<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Francis C. Oakley
Marion N. Ruth
Frances T. Newton
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Steven M. Yeary
VICE PRESIDENT
Jerome Kaplan
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT and
SECRETARY/TREASURER
Jack M. Houston
ASSISTANT SECRETARY/TREASURER
Stephen La Rosa
ASSISTANT SECRETARY/TREASURER
</TABLE>
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN TAKEN FROM THE
RECORDS OF THE FUND WITHOUT EXAMINATION BY THE INDEPENDENT ACCOUNTANTS
AND, ACCORDINGLY, THEY DO NOT EXPRESS AN OPINION THEREON.
THIS UNAUDITED REPORT IS ISSUED FOR 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).
VLF609169
------------------------------------
SEMI-ANNUAL REPORT
------------------------------------
SEPTEMBER 30, 1996
----------------------------------------
VALUE LINE
SMALL-CAP
GROWTH
FUND, INC.
[LOGO]
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
To Our Value Line Small-Cap
- -------------------------------------------
Dear Shareholder:
We are pleased to bring you this semi-annual report for the Value Line Small-Cap
Growth Fund (the "Fund"). For the six-months ended September 30, 1996, your Fund
achieved a total return of 6.75%, compared to 5.36% for the unmanaged Russell
2000 stock Index, a widely used benchmark for small-company stocks. Since its
inception on June 23, 1993, the total return of the Fund has been 68.0% versus
59.6% for the Russell 2000. The Fund has achieved a total return of 17.18%, on
an annualized basis, which handily outpaced the 15.4% return for the Russell
2000 since inception.
The small-cap market has proven highly volatile over the past six months. The
likelihood of slower economic growth in the months ahead, plus the earlier
uncertainty of the national election, has shifted investors' interest to larger,
more liquid, stocks. We believe that the investment focus will once again favor
smaller stocks, assuming that a pattern of slow and predictable economic growth
unfolds over the next few quarters. Earnings and growth prospects should then
return as drivers to the stock market, replacing the emotional valuation that
had been in place for much of the previous half year.
Your Fund's performance over the last six months benefited from investments in
apparel and retail stocks, with less emphasis on the semiconductor and
semiconductor capital-equipment issues. Looking ahead, we believe the technology
and healthcare sectors will provide solid returns as part of the overall
investment strategy of the Fund.
The case for investing in small-cap stocks remains a compelling one. Typically,
these companies are more focused in their particular area and have greater
growth potential than larger capitalization stocks. Small companies are usually
more nimble and can exploit a market niche with greater success. As the
historical record has proven, moreover, smaller-cap companies will likely
outperform larger-cap stocks over long periods of time.
Our investment strategy remains as it has been: to invest in small-cap stocks
that are generating exceptionally good earnings, whose stock-price momentum
outpaces that of the market in general, and whose stocks are trading at
attractive valuations. Although your Fund is always well diversified across
economic sectors, it remains weighted more heavily in the technology,
health-care, and capital-goods areas.
We appreciate the trust you have placed in Value Line and the Value Line
Small-Cap Growth Fund, and we will work hard to continue to justify your
confidence. We look forward to serving your investment needs in the future.
Sincerely,
[/S/ JEAN BERNHARD BUTTNER]
CHAIRMAN AND PRESIDENT
November 11, 1996
- --------------------------------------------------------------------------------
2
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Growth Fund Shareholders
- -------------------------------------------
Economic Observations
The economy appears to be entering a period of somewhat slower growth, with this
deceleration in activity likely to persist for at least another several
quarters. Recent figures, for example, show that the employment, retail,
manufacturing, and housing sectors, albeit still showing some improvement, are
not nearly as strong as they had been earlier in the expansion. All of this
suggests that real, inflation-adjusted gross domestic product, which increased
at a modest 2.2% rate in the third quarter, will advance at a similarly
restrained pace over the final three months of this year and through much of
1997.
A slower pace of growth is probably not an unwelcome development at this stage
of the business cycle, since such a deceleration would likely help keep labor,
energy, and raw materials shortages at bay, thus paving the way for continued
moderate levels of inflation. Limited pricing pressures, in turn, would tend to
dissuade the Federal Reserve Board from shifting onto a much tighter monetary
course. Our sense, for now, is that interest rates will remain relatively stable
over the next year.
