================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
September 30, 1999
------------------
Value Line
Small-Cap
Growth
Fund, Inc.
[LOGO]
------------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
We're pleased to report strong returns for the six months ending September 30,
1999. The Value Line Small-Cap Growth Fund earned total returns of 18.73% for
the period, versus total returns of 8.25% for the unmanaged Russell 2000 Index,
a benchmark of small-capitalization stocks.
Our disciplined stock selection process continues to pay off for us. We invest
only in companies with strong earnings momentum and strong stock price momentum.
Any signs of weakness on either measure cause us to look closely at selling a
stock. For this reason, turnover of the Fund's holdings can be relatively high,
but we stick with winners for a long time if they continue to do well.
Technology stocks, the largest sector holding in the Fund, have been the primary
drivers of performance this year. Our technology holdings are well diversified
across a number of subsectors, including computer software, communications,
semiconductors, and the internet.
Your Fund holds over 300 different stocks, and it is unusual for any single name
to make up as much as 1% of assets. This minimizes the effect of any
company-specific unpleasant surprises. We know that our basic investment process
puts the odds in our favor, so we want to insure that any "accidents" inflict
only minimal damage to performance.
We believe we will continue to find fruitful investments among small-cap stocks.
Thank you for investing with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
November 10, 1999
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2
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Value Line Small-Cap Growth Fund, Inc.
Small-Cap Growth Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The American economy continues to perform well as we proceed through the final
weeks of the year. 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 performance with respect to consumer spending. Overall, we
estimate that GDP growth, which rose at a vigorous 4.8% rate in the third
quarter, will average a solid 4% during the final three months of the year,
unless serious Year 2000 dislocations develop. We think growth will then
moderate into the 2.0%-2.5% range during the first half of next year. In all, we
believe that the 12 months upcoming will mark the tenth year in a row of
sustained economic growth.
Inflationary pressures, meanwhile, continue to be held largely at bay, in spite
of a tightening labor market, with strong increases in productivity 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 maintain a neutral to at most modestly
restrictive monetary stance in the months ahead.
Performance Data:*
Average
Annual Total
Return
---------
1 year ended September 30, 1999..................... 58.44%
5 years ended September 30, 1999.................... 14.28%
From June 23, 1993+ to
September 30, 1999................................ 14.65%
+ Commencement of operations.
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns 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 Small-Cap Growth Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS (91.1%)
ADVERTISING (1.2%)
1,600 Lamar Advertising Co.
Class "A"*........................................ $ 79,200
1,800 Modem Media.Poppe Tyson,
Inc. Class "A"*................................... 66,600
1,700 Omnicom Group, Inc.................................... 134,619
1,600 True North
Communications Inc................................ 58,200
------------
338,619
AEROSPACE/
DEFENSE (0.5%)
500 Alliant Techsystems Inc.*............................. 34,656
3,000 Elbit Systems Ltd..................................... 40,500
1,000 General Dynamics Corp................................. 62,438
------------
137,594
AIR TRANSPORT (0.2%)
2,000 SkyWest, Inc.......................................... 43,875
APPAREL (0.9%)
3,500 Chico's FAS, Inc.*.................................... 95,375
5,000 Gildan Activewear Inc.
Class "A"*........................................ 86,250
1,800 Tommy Hilfiger Corp.*................................. 50,737
------------
232,362
AUTO PARTS--ORIGINAL
EQUIPMENT (0.4%)
2,000 Arvin Industries, Inc................................. 61,875
2,500 Gentex Corp.*......................................... 51,641
------------
113,516
BANK--MIDWEST (0.4%)
800 Fifth Third Bancorp................................... 48,675
2,000 First Tennessee
National Corp..................................... 56,250
------------
104,925
BEVERAGE--
ALCOHOLIC (0.4%)
1,800 Canandaigua Brands, Inc.
Class "A"*........................................ 107,550
BUILDING
MATERIALS (1.3%)
2,000 Dayton Superior Corp.
Class "A"*........................................ 34,000
4,500 Elcor Corp............................................ 112,500
5,000 Insituform Technologies, Inc.
Class "A"*........................................ 125,000
1,000 Simpson Manufacturing
Co., Inc.*........................................ 46,875
700 USG Corp.............................................. 33,250
------------
351,625
CABLE TV (1.8%)
2,704 Adelphia Communications
Corp. Class "A"*.................................. 159,029
1,300 Cablevision Systems Corp.
Class "A"*........................................ 94,575
3,000 Comcast Corp. Class "A"*.............................. 119,625
1,200 EchoStar Communications
Corp. Class "A"*.................................. 108,975
------------
482,204
CEMENT &
AGGREGATES (0.4%)
1,700 Centex Construction
Products, Inc..................................... 63,112
1,500 Florida Rock Industries, Inc.......................... 52,125
------------
115,237
CHEMICAL--
DIVERSIFIED (0.4%)
1,500 Brady Corp. Class "A"................................. 48,000
2,000 Spartech Corp......................................... 58,625
------------
106,625
CHEMICAL--
SPECIALTY (0.2%)
1,000 Fuller (H.B.) Co...................................... 60,875
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Value Line Small-Cap Growth Fund, Inc.
