<PAGE>
SEMI-ANNUAL REPORT
June 30, 1995
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
[LOGO]
VALUE LINE MUTUAL FUNDS
INVESTMENT ADVISER
Value Line, Inc.
220 East 42nd Street, New York, NY 10017-5891
DISTRIBUTOR
Value Line Securities, Inc.
220 East 42nd Street, New York, NY 10017-5891
CUSTODIAN BANK
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company c/o NFDS
P.O. Box 419729, Kansas City, MO 64141-6729
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas, New York, N.Y. 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF DIRECTORS
Jean Bernhard Buttner Leo R. Futia
Charles E. Reed Paul Craig Roberts
John W. Chandler
OFFICERS
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
David T. Henigson
VICE PRESIDENT
SECRETARY/TREASURER
Alan N. Hoffman Stephen Grant
VICE PRESIDENT VICE PRESIDENT
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY/TREASURER SECRETARY/TREASURER
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 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). VLF 50686
<PAGE>
TO OUR VALUE LINE LEVERAGED
- -------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The first half of 1995 witnessed the most powerful equity marketplace in some
time, and we are pleased to report that Value Line Leveraged Growth Investors
participated fully in the excitement. For the six months ended June 30, 1995,
your Fund returned 22.13%, almost two percentage points better than the
unmanaged S&P 500 Index (which posted a return of 20.21%, including reinvested
dividends).
A good portion of your Fund's strong performance this year has been a result of
its holdings in the technology sector, including such industries as computer
hardware and software, semiconductors, telecommunications equipment, and
electronics distribution. These stocks have been powerful engines of growth,
appreciating by mid-year to nearly a third of the total portfolio's value. We
have since trimmed our technology exposure somewhat, but we still believe that
technology will become increasingly important to businesses and consumers going
forward, and that the stocks of well-run, financially secure technology
companies will remain core holdings in any growth-oriented equity portfolio.
While the first half of the year was a very positive environment for stocks,
it's important to keep in mind that markets can't go up forever, and it is
entirely likely that some kind of correction or plateau will occur during the
July-December span. In anticipation, we have moved to reduce the Fund's
volatility (the aforementioned reduction in technology exposure is an example of
this). We do not believe, however, that a convincing case for a prolonged bear
market can be made in the current economic climate (see our accompanying
Economic Observations), and we continue to favor quality growth stocks as the
investment vehicles of choice for the long term.
We appreciate your confidence in Value Line Leveraged Growth Investors. We look
forward to serving your investment needs in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
July 16, 1995
2
<PAGE>
GROWTH INVESTORS SHAREHOLDERS
- -------------------------------------------------------------------------------
ECONOMIC OBSERVATIONS
The economy slowed to a virtual crawl in the second quarter, with real,
inflation-adjusted gross domestic product rising by a scant 0.5%. This narrow
increase in growth, which follows much healthier expansion rates of 5.1% and
2.7% in the final quarter of 1994 and the first three months of this year,
respectively, was fueled principally by a mild pickup in consumer spending.
Sharply lower levels of housing construction and somewhat weaker auto production
numbers were the quarter's main depressants.
The recent slowing in business activity, however, is likely to prove short-lived
as recent data show that consumer spending is continuing to pick up, while the
sharp reduction in mortgage rates over the past several months seems to be
injecting some life into the housing market. Assuming that these positive trends
persist, we would expect economic growth to accelerate in the third and fourth
quarters. A moderate carryover effect is likely through at least the opening
months of 1996. The risk of recession, which seemed very real just a short time
ago, has lessened noticeably, in the past month or two.
But the news isn't all good. For example, the pending improvement on the
economic front is likely to dissuade the Federal Reserve Board from trimming
interest rates aggressively in the months ahead, since the added stimulus of
substantially lower borrowing costs would, presumably, not be needed. If that's
the case, the stock market, which continues to be partially underpinned by the
expectation of further interest-rate reductions, would have a key support
mechanism removed.
* PERFORMANCE DATA:
AVERAGE ANNUAL GROWTH OF AN ASSUMED
TOTAL RETURN INVESTMENT OF $10,000
-------------- ---------------------
1 year ended 6/30/95. . . 31.46% $ 13,146
5 years ended 6/30/95. . . 12.60% $ 18,097
10 years ended 6/30/95. . . 13.63% $ 35,897
*THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURNS AND GROWTH OF AN ASSUMED
INVESTMENT OF $10,000 INCLUDE DIVIDENDS REINVESTED AND CAPITAL GAINS
DISTRIBUTIONS ACCEPTED IN SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF
AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTMENT, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN ITS ORIGINAL COST.
3
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
PORTFOLIO HIGHLIGHTS
AT JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
- -------------------------------------------------------------------------------
DOLLARS PERCENTAGE
ISSUE SHARES (IN THOUSANDS) OF NET ASSETS
- -------------------------------------------------------------------------------
Intel Corp. 200,000 $12,662 3.8%
DSC Communications Corp. 225,000 10,463 3.2
EMC Corp. 380,000 9,215 2.8
Midlantic Corp. 225,000 9,000 2.7
Citicorp 150,000 8,681 2.6
Deere & Co. 100,000 8,562 2.6
First Financial Management Corp. 100,000 8,550 2.6
Loral Corp. 160,000 8,280 2.5
CUC International, Inc. 187,500 7,875 2.4
SunAmerica Inc. 140,000 7,140 2.2
----------------------------------------------------------------
FIVE LARGEST INDUSTRY CATEGORIES*
----------------------------------------------------------------
DOLLARS PERCENTAGE
INDUSTRY (IN THOUSANDS) OF NET ASSETS
----------------------------------------------------------------
Financial Services $31,515 9.6%
Semiconductor 29,091 8.8
Computer Software & Services 25,623 7.8
Computer & Peripherals 24,417 7.4
Bank 20,089 6.1
----------------------------------------------------------------
FIVE LARGEST SECURITY PURCHASES* +
----------------------------------------------------------------
COST
ISSUE (IN THOUSANDS)
----------------------------------------------------------------
Cordis Corp. $3,375
Sysco Corp. 3,284
Microsoft Corp. 3,184
Gillette Co. 3,112
Danka Business Systems PLC (ADR) 3,110
----------------------------------------------------------------
FIVE LARGEST SECURITY SALES* +
----------------------------------------------------------------
PROCEEDS
ISSUE (IN THOUSANDS)
----------------------------------------------------------------
Computer Associates International, Inc. $6,396
Nucor Corp. 4,941
SunTrust Banks, Inc. 4,543
U.S. Healthcare, Inc. 4,306
Chase Manhattan Corp. 3,445
----------------------------------------------------------------
*EXCLUSIVE OF FIXED INCOME SECURITIES.
+FOR THE SIX MONTHS ENDED 6/30/95.
4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
VALUE
SHARES (IN THOUSANDS)
- -------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (96.1%)
ADVERTISING (0.6%)
30,000 Omnicom Group, Inc. . . . . . . . . . . . . . $ 1,819
AEROSPACE/DEFENSE (2.5%)
160,000 Loral Corp. . . . . . . . . . . . . . . . . . 8,280
AUTO PARTS-ORIGINAL
EQUIPMENT (1.1%)
100,000 Modine Manufacturing Co.. . . . . . . . . . . 3,675
BANK (6.1%)
150,000 Citicorp. . . . . . . . . . . . . . . . . . 8,681
30,000 First Interstate Bancorp. . . . . . . . . . 2,408
225,000 Midlantic Corp. . . . . . . . . . . . . . . 9,000
----------
20,089
BANK-MIDWEST (1.4%)
80,000 Fifth Third Bancorp . . . . . . . . . . . 4,500
BEVERAGE-ALCOHOLIC (0.7%)
50,000 * Canandaigua Wine Co., Inc. Class "A". . . . . 2,238
BEVERAGE-SOFT DRINK (1.4%)
70,000 Coca-Cola Co. . . . . . . . . . . . . . . . . 4,462
BROADCASTING/CABLE TV (1.6%)
50,000 Capital Cities/ABC, Inc.. . . . . . . . . . . 5,400
CHEMICAL-BASIC (0.9%)
90,000 Union Carbide Corp. . . . . . . . . . . . . . 3,004
CHEMICAL-DIVERSIFIED (1.3%)
45,000 Cabot Corp. . . . . . . . . . . . . . . . . . 2,374