The danger, though, is that the economy could slow too much, leading, perhaps,
to a recession. For now, we do not see such a reversal evolving over the next
year. We caution, however, that a business contraction would likely bring to an
end the long uptrend in corporate profits, and, most likely, to the bull market
as well.
Performance Data:*
<TABLE>
<CAPTION>
Average
Annual Total
Return
--------------------------
<S> <C>
1 Year ended 9/30/96...... 7.51%
From 6/23/93 (commencement
of operations) to
9/30/96.................. 17.18%
</TABLE>
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
3
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Schedule of Investments (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------
COMMON STOCKS (91.5%)
AEROSPACE/DEFENSE (2.8%)
14,300 Rohr, Inc.*................................................................ $ 280,638
12,100 Wyman-Gordon Co.*.......................................................... 276,787
-----------
557,425
AIR TRANSPORT (2.0%)
14,200 Air Express International Corp............................................. 401,150
APPAREL (6.8%)
17,100 Nautica Enterprises, Inc.*................................................. 551,475
7,000 St. John Knits, Inc........................................................ 350,875
7,200 Tommy Hilfiger Corp.*...................................................... 426,600
-----------
1,328,950
BANK (1.3%)
2,800 Zions Bancorporation....................................................... 247,800
CEMENT (1.3%)
4,400 Texas Industries, Inc...................................................... 263,450
COMPUTER & PHERIPHERALS (2.8%)
9,700 SCI Systems, Inc.*......................................................... 545,625
COMPUTER SOFTWARE & SERVICES (9.8%)
9,000 America Online, Inc.*...................................................... 320,625
11,400 FIserv, Inc.*.............................................................. 436,050
11,800 National Data Corp......................................................... 514,775
6,600 Network General Corp.*..................................................... 150,975
6,600 Sterling Software Inc.*.................................................... 504,075
-----------
1,926,500
DIVERSIFIED COMPANIES (0.6%)
3,600 Valmont Industries, Inc.................................................... 122,850
ELECTRONICS (1.7%)
8,600 Safeguard Scientifics, Inc.*............................................... 342,925
ENVIRONMENTAL (3.2%)
6,200 Ionics, Inc.*.............................................................. 292,175
9,400 United Waste Systems, Inc.*................................................ 326,650
-----------
618,825
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
September 30, 1996 (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (4.7%)
1,900 Aames Financial Corp....................................................... $ 95,712
4,800 FINOVA Group, Inc.......................................................... 288,000
20,000 Money Store, Inc. (The).................................................... 530,000
-----------
913,712
FOOD WHOLESALERS (1.0%)
5,000 Richfood Holdings, Inc..................................................... 186,250
FURNITURE/HOME FURNISHNGS (1.5%)
5,000 Bush Industries, Inc....................................................... 91,875
5,200 HON Industries, Inc........................................................ 206,700
-----------
298,575
HEALTHCARE INFORMATION SYSTEMS (1.6%)
8,400 Medic Computer Systems, Inc.*.............................................. 305,550
HOTEL/GAMING (0.6%)
6,000 La Quinta Inns, Inc........................................................ 117,000
INDUSTRIAL SERVICES (0.6%)
4,500 Primark Corp.*............................................................. 123,188
INSURANCE-PROPERTY/CASUALTY (2.2%)
10,670 Frontier Insurance Group, Inc.............................................. 425,466
MANUFACTURED HOUSING/RECREATIONAL VEHICLES (6.5%)
19,800 Champion Enterprises, Inc.*................................................ 447,975
15,400 Oakwood Homes Corp......................................................... 423,500
14,000 Redman Industries, Inc.*................................................... 392,000
-----------
1,263,475
MEDICAL SERVICES (9.0%)
9,600 HealthCare COMPARE Corp.*.................................................. 454,800
19,000 Omnicare, Inc.............................................................. 579,500
18,800 RoTech Medical Corp.*...................................................... 310,200
12,600 Vivra, Inc.*............................................................... 411,075
-----------
1,755,575
MEDICAL SUPPLIES (2.9%)
12,900 Invacare Corp.............................................................. 361,200
9,600 Nellcor-Puritan Bennett, Inc.*............................................. 211,200
-----------
572,400
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Schedule of Investments (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------------------------
<C> <S> <C>
METAL FABRICATING (1.4%)
8,500 Oregon Metallurgical Corp.*................................................ $ 276,250
NEWSPAPER (0.5%)
3,500 Harte-Hanks Communications, Inc............................................ 97,563
OFFICE EQUIPMENT & SUPPLIES (3.5%)
22,500 Reynolds & Reynolds Co. Class "A".......................................... 587,813
4,462 Staples, Inc.*............................................................. 99,000
-----------
686,813
OILFIELD SERVICES/EQUIPMENT (2.1%)
9,300 Helmerich & Payne, Inc..................................................... 405,713
PACKAGING & CONTAINER (2.6%)
13,500 Sealed Air Corp.*.......................................................... 502,875
PRECISION INSTRUMENT (4.5%)
15,100 Checkpoint Systems, Inc.*.................................................. 400,150
16,500 Sybron International Corp.*................................................ 478,500
-----------
878,650
RESTAURANT (2.2%)
10,600 Applebee's International, Inc.............................................. 280,900
9,700 VICORP Restaurants, Inc.*.................................................. 140,650
-----------
421,550
RETAIL-SPECIAL LINES (4.2%)
11,250 Claire's Stores Inc........................................................ 240,469
5,700 Men's Wearhouse, Inc. (The)*............................................... 142,500
11,200 Tiffany & Co............................................................... 448,000
-----------
830,969
RETAIL-BUILDING SUPPLY (0.5%)
3,900 Eagle Hardware & Garden, Inc.*............................................. 105,300
RETAIL STORE (1.6%)
7,600 Consolidated Stores Corp.*................................................. 304,000
TELECOMMUNICATION SERVICES (3.0%)
4,800 ACC Corp. Class A*......................................................... 226,800
11,800 Billing Info Concepts Corp.*............................................... 262,550
11,800 U.S. Long Distance Corp.*.................................................. 105,462
-----------
594,812
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
September 30, 1996 (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
THRIFT (2.5%)
20,000 Cal Fed Bancorp Inc.*.............................................................. $ 465,000
2,000 California Federal Bank, F.S.B. (CLR)+*............................................ 22,750
-----------
487,750
TOTAL COMMON STOCKS AND TOTAL INVESTMENT SECURITIES (91.5%)
(COST 14,110,552)................................................................ $17,908,936
-----------
REPURCHASE AGREEMENT (7.1%) (including accrued interest)
$1,400,000 Collateralized by $1,425,000 U.S. Treasury Notes 5 1/4%, due 12/31/97, with a value
of $1,433,461 (with State Street Bank & Trust Co., Inc. 5.40%, dated 9/30/96, due
10/1/96, delivery value $1,400,210).............................................. 1,400,210
CASH AND OTHER ASSETS OVER LIABILITIES (1.4%).................................................. 274,052
-----------
NET ASSETS (100%)............................................................................... $19,583,198
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER OUTSTANDING SHARE ($19,583,198 DIVIDED BY
1,214,270 SHARES OUTSTANDING)................................................................... $ 16.13
-----------
</TABLE>
* NON-INCOME PRODUCING
+ CONTIGENT LITIGATION RECOVERY CERTIFICATE
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Statement of Operations
Statement of Assets and Liabilities
for the six months ended
at September 30, 1996 (unaudited)
September 30, 1996 (unaudited)
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investment securities, at value
(Cost--$14,110,552).................. $17,908,936
Repurchase agreement
(Cost--$1,400,210)................... 1,400,210
Cash................................... 65,747
Receivable for investments sold........ 448,860
Deferred organization costs (note 2)... 22,882
Dividends receivable................... 4,640
Receivable for capital shares sold..... 1,400
-----------
Total Assets....................... 19,852,675
-----------
Liabilities:
Payable for securities purchased....... 216,000
Accrued expenses:
Advisory fee payable................. 11,511
Plan fee payable..................... 3,837
Other................................ 38,129
-----------
Total Liabilities.................. 269,477
-----------
Net Assets............................. $19,583,198
-----------
Net Assets consist of:
Capital stock, at $.001 par value