September 30, 1999
================================================================================
Shares Value
- --------------------------------------------------------------------------------
COMPUTER &
PERIPHERALS (3.6%)
2,400 Cybex Computer
Products Corp.*................................... $ 80,100
1,600 Emulex Corp.*......................................... 137,400
2,500 Inter-Tel, Inc........................................ 44,375
2,200 Interphase Corp.*..................................... 51,425
2,000 Mercury Computer
Systems, Inc.*.................................... 68,000
3,000 NYFIX, Inc.*.......................................... 77,625
3,750 Performance Technologies,
Inc.*............................................. 84,609
2,800 Pinnacle Systems, Inc.*............................... 118,650
4,500 Puma Technology, Inc.*................................ 68,625
1,600 Smart Modular
Technologies, Inc.*............................... 54,500
1,300 Visual Networks, Inc.*................................ 55,169
1,400 Xircom, Inc.*......................................... 59,762
2,000 Zebra Technologies Corp.
Class "A"*........................................ 90,938
------------
991,178
COMPUTER SOFTWARE
& SERVICES (9.0%)
7,000 Acclaim Entertainment,
Inc.*............................................. 53,156
2,000 Actuate Corp.*........................................ 67,750
800 Adobe Systems Inc..................................... 90,800
1,800 Advanced Digital Information
Corp.*............................................ 50,062
2,300 Ancor Communications,
Inc.*............................................. 55,775
3,500 Ardent Software, Inc.*................................ 94,281
900 BroadVision, Inc.*.................................... 119,756
1,200 Business Objects S.A.
(ADR)*............................................ 70,800
1,000 Citrix Systems, Inc.*................................. 61,937
1,350 Comverse Technology, Inc.*............................ 127,322
1,500 Concentric Network Corp.*............................. 30,469
2,500 Dendrite International, Inc.*......................... 118,125
100 E.piphany, Inc.*...................................... 4,875
2,000 Eidos PLC (ADR)*...................................... 126,250
2,500 Electronics For
Imaging Inc.*..................................... 128,516
3,800 Forte Software, Inc.*................................. 104,500
4,300 4Front Technologies, Inc.*............................ 60,737
1,400 Great Plains Software, Inc.*.......................... 72,100
2,400 InfoCure Corp.*....................................... 45,300
4,300 Interleaf, Inc.*...................................... 73,100
100 Internap Network
Services Corp.*................................... 4,463
100 Kana Communications, Inc.*............................ 4,987
5,000 Loronix Information
Systems, Inc.*.................................... 57,500
2,600 Mercury Interactive Corp.*............................ 167,863
1,200 Paychex, Inc.......................................... 40,950
2,000 Peregrine Systems, Inc.*.............................. 81,500
200 RedHat, Inc.*......................................... 19,200
5,000 S3 Incorporated*...................................... 52,188
2,200 ScanSource, Inc.*..................................... 61,325
2,000 Siebel Systems, Inc.*................................. 133,250
3,000 Unify Corp.*.......................................... 67,500
2,000 Verity Inc.*.......................................... 137,625
100 Vitria Technology, Inc.*.............................. 3,675
2,600 Zomax Incorporated*................................... 67,275
------------
2,454,912
DIVERSIFIED
COMPANIES (1.1%)
1,700 Nortek, Inc.*......................................... 58,013
2,200 Teleflex Inc.......................................... 86,900
700 Textron, Inc.......................................... 54,162
700 Tyco International, Ltd............................... 72,275
1,400 Viad Corp............................................. 41,300
------------
312,650
DRUG (5.3%)
1,800 Andrx Corp.*.......................................... 105,356
2,000 Biogen, Inc.*......................................... 157,625
1,100 Biovail Corporation
International *................................... 55,825
3,000 Corixa Corp.*......................................... 40,313
3,000 Enzon, Inc.*.......................................... 91,500
1,400 Forest Laboratories, Inc.*............................ 58,975
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5
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
- --------------------------------------------------------------------------------
500 Genetech, Inc.*....................................... $ 73,156
900 IDEC Pharmaceuticals
Corp.*............................................ 84,628
1,950 Jones Pharma Inc...................................... 64,289
