================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 1997
------------------
Value Line
Leveraged Growth
Investors, Inc.
[LOGO]
<PAGE>
Value Line Leveraged Growth Investors, Inc.
To Our Value Line Leveraged
- --------------------------------------------------------------------------------
To Our Shareholders
We are pleased to report that your Fund has been making progress relative to the
broad markets. Though performance through June lagged the market indexes, we
have seen a definite improvement in investment results since the spring, as
described later in this letter.
As you can see from the accompanying table, the most difficult relative
performance occurred in the first quarter. During that period, the big
"household name" stocks that make up the Standard & Poor's 500 and other popular
indexes generally did well, while the smaller, more speculative names-especially
in the technology sector, where the Fund has a sizable exposure-met one setback
after another. Part of the problem was that investors had previously accumulated
large gains in these technology stocks, and concerns about the economy or the
health of the personal-computer market provoked waves of panic selling by
holders seeking to lock in those profits; the selling extended even to the
stocks of companies that have excellent longer-term prospects. When the dust
settled on the first quarter, the Fund generated a loss of nearly 6.5%, while
the S&P 500 posted a modest gain.
Leveraged
Growth* S&P 500*
-------- -------
First Quarter...................................... -6.44% 2.67%
Second Quarter..................................... 18.83% 17.46%
Six Months......................................... 11.17% 20.59%
- ----------
* Includes reinvested dividends.
The tide began to turn in the second quarter. While the broad market continued
to edge upward, many of the stocks that had lagged early in the year went into
overdrive, and the Fund's second-quarter total return beat the benchmark by more
than one full percentage point. Given the performance gap that opened up in the
January-March interval, however, the year-to-date comparison remains
unfavorable.
We are optimistic that the balance of 1997 will continue the trends established
in the second quarter. Company earnings have been in line with or ahead of
expectations, and many of the stocks in which the Fund has a concentration
(including technology, health care, and financial services) have been stellar
performers. We believe that it is entirely possible to surpass the performance
of the S&P 500 by the end of the year.
Though equity market indexes are near all-time high levels, we remain bullish on
the prospects for the U.S. stock market. We are in a very favorable economic
environment (see our Economic Observations nearby). A large-scale demographic
shift favoring investment over consumption is under way as the baby-boom
generation prepares for retirement, and global competition is operating to the
benefit of American corporations. All of these factors suggest continuing
progress for stock investors, though they will undoubtedly encounter some
pullbacks and consolidations along the way.
We appreciate your confidence in Value Line, and we will make every effort to
surpass the S&P 500 by the end of the year.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 26, 1997
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2
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Growth Investors Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The economy continues to push ahