================================================================================
-----------------
ANNUAL REPORT
-----------------
December 31, 1999
-----------------
Value Line
Leveraged Growth
Investors, Inc.
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Leveraged Growth Investors, Inc.
To Our Value Line Leveraged
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to report that Value Line Leveraged Growth Investors completed an
excellent six- and twelve-month performance record December 31, 1999. For the
full year, the Fund beat the benchmark Standard & Poor's 500 Index by nearly 10
full percentage points; during the second half, we outperformed by better than
eight percentage points. (Returns for both the Fund and the index include
reinvested dividends.) The actual performance record is as follows:
Leveraged
Growth
Investors S&P 500
----------- -------
Second half ........................... 15.95% 7.71%
Full year ............................. 30.99 21.04
In our last semiannual report to shareholders, covering the first six months of
1999, we detailed the "cyclical rotation" that took place in the spring, whereby
smaller-capitalization stocks and those of cyclical or commodity-based companies
commanded investors' focus at the expense of larger-cap growth stocks. While
this hurt the Fund's performance from roughly late March to the middle of June,
marketplace conditions began to turn around during the summer. By the time crisp
autumn air settled in, growth equities had resumed their historic market
dominance, leading to a powerful rally into the end of 1999.
One factor that momentarily distracted investors last fall was the series of
interest-rate hikes, including both market-induced increases in long-term rates
and a suite of three short-term rate hikes orchestrated by the Federal Open
Market Committee. Recall, however, that the Fed had lowered rates by
three-quarters of a percentage point back during the global economic collapse in
the fall of 1998, so its tighter 1999 monetary policy only returned the Federal
Funds and Discount Rate environment to the level in place during the summer of
1998.
It is difficult to gauge the Federal Reserve's monetary posture in the opening
months of the new year. On the one hand, it's clear that the fourth quarter of
1999 saw Gross Domestic Product expand briskly on the heels of a very strong
5.7% third-quarter gain. Such strong growth may well prompt the Fed to put on
the monetary brakes throughout the spring, in order to keep the economy from
overheating. On the other hand, part of the economic expansion during last
year's second half was prompted by inventory stocking in advance of the Year
2000 event, and now that that date has come and gone those inventories must be
worked down, causing weaker-than-trendline economic growth. (For further
details, see our Economic Observations nearby.)
In any case, we remain convinced that a diversified portfolio of high-quality
growth stocks, especially those identified by the Value Line Timeliness Ranking
System, will continue to deliver superior long-term returns to investors,
despite short-term volatility. We appreciate your continued confidence in Value
Line, and wish you the best for the new year.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
January 20, 2000
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2
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Growth Investors Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The American economy continues to perform well as we proceed through the first
quarter of 2000. Evidence of this healthy level of business activity can be
found in the strong pace of manufacturing, the acceleration in job growth, and
the generally solid performances by the auto, housing, and retail sectors.
Overall, we estimate that GDP growth will average 3.0%-3.5% for the year as a
whole, making 2000 the tenth year in a row of sustained economic growth in this
country.
Inflationary pressures, meanwhile, continue to be held largely at bay, in spite
of a tightening labor market and a further recent rise in energy prices, with
strong increases in productivity and ongoing technological innovations being at
least partially responsible for this comparative pricing stability.
Nevertheless, a gradual uptrend in cost pressures does seem likely over the next
several quarters. The Federal Reserve, taking note of this somewhat higher
expense structure, is likely to chart a modestly more restrictive monetary
course in the months ahead, with additional, albeit rather modest, interest rate
increases being quite possible.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 12/31/99................. 30.99% $13,099
5 years ended 12/31/99................ 30.57% $37,954
10 years ended 12/31/99................ 19.55% $59,645
* 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.
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3
<PAGE>
Value Line Leveraged Growth Investors, Inc.
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COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT
IN VALUE LINE LEVERAGED GROWTH INVESTORS
AND THE S&P 500 STOCK INDEX*
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Value Line Leveraged
Growth Investors Fund S & P 500 Index
--------------------- ---------------
1/90 $10,000 $10,000
3/90 $ 9,623 $ 9,699
6/90 $10,606 $10,308
9/90 $ 8,943 $ 8,893
12/90 $ 9,839 $ 9,689
3/91 $12,034 $11,094
6/91 $11,778 $11,068
9/91 $12,722 $11,658
12/91 $14,400 $12,635
3/92 $13,395 $12,316
6/92 $12,142 $12,550
9/92 $12,659 $12,946
12/92 $14,045 $13,596
3/93 $14,603 $14,189
6/93 $15,161 $14,257
9/93 $16,829 $14,624
12/93 $16,321 $14,963
3/94 $15,461 $14,397
6/94 $14,601 $14,457
9/94 $15,679 $15,163
12/94 $15,716 $15,160
3/95 $17,045 $16,634
6/95 $19,194 $18,220
9/95 $21,580 $19,667
12/95 $21,540 $20,850
3/96 $23,150 $21,969
6/96 $23,921 $22,954
9/96 $25,954 $23,663
12/96 $26,345 $25,634
3/97 $24,648 $26,323
6/97 $29,288 $30,915
9/97 $33,493 $33,229
12/97 $32,614 $34,183
3/98 $37,463 $38,948
6/98 $40,093 $40,234
9/98 $34,768 $36,239
12/98 $45,537 $43,951
3/99 $50,362 $46,140
6/99 $51,444 $49,392
9/99 $49,459 $46,310
12/99 $59,645 $53,198
(From 1/1/90 to 12/31/99)
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* The Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged index that is
representative of the larger-capitalization stocks traded in the United States.
The return for the index does not reflect expenses which are deducted from the
Fund's returns.
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4
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Portfolio Highlights at December 31, 1999 (unaudited)
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<TABLE>
<CAPTION>
Ten Largest Holdings
Value Percentage
Issue Shares (in thousands) of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
America Online, Inc. ........................................... 400,000 $30,175 4.0%
EMC Corp. ...................................................... 266,000 29,061 3.8
Cisco Systems, Inc. ............................................ 249,000 26,674 3.5
Dell Computer Corp. ............................................ 500,000 25,500 3.3
Home Depot, Inc. (The) ......................................... 360,000 24,683 3.2
QUALCOMM Inc. .................................................. 140,000 24,658 3.2
American International Group, Inc. ............................. 225,000 24,328 3.2
Microsoft Corp. ................................................ 200,000 23,350 3.1
Intel Corp. .................................................... 280,000 23,048 3.0
Harley-Davidson, Inc. .......................................... 320,000 20,500 2.7
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ......................................... $90,955 11.9%
Telecommunications Equipment ................................... 67,344 8.8
Retail-Special Lines ........................................... 64,494 8.5
Computer Software & Services ................................... 49,086 6.4
Financial Services-Diversified ................................. 43,901 5.8
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Nike, Inc. Class "B" ........................................... $6,054
Adobe Systems, Inc. ............................................ 6,000
CVS Corp. ...................................................... 5,991
Time Warner, Inc. .............................................. 5,535
VISX, Inc. ..................................................... 5,348
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cisco Systems, Inc. ............................................ $14,669
EMC Corp. ...................................................... 12,762
Vodafone AirTouch PLC (ADR) .................................... 10,149
Ceridian Corp. ................................................. 5,693
AT & T Corp. ................................................... 5,074
</TABLE>
* For the six month period ended 12/31/99.
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5
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments
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Value
Shares (in thousands)
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COMMON STOCKS (97.2%)
ADVERTISING (2.6%)
200,000 Omnicom Group, Inc............................. $ 20,000
BANK (1.9%)
40,000 Chase Manhattan Corp........................... 3,107
80,000 State Street Corp.............................. 5,845
100,000 Zions Bancorporation........................... 5,919
--------
14,871
BANK--MIDWEST (2.8%)
225,000 Fifth Third Bancorp............................ 16,509
215,000 Firstar Corp................................... 4,542
--------
21,051
COMPUTER &
PERIPHERALS (11.9%)
249,000 Cisco Systems, Inc.*........................... 26,674
500,000 Dell Computer Corp.*........................... 25,500
266,000 EMC Corp.*..................................... 29,061
90,000 International Business
Machines Corp.............................. 9,720
--------
90,955
COMPUTER SOFTWARE
& SERVICES (6.4%)
90,000 Adobe Systems, Inc............................. 6,053
189,000 Computer Associates
International, Inc......................... 13,218
168,750 Fiserv, Inc.*.................................. 6,465
200,000 Microsoft Corp.*............................... 23,350
--------
49,086
DIVERSIFIED
COMPANIES (1.9%)
120,000 Honeywell International Inc.................... 6,922
200,000 Tyco International, Ltd........................ 7,775
--------
14,697
DRUG (5.3%)
120,000 Amgen Inc.*.................................... 7,207
70,000 Biogen, Inc.*.................................. 5,915
45,000 Lilly (Eli) & Co............................... 2,993
100,000 Merck & Co., Inc............................... 6,706
216,000 Pfizer, Inc.................................... 7,007
250,000 Schering-Plough Corp........................... 10,547
--------
40,375
DRUGSTORE (0.8%)
150,000 CVS Corp....................................... 5,991
ELECTRIC UTILITY--
CENTRAL (1.0%)
100,000 AES Corp.*..................................... 7,475
ELECTRICAL
EQUIPMENT (2.0%)
100,000 General Electric Co............................ 15,475
ENTERTAINMENT (2.6%)
150,000 Clear Channel
Communications, Inc.*...................... 13,388
90,000 Time Warner, Inc............................... 6,519
--------
19,907
FINANCIAL SERVICES--
DIVERSIFIED (5.8%)
30,000 American Express Co............................ 4,988
225,000 American International
Group, Inc................................. 24,328
262,500 Citigroup Inc.................................. 14,585
--------
43,901
GROCERY (0.8%)
180,000 Safeway Inc.*.................................. 6,401
HOTEL/GAMING (0.7%)
250,000 Mandalay Resort Group*......................... 5,031
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6
<PAGE>
Value Line Leveraged Growth Investors, Inc.