3,500 King Pharmaceuticals, Inc.*........................... 122,500
1,700 MedImmune, Inc.*...................................... 169,416
2,100 Millennium Pharmaceuticals,
Inc. *............................................ 136,500
1,300 QLT PhotoTherapeutics,
Inc.*............................................. 99,369
3,100 Roberts Pharmaceutical
Corp.*............................................ 93,775
5,300 Taro Pharmaceutical
Industries Ltd.*.................................. 80,825
------------
1,434,052
EDUCATIONAL
SERVICES (0.7%)
2,500 CBT Group PLC (ADR)*.................................. 61,562
2,100 Career Education Corp.*............................... 60,900
1,500 National Computer
Systems, Inc...................................... 57,516
------------
179,978
ELECTRIC UTILITY--
CENTRAL (0.2%)
1,000 AES Corp.*............................................ 59,000
ELECTRIC UTILITY--
WEST (0.4%)
1,400 Calpine Corp.*........................................ 119,088
ELECTRICAL
EQUIPMENT (1.8%)
4,000 Aaon, Inc.*........................................... 54,000
1,000 Corning Inc........................................... 68,563
2,600 LSI Industries, Inc................................... 59,475
1,700 Power Integrations, Inc.*............................. 117,725
2,200 Power-One, Inc.*...................................... 56,100
3,600 Semtech Corp.*........................................ 131,850
------------
487,713
ELECTRONICS (3.5%)
1,100 Alpha Industries, Inc.*............................... 62,047
1,300 Amphenol Corp.*....................................... 64,431
4,000 CTS Corp.............................................. 230,000
2,400 Cree Research, Inc.*.................................. 81,450
1,000 Gemstar International
Group, Ltd.*...................................... 78,125
1,900 Imation Corp.*........................................ 58,900
4,500 Interlink Electronics, Inc.*.......................... 36,281
800 Lexmark International
Group, Inc. Class "A"*............................ 64,400
1,800 Sawtek Inc.*.......................................... 63,000
2,400 Symbol Technologies, Inc.............................. 80,700
6,000 Titan Corp. (The)*.................................... 86,250
2,500 Universal Electronics Inc.*........................... 57,813
------------
963,397
ENTERTAINMENT (1.9%)
1,200 CBS Corp.*............................................ 55,500
800 Clear Channel
Communications, Inc.*............................. 63,900
1,200 Cox Radio, Inc. Class "A"*............................ 71,400
2,000 Cumulus Media Inc.
Class "A"*........................................ 65,375
1,300 Entercom Communications
Corp.*............................................ 46,800
1,200 Time Warner Inc....................................... 72,900
100 TiVo Inc.*............................................ 2,994
2,000 USA Networks, Inc.*................................... 77,500
800 Univision Communications
Inc. Class "A"*................................... 65,100
------------
521,469
FINANCIAL
SERVICES (1.0%)
100 Digital Insight Corp.*................................ 1,500
3,000 InterCept Group, Inc. (The)*.......................... 55,500
1,400 Metris Companies, Inc................................. 41,213
1,300 NCO Group, Inc.*...................................... 61,100
900 Providian Financial Corp.............................. 71,268
2,000 United Payors & United
Providers, Inc.*.................................. 35,250
------------
265,831
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<PAGE>
Value Line Small-Cap Growth Fund, Inc.
September 30, 1999
================================================================================
Shares Value
- --------------------------------------------------------------------------------
FOOD PROCESSING (0.3%)
1,500 Keebler Foods Co.*.................................... $ 44,812
700 Quaker Oats Co. (The)................................. 43,313
------------
88,125
FOREIGN
TELECOMMUNICATIONS
(0.4%)
800 AT & T Canada Inc.
Class "B" (ADR)* ................................. 50,250
4,700 TTI Team Telecom
International Ltd.*............................... 47,587
------------
97,837
FURNITURE/HOME
FURNISHINGS (0.7%)
2,250 Ethan Allen Interiors, Inc............................ 71,578
3,500 Shaw Industries, Inc.................................. 55,563
3,000 Stanley Furniture Co., Inc.*.......................... 63,375
------------
190,516
GROCERY (0.2%)
2,400 Kroger Co.*........................................... 52,950
HEALTHCARE
INFORMATION
SYSTEMS (0.2%)
1,300 MedQuist Inc.*........................................ 43,469
HOTEL/GAMING (0.8%)
4,000 Argosy Gaming Company*................................ 53,000
4,000 Park Place Entertainment Corp.*....................... 50,000
2,600 Station Casinos, Inc.*................................ 60,450
2,500 U.S. Franchise Systems, Inc.
