<PAGE>
This document is a copy of the Annual Report for the year ended
March 31, 1995, filed on June 20, 1995.
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, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF DIRECTORS
Jean Bernhard Buttner Francis C. Oakley
Marion N. Ruth Frances T. Newton
OFFICERS
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
John E. Leslie III Jerome Kaplan
VICE PRESIDENT VICE PRESIDENT
David T. Henigson
VICE PRESIDENT/SECRETARY/TREASURER
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).
--------------
ANNUAL REPORT
MARCH 31, 1995
--------------
VALUE LINE SMALL-CAP GROWTH FUND, INC.
[Logo]
VALUE LINE MUTUAL FUNDS
<PAGE>
[Logo] TO OUR VALUE LINE SMALL-CAP GROWTH FUND SHAREHOLDERS
--------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The Value Line Small-Cap Growth Fund performed well during the twelve months
ended March 31, 1995. Specifically, your Fund posted a total return of 7.57% for
this period, versus a 5.50% total return for the unmanaged Russell 2000 Index.
Since inception on June 23, 1993 (through March 31, 1995), your Fund has
provided a total return of 27.32% outperforming the Russell 2000's total return
by 9.95 percentage points.
Last year was a difficult one for both stocks and bonds. Small-cap stocks were
no exception. They underperformed their larger capitalization counterparts,
sometimes by wide margins. Looking ahead, though, small-company stocks appear to
be in favor with many currently trading at multiples that are at, or even below,
their large-cap counterparts. With analysts' forecasting that smaller-cap stocks
will grow 30% to 50% faster than the large-cap "S&P 500" type stocks, your
Fund's management believes a brighter year lies ahead.
Our investment strategy continues to emphasize the purchase of small-cap stocks
that are generating exceptionally good earnings momentum, have stock price
momentum that outpaces the overall market, and are trading at attractive
valuations. Although your Fund is always well diversified across economic
sectors, we are currently finding that the technology and health care sectors
are providing more stocks that "best fit" our current investment strategy.
Thank you for your confidence in the Value Line Small-Cap Growth Fund, Inc. We
look forward to serving your investment needs in the future.
Sincerely,
/s/ JEAN BERNHARD BUTTNER
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
May 19, 1995
ECONOMIC OBSERVATIONS
The odds that a "soft economic landing" will materialize over the next several
months are fairly high. Under this scenario, the economy temporarily moves onto
a slower growth track, but doesn't stop growing altogether; corporate profits
continue to rise, but at a lesser rate; inflation begins to pick up, but does
not veer out of control; and short-term interest rates stabilize and then
decline. To date, such key indicators as the employment level, auto sales,
retail spending, and personal income show an expansion that's slowing, but not
coming apart. At the same time, the latest producer and consumer price data
signal that there has been little overall buildup in pricing pressures, although
rising oil and paper prices suggest that inflation reports later in the year may
make somewhat less hospitable reading.
Meanwhile, there is historical precedent for a "soft landing" as well as for a
lengthy business expansion. The 1960s and the 1980s both witnessed upcycles that
lasted for seven or eight years--or about double the length of the present
upturn--with nothing more serious than a brief interlude or two along the way.
The 1970s, in contrast, brought surging inflation and a pair of recessions.
There are risks in the current situation, however. For example, there is still
the possibility that the aforementioned runup in certain commodity prices is a
harbinger of things to come on the inflation front. There's also the risk that
May's weaker-than-expected employment data is a signal that the Federal Reserve
has already pushed interest rates too high and that a recession is probably on
the way, perhaps later this year or in 1996.
The stock market, meanwhile, is still accentuating the positive, with most
investors preferring to view the mixed economic and inflation statistics, along
with very the encouraging recent decline in long-term interest
2
<PAGE>
rates, as being consistent with an orderly slowing in growth--rather than as the
opening salvos in a looming recession. We think the market's sentiments are on
target and, as such, believe that positive returns will still be achieved with
equities in the months ahead, although given the strong runup in stocks over the
last several months, we also suspect that the easy money has already been made
this year.
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
VALUE LINE SMALL-CAP GROWTH FUND AND THE RUSSELL 2000 INDEX
[Line Graph]
PERIOD COVERED BY THE GRAPH IS FROM 6/23/93 TO 3/31/95
THE RUSSELL 2000 INDEX CONSISTS OF THE SMALLEST CAPITALIZATION STOCKS IN THE
RUSSELL 3000 INDEX AND GENERALLY REPRESENTS THE SMALL CAPITALIZATION MARKET.