December 31, 1999
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Value
Shares (in thousands)
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HOUSEHOLD
PRODUCTS (0.9%)
60,000 Procter & Gamble Co............................ $ 6,574
INTERNET (4.0%)
400,000 America Online, Inc.*.......................... 30,175
MEDICAL SUPPLIES (4.0%)
100,000 Guidant Corp.*................................. 4,700
100,000 Johnson & Johnson.............................. 9,313
320,000 Medtronic, Inc................................. 11,660
100,000 VISX, Inc.*.................................... 5,175
--------
30,848
OFFICE EQUIPMENT &
SUPPLIES (1.1%)
417,655 Staples, Inc.*................................. 8,666
RECREATION (5.7%)
105,000 Carnival Corp.................................. 5,020
150,000 Electronic Arts Inc.*.......................... 12,600
320,000 Harley-Davidson, Inc........................... 20,500
105,000 Royal Caribbean
Cruises, Ltd............................... 5,178
--------
43,298
RETAIL BUILDING
SUPPLY (4.4%)
360,000 Home Depot, Inc. (The)......................... 24,683
150,000 Lowe's Companies, Inc.......................... 8,962
--------
33,645
RETAIL--
SPECIAL LINES (8.5%)
150,000 Abercrombie & Fitch Co.
Class "A"*................................. 4,003
150,000 Bed Bath & Beyond Inc.*........................ 5,213
120,000 Best Buy Co., Inc.*............................ 6,022
80,000 Circuit City Stores--
Circuit City Group......................... 3,605
405,000 Gap, Inc. (The)................................ 18,630
120,000 Intimate Brands, Inc.
Class "A".................................. 5,175
140,000 Tandy Corp..................................... 6,886
80,000 Tiffany & Co................................... 7,140
170,000 Williams-Sonoma, Inc.*......................... 7,820
--------
64,494
RETAIL STORE (4.0%)
65,000 Costco Wholesale Corp.*........................ 5,931
100,000 Dayton Hudson Corp............................. 7,344
140,000 Kohl's Corp.*.................................. 10,106
110,000 Wal-Mart Stores, Inc........................... 7,604
--------
30,985
SECURITIES
BROKERAGE (1.2%)
240,000 Schwab (Charles) Corp.......................... 9,210
SEMICONDUCTOR (4.2%)
280,000 Intel Corp..................................... 23,048
55,000 PMC-Sierra, Inc.*.............................. 8,817
--------
31,865
SEMICONDUCTOR
CAPITAL
EQUIPMENT (1.4%)
95,000 Altera Corp.*.................................. 4,709
50,000 Applied Materials, Inc.*....................... 6,334
--------
11,043
SHOE (0.8%)
120,000 Nike, Inc. Class "B"........................... 5,947
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7
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments December 31, 1999
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Value
Shares (in thousands)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS
EQUIPMENT (8.8%)
200,000 ADC Telecommunications,
Inc.*...................................... $ 14,512
200,000 Loral Space &
Communications Ltd*........................ 4,863
140,000 Lucent Technologies Inc........................ 10,474
140,000 QUALCOMM Inc.*................................. 24,658
200,000 Tellabs, Inc.*................................. 12,837
--------
67,344
TELECOMMUNICATION
SERVICES (0.7%)
97,500 MCI WorldCom, Inc.*............................ 5,174
THRIFT (1.0%)
80,000 Federal Home Loan
Mortgage Corp.............................. 3,765
60,000 Federal National Mortgage
Association................................ 3,746
--------
7,511
--------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (97.2%)
(Cost $276,717,000) ....................... 741,995
--------
Principal Value
Amounts (in thousands except
(in thousands) per share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (2.7%)
(including accrued interest)
$20,500 Collateralized by $16,950,000
U.S. Treasury Notes 103/4%,
due 8/15/05 with a value of
$20,907,000 (with State
Street Bank & Trust Company
3.75%, dated 12/31/99,
due 1/3/00, delivery value
$20,506,000)................................... $ 20,502
--------
CASH AND OTHER ASSETS
IN EXCESS OF
LIABILITIES (0.1%)......................................... 706
--------
NET ASSETS (100.0%) ........................................... $763,203
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE
($763,202,719 / 13,162,558 shares of
capital stock outstanding) ................................ $ 57.98
========
* Non-income producing.