60,000 First Mississippi Corp. . . . . . . . . . . . 2,047
----------
4,421
CHEMICAL-SPECIALTY (1.4%)
60,000 * Airgas, Inc.. . . . . . . . . . . . . . . . $ 1,613
120,000 Praxair, Inc. . . . . . . . . . . . . . . . . 3,000
----------
4,613
COMPUTER &
PERIPHERALS (7.4%)
30,000 * Cabletron Systems, Inc. . . . . . . . . . . . 1,598
35,000 * Dell Computer Corp. . . . . . . . . . . . . 2,104
380,000 * EMC Corp. . . . . . . . . . . . . . . . . . 9,215
50,000 International Business Machines Corp. . . . . 4,800
100,000 * 3Com Corp.. . . . . . . . . . . . . . . . 6,700
----------
24,417
COMPUTER SOFTWARE
& SERVICES (7.8%)
40,000 * America Online, Inc.. . . . . . . . . . . 1,760
50,000 Automatic Data Processing, Inc. . . . . . . . 3,144
50,000 * Ceridian Corp.. . . . . . . . . . . . . . . . 1,844
100,000 Computer Associates International, Inc. . . . 6,775
75,000 * FIserv Inc. . . . . . . . . . . . . . . . . 2,109
40,000 * Microsoft Corp. . . . . . . . . . . . . . . 3,615
120,000 * Oracle Systems Corp.. . . . . . . . . . . . 4,635
35,000 * Parametric Technology Corp. . . . . . . . . 1,741
----------
25,623
DIVERSIFIED COMPANIES (1.8%)
50,000 Danaher Corp. . . . . . . . . . . . . . . . . 1,512
30,000 Premark International, Inc. . . . . . . . . . 1,556
75,000 * Thermo Electron Corp. . . . . . . . . . . . . 3,019
----------
6,087
DRUG (4.6%)
60,000 * Amgen Inc.. . . . . . . . . . . . . . . . . . 4,826
70,000 Merck & Co., Inc. . . . . . . . . . . . . . . 3,430
55,000 Mylan Laboratories Inc. . . . . . . . . . . . 1,691
18,000 Pfizer, Inc.. . . . . . . . . . . . . . . . . 1,663
80,000 Schering-Plough Corp. . . . . . . . . . . . . 3,530
----------
15,140
5
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
VALUE
SHARES (IN THOUSANDS)
- -------------------------------------------------------------------------------
ELECTRONICS (2.8%)
135,000 * Arrow Electronics, Inc. . . . . . . . . . . $ 6,716
50,000 Avnet, Inc. . . . . . . . . . . . . . . . . 2,419
----------
9,135
EUROPEAN DIVERSIFIED (0.9%)
120,000 Danka Business Systems PLC (ADR). . . . . . . 2,903
FINANCIAL SERVICES (9.6%)
100,000 American Express Co.. . . . . . . . . . . . . 3,513
187,500 * CUC International, Inc. . . . . . . . . . . . 7,875
100,000 First Financial Management Corp.. . . . . . . 8,550
100,000 Green Tree Financial Corp.. . . . . . . . . . 4,437
140,000 SunAmerica Inc. . . . . . . . . . . . . . . . 7,140
----------
31,515
FOOD PROCESSING (1.0%)
30,000 Campbell Soup Co. . . . . . . . . . . . . . . 1,470
60,000 Sara Lee Corp.. . . . . . . . . . . . . . . . 1,710
----------
3,180
FOOD WHOLESALERS (1.1%)
120,000 Sysco Corp. . . . . . . . . . . . . . . . . . 3,540
GROCERY (0.8%)
150,000 Casey's General Stores, Inc.. . . . . . . . . 2,700
HOME APPLIANCE (0.5%)
50,000 Black & Decker Corp.. . . . . . . . . . . . . 1,544
HOTEL/GAMING (0.5%)
55,000 * Mirage Resorts, Inc.. . . . . . . . . . . . . 1,684
HOUSEHOLD PRODUCTS (1.0%)
45,000 Lancaster Colony Corp.. . . . . . . . . . . . 1,609
70,000 Newell Co.. . . . . . . . . . . . . . . . . . 1,715
----------
3,324
INDUSTRIAL SERVICES (2.2%)
130,000 Manpower, Inc.. . . . . . . . . . . . . . . $ 3,315
120,000 Olsten Corp. . . . . . . . . . . . . . . . 3,930
----------
7,245
MACHINERY (1.0%)
60,000 Cummins Engine Co., Inc.. . . . . . . . . . . 2,617
24,000 IDEX Corp.. . . . . . . . . . . . . . . . . . 804
----------
3,421
MACHINERY-CONSTRUCTION
& MINING (3.8%)
60,000 Caterpillar, Inc. . . . . . . . . . . . . . . 3,855
100,000 Deere & Co. . . . . . . . . . . . . . . . . . 8,562
----------
12,417
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (1.6%)
312,500 Clayton Homes, Inc. . . . . . . . . . . . . 5,117
MEDICAL SERVICES (0.8%)
50,000 * HealthCare COMPARE Corp.. . . . . . . . . . . 1,500
25,000 * PacifiCare Health Systems, Inc.