THE INDEX USED FOR PRESENTATION INCLUDES REINVESTED DIVIDENDS.
--------------------------------------------------------------------------------
* PERFORMANCE DATA:
AVERAGE ANNUAL
TOTAL RETURN
--------------
1 year ended 3/31/95 . . . . . . . . . . . . 7.57%
From 6/23/93 (commencement
of operations) to 3/31/95 . . . . . . . . . 14.62%
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN 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 SMALL-CAP GROWTH FUND, INC.
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS MARCH 31, 1995
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (90.4%)
AUTO PARTS-REPLACEMENT (1.2%)
10,000 *Republic Automotive Parts, Inc.. . . . . . . $ 150,000
BROADCASTING/CABLE TV (2.2%)
4,800 Belo (A.H.) Corp. Series "A" . . . . . . . . 278,400
COMPUTER SOFTWARE & SERVICES (11.3%)
4,000 Fair Issac & Co., Inc. . . . . . . . . . . . 192,000
11,400 *FIserv, Inc. . . . . . . . . . . . . . . . . 302,100
6,300 *Network General Corp.. . . . . . . . . . . . 179,550
9,200 *Sterling Software Inc. . . . . . . . . . . . 320,850
6,400 *SunGard Data Systems Inc.. . . . . . . . . . 294,400
4,800 System Software Associates, Inc. . . . . . . 120,000
------------
1,408,900
DIVERSIFIED COMPANIES (4.0%)
20,000 *Park Ohio Industries, Inc. . . . . . . . . . 230,000
9,000 Standex International Corp.. . . . . . . . . 270,000
------------
500,000
DRUGSTORE (2.2%)
20,000 Big B, Inc.. . . . . . . . . . . . . . . . . 272,500
ELECTRONICS (14.8%)
6,400 *Arrow Electronics, Inc.. . . . . . . . . . . 269,600
9,500 Augat Inc. . . . . . . . . . . . . . . . . . 174,562
8,200 *Electro Scientific Industries, Inc.. . . . . 197,825
5,850 *Kent Electronics Corp. . . . . . . . . . . . 172,575
15,300 Pioneer-Standard Electronics, Inc. . . . . . 279,225
8,600 Varian Associates, Inc.. . . . . . . . . . . 362,275
7,056 *Vishay Intertechnology, Inc. . . . . . . . . 396,018
------------
1,852,080
FOOD WHOLESALERS (1.6%)
10,000 Richfood Holdings, Inc.. . . . . . . . . . . 195,000
FURNITURE/HOME FURNISHINGS (1.1%)
11,250 Bush Industries, Inc. Class "A". . . . . . . 140,625
HOUSEHOLD PRODUCTS (2.2%)
7,866 Lancaster Colony Corp. . . . . . . . . . . . 279,243
INDUSTRIAL SERVICES (0.7%)
5,000 Wackenhut Corp. Series "A" . . . . . . . . . 80,625
MACHINERY (4.8%)
7,200 *FSI International, Inc.. . . . . . . . . . . 290,700
10,500 IDEX Corp. . . . . . . . . . . . . . . . . . 313,688
------------
604,388
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (2.2%)
7,000 *Champion Enterprises, Inc. . . . . . . . . . 273,000
MEDICAL SERVICES (4.7%)
9,600 *Healthcare Compare Corp. . . . . . . . . . . 319,200
10,000 *Horizon Healthcare Corp. . . . . . . . . . . 267,500
------------
586,700
MEDICAL SUPPLIES (16.1%)
8,750 Cardinal Health Inc. . . . . . . . . . . . . 416,719
5,000 *Cordis Corp. . . . . . . . . . . . . . . . . 363,750
9,500 *Diagnostek, Inc. . . . . . . . . . . . . . . 193,562
9,700 Invacare Corp. . . . . . . . . . . . . . . . 341,925
4,800 *Nellcor Inc. . . . . . . . . . . . . . . . . 183,000
15,000 Owens & Minor, Inc.. . . . . . . . . . . . . 195,000
9,000 *Sunrise Medical, Inc.. . . . . . . . . . . . 321,750
------------
2,015,706
OFFICE EQUIPMENT & SUPPLIES (5.8%)
12,000 Reynolds & Reynolds Co. Class "A". . . . . . 330,000
14,850 *Staples, Inc.. . . . . . . . . . . . . . . . 391,669
------------
721,669
4
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
<CAPTION>
SCHEDULE OF INVESTMENTS MARCH 31, 1995
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
PACKAGING & CONTAINER (1.5%)
11,800 *Shorewood Packaging Corp.. . . . . . . . . . $ 190,275
PUBLISHING (0.7%)
10,300 Graphic Industries, Inc. . . . . . . . . . . 92,700
RESTAURANT (0.8%)
8,700 *O'Charley's Inc. . . . . . . . . . . . . . . 102,225
RETAIL-SPECIAL LINES (1.7%)
6,300 *Michaels Stores, Inc.. . . . . . . . . . . . 209,475
RETAIL STORE (2.6%)
12,500 Dollar General Corp. . . . . . . . . . . . . 328,125
SEMICONDUCTOR (3.0%)
10,000 *Integrated Device Technology, Inc. . . . . . 370,000
TELECOMMUNICATIONS EQUIPMENT (2.1%)
6,300 *Andrew Corp. . . . . . . . . . . . . . . . . 256,725
THRIFT (1.5%)