Class "A"*........................................ 43,281
------------
206,731
HOUSEHOLD
PRODUCTS (1.3%)
3,600 Church & Dwight Co., Inc.............................. 90,000
800 Kimberly-Clark Corp................................... 42,000
6,000 Salton, Inc.*......................................... 181,125
1,500 Scotts Company (The)
Class "A"*........................................ 51,937
------------
365,062
INDUSTRIAL
SERVICES (3.8%)
3,600 A.C.L.N. Limited*..................................... 56,925
2,000 Advantage Learning
Systems, Inc.*.................................... 37,250
600 Catalina Marketing Corp.*............................. 50,888
2,200 EMCOR Group, Inc.*.................................... 42,350
3,000 Korn/Ferry International*............................. 69,187
4,000 Nielsen Media
Research, Inc.*................................... 148,750
1,800 Pre-Paid Legal
Services, Inc.*................................... 70,875
3,000 Profit Recovery Group
International, Inc. (The)*........................ 133,875
2,400 QRS Corp.*............................................ 153,900
2,200 Quanta Sevices, Inc.*................................. 64,488
1,000 SABRE Group Holdings,
Inc. Class "A"*................................... 43,000
2,600 Select Appointments Holdings
PLC (ADR)*........................................ 87,750
3,700 URS Corp.*............................................ 90,650
------------
1,049,888
INSURANCE--
DIVERSIFIED (0.5%)
2,200 Blanch (E.W.) Holdings Inc............................ 143,275
INTERNET (1.3%)
400 America Online, Inc.*................................. 41,600
200 Alteon Websystems, Inc.*.............................. 18,800
200 Ashford.com, Inc.*.................................... 1,844
1,200 At Home Corp.*........................................ 49,725
1,800 Exodus Communications,
Inc.*............................................. 129,713
70 Internet Capital Group, Inc.*......................... 6,151
100 LookSmaOrt, Ltd.*..................................... 2,381
2,000 Macromedia Inc.*...................................... 81,750
100 NetZero, Inc.*........................................ 2,600
500 Ticketmaster Online--
Citysearch, Inc. Class "B"*....................... 12,094
------------
346,658
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7
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
- --------------------------------------------------------------------------------
MACHINERY (1.6%)
2,800 Astec Industries, Inc.*............................... $ 67,550
1,000 Briggs & Stratton Corp................................ 58,375
2,700 Donaldson Company, Inc................................ 62,607
1,700 Graco Inc............................................. 55,781
2,250 Manitowoc Co., Inc.................................... 76,781
4,100 Summa Industries *.................................... 52,531
2,300 Terex Corp.*.......................................... 72,450
------------
446,075
MANUFACTURED
HOUSING/
RECREATIONAL
VEHICLES (0.9%)
3,375 Monaco Coach Corp.*................................... 82,266
2,000 National R.V. Holdings,
Inc.*............................................. 39,500
1,500 Oshkosh Truck Corp.................................... 39,937
4,000 Winnebago Industries, Inc............................. 95,750
------------
257,453
MEDICAL SERVICES (2.2%)
1,600 Accredo Health, Inc.*................................. 50,400
1,400 Advance Paradigm, Inc.*............................... 76,650
1,400 Express Scripts, Inc.
Class "A"*........................................ 109,550
7,000 Hooper Holmes, Inc.................................... 179,375
1,500 QIAGEN N.V.*.......................................... 63,937
2,000 Quest Diagnostics Inc.*............................... 52,000
2,000 Syncor International Corp.*........................... 75,000
------------
606,912
MEDICAL SUPPLIES (5.9%)
1,000 Allergan, Inc......................................... 110,000
2,800 Alpharma Inc. Class "A"............................... 98,875
2,000 ArthroCare Corp.*..................................... 109,250
4,533 Bindley Western
Industries, Inc................................... 64,879
4,000 Candela Corp.*........................................ 42,500
2,700 D & K Healthcare
Resources, Inc.*.................................. 63,112
1,700 Datascope Corp.*...................................... 59,713
500 Johnson & Johnson..................................... 45,937
3,000 Koala Corp.*.......................................... 92,250
2,000 Laser Vision Centers, Inc.*........................... 28,062
2,000 Patterson Dental Co.*................................. 99,125
4,000 PolyMedica Corp.*..................................... 93,000
3,330 Priority Heathcare Corp.
Class "B"*........................................ 102,814
3,000 SonoSite, Inc.*....................................... 78,375
2,800 Techne Corp.*......................................... 87,850
1,500 VISX, Inc.*........................................... 118,641
1,300 West Pharmaceutical
Services, Inc..................................... 49,319
2,600 Xomed Surgical
Products, Inc.*................................... 148,200
4,000 Zoll Medical Corp.*................................... 121,000
------------
1,612,902
METAL FABRICATING
(0.3%)
3,200 Mobile Mini, Inc.*.................................... 70,000
NEWSPAPER (0.7%)
1,800 Central Newspapers, Inc.