Class "A" . . . . . . . . . . . . . . . . . 1,269
----------
2,769
MEDICAL SUPPLIES (5.0%)
40,000 Abbott Laboratories . . . . . . . . . . . . . 1,620
125,000 * Biomet, Inc.. . . . . . . . . . . . . . . . . 1,938
50,000 * Cordis Corp.. . . . . . . . . . . . . . . . 3,337
40,000 Invacare Corp.. . . . . . . . . . . . . . . 1,660
50,000 Johnson & Johnson . . . . . . . . . . . . . . 3,381
40,000 Medtronic Inc.. . . . . . . . . . . . . . . 3,085
35,000 Stryker Corp. . . . . . . . . . . . . . . . 1,343
----------
16,364
OFFICE EQUIPMENT
& SUPPLIES (2.0%)
150,000 * Office Depot, Inc.. . . . . . . . . . . . . . 4,219
82,500 * Staples, Inc. . . . . . . . . . . . . . . . . 2,382
----------
6,601
6
<PAGE>
JUNE 30, 1995
- ------------------------------------------------------------------------------
VALUE
SHARES (IN THOUSANDS)
- ------------------------------------------------------------------------------
PACKAGING & CONTAINER (0.3%)
20,000 * Sealed Air Corp.. . . . . . . . . . . . . . . $ 880
RECREATION (0.9%)
55,000 Disney (Walt) Co. . . . . . . . . . . . . . . 3,059
RETAIL STORE (2.4%)
112,500 Dollar General Corp.. . . . . . . . . . . . . 3,558
35,000 * Kohl's Corp.. . . . . . . . . . . . . . . . . 1,597
100,000 Wal-Mart Stores, Inc. . . . . . . . . . . . . 2,675
----------
7,830
SEMICONDUCTOR (8.8%)
50,000 * Advanced Micro Devices, Inc.. . . . . . . . 1,819
60,000 * Applied Materials, Inc. . . . . . . . . . . 5,198
45,000 * Integrated Device Technology, Inc.. . . . 2,081
200,000 Intel Corp. . . . . . . . . . . . . . . . . . 12,662
80,000 Motorola, Inc.. . . . . . . . . . . . . . . . 5,370
30,000 * Teradyne, Inc.. . . . . . . . . . . . . . . . 1,961
----------
29,091
TELECOMMUNICATIONS
EQUIPMENT (6.1%)
129,000 * ADC Telecommunications, Inc.. . . . . . . . 4,612
45,000 * Andrew Corp.. . . . . . . . . . . . . . . . . 2,604
225,000 * DSC Communications Corp.. . . . . . . . . . . 10,463
50,000 * Tellabs, Inc. . . . . . . . . . . . . . . . . 2,406
----------
20,085
TOILETRIES/COSMETICS (1.6%)
120,000 Gillette Co.. . . . . . . . . . . . . . . 5,355
TRUCKING/TRANSPORTATION
LEASING (0.8%)
125,000 Consolidated Freightways, Inc. . . . . . 2,766
----------
TOTAL COMMON
STOCKS (Cost $204,357) . . . . . . . . . . 316,293
----------
<CAPTION>
CONVERTIBLE BONDS (0.1%)
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS EXCEPT
(IN THOUSANDS) PER-SHARE AMOUNT)
- -------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTOR (0.1%)
$ 250 Integrated Device Technology, Inc.