4,300 TCF Financial Corp.. . . . . . . . . . . . . 185,437
TRUCKING/TRANSPORTATION LEASING (1.6%)
8,000 *Swift Transportation Co., Inc. . . . . . . . 124,000
3,500 Werner Enterprises, Inc. . . . . . . . . . . 70,000
------------
194,000
------------
TOTAL COMMON STOCKS
(90.4%)(Cost $8,725,207). . . . . . . . . . . 11,287,798
<CAPTION>
PURCHASE
AMOUNT VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (9.6%) (INCLUDING ACCRUED INTEREST)
$1,200,000 Collateralized by $890,000 U.S.
Treasury Bonds 12 3/8%, due
5/15/04, with a value of $1,232,587.
(With Morgan Stanley & Co., Inc.
6%, dated 3/31/95, due 4/3/95,
delivery value $1,200,600.) . . . . . . . . . $ 1,200,200
CASH AND OTHER ASSETS LESS LIABILITIES (0.0%). . . . . . . . 4,390
------------
NET ASSETS (100%). . . . . . . . . . . . . . . . . . . . . . $ 12,492,388
------------
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE, PER
OUTSTANDING SHARE ($12,492,388 DIVIDED BY 1,013,201
SHARES OUTSTANDING) . . . . . . . . . . . . . . . . . . . . $ 12.33
------------
------------
<FN>
* NON-INCOME PRODUCING
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES AT MARCH 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment securities, at value (Cost-$8,725,207). . . . . $ 11,287,798
Repurchase agreement (Cost-$1,200,200) . . . . . . . . . . 1,200,200
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,212
Deferred organization costs (note 2) . . . . . . . . . . . 42,700
Dividends receivable . . . . . . . . . . . . . . . . . . . 5,607
Receivable for capital shares sold . . . . . . . . . . . . 1,074
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . 12,570,591
------------
LIABILITIES:
Payable for capital shares redeemed. . . . . . . . . . . . 6,246
Accrued expenses:
Advisory fee payable . . . . . . . . . . . . . . . . . . 21,831
Plan fee payable . . . . . . . . . . . . . . . . . . . . 2,544
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 47,582
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . 78,203
------------
NET ASSETS:
Capital stock, at $.001 par value (authorized
300,000,000, outstanding 1,013,201 shares) . . . . . . . 1,013
Additional paid-in capital . . . . . . . . . . . . . . . . 10,256,346
Accumulated net realized loss on investments . . . . . . . (325,832)
Distributions in excess of net realized gains. . . . . . . (1,730)
Unrealized net appreciation of investments . . . . . . . . 2,562,591
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 12,492,388
------------
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE, PER
OUTSTANDING SHARE ($12,492,388 DIVIDED BY
1,013,201 SHARES OUTSTANDING). . . . . . . . . . . . . . $ 12.33
------------
------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income . . . . . . . . . . . . . . . . . . . . . $ 51,487
Interest income . . . . . . . . . . . . . . . . . . . . . 40,610
------------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . . 92,097
------------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . . . . . . 80,681
Directors' fees and expenses . . . . . . . . . . . . . . . 35,748
Accounting and bookkeeping expense . . . . . . . . . . . . 32,579
Auditing and legal fees. . . . . . . . . . . . . . . . . . 32,497
Service and distribution plan fee . . . . . . . . . . . . 26,894
Registration and filing fees . . . . . . . . . . . . . . . 17,627
Custodian fees . . . . . . . . . . . . . . . . . . . . . . 16,559
Amortization of deferred organization costs (note 2) . . . 13,378
Printing . . . . . . . . . . . . . . . . . . . . . . . . . 10,272
Insurance, dues and other. . . . . . . . . . . . . . . . . 2,878
Transfer agent fees. . . . . . . . . . . . . . . . . . . . 1,802
Postage expense. . . . . . . . . . . . . . . . . . . . . . 1,451
Telephone expense. . . . . . . . . . . . . . . . . . . . . 1,401
------------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . . 273,767
LESS: EXPENSES REIMBURSED BY ADVISER . . . . . . . . . . . (4,473)
------------
NET EXPENSES . . . . . . . . . . . . . . . . . . . . . . 269,294
------------
INVESTMENT LOSS-NET. . . . . . . . . . . . . . . . . . . . . (177,197)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NET:
Realized Loss-Net. . . . . . . . . . . . . . . . . . (325,832)
Change in Unrealized Appreciation. . . . . . . . . . 1,309,330
------------
NET REALIZED LOSS AND CHANGE IN NET
UNREALIZED APPRECIATION OF INVESTMENTS . . . . . . . . . . 983,498
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . $ 806,301
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1995 AND FOR THE PERIOD JUNE 23, 1993* TO MARCH 31, 1994
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 23, 1993*
MARCH 31, 1995 TO MARCH 31, 1994
-------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment (loss) income-net . . . . . . . . . . . . . . . . . . . . . . . . . $ (177,197) $ 20,141
Realized (loss) gain on investments-net. . . . . . . . . . . . . . . . . . . . (325,832) 303,514
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . 1,309,330 1,253,261
------------ -----------
Net increase in net assets from operations . . . . . . . . . . . . . . . . . . 806,301 1,576,916
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (20,141)
Realized gains-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (291,703) (13,541)
------------ -----------
(291,703) (33,682)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares . . . . . . . . . . . . . . . . . . . . . . . 4,959,735 13,835,396
Net proceeds from reinvestment of distributions to shareholders. . . . . . . . 286,982 30,191
Cost of shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . (3,091,872) (5,685,876)
------------ -----------
Increase from capital share transactions . . . . . . . . . . . . . . . . . . . 2,154,845 8,179,711
------------ -----------
TOTAL INCREASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,669,443 9,722,945
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,822,945 100,000
------------ -----------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,492,388 $ 9,822,945
------------ -----------
------------ -----------
<FN>
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. 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 price 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 of 1986, as amended, applicable to
regulated investment companies, 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.
2. ORGANIZATION COST
Costs of $66,890 incurred in connection with the Fund's organization and initial
registration have been deferred and are being amortized over sixty months
beginning at the commencement of operations of the Fund. In the event any of the
initial shares of the Fund are redeemed by the holder thereof during the
five-year amortization period, the redemption proceeds will be reduced by a pro
rata portion of any unamortized deferred organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
3. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 23, 1993* TO
MARCH 31, 1995 MARCH 31, 1994
-------------- -----------------
<S> <C> <C>
Shares sold. . . . . . . . . . . . . . . 415,645 1,289,088
Shares issued in reinvestment of
dividends and distributions. . . . . . 25,218 2,598
-------- ----------
440,863 1,291,686
Shares repurchased . . . . . . . . . . . 260,146 469,202
-------- ----------
Net increase . . . . . . . . . . . . . . 180,717 822,484
-------- ----------
-------- ----------
<FN>
* COMMENCEMENT OF OPERATIONS.
</TABLE>
8
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, were as
follows:
YEAR ENDED
MARCH 31, 1995
--------------
PURCHASES:
Investment Securities. . . . . . . . . . . . . . . . . $ 3,728,069
-----------
-----------
SALES:
Investment Securities. . . . . . . . . . . . . . . . . $ 2,930,222
-----------
-----------
At March 31, 1995, the aggregate cost of investment securities and repurchase
agreement for Federal income tax purposes is $9,925,407. The aggregate
appreciation and depreciation of investments, based on a comparison of
investment values and their costs for Federal income tax purposes is $2,880,674
and $318,083, respectively, resulting in a net appreciation of $2,562,591.
For Federal income tax purposes, the Fund had a net capital loss carryover at
March 31, 1995 of approximately $166,169 which will expire in the year 2003.
