respects, 1995 was a banner year for the stock market. Your Fund
participated fully in the broad advance. The most significant contributions to
the Fund's results came from holdings in the technology sector, especially
computer hardware and software, semiconductors, electronics, and
telecommunications equipment. Share prices of many of these stocks were bid up
aggressively for much of the year, led by enthusiasm for Intel Corp.'s
Pentium-TM- microprocessor, introduction of Microsoft's Windows 95-TM- operating
system, and the increasing reliance of businesses on technology to fuel
productivity growth.
Another major theme for 1995 was mergers and acquisitions, including
announcements of takeovers of Midlantic, Capital Cities/ABC, Cordis, First
Interstate, and other companies. Your Fund's holdings in these target companies'
stocks gave a significant boost to overall performance, as the stocks' prices
appreciated sharply upon announcement of the mergers.
Just as our technology holdings provided much of the positive results for the
year, this sector suffered more than others during the last quarter. Earlier in
the year, prices of many of these stocks were driven up too far, too fast. In
the final period, the combination of profit-taking and general nervousness about
future earnings growth caused damage to this sector.
Looking ahead, we remain enthusiastic about the prospects of technology
companies with strong performance records. Your Fund's position in this sector
remains significant (at over 30% of total holdings), as we anticipate
additional, healthy price-appreciation of these stocks. We believe, as well,
that the U.S. economy will continue to expand at a modest but sustainable pace
and that interest rates and inflation rates will remain low (see the
accompanying "Economic Observations" insert). Thus, we anticipate that 1996 will
be another good year for common stocks.
We thank you for your continued interest in Value Line Leveraged Growth
Investors. We wish you a happy and prosperous New Year, and we look forward to
serving your investment needs in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
January 24, 1996
2
<PAGE>
GROWTH INVESTORS SHAREHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ECONOMIC OBSERVATIONS
The economy is continuing to slow. Indeed, whereas until recently it looked as
though the business expansion still had enough strength left in it for growth to
average well above 2% in 1996, the latest statistics paint a somewhat weaker
picture. For example, the nation's manufacturers report a continuing drop in
activity, while employment growth is down from where it was late last year.
Furthermore, American consumers are now less upbeat about the nation's near-term
prospects and their own situation than they were earlier in the expansion cycle.
All of this now suggests that the economy will grow by just over 1% in the
opening quarter of the year and by a bit less than 2% for the full 12 months.
There are good and bad sides to the current economic story. On the plus side is
the fact that slow growth will keep labor and materials shortages--which can
often lead to higher inflation--at bay. A slowing economy might also nudge the
Federal Reserve, which has already lowered interest rates three times since last
July, toward a still easier monetary stance in the months ahead, although this
scenario is by no means assured. The flip side of the equation is that a
softening economy is often a harbinger of a pending deceleration on the
corporate earnings front. The first indications of this profit slowdown, in
fact, may already be at hand.
For now, at least, our sense is that the current weakening in business will not
prove to be the opening act in a recession. Instead, we see several quarters of
weak growth followed by a modestly healthier pace of activity in 1997 and 1998.
At the same time, we do not envision a protracted drop in corporate profits, but
rather a several-quarter-long slowdown followed by a modest recovery later this
year or in 1997. All of this assumes, of course, that a workable budget
agreement will ultimately come out of Washington.
- --------------------------------------------------------------------------------
*PERFORMANCE DATA:
<TABLE>
<CAPTION>
AVERAGE ANNUAL GROWTH OF AN ASSUMED
TOTAL RETURN INVESTMENT OF $10,000
-------------- ---------------------
<S> <C> <C>
1 year ended 12/31/95. . . . . . . . . . . . 37.06% $ 13,706
5 years ended 12/31/95 . . . . . . . . . . . 16.96% $ 21,892
10 years ended 12/31/95. . . . . . . . . . . 14.40% $ 38,377
</TABLE>
*THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURNS AND GROWTH OF AN ASSUMED
INVESTMENT OF $10,000 INCLUDE DIVIDENDS REINVESTED AND CAPITAL-GAINS
DISTRIBUTIONS ACCEPTED IN SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF
AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTMENT, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN ITS ORIGINAL COST.