Class "A"......................................... 80,100
1,100 Dow Jones & Company, Inc.............................. 58,712
1,200 Tribune Co............................................ 59,700
------------
198,512
OFFICE EQUIPMENT &
SUPPLIES (0.4%)
1,000 Pitney Bowes, Inc..................................... 60,938
2,250 Staples, Inc.*........................................ 49,078
------------
110,016
PACKAGING &
CONTAINER (0.2%)
1,000 Ball Corp............................................. 44,062
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8
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
September 30, 1999
================================================================================
Shares Value
- --------------------------------------------------------------------------------
PRECISION
INSTRUMENTS (2.8%)
1,500 Badger Meter, Inc..................................... $ 51,375
3,600 Kronos Inc.*.......................................... 132,075
3,700 Measurement Specialities,
Inc.*............................................. 67,987
2,000 Mettler-Toledo
International Inc.*............................... 59,250
1,700 Optical Coating
Laboratory, Inc................................... 156,506
1,500 Orbotech Ltd.*........................................ 92,813
1,600 Perkin Elmer, Inc..................................... 63,700
2,400 Waters Corp.*......................................... 145,350
------------
769,056
PUBLISHING (0.9%)
4,500 Advanced Marketing
Services, Inc..................................... 88,875
1,300 Reader's Digest Association,
Inc. Class "A" ................................... 38,025
2,550 Valassis Communications,
Inc.*............................................. 112,041
------------
238,941
RAILROAD (0.2%)
3,000 Trasnportation Technologies
Industries, Inc.*................................. 51,938
RECREATION (1.5%)
1,000 Harley-Davidson, Inc.................................. 50,062
2,000 International Speedway Corp.
Class "A"......................................... 105,125
3,000 JAKKS Pacific, Inc.*.................................. 112,500
1,200 Royal Caribbean Cruises,
Ltd............................................... 54,000
2,200 THQ, Inc.*............................................ 94,875
------------
416,562
RESTAURANT (2.2%)
1,700 Applebee's International,
Inc............................................... 57,269
3,300 Brinker International, Inc.*.......................... 89,513
2,100 Cheesecake Factory,
Inc. (The) *...................................... 58,275
2,500 Darden Restaurants, Inc............................... 48,906
4,200 Jack In The Box Inc.*................................. 104,737
4,000 RARE Hospitality
International, Inc.*.............................. 86,500
4,800 Ruby Tuesday, Inc..................................... 93,600
2,200 Sonic Corp.*.......................................... 66,962
------------
605,762
RETAIL BUILDING
SUPPLY (0.2%)
1,280 Lowe's Companies, Inc................................. 62,400
RETAIL--SPECIAL
LINES (8.0%)
2,000 Abercrombie & Fitch Co.
Class "A"*........................................ 68,125
2,800 American Eagle
Outfitters, Inc.*................................. 135,625
1,500 AnnTaylor Stores Corp.*............................... 61,312
4,000 Audiovox Corp. Class "A".............................. 70,000
2,800 bebe stores, inc.*.................................... 67,550
1,500 Best Buy Co., Inc.*................................... 93,094
3,200 Brauns Fashions Corp.*................................ 58,200
3,400 Children's Place Retail
Stores, Inc. (The)*............................... 90,525
1,600 Circuit City Stores--
Circuit City Group ............................... 67,500
3,000 Copart, Inc.*......................................... 55,312
2,500 Deb Shops, Inc........................................ 48,750
1,200 Dollar Tree Stores, Inc.*............................. 47,925
3,750 Fossil Inc.*.......................................... 101,484
4,000 Haverty Furniture
Companies, Inc.................................... 58,000
3,000 InterTAN, Inc.*....................................... 58,875
2,835 Intimate Brands, Inc.................................. 110,388
2,000 Linens `N' Things, Inc.*.............................. 67,500
2,500 Lithia Motors, Inc.*.................................. 57,344
3,750 Quiksilver, Inc.*..................................... 68,438
3,000 Ross Stores, Inc...................................... 60,375
4,000 Rush Enterprises, Inc.*............................... 62,500
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9
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
- --------------------------------------------------------------------------------
RETAIL--SPECIAL
LINES (8.0%)(continued)
4,000 SCP Pool Corp.*....................................... $ 94,000
4,000 Sonic Automotive, Inc.*............................... 52,000
7,000 Sound Advice, Inc.*................................... 50,750
1,500 TJX Companies, Inc.................................... 42,094
1,200 Tandy Corp............................................ 62,025
2,000 Tiffany & Co.......................................... 119,875
3,700 Ultimate Electronics, Inc.*........................... 57,812
2,300 Whitehall Jewellers, Inc.*............................ 66,125
3,900 Wilsons The Leather