Realized losses incurred after October 31, if so elected by the Fund, are deemed
to arise on the first day of the following fiscal year. The Fund incurred and
elected to defer losses of approximately $161,387. To the extent future capital
gains are offset by such capital losses, the Fund does not anticipate
distributing such gains to the shareholders.
5. ADVISORY FEES, SERVICE AND DISTRIBUTION PLAN FEES AND TRANSACTIONS WITH
AFFILIATES
An advisory fee of $80,681 was paid or payable to Value Line, Inc., the Fund's
investment adviser (the "Adviser"), for the year ended March 31, 1995. The fee
was computed at the rate of .75 of 1% of the 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 certain administrative
services and office space. The Adviser also provides persons, satisfactory to
the Fund's Board of Directors to act as officers of the Fund and pays their
salaries and wages. The Fund bears all other costs and expenses in its
organization and operation. 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 sells its shares, the
advisory fee will be reduced by the amount of such excess, or the amount of such
excess will be refunded. For the year ended March 31, 1995, the Adviser
reimbursed the Fund $4,473 for such excess. A fee of $3,780 for printing
services was paid or payable to the Adviser for the year ended March 31, 1995.
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, for the payment of certain
expenses incurred by Value Line Securities, Inc. (the "Distributor"), a
wholly-owned subsidiary of the Adviser, in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets. In the year ended
March 31, 1995, fees amounting to $26,894 were paid or payable under the Plan.
Certain officers and directors of the Adviser and the Distributor, are also
officers and a director of the Fund.
At March 31, 1995, the Adviser and/or affiliated companies owned 804,681 shares
of the Fund's capital stock, representing 79.4% of the outstanding shares. In
addition, certain officers and directors of the Fund owned 42,419 shares of
capital stock, representing 4.2% of the outstanding shares.
9
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
JUNE 23, 1993
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
MARCH 31, 1995 MARCH 31, 1994
-------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 11.80 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . (.19)(3) .02(1)
Net gains or losses on securities (both realized and unrealized) . . . . . . . 1.05 1.81
------- -------
Total from investment operations . . . . . . . . . . . . . . . . . . . . . . .86 1.83
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income . . . . . . . . . . . . . . . . . . . . . -- (.02)
Distributions from capital gains . . . . . . . . . . . . . . . . . . . . . . . (.33) (.01)
------- -------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.33) (.03)
------- -------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . $ 12.33 $ 11.80
------- -------
------- -------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.57% 18.36%+
------- -------
------- -------
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands). . . . . . . . . . . . . . . . . . . . . $12,492 $ 9,823
Ratio of operating expenses to average net assets. . . . . . . . . . . . . . . . 2.48%(3) 0.61%*(1)(2)
Ratio of net investment (loss) income to average net assets. . . . . . . . . . . (1.63)%(3) 0.26%*(1)(2)
Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30% 74%
<FN>
(1) Net of expense reimbursement and fees waived by the Adviser. Had these
expenses been fully paid by the Fund, investment loss-net per share would have
been $(.12), ratio of operating expenses to average net assets would have been
2.45%* and ratio of net investment income (loss) to average net assets would
have been (1.57%)*.
(2) Due to the reimbursement of expenses and waiver of fees by the Adviser and
short period covered by this report, data is not indicative of future periods.
(3) Net of expense reimbursement by the Adviser. Had these expenses been fully
paid by the Fund, investment loss-net per share would have been $(.20), ratio of
expenses to average net assets would have been 2.52% and ratio of net investment
loss to average net assets would have been (1.67%).
+ Not annualized
* Annualized
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF VALUE LINE SMALL-CAP GROWTH FUND, 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 Small-Cap Growth Fund,
Inc. (the "Fund") at March 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
the year then ended and for the period June 23, 1993 (commencement of
operations) through March 31, 1994, 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 March 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, New York
May 19, 1995
11
<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. The Fund is available to investors only through
the purchase of Guardian Investor, a tax deferred variable annuity, or Value
Plus, a variable life insurance policy.
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. The Fund is available to investors only through the
purchase of the Guardian Investor, a tax deferred variable annuity, or Value
Plus, a variable life insurance policy.
1992 -- THE VALUE LINE ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND seeks
high current income consistent with low volatility of principal by investing
primarily in adjustable rate U.S. Government 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.
--------------------------------------------------------------------------------
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. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
12