3
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
[GRAPH]
(Period covered is 1/1/86 to 12/31/95)
- --------------------------------------------------------------------------------
*THE STANDARD & POOR'S 500 INDEX (S&P 500) IS AN UNMANAGED INDEX THAT IS
REPRESENTATIVE OF THE LARGER-CAPITALIZATION STOCKS TRADED IN THE UNITED STATES.
4
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
PORTFOLIO HIGHLIGHTS
AT DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DOLLARS PERCENTAGE
ISSUE SHARES (IN THOUSANDS) OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SunAmerica Inc. 210,000 $9,975 3.0%
CUC International, Inc. 281,250 9,598 2.8
Loral Corp. 260,000 9,198 2.7
Deere & Co. 250,000 8,812 2.6
Clayton Homes, Inc. 390,625 8,350 2.5
Citicorp 120,000 8,070 2.4
First Data Corp. 120,000 8,025 2.4
Green Tree Financial Corp. 300,000 7,913 2.3
Amgen Inc. 120,000 7,125 2.1
3Com Corp. 150,000 6,994 2.1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FIVE LARGEST INDUSTRY CATEGORIES*
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS PERCENTAGE
INDUSTRY (IN THOUSANDS) OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C> <C>
Financial Services $41,578 12.3%
Computer & Peripherals 34,558 10.3
Computer Software & Services 26,456 7.8
Semiconductor 23,909 7.1
Drug 18,376 5.5
- ------------------------------------------------------------------------
</TABLE>
FIVE LARGEST NET SECURITY PURCHASES* +
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST
ISSUE (IN THOUSANDS)
- ------------------------------------------------------------------------
<S> <C>
Hewlett-Packard Co. $6,794
Micron Technology, Inc. 5,375
Alco Standard Corp. 3,658
HBO & Co. 3,629
McDonnell Douglas Corp. 3,595
- ------------------------------------------------------------------------
</TABLE>
FIVE LARGEST NET SECURITY SALES* +
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PROCEEDS
ISSUE (IN THOUSANDS)
- ------------------------------------------------------------------------
<S> <C>
Midlantic Corp. $10,596
Intel Corp. 8,098
DSC Communications Corp. 6,831
Cordis Corp. 5,501
First Interstate Bancorp 4,154
- ------------------------------------------------------------------------
</TABLE>
* EXCLUSIVE OF FIXED-INCOME SECURITIES
+ FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995
5
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (98.5%)
AEROSPACE/DEFENSE (4.0%)
260,000 Loral Corp. . . . . . . . . . . . . . . $ 9,198
45,000 McDonnell Douglas Corp. . . . . . . . . 4,140
---------
13,338
BANK (3.6%)
90,000 Bank of Boston Corp.. . . . . . . . . . 4,162
120,000 Citicorp. . . . . . . . . . . . . . . . 8,070
---------
12,232
BANK-MIDWEST (1.7%)
80,000 Fifth Third Bancorp . . . . . . . . . . 5,860
BEVERAGE-SOFT DRINK (1.5%)
70,000 Coca-Cola Co. . . . . . . . . . . . . . 5,197
BROADCASTING/CABLE TV (1.8%)
50,000 Capital Cities/ABC, Inc.. . . . . . . . 6,169
CHEMICAL-BASIC (1.0%)
90,000 Union Carbide Corp. . . . . . . . . . . 3,375
CHEMICAL-DIVERSIFIED (2.4%)
45,000 Cabot Corp. . . . . . . . . . . . . . . 2,424
60,000 First Mississippi Corp. . . . . . . . . 1,590
50,000 IMC Global Inc. . . . . . . . . . . . . 2,044
50,000 Millipore Corp. . . . . . . . . . . . . 2,056
---------
8,114
CHEMICAL-SPECIALTY (3.0%)
120,000 *Airgas, Inc. . . . . . . . . . . . . . 3,990
30,000 Great Lakes Chemical Corp.. . . . . . . 2,160
120,000 Praxair, Inc. . . . . . . . . . . . . . 4,035
---------
10,185
COMPUTER & PERIPHERALS (10.3%)
30,000 *Cabletron Systems, Inc.. . . . . . . . $ 2,430
55,000 *Cisco Systems, Inc.. . . . . . . . . . 4,104
70,000 *Dell Computer Corp.. . . . . . . . . . 2,424
357,300 *EMC Corp.. . . . . . . . . . . . . . . 5,493
80,000 Hewlett-Packard Co. . . . . . . . . . . 6,700
50,000 International Business
Machines Corp.. . . . . . . . . . . . . 4,588
40,000 *Sun Microsystems, Inc. . . . . . . . . 1,825