Experts Inc.*..................................... 62,400
2,000 Zale Corp.*........................................... 76,625
------------
2,192,528
RETAIL STORE (2.4%)
3,000 Ames Department
Stores, Inc.*..................................... 95,625
2,500 BJ's Wholesale Club, Inc.*............................ 73,906
1,500 Cost Plus, Inc.*...................................... 72,750
800 Dayton Hudson Corp.................................... 48,050
2,300 Factory 2-U Stores Inc.*.............................. 68,713
3,000 Family Dollar Stores, Inc............................. 63,375
1,000 Federated Department
Stores, Inc.*..................................... 43,687
1,000 Kohl's Corp.*......................................... 66,125
1,500 99 Cents Only Stores*................................. 54,188
2,000 ShopKo Stores, Inc.*.................................. 58,000
------------
644,419
SEMICONDUCTOR (5.0%)
3,200 Applied Micro Circuits
Corp.*............................................ 182,400
1,100 Conexant Systems, Inc.*............................... 79,922
3,400 Elantec Semiconductor, Inc.*.......................... 60,137
700 hi/fn, inc.*.......................................... 77,175
1,900 Ibis Technology Corp.*................................ 65,550
1,300 PMC-Sierra, Inc.*..................................... 120,250
2,000 QLogic Corp.*......................................... 139,750
3,600 RF Micro Devices Inc.*................................ 164,700
1,600 SDL, Inc.*............................................ 122,100
5,200 Telcom Semiconductor, Inc.*........................... 66,300
3,000 TranSwitch Corp.*..................................... 171,000
2,250 TriQuint Semiconductor,
Inc.*............................................. 128,672
------------
1,377,956
SHOE (1.3%)
1,500 Cole (Kenneth) Productions,
Inc. Class "A"*................................... 56,062
3,600 K-Swiss Inc. Class "A"................................ 113,625
4,400 Madden (Steven), Ltd.*................................ 56,925
2,000 Saucony Inc. Class "B"*............................... 31,500
2,400 Timberland Co. (The)
Class "A"*........................................ 93,750
------------
351,862
TELECOMMUNICATIONS
EQUIPMENT (4.1%)
3,000 AVT Corp.*............................................ 91,875
1,900 C-Cor.net Corp.*...................................... 57,713
3,000 CommScope, Inc.*...................................... 97,500
1,400 DSP Group, Inc.*...................................... 55,825
1,000 Harmonic Inc.*........................................ 130,812
1,500 L-3 Communications
Holdings, Inc.*................................... 56,625
3,000 Periphonics Corporation*.............................. 94,125
3,000 Polycom, Inc.*........................................ 142,969
2,000 Powerwave Technologies,
Inc.*............................................. 96,438
1,000 Proxim, Inc.*......................................... 46,000
600 QUALCOMM Inc.*........................................ 113,512
1,400 Scientific-Atlanta, Inc............................... 69,387
3,700 ViaSat, Inc.*......................................... 66,138
------------
1,118,919
TELECOMMUNICATION
SERVICES (3.3%)
900 Allegiance Telecom, Inc.*............................. 47,363
3,600 CapRock Communications
Corp.*............................................ 83,700
2,600 DyCom Industries, Inc.*............................... 109,687
5,000 FirstCom Corporation*................................. 50,000
1,600 Global Crossing Ltd.*................................. 42,400
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10
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
September 30, 1999
================================================================================
Shares Value
- --------------------------------------------------------------------------------
2,800 Leap Wireless
International, Inc.*.............................. $ 65,800
1,000 Level 3 Communications,
Inc.*............................................. 52,219
3,600 Lightbridge, Inc.*.................................... 70,875
2,000 Metromedia Fiber Network,
Inc. Class "A"*................................... 49,000
1,600 Powertel, Inc.*....................................... 88,100
3,465 Price Communications
Corp.*............................................ 86,842
1,800 Qwest Communications
International Inc.*............................... 53,212
3,300 Viatel, Inc.*......................................... 97,556
------------
896,754
THRIFT (0.3%)
1,300 Queens County Bancorp Inc............................. 35,913
3,100 Westernbank Puerto Rico............................... 37,587
------------
73,500
TOILETRIES/
COSMETICS (0.1%)
1,000 Lauder (Estee) Companies, Inc.
(The) Class "A" .................................. 39,063
TRUCKING/
TRANSPORTATION
LEASING (0.3%)
2,000 Avis Rent A Car, Inc.*................................ 41,750
1,000 Landstar System, Inc.*................................ 34,750
------------
76,500
WATER UTILITY (0.2%)
3,000 Southwest Water Co.................................... 61,125
------------
TOTAL COMMON
STOCKS AND TOTAL
INVESTMENT
SECURITIES (91.1%)
(Cost $17,795,197) ................................... $ 24,892,003
------------
Principal
Amount Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (8.1%)
(Including accrued interest.)