5.50%, 6/1/02. . . . . . . . . . . . . . . . $ 266
TELECOMMUNICATIONS
SERVICE (0.0%)
500 United States Cellular Corp.
zero coupon, 6/15/15 . . . . . . . . . . . . 156
----------
TOTAL CONVERTIBLE BONDS
(Cost $404) . . . . . . . . . . . . . . . . 422
----------
TOTAL INVESTMENT
SECURITIES (96.2%)
(Cost $204,761) . . . . . . . . . . . . . . 316,715
----------
SHORT-TERM INVESTMENTS (4.3%)
14,200 Federal Home Loan Mortgage Corp.
Discount Notes 6.10%, 7/3/95 . . . . . . . 14,195
----------
TOTAL SHORT-TERM
INVESTMENTS (Cost $14,195) . . . . . . . 14,195
----------
EXCESS OF LIABILITIES OVER CASH
AND RECEIVABLES (-0.5%) . . . . . . . . . . . . . . . . . . ( 1,633)
----------
NET ASSETS (100%) . . . . . . . . . . . . . . . . . . . . . $ 329,277
----------
----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER OUTSTANDING
SHARE ($329,277,000 DIVIDED BY 11,632,652 SHARES OF
CAPITAL STOCK OUTSTANDING). . . . . . . . . . . . . . . . $ 28.31
----------
----------
* NON-INCOME PRODUCING
</TABLE>
SEE NOTES TO FINANANCIAL STATEMENTS
7
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
AT JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS
EXCEPT PER-
SHARE AMOUNT)
-------------
<S> <C>
ASSETS:
Investment securities, at value
(Cost--$204,761) . . . . . . . . . . . . . . . . $ 316,715
Short-term investments (Cost--$14,195) . . . . . . 14,195
Cash . . . . . . . . . . . . . . . . . . . . . . . 70
Receivable for capital shares sold . . . . . . . . 2,086
Dividends and interest receivable. . . . . . . . . 224
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . 333,290
----------
LIABILITIES:
Payable for securities purchased . . . . . . . . . 3,486
Payable for capital shares repurchased . . . . . . 224
Accrued expenses:
Advisory fee. . . . . . . . . . . . . . . . . 195
Other . . . . . . . . . . . . . . . . . . . . 108
----------
TOTAL LIABILITIES . . . . . . . . . . . . . . 4,013
----------
NET ASSETS:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 11,632,652 shares) . . . . . . . . . 11,633
Additional paid-in capital . . . . . . . . . . . . 200,156
Undistributed investment income--net . . . . . . . 814
Accumulated net realized gain on investments . . . 4,720
Unrealized net appreciation of investments . . . . 111,954
----------
NET ASSETS . . . . . . . . . . . . . . . . . $ 329,277
----------
----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE
($329,277,000 DIVIDED BY
11,632,652 SHARES OUTSTANDING) . . . . . . $28.31
----------
----------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS)
-------------
<S> <C>
INVESTMENT INCOME:
Dividends
(Net of foreign withholding taxes of $1) . . . . $ 1,319
Interest . . . . . . . . . . . . . . . . . . . . . 805
----------
TOTAL INCOME . . . . . . . . . . . . . . . . . . 2,124
----------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . . 1,088
Transfer agent fees. . . . . . . . . . . . . . . . 82
Auditing and legal fees. . . . . . . . . . . . . . 26
Registration and filing fees . . . . . . . . . . . 23
Telephone and wire charges . . . . . . . . . . . . 21
Custodian fees . . . . . . . . . . . . . . . . . . 16
Commitment fee . . . . . . . . . . . . . . . . . . 16
Postage. . . . . . . . . . . . . . . . . . . . . . 13
Printing and stationery. . . . . . . . . . . . . . 10
Insurance, dues, and other . . . . . . . . . . . . 9
Directors' fees and expenses . . . . . . . . . . . 6
----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . 1,310
----------
INVESTMENT INCOME--NET . . . . . . . . . . . . . 814
----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS--NET:
Realized Gain--Net . . . . . . . . . . . . . 6,479
Change in Unrealized Appreciation . . . . . . 52,050
----------
NET REALIZED GAIN AND CHANGE IN
UNREALIZED APPRECIATION ON INVESTMENTS . . . . . 58,529
----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS . . . . . . . . . . . . . . . . $ 59,343
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED),