(ADR) American Depositary Receipts.
See Notes to Financial Statements.
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8
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Assets and Liabilities
at December 31, 1999
- --------------------------------------------------------------------------------
(In thousands
except per share
amount)
---------------
Assets:
Investment securities, at value
(Cost--$276,717)........................................... $741,995
Repurchase agreement
(Cost--$20,502) ........................................... 20,502
Cash ....................................................... 10
Receivable for capital shares sold ......................... 1,171
Dividends receivable ....................................... 253
Prepaid insurance expense .................................. 11
--------
Total Assets ......................................... 763,942
--------
Liabilities:
Payable for capital shares repurchased...................... 188
Accrued expenses:
Advisory fee ............................................. 470
Other .................................................... 81
--------
Total Liabilities .................................... 739
--------
Net Assets ................................................. $763,203
========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
13,162,558 shares)........................................ $ 13,162
Additional paid-in capital ................................. 261,080
Undistributed net realized gain
on investments............................................ 23,683
Net unrealized appreciation
of investments............................................ 465,278
--------
Net Assets ................................................. $763,203
========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($763,202,719 / 13,162,558
shares outstanding) ...................................... $ 57.98
========
Statement of Operations
for the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
(In thousands)
------------
Investment Income:
Dividends .................................................. $ 2,684
Interest ................................................... 922
--------
Total Income ......................................... 3,606
--------
Expenses:
Advisory fee ............................................... 4,955
Transfer agent fees ........................................ 168
Custodian fees ............................................. 64
Printing ................................................... 49
Postage .................................................... 39
Auditing and legal fees .................................... 38
Registration and filing fees ............................... 36
Commitment fee ............................................. 31
Telephone .................................................. 31
Insurance, dues and other .................................. 16
Directors' fees and expenses ............................... 14
Interest expense ........................................... 6
--------
Total Expenses Before
Custody Credits .................................... 5,447
Less: Custody Credits ................................ (4)
--------
Net Expenses ......................................... 5,443
--------
Net Investment Loss ........................................ (1,837)
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ........................................ 62,968
Change in Net
Unrealized Appreciation ................................ 123,405
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ........................................... 186,373
--------
Net Increase in Net Assets
from Operations .......................................... $184,536
========
See Notes to Financial Statements.
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9
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Changes in Net Assets
for the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment loss ....................................... $ (1,837) $ (1,061)
Net realized gain on investments .......................... 62,968 38,523
Change in net unrealized appreciation ..................... 123,405 133,597
----------------------
Net increase in net assets from operations ................ 184,536 171,059
----------------------
Distributions to Shareholders:
Net realized gain from investment transactions ............ (64,005) (14,660)
----------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 802,337 411,246
Proceeds from reinvestment of distributions to shareholders 59,964 13,826
Cost of shares repurchased ................................ (828,127) (405,788)
----------------------
Net increase from capital share transactions .............. 34,174 19,284
----------------------
Total Increase in Net Assets ................................ 154,705 175,683
Net Assets:
Beginning of year ......................................... 608,498 432,815
----------------------
End of year ............................................... $ 763,203 $ 608,498
======================
</TABLE>
See Notes to Financial Statements.