(authorized 300,000,000, outstanding
1,214,270 shares).................... $ 1,215
Additional paid-in capital............. 13,227,516
Accumulated investment loss--net....... (120,130)
Accumulated net realized gain on
investments.......................... 2,676,213
Unrealized net appreciation of
investments.......................... 3,798,384
-----------
Net Assets............................. $19,583,198
-----------
Net Asset Value, Offering and
Redemption Price per Outstanding
Share
($19,583,198 DIVIDED BY 1,214,270
shares outstanding).................. $ 16.13
-----------
</TABLE>
<TABLE>
<S> <C>
Investment Income:
Dividend income......................... $ 31,364
Interest income......................... 24,082
----------
Total Income........................ 55,446
----------
Expenses:
Advisory fee............................ 72,521
Service and distribution plan fee....... 24,173
Auditing and legal fees................. 19,947
Accounting and bookkeeping expense...... 16,195
Custodian fees.......................... 10,487
Directors' fees and expenses............ 9,150
Registration and filing fees............ 8,972
Amortization of deferred organization
costs (note 2)........................ 6,647
Printing................................ 5,856
Transfer agent fees..................... 3,660
Other................................... 3,331
----------
Total Expenses Before Expense
Offset............................. 180,939
Less: Expense Offset................ (5,363)
----------
Net Expenses........................ 175,576
----------
Investment Loss--Net.................... (120,130)
----------
Realized and Unrealized Gain (Loss) on
Investments--Net:
Realized Gain--Net.................... 1,661,167
Change in Unrealized Appreciation..... (371,796)
----------
Net Realized Gain and Net Unrealized
Appreciation (Depreciation) of
Investments........................... 1,289,371
----------
Net Increase in Net Assets from
Operations............................ $1,169,241
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Statement of Changes in Net Assets
for the six months ended September 30, 1996 (unaudited), and for the year ended
March 31, 1996
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1996 March 31,
(unaudited) 1996
<S> <C> <C>
---------------------------------
Operations:
Investment loss--net.................................................... $ (120,130) $ (194,061)
Realized gain on investments--net....................................... 1,661,167 1,669,533
Net unrealized (depreciation) appreciation.............................. (371,796) 1,607,589
---------------------------------
Net increase in net assets from operations.............................. 1,169,241 3,083,061
---------------------------------
Distributions to Shareholders:
Realized gains--net..................................................... -- (132,864 )
---------------------------------
Capital Share Transactions:
Net proceeds from sale of shares........................................ 869,967 5,517,098
Net proceeds from reinvestment of distributions to shareholders......... -- 130,221
Cost of shares repurchased.............................................. (1,561,667 ) (1,984,247 )
---------------------------------
(Decrease) Increase from capital share transactions..................... (691,700 ) 3,663,072
---------------------------------
Total Increase.......................................................... 477,541 6,613,269
Net Assets:
Beginning of period..................................................... 19,105,657 12,492,388
---------------------------------
End of period........................................................... $ 19,583,198 $ 19,105,657
---------------------------------
Accumulated investment loss--net, at end of period...................... $ (120,130 ) $ --
---------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Notes to Financial Statements (unaudited)
- -------------------------------------------
1.Significant Accounting Policies
Value Line Small-Cap Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company whose primary investment objective is long-term
growth of capital. The Fund invests primarily in "small-cap" common stocks.
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 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. Realized gains and losses
on sales of securities are calculated for financial accounting purposes 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.
Permanent book-tax differences relating to shareholder distributions have been
reclassified. Net investment loss, net realized gain (loss), and net assets are
not affected. In the current year the net investment loss of $194,061 was
reclassified within the composition of net assets to accumulated net realized
gain on investments.