AND FOR THE YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . $ 814 $ 1,336
Realized gain on investments--net. . . . . . . . . . . . . . . 6,479 2,525
Change in unrealized appreciation. . . . . . . . . . . . . . . 52,050 (15,077)
---------- ---------
Net increase (decrease) in net assets from operations. . . . . 59,343 (11,216)
---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income--net . . . . . . . . . . . . . . . . . . . . -- (1,336)
Realized gain from investment transactions--net. . . . . . . . -- (3,492)
Distributions in excess of realized gain--net. . . . . . . . . -- (1,514)
---------- ---------
-- (6,342)
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares . . . . . . . . . . . . . . . . . 68,764 77,687
Proceeds from reinvestment of distributions to shareholders. . -- 5,950
Cost of shares repurchased . . . . . . . . . . . . . . . . . . (63,633) (103,621)
---------- ---------
Increase (Decrease) from capital share transactions. . . . . . 5,131 (19,984)
---------- ---------
TOTAL INCREASE (DECREASE). . . . . . . . . . . . . . . . . . . . 64,474 (37,542)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . 264,803 302,345
---------- ---------
End of period. . . . . . . . . . . . . . . . . . . . . . . . $ 329,277 $ 264,803
---------- ---------
---------- ---------
UNDISTRIBUTED INVESTMENT INCOME--NET, AT END OF PERIOD . . . . . $ 814 $ --
---------- ---------
---------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) SECURITY TRANSACTIONS AND DISTRIBUTIONS. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
(E) AMORTIZATION. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
10
<PAGE>
JUNE 30, 1995
- --------------------------------------------------------------------------------
2. CAPITAL SHARE TRANSACTIONS, DIVIDENDS,
AND DISTRIBUTIONS TO SHAREHOLDERS
Transactions in capital stock were as follows
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DEC. 31,
(UNAUDITED) 1994
---------- ----------
<S> <C> <C>
Shares sold. . . . . . . . . . . . . . . . . 2,717 3,273
Shares issued to shareholders
in reinvestment of dividends
and distributions. . . . . . . . . . . . . -- 260
-------- --------
.. . . . . . . . . . . . . . . . . . . . . . 2,717 3,533
Shares repurchased . . . . . . . . . . . . . 2,509 4,365
-------- --------
Net increase (decrease). . . . . . . . . . . 208 (832)
-------- --------
-------- --------
Dividends per share. . . . . . . . . . . . . $ -- $ .11400
-------- --------
-------- --------
Distributions per share from
net realized gains . . . . . . . . . . . . $ -- $ .45331
-------- --------
-------- --------
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995
(UNAUDITED)
-----------
(IN THOUSANDS)
<S> <C>
PURCHASES:
Investment Securities. . . . . . . $ 80,130
---------
---------
SALES:
U.S. Treasury Obligations. . . . . $ 10,448
Other Investment Securities. . . . 55,214
---------
$ 65,662
---------
---------
</TABLE>
At June 30, 1995, the aggregate cost of investment securities and short-term
investments for federal income tax purposes was $219,576,000. The aggregate
appreciation and depreciation of investments at June 30, 1995, based on a
comparison of investment values and their costs for federal income tax purposes,
was $112,579,000 and $1,245,000, respectively, resulting in a net appreciation
of $111,334,000.
For federal income tax purposes, realized losses incurred after October 31,
within the fiscal year, 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
net capital losses of approximately $1,137,000 during the fiscal year ended
December 31, 1994. To the extent future capital gains are offset by such capital
losses, the Fund does not anticipate distributing any such gains to the
shareholders.
4. INVESTMENT ADVISORY CONTRACT,
MANAGEMENT FEES, AND TRANSACTIONS
WITH AFFILIATES
An advisory fee of $1,088,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1995.