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10
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Notes to Financial Statements December 31, 1999
- --------------------------------------------------------------------------------
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(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 which 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 with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
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11
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Year Ended Year Ended
December 31, December 31,
1999 1998
----------------------------
Shares sold ................................... 15,046 10,027
Shares issued to shareholders
in reinvestment
distributions................................ 1,082 298
----------------------------
16,128 10,325
Shares repurchased ............................ 15,533 9,921
----------------------------
Net increase .................................. 595 404
============================
Distributions per share from
net realized gains........................... $ 5.20 $ 1.206
============================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year Ended
December 31,
1999
------------
(in thousands)
Purchases:
Investment Securities ...................................... $176,362
========
Sales:
Investment Securities ...................................... $219,861
========
At December 31, 1999, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $297,995,000. The aggregate
appreciation and depreciation of investments at December 31, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $466,856,000 and $2,354,000, respectively, resulting in a net appreciation
of $464,502,000.
Permanent book-tax differences relating to shareholder distributions are
reclassified within the composition of net asset accounts. In the current year
the Fund reclassified $1,837,000 from accumulated net investment loss to
additional paid-in capital. Net investment loss, net realized gain and net
assets were not affected by this reclassification.
4. Investment Advisory Contract, Management Fees, and Transactions With
Affiliates
An advisory fee of $4,955,000 was paid or payable to Value Line, Inc., the
Fund's investment adviser (the "Adviser"), for the year ended December 31, 1999.
This was computed at the annual rate of 3/4 of 1% of the average daily net
assets during 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.
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), are also officers and a director of the Fund. During the year
ended December 31, 1999, the Fund paid brokerage commissions totaling $245,561
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 1,032,160 shares of the Fund's capital stock,
representing 7.8% of the outstanding shares at December 31, 1999.
- --------------------------------------------------------------------------------
12
<PAGE>
Value Line Leveraged Growth Investors, Inc.
December 31, 1999
- --------------------------------------------------------------------------------
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 the Bank'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, 1999. The weighted
average amount of bank loans outstanding for the year ended December 31, 1999,
amounted to approximately $94,000 at a weighted average interest rate of 5.95%.
For the year ended December 31, 1999, interest expense of approximately $6,000
and commitment fees of approximately $31,000 relating to borrowings under the
agreement were paid or payable to SSBT.
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13
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $48.42 $35.58 $31.51 $28.50 $23.18
---------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment (loss) income .......... (.14) (.08) (.06) (.01) .09
Net gains or losses on securities
(both realized and unrealized) ...... 14.90 14.13 7.37 6.40 8.48
---------------------------------------------------------------------------------
Total from investment operations ...... 14.76 14.05 7.31 6.39 8.57
---------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income .. -- -- -- # (.09)
Distributions from net realized gains . (5.20) (1.21) (3.24) (3.38) (3.16)
---------------------------------------------------------------------------------
Total distributions ................... (5.20) (1.21) (3.24) (3.38) (3.25)
---------------------------------------------------------------------------------
Net asset value, end of year .............. $57.98 $48.42 $35.58 $31.51 $28.50
---------------------------------------------------------------------------------
Total return .............................. 30.99% 39.63% 23.79% 22.31% 37.06%
---------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .... $763,203 $608,498 $432,815 $371,060 $337,280
Ratio of expenses to average net assets
(including interest expense) ............ .82%(2) .87%(1) .86%(1) .88%(1) .88%
Ratio of expenses to average
net assets (excluding interest expense) . .82%(2) .84%(1) .86%(1) .87%(1) --
Ratio of net investment (loss) income
to average net assets ................... (.28)% (.22)% (0.17)% (.02)% .31%
Portfolio turnover rate ................... 27% 54% 37% 34% 54%
</TABLE>
# Dividend paid was less than one cent.
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The ratio
of expenses to average net assets net of custody credits would not have changed.
See Notes to Financial Statements
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14
<PAGE>
Value Line Leveraged Growth Investors, Inc.
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, 1999, 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 accounting principles generally
accepted in the United States. 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 auditing standards
generally accepted in the United States 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, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 11, 2000
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15
<PAGE>
Value Line Leveraged Growth Investors, Inc.
The Value Line Family of Funds
- --------------------------------------------------------------------------------
1950--The Value Line Fund seeks long-term growth of capital. Current income is a
secondary objective.
1952--Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983--Value Line Centurion Fund* seeks long-term growth of capital.
1984--The Value Line Tax Exempt Fund seeks to provide investors with the maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: The Money Market Portfolio
and The National Bond 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.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the 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* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line Emerging Opportunities 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 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.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line 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, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
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16