150,000 *3Com Corp. . . . . . . . . . . . . . . 6,994
---------
34,558
COMPUTER SOFTWARE
& SERVICES (7.8%)
80,000 *America Online, Inc. . . . . . . . . . 3,000
30,000 *Broderbund Software, Inc.. . . . . . . 1,823
50,000 *Ceridian Corp. . . . . . . . . . . . . 2,062
112,500 Computer Associates
International, Inc. . . . . . . . . . . 6,398
75,000 *Fiserv, Inc. . . . . . . . . . . . . . 2,250
40,000 *Microsoft Corp.. . . . . . . . . . . . 3,510
120,000 *Oracle Systems Corp. . . . . . . . . . 5,085
35,000 *Parametric Technology Corp.. . . . . . 2,328
---------
26,456
DIVERSIFIED COMPANIES (3.8%)
90,000 Alco Standard Corp. . . . . . . . . . . 4,106
50,000 Danaher Corp. . . . . . . . . . . . . . 1,588
60,000 Premark International, Inc. . . . . . . 3,037
75,000 *Thermo Electron Corp.. . . . . . . . . 3,900
---------
12,631
DRUG (5.5%)
120,000 *Amgen Inc. . . . . . . . . . . . . . . 7,125
70,000 Merck & Co., Inc. . . . . . . . . . . . 4,603
36,000 Pfizer, Inc.. . . . . . . . . . . . . . 2,268
80,000 Schering-Plough Corp. . . . . . . . . . 4,380
---------
18,376
6
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<S> <C>
ELECTRONICS (2.6%)
100,000 *Arrow Electronics, Inc . . . . . . . . $ 4,312
50,000 Avnet, Inc. . . . . . . . . . . . . . . 2,238
75,000 *Vishay Intertechnology, Inc. . . . . . 2,362
---------
8,912
EUROPEAN DIVERSIFIED (1.3%)
120,000 Danka Business Systems Plc (ADR). . . . 4,440
FINANCIAL SERVICES (12.3%)
100,000 American Express Co.. . . . . . . . . . 4,137
281,250 *CUC International, Inc.. . . . . . . . 9,598
40,000 FINOVA Group (The). . . . . . . . . . . 1,930
120,000 First Data Corp.. . . . . . . . . . . . 8,025
300,000 Green Tree Financial Corp.. . . . . . . 7,913
210,000 SunAmerica Inc. . . . . . . . . . . . . 9,975
---------
41,578
GROCERY (1.0%)
150,000 Casey's General Stores, Inc.. . . . . . 3,281
HEALTHCARE INFORMATION
SYSTEMS (1.1%)
50,000 HBO & Co. . . . . . . . . . . . . . . . 3,831
HOME APPLIANCE (0.5%)
50,000 Black & Decker Corp.. . . . . . . . . . 1,763
INDUSTRIAL SERVICES (1.4%)
120,000 Olsten Corp. . . . . . . . . . . . . . 4,740
INSURANCE-DIVERSIFIED (1.5%)
20,000 American International Group, Inc.. . . 1,850
60,000 MGIC Investment Corp. . . . . . . . . . 3,255
---------
5,105
INSURANCE-LIFE (0.5%)
40,000 AFLAC Incorporated. . . . . . . . . . . 1,735
MACHINERY (0.6%)
50,000 Dover Corp. . . . . . . . . . . . . . . 1,844
MACHINERY-CONSTRUCTION
& MINING (2.6%)
250,000 Deere & Co. . . . . . . . . . . . . . . $8,812
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (2.5%)
390,625 Clayton Homes, Inc. . . . . . . . . . . 8,350
MEDICAL SERVICES (1.3%)
100,000 *HealthCare COMPARE Corp. . . . . . . . 4,350
MEDICAL SUPPLIES (4.9%)
160,000 Invacare Corp.. . . . . . . . . . . . . 4,040
50,000 Johnson & Johnson . . . . . . . . . . . 4,281
80,000 Medtronic Inc.. . . . . . . . . . . . . 4,470
70,000 Stryker Corp. . . . . . . . . . . . . . 3,675
---------
16,466
OFFICE EQUIPMENT &
SUPPLIES (0.9%)
123,750 *Staples, Inc.. . . . . . . . . . . . . 3,016
PRECISION INSTRUMENT (1.3%)
90,000 *KLA Instruments Corp.. . . . . . . . . 2,346
55,000 *Summit Technology, Inc.. . . . . . . . 1,856
---------
4,202
RECREATION (1.0%)
55,000 Disney (Walt) Co. . . . . . . . . . . . 3,245
RESTAURANT (1.2%)
50,000 McDonald's Corp.. . . . . . . . . . . . 2,256
85,000 Wendy's International, Inc. . . . . . . 1,806
---------
4,062
RETAIL STORE (1.2%)
112,500 Dollar General Corp.. . . . . . . . . . 2,334
35,000 *Kohl's Corp. . . . . . . . . . . . . . 1,838
---------
4,172
7
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<S> <C>
SEMICONDUCTOR (7.1%)
120,000 *Applied Materials, Inc.. . . . . . . . $ 4,725
90,000 *Integrated Device Technology, Inc. . . 1,159
90,000 Intel Corp. . . . . . . . . . . . . . . 5,107
60,000 *Kulicke & Soffa Industries, Inc. . . . 1,395
100,000 Micron Technology, Inc. . . . . . . . . 3,963