$1,100,000 Collateralized by $765,000
U.S. Treasury Bonds
11.25%, due 2/15/15,
with a value of
$1,132,440 (with
Morgan Stanley Co.,
Incorporated, 5.25%,
dated 9/30/99,
due 10/1/99, delivery
value $1,100,160)............................ $ 1,100,160
1,100,000 Collateralized by $1,028,000
U.S. Treasury Bonds
7.25%, due 8/15/22,
with a value of
$1,136,904 (with
Warburg Dillon Read
LLC 5%, dated 9/30/99,
due 10/1/99, delivery
value $1,100,153)............................ 1,100,153
------------
TOTAL REPURCHASE
AGREEMENTS
(Cost $2,200,313) ....................................... 2,200,313
------------
CASH AND OTHER ASSETS LESS
LIABILITIES (0.8%) ............................................... 218,992
------------
NET ASSETS (100%) ................................................ $ 27,311,308
============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE,
PER OUTSTANDING SHARE
($27,311,208 / 1,737,572
shares outstanding) .............................................. $ 15.72
============
* Non-income producing
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Statement of Assets and Liabilities
at September 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost-$17,795,197) .................................... $ 24,892,003
Repurchase agreements
(Cost-$2,200,313) ..................................... 2,200,313
Cash .................................................... 17,845
Receivable for capital shares sold ...................... 205,675
Receivable for securities sold .......................... 186,609
Dividends receivable .................................... 3,725
------------
Total Assets ........................................ 27,506,170
------------
Liabilities:
Payable for securities purchased ........................ 157,892
Service and distribution plan
fees payable .......................................... 5,502
Accrued expenses ........................................ 31,468
------------
Total Liabilities ................................... 194,862
------------
Net Assets .............................................. $ 27,311,308
============
Net Assets consist of:
Capital stock, at $.001 par value
(authorized 300,000,000,
outstanding 1,737,572 shares) ......................... $ 1,738
Additional paid-in capital .............................. 19,559,566
Accumulated net investment loss ......................... (70,810)
Undistributed net realized gain
on investments ........................................ 724,008
Net unrealized appreciation
of investments ........................................ 7,096,806
------------
Net Assets .............................................. $ 27,311,308
============
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share
($27,311,308 / 1,737,572
shares outstanding) ................................... $ 15.72
============
Statement of Operations
for the six months ended September 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividend income (net of foreign
withholding tax of $169) .............................. $ 25,328
Interst income .......................................... 20,413
-----------
Total Income ........................................ 45,741
-----------
Expenses:
Advisory fee (note 5) ................................... --
Custodian fees .......................................... 28,875
Auditing and legal fees ................................. 18,326
Service and distribution plan fee
(note 5) .............................................. 16,700
Accounting and bookkeeping
expense ............................................... 16,200
Registration and filing fees ............................ 14,923
Directors' fees and expenses ............................ 11,182
Printing ................................................ 5,485
Insurance, dues and other ............................... 5,362
Transfer agent fees ..................................... 3,413
-----------
Total expenses before
custody credits ................................... 120,466
Less: custody credits ............................... (3,915)
-----------
Net Expenses ........................................ 116,551
-----------
Net Investment Loss ..................................... (70,810)
-----------
Net Realized and Unrealized
Gain on Investments:
Net Realized Gain ................................... 1,800,030
Change in Net Unrealized
Appreciation ...................................... 2,359,283
-----------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ........................................ 4,159,313
-----------
Net Increase in Net Assets
from Operations ....................................... $ 4,088,503
===========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Statement of Changes in Net Assets
for the six months ended September 30, 1999 (unaudited) and for the year
ended March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September 30, Year Ended
1999 March 31,
(unaudited) 1999
-----------------------------
<S> <C> <C>
Operations:
Net investment loss ....................................... $ (70,810) $ (183,035)
Net realized gain (loss) on investments ................... 1,800,030 (1,060,364)
Change in net unrealized appreciation ..................... 2,359,283 1,539,399
-----------------------------
Net increase in net assets from operations ................ 4,088,503 296,000
-----------------------------
Distributions to Shareholders:
Net realized gain from investment transactions ............ -- (374,217)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 5,090,692 3,510,733
Proceeds from reinvestment of distributions to shareholders -- 365,602
Cost of shares repurchased ................................ (3,428,730) (3,726,932)
-----------------------------
Net increase from capital share transactions .............. 1,661,962 149,403
-----------------------------
Total Increase in Net Assets ................................ 5,750,465 71,186
Net Assets:
Beginning of period ....................................... 21,560,843 21,489,657
-----------------------------
End of period ............................................. $ 27,311,308 $ 21,560,843
=============================
Accumulated Net Investment Loss, at end of period ........... $ (70,810) $ --
=============================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 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 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 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.