(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
- --------------------------------------------------------------------------------
10
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
- -------------------------------------------
rata portion of any unamortized deferred organizational expenses in the same
porportion 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>
Six Months Ended Year Ended
September 30, 1996 March 31,
(unaudited) 1996
<S> <C> <C>
--------------------------------
Shares sold.......... 56,353 382,670
Shares issued to
shareholders in
reinvestment of
dividends and
distributions...... -- 9,151
--------------------------------
56,353 391,821
Shares repurchased... 106,891 140,214
--------------------------------
Net (decrease)
increase........... (50,538 ) 251,607
--------------------------------
</TABLE>
4.Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1996
(unaudited)
<S> <C>
-------------------
PURCHASES:
Investment Securities.......... $ 9,091,192
-------------------
SALES:
Investment Securities.......... $ 10,874,351
-------------------
</TABLE>
At September 30, 1996, the aggregate cost of investment securities and
repurchase agreement for federal income tax purposes is $15,510,762. The
aggregate appreciation and depreciation of investments at September 30, 1996,
based on a comparison of investment values and their costs for federal income
tax purposes, is $4,055,662 and $257,278, respectively, resulting in a net
appreciation of $3,798,384.
5.Advisory Fees, Service and Distribution Plan Fees and
Transactions With Affiliates
An advisory fee of $72,521 was paid or payable to Value Line, Inc., the Fund's
investment adviser (the "Adviser"), for the six months ended September 30, 1996.
The fee was computed at the rate of .75 of 1% of the daily net assets during the
period 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.
A fee of $2,880 for printing services was paid or payable to the Adviser for the
six months ended September 30, 1996.
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 six months
ended September 30, 1996, fees amounting to $24,173 were paid or payable under
this Plan.
Certain officers and directors of the Adviser and the Distributor are also
officers and a director of the Fund.
At September 30, 1996, the Adviser and/or affiliated companies owned 1,014,240
shares of the Fund's capital stock, representing 84% of the outstanding shares.
- --------------------------------------------------------------------------------
11
<PAGE>
VALUE LINE SMALL-CAP GROWTH FUND, INC.
Financial Highlights
- -------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Years Ended March June 23, 1993
Six Months Ended 31, (commencement of
Sept. 30, 1996 ------------------- operations) to
(unaudited) 1996 1995 March 31, 1994
<S> <C> <C> <C> <C>
---------------------------------------------------------
Net asset value, beginning of period.................................. $15.11 $12.33 $11.80 $10.00
---------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss) income.................................... (.10) (.18) (.19)(2) .02(1)
Net gains or losses on securities (both realized and
unrealized)................................................... 1.12 3.08 1.05 1.81
---------------------------------------------------------
Total from investment operations................................ 1.02 2.90 .86 1.83
---------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income............................ -- -- -- (.02)
Distributions from capital gains................................ -- (.12) (.33) (.01)
---------------------------------------------------------
Total distributions............................................. -- (.12) (.33) (.03)
---------------------------------------------------------
Net asset value, end of period........................................ $16.13 $15.11 $12.33 $11.80
---------------------------------------------------------
Total return.......................................................... 6.75%+ 23.58% 7.57% 18.36%+
---------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).............................. $19,583 $19,106 $12,492 $9,823
Ratio of operating expenses to average net assets..................... 1.81%* 2.15% 2.48%(2) 0.61%*(1)
Ratio of net investment (loss) income to average net assets........... (1.24)%* (1.27)% (1.63%)(2) 0.26%*(1)
Portfolio turnover rate............................................... 50%+ 57% 30% 74%+
Average commission rate paid per share of common stock investments
purchased/sold...................................................... $ .05(3)
</TABLE>
(1)NET OF EXPENSE REIMBURSEMENT AND FEES WAIVED BY THE ADVISER. HAD THESE
EXPENSES BEEN FULLY PAID BY THE FUND, THE INVESTMENT LOSS-NET PER SHARE WOULD
HAVE BEEN $(.12), THE RATIO OF OPERATING EXPENSES TO AVERAGE NET ASSETS WOULD
HAVE BEEN 2.45%* AND THE RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS
WOULD HAVE BEEN (1.57%)*.
(2)NET OF EXPENSE REIMBURSEMENT BY THE ADVISER. HAD THESE EXPENSES BEEN FULLY
PAID BY THE FUND, THE INVESTMENT LOSS-NET PER SHARE WOULD HAVE BEEN $(.20),
THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.52% AND THE
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS WOULD HAVE BEEN (1.67%).
(3)DISCLOSURE EFFECTIVE FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,
1995.
+ NOT ANNUALIZED
* ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
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