80,000 Motorola, Inc.. . . . . . . . . . . . . 4,560
120,000 *Teradyne, Inc. . . . . . . . . . . . . 3,000
---------
23,909
TELECOMMUNICATIONS
EQUIPMENT (3.4%)
129,000 *ADC Telecommunications, Inc. . . . . . 4,709
45,000 *Andrew Corp. . . . . . . . . . . . . . 1,721
90,000 *DSC Communications Corp. . . . . . . . 3,319
50,000 *Tellabs, Inc.. . . . . . . . . . . . . 1,850
---------
11,599
TOILETRIES/COSMETICS (1.9%)
120,000 Gillette Co.. . . . . . . . . . . . . . 6,255
---------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (COST $214,239). . . . . . . 332,158
---------
<CAPTION>
Principal Value
Amount (IN THOUSANDS EXCEPT
(IN THOUSANDS) PER-SHARE AMOUNT)
- --------------------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENTS (1.1%)
(INCLUDING ACCRUED INTEREST)
$ 3,600 Collateralized by $3,815,000
U.S. Treasury Bills due 9/19/96,
with a value of $3,675,990
(with First Chicago Capital
Markets, Inc., 5.70%, dated
12/29/95, due 1/2/96, delivery
value of $3,602,280). . . . . . . . . . $ 3,602
CASH AND RECEIVABLES OVER
LIABILITIES (0.4%) . . . . . . . . . . . . . . . . . . 1,520
---------
NET ASSETS (100%). . . . . . . . . . . . . . . . . . . $ 337,280
---------
---------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER OUTSTANDING SHARE
($337,280,000 DIVIDED BY 11,834,496 SHARES
OF CAPITAL STOCK OUTSTANDING). . . . . . . . . . . . . $ 28.50
---------
---------
</TABLE>
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
STATEMENT OF ASSETS
AND LIABILITIES
AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars
(IN THOUSANDS
EXCEPT PER-
SHARE AMOUNT)
--------------
<S> <C>
ASSETS:
Investment securities, at value
(cost--$214,239) . . . . . . . . . . . . . . . . . . $ 332,158
Repurchase agreement (cost--$3,602). . . . . . . . . . 3,602
Cash . . . . . . . . . . . . . . . . . . . . 59
Receivable for securities sold . . . . . . . . . . . . 1,377
Receivable for capital shares sold . . . . . . . . . . 529
Dividends and interest receivable. . . . . . . . . . . 240
----------
TOTAL ASSETS. . . . . . . . . . . . . . 337,965
----------
LIABILITIES:
Payable for capital shares repurchased . . . . . . . . 317
Accrued expenses:
Advisory fee . . . . . . . . . . . . . . . . . . . 218
Other . . . . . . . . . . . . . . . . . . . . 150
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . 685
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . $ 337,280
----------
----------
NET ASSETS CONSIST OF:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
11,834,496 shares). . . . . . . . . . . . . . . . . $ 11,834
Additional paid-in capital . . . . . . . . . . . . . . 204,021
Undistributed investment income--net . . . . . . . . . 4
Accumulated net realized gain on
investments . . . . . . . . . . . . . . . . . . . . 3,502
Unrealized net appreciation of investments . . . . . . 117,919
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . $ 337,280
----------
----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE ($337,280,000
DIVIDED BY 11,834,496 SHARES OUTSTANDING). . . . $ 28.50
----------
----------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Dollars
(IN THOUSANDS)
--------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding. . . . . . . . . $ 2,606
taxes of $4)
Interest . . . . . . . . . . . . . . . . . . . . 1,167
----------
TOTAL INCOME. . . . . . . . . . . . . . . . . . 3,773
----------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . . . 2,373
Transfer agent fees. . . . . . . . . . . . . . . . . . 155
Auditing and legal fees. . . . . . . . . . . . . . . . 48
Custodian fees . . . . . . . . . . . . . . . . . . . . 41
Telephone and wire charges . . . . . . . . . . . . . . 36
Commitment fee . . . . . . . . . . . . . . . . . . . . 31
Registration and filing fees . . . . . . . . . . . . . 30
Postage. . . . . . . . . . . . . . . . . . . . . . . . 23
Printing and stationery. . . . . . . . . . . . . . . . 22