- --------------------------------------------------------------------------------
14
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
September 30, 1999
- --------------------------------------------------------------------------------
2. Capital Share Transactions
Transactions in capital stock, were as follows:
Six Months
Ended Year
September 30, Ended
1999 March 31,
(unaudited) 1999
-------------------------
Shares sold ............................ 341,480 304,372
Shares issued to shareholders
in reinvestment of dividends
and distributions..................... -- 32,070
-------------------------
341,480 336,442
Shares repurchased ..................... 232,727 314,846
-------------------------
Net increase ........................... 108,753 21,596
=========================
3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
Six Months Ended
September 30, 1999
(unaudited)
--------------
PURCHASES:
Investment Securities .......................... $12,900,273
===========
SALES:
Investment Securities .......................... $12,805,230
===========
At September 30, 1999, the aggregate cost of investment securities and
repurchase agreements for federal income tax purposes was $19,995,510. The
aggregate appreciation and depreciation of investments at September 30, 1999,
based on a comparison of investment values and their costs for federal income
tax purposes was $7,782,548 and $685,742, respectively, resulting in a net
appreciation of $7,096,806.
4. Advisory Fees, Service and Distribution Plan Fees and Transactions With
Affiliates
An advisory fee of $91,938 payable to Value Line, Inc., the Fund's investment
adviser (the "Adviser"), for the six months ended September 30, 1999, was
voluntarily waived by the Adviser. The fee was computed at the rate of .75 of 1%
of the daily net assets. 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.
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. Fees amounting to
$16,700 for the period June 29, 1999 to September 30, 1999 were paid to the
Distributor, and fees amounting to $13,946 for the period April 1, 1999 to June
28, 1999, were voluntarily waived by the Distributor.
Certain officers and directors of the Adviser and the Distributor are also
officers and a director of the Fund. During the period ended September 30, 1999,
the Fund paid brokerage commissions totalling $8,982 to the Distributor, a
registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At September 30, 1999, the Adviser and/or affiliated companies owned 1,331,437
shares of the Fund's capital stock, representing 76.6% of the outstanding
shares. In addition, certain officers and directors of the Fund owned 45,336
shares of capital stock, representing 2.6% of the outstanding shares.
- --------------------------------------------------------------------------------
15
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Years Ended March 31,
Sept. 30, 1999 ----------------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $13.24 $13.37 $12.67 $15.11 $12.33 $11.80
------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment loss ......... (.04)(4) (.11)(4) (.15) (.13) (.18) (.19)(1)
Net gains or (losses) on
securities (both realized
and unrealized) ........... 2.52 .21 3.34 (.08) 3.08 1.05
------------------------------------------------------------------------------------------------
Total from investment
operations ................ 2.48 .10 3.19 (.21) 2.90 .86
------------------------------------------------------------------------------------------------
Less distributions:
Distributions from
capital gains ............. -- (.23) (2.49) (2.23) (.12) (.33)
------------------------------------------------------------------------------------------------
Total distributions ......... -- (.23) (2.49) (2.23) (.12) (.33)
------------------------------------------------------------------------------------------------
Net asset value, end of period $15.72 $13.24 $13.37 $12.67 $15.11 $12.33
================================================================================================
Total return .................. 18.73%+ 1.01% 27.50% (2.07)% 23.58% 7.57%
================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .............. $27,311 $21,561 $21,490 $16,974 $19,106 $12,492
Ratio of operating expenses to
average net assets .......... 0.98%*(3)(4) 1.34%(3)(4) 1.81%(2) 1.87%(2) 2.15%(2) 2.48%(1)
Ratio of net investment loss to
average net assets .......... (0.58%)*(4) (0.90)%(4) (1.10)% (1.07)% (1.27)% (1.63)%(1)
Portfolio turnover rate ....... 54%+ 203% 149% 100% 57% 30%
</TABLE>
(1) Net of expense reimbursement by the Adviser. Had these expenses been fully
paid by the Fund, net investment loss per share would have been $(.20), the
ratio of expense 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%).
(2) Before offset of custody credits.
(3) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets net of custody credits would have
been 1.29% in the year ended 3/31/99 and 0.95% for the six months ended
9/30/99
(4) Net of waived advisory fee and service and distribution plan fees. Had
these expenses been fully paid by the Fund for year ended March 31, 1999
and for the six months ended September 30, 1999, net investment loss per
share would have been $(.18) and $(.10), the ratio of expenses to average
net assets would have been 1.91% and 1.85%*, and the ratio of net
investment loss to average net assets would have been (1.47)% and (1.44)%*,
respectively.
* Annualized
+ Not annualized
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
Other Information (unaudited)
- --------------------------------------------------------------------------------
Year 2000. Like other mutual funds, the Fund could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser is
taking steps that it believes are reasonably designed to address the Year 2000
problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
- --------------------------------------------------------------------------------
17
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
18
<PAGE>
Value Line Small-Cap Growth Fund, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
19
<PAGE>
Value Line Small-Cap Growth Fund, 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 achieve a high total
investment return consistent with reasonable risk.
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 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.
- --------------------------------------------------------------------------------
20
<PAGE>
================================================================================
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers 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
Francis T. Newton
OFFICERS Jean Bernhard Buttner
Chairman and President
Stephen E. Grant
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
Small-Cap investments entail special risk considerations including liquidity and
volatility.
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).
#509916