This was computed at the rate of 3/4 of 1% of average daily net assets for the
year and paid monthly. The Adviser provides research, investment programs, and
supervision of the investment portfolio and pays costs of administrative
services, office space, and equipment and compensation of administrative,
bookkeeping, and clerical personnel necessary for managing the affairs of the
Fund. The Adviser also provides persons, satisfactory to the Fund's Board of
Directors, to act as officers and employees of the Fund and pays their salaries
and wages. The Fund bears all other costs and expenses. If the aggregate
expenses of the Fund, other than taxes, interest, brokerage commissions, and
extraordinary expenses,
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
exceed the expense limitation imposed by any state in which the Fund's share are
sold, the advisory fee will be reduced by the amount of such excess, or the
amount of such excess will be refunded. No such reimbursement was required for
the six months ended June 30, 1995.
A fee of $1,960 for printing services was paid or payable to the Adviser for the
six months ended June 30, 1995.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers and a director of the Fund. During the six
months ended June 30, 1995, the Fund paid brokerage commissions totalling
$95,000 to the distributor, which clears its transactions through unaffiliated
brokers.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 1,844,537 shares of the Fund's capital stock,
representing 15.9% of the outstanding shares at June 30, 1995. In addition,
certain officers and directors of the Fund owned 96,305 shares of the Fund,
representing 0.8% of the outstanding shares.
5. BORROWING ARRANGEMENT
The Fund has a line of credit agreement with State Street Bank and Trust (SSBT),
dated August 23, 1994, in the amount of $37,500,000. The terms of the agreement
are as follows: The first $12.5 million is available on a committed basis which
at the Fund's option may be either at the Bank's prime rate or at the Federal
Funds Rate plus 1%, whichever is less, and will be subject to a commitment fee
of 1/4 of 1% on the unused portion thereof; amounts in excess of $12.5 million
are made available on an unsecured basis at the same interest-rate options
stated above.
The Fund had no borrowings outstanding during the six months ended June 30,
1995. A commitment fee was payed or payable to SSBT in the amount of $16,000 for
the six-month period ended June 30, 1995.
12
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED DECEMBER 31,
(UNAUDITED) -----------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . $ 23.18 $ 24.67 $ 22.15 $ 25.64 $ 21.16 $ 23.09
-------- -------- -------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . . . . . 0.07 .12 .06 .16 .23 .34
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . 5.06 (1.05) 3.50 ( .81) 9.09 ( .73)
-------- -------- -------- -------- -------- --------
Total from investment operations . . . . . . . 5.13 (.93) 3.56 ( .65) 9.32 ( .39)
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income. . . . . . . -- (.12) ( .06) ( .15) (.23) ( .36)
Distributions from capital gains. . . . . . . . . -- (.31) ( .98) (2.69) (4.61) (1.18)
Distributions in excess of capital gains. . . . . -- (.13) -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions. . . . . . . . . . . . . . -- (.56) (1.04) (2.84) (4.84) (1.54)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . $28.31 $23.18 $24.67 $22.15 $25.64 $21.16
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 22.13%+ -3.71% 16.20% -2.46% 46.35% -1.61%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) . . . . . . . $329,277 $264,803 $302,345 $290,547 $347,620 $236,095
Ratio of operating expenses to
average net assets . . . . . . . . . . . . . . . . . .90%* .89% .90% .93% .90% .96%
Ratio of interest expense to average
net assets . . . . . . . . . . . . . . . . . . . . . -- -- .02% -- .02% --
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . . . . .56%* .49% .22% .62% .84% 1.51%
Portfolio turnover rate. . . . . . . . . . . . . . . . 24%+ 49% 80% 208% 250% 94%
Amount of debt outstanding at end of
period (in thousands). . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ -- $ --
Average amount of debt outstanding
during the period (in thousands) . . . . . . . . . . $ -- $ -- $ 1,651 $ -- $ 635 $ --
Average number of shares outstanding
during the period (in thousands) . . . . . . . . . . 11,588 11,635 12,410 12,530 11,515 10,475
Average amount of debt per outstanding
share during the period. . . . . . . . . . . . . . . $ -- $ -- $ .13 $ -- $ .055 $ --
<FN>
+ Not annualized
* Annualized
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<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 INVESTOR'S 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.
14