Insurance, dues, and other . . . . . . . . . . . . . . 19
Directors' fees and expenses . . . . . . . . . . . . . 12
Interest expense . . . . . . . . . . . . . . . . . . . 3
----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . 2,793
----------
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . 980
----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS--NET:
Realized Gain--Net . . . . . . . . . . . . . . . . 39,174
Change in Unrealized Appreciation. . . . . . . . . 58,015
----------
NET REALIZED GAIN AND CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS. . . . . . . . . . . . . 97,189
----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . $ 98,169
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995, AND 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994
------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 980 $ 1,336
Realized gain on investments--net. . . . . . . . . . . . . . . . . . . . . . . . . . . 39,174 2,525
Change in unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . 58,015 (15,077)
------------ ------------
Net increase (decrease) in net assets from operations. . . . . . . . . . . . . . . . . 98,169 (11,216)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (976) (1,336)
Realized gain from investment transactions--net. . . . . . . . . . . . . . . . . . . . (33,913) (3,492)
Distributions in excess of realized gain--net. . . . . . . . . . . . . . . . . -- (1,514)
------------ ------------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34,889) (6,342)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,520 77,687
Proceeds from reinvestment of distributions to shareholders. . . . . . . . . . . . . . 33,320 5,950
Cost of shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (179,643) (103,621)
------------ ------------
Increase (decrease) from capital share transactions. . . . . . . . . . . . . . . . . . 9,197 (19,984)
------------ ------------
TOTAL INCREASE (DECREASE). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,477 (37,542)
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,803 302,345
------------ ------------
End of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 337,280 $ 264,803
------------ ------------
------------ ------------
Undistributed Investment Income--net, at end of year . . . . . . . . . . . . . . . . . . . $ 4 $ --
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line Leveraged Growth Investors, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company whose sole investment objective is to realize
capital growth. The Fund may employ "leverage" by borrowing money and using it
for the purchase of additional securities. Borrowing for investment increases
both investment opportunity and investment risk.
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. Such policies are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
(A) SECURITY VALUATION. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales prices on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid prices.
Securities for which market quotations are not readily available or that are not
readily marketable and all other assets of the Fund are valued at fair value as
the Board of Directors may determine in good faith. Short-term instruments with
maturities of 60 days or less, at the date of purchase, are valued at amortized
cost, which approximates market value.
(B) REPURCHASE AGREEMENTS. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) FEDERAL INCOME TAXES. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income-tax or excise-tax provision is required.
(D) SECURITY TRANSACTIONS AND DISTRIBUTIONS. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified-cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income-tax
regulations, which may differ from generally accepted accounting principles.
(E) AMORTIZATION. Discounts on debt securities are amortized to interest income
over the life of the security
11
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
with a corresponding increase to the security's cost basis; premiums on debt
securities are not amortized.
2. CAPITAL SHARE TRANSACTIONS, DIVIDENDS, AND DISTRIBUTIONS TO SHAREHOLDERS
Transactions in capital stock were as follows: (in thousands except per-share
amounts)
<TABLE>
<CAPTION>
1995 1994
------ --------
<S> <C> <C>
Shares sold. . . . . . . . . . . . . . . . . 5,497 3,273
Shares issued to shareholders
in reinvestment of dividends
and distributions. . . . . . . . . . . . . . 1,178 260
------ --------
6,675 3,533
Shares repurchased . . . . . . . . . . . . . 6,265 4,365
------ --------
Net increase (decrease). . . . . . . . . . . 410 ( 832)
------ --------
------ --------
Dividends per share. . . . . . . . . . . . . $.091 $.11400
------ --------
------ --------
Distributions per share
from net realized gains. . . . . . . . . . $3.159 $.45331
------ --------
------ --------
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
<TABLE>
<CAPTION>
1995
(IN THOUSANDS)
--------------
<S> <C>
PURCHASES:
Investment securities. . . . . . . . . . . . . . . . . . . . $ 162,026
--------------
--------------
SALES:
U.S. Treasury obligations. . . . . . . . . . . . . . . . . . $ 10,448
Other investment securities. . . . . . . . . . . . . . . . . 160,332
--------------
$ 170,780
--------------
--------------
</TABLE>
At December 31, 1995, the aggregate cost of investment securities and repurchase
agreements for federal income-tax purposes, was $218,463,000. The aggregate
appreciation and depreciation of investments at December 31, 1995, based on a
comparison of investment values and their costs for federal income-tax purposes
was $122,433,000 and $5,136,000, respectively, resulting in a net appreciation
of $117,297,000.
4. INVESTMENT ADVISORY CONTRACT,
MANAGEMENT FEES, AND
TRANSACTIONS WITH AFFILIATES
An advisory fee of $2,373,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the year ended December 31, 1995.
This was computed at the rate of 3/4 of 1% of average daily net assets for the
year and paid monthly. The Adviser provides research, investment programs, and
supervision of the investment portfolio and pays costs of administrative
services, office space, equipment, and compensation of administrative,
bookkeeping, and clerical personnel necessary for managing the affairs of the
Fund. The Adviser also provides persons, satisfactory to the Fund's Board of
Directors, to act as officers and employees of the Fund and pays their salaries
and wages. The Fund bears all other costs and expenses. If the aggregate
expenses of the Fund, other than taxes, interest, brokerage commissions, and
extraordinary expenses, exceed the expense limitation imposed by any state in
which the Fund's share are sold, the advisory fee will be reduced by the amount
of such excess, or the amount of such excess will be refunded. No such
reimbursement was required for the year ended December 31, 1995.
A fee of $5,760 for printing services was paid or payable to the Adviser for the
year ended December 31, 1995.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer),
12
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
are also officers and a director of the Fund. During the year ended December 31,
1995, the Fund paid brokerage commissions totalling $200,143 to the distributor,
which clears its transactions through unaffiliated brokers.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan, owned 1,516,133 shares of the Fund's capital stock,
representing 12.8% of the outstanding shares at December 31, 1995. In addition,
certain officers and directors of the Fund owned 68,908 shares of the Fund,
representing 0.6% of the outstanding shares.
5. BORROWING ARRANGEMENT
The Fund has a line-of-credit agreement with State Street Bank and Trust (SSBT),
in the amount of $37,500,000. The terms of the agreement are as follows: The
first $12.5 million is available on a committed basis which, at the Fund's
option, may be either at SSBT's prime rate or at the Federal Funds Rate plus 1%,
whichever is less, and will be subject to a commitment fee of 1/4 of 1% on the
unused portion thereof; amounts in excess of $12.5 million are made available on
an unsecured basis at the same interest-rate options stated above.
The Fund had no borrowings outstanding at December 31, 1995. The weighted
average amount of bank loans outstanding for the year ended December 31, 1995,
amounted to approximately $44,000 at a weighted average interest rate of 6.7%.
For the year then ended, interest expense of approximately $3,000 and commitment
fees of approximately $31,000 relating to borrowings under the agreement were
charged to the Fund.
13
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . $23.18 $24.67 $22.15 $25.64 $21.16
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . .09 .12 .06 .16 .23
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . . . . . . . . . . . . . 8.48 (1.05) 3.50 ( .81) 9.09
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . . . . . . . . . . . . . . 8.57 ( .93) 3.56 ( .65) 9.32
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income . . . . . . . . . . . . . . . . . . ( .09) ( .12) ( .06) ( .15) ( .23)
Distributions from capital gains . . . . . . . . . . . . . . . . . . . . (3.16) ( .31) ( .98) (2.69) (4.61)
Distributions in excess of capital gains . . . . . . . . . . . . . . . . - ( .13) - - -
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . (3.25) ( .56) (1.04) (2.84) (4.84)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . $28.50 $23.18 $24.67 $22.15 $25.64
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.06% -3.71% 16.20% -2.46% 46.35%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) . . . . . . . . . . . . . . . . . . $337,280 $264,803 $302,345 $290,547 $347,620
Ratio of operating expenses to average net assets. . . . . . . . . . . . . .88% .89% .90% .93% .90%
Ratio of interest expense to average net assets. . . . . . . . . . . . . . - - .02% - .02%
Ratio of net investment income to average net assets . . . . . . . . . . . .31% .49% .22% .62% .84%
Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . . . . . . 54% 49% 80% 208% 250%
Average amount of debt outstanding during
the year (in thousands). . . . . . . . . . . . . . . . . . . . . . . . . $ 44 $ - $ 1,651 $ - $ 635
Average number of shares outstanding
during the year (in thousands) . . . . . . . . . . . . . . . . . . . . . 11,357 11,635 12,410 12,530 11,515
Average amount of debt per outstanding share
during the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .004 $ - $ .13 $ - $ .055
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND
BOARD OF DIRECTORS OF VALUE LINE
LEVERAGED GROWTH INVESTORS, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Value Line Leveraged Growth
Investors, Inc. (the "Fund") at December 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, 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 December 31, 1995, by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10036
February 16, 1996
15
<PAGE>
THE VALUE LINE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital along with
modest current income by investing substantially all of its assets in common
stocks or securities convertible into common stock.
1952 -- THE VALUE LINE INCOME FUND's primary investment objective is income,
as high and dependable as is consistent with reasonable growth. Capital growth
to increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term
growth of capital by investing not less than 80% of its assets in "special
situations." No consideration is given to achieving current income.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks high current
income consistent with preservation of capital and liquidity.
1981 -- VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income
without undue risk to principal. Under normal conditions, at least 80% of the
value of its assets will be invested in issues of the U.S. Government and its
agencies and instrumentalities.
1983 -- VALUE LINE CENTURION FUND* seeks long-term growth of capital as its
sole objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield Portfolio.
1985 -- VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 -- VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income by
investing in high yielding, lower-rated, fixed-income securities.
1987 -- VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York
taxpayers with maximum income exempt from New York State, New York City, and
federal income taxes while avoiding undue risk to principal.
1987 -- VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* invests in stocks, bonds,
and cash equivalents according to computer trend models developed by Value Line.
The objective is to professionally manage the optimal allocation of these
investments at all times.
1992 -- VALUE LINE INTERMEDIATE BOND FUND seeks high current income consistent
with low volatility of principal by investing primarily in a diversified
portfolio of debt securities.
1993 -- VALUE LINE SMALL-CAP GROWTH FUND invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993 -- VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds, and money
market instruments utilizing quantitative modeling to determine the correct
asset mix.
1995 -- VALUE LINE U.S. MULTINATIONAL COMPANY FUND's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* AVAILABLE ONLY THROUGH THE PURCHASE OF THE GUARDIAN INVESTOR, A
TAX-DEFERRED, VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
- --------------------------------------------------------------------------------
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE MUTUAL FUNDS,
INCLUDING CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE
SECURITIES, INC., 220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891, OR CALL
1-800-223-0818, 24 HOURS A DAY, 7 DAYS A WEEK. READ THE PROSPECTUS CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
16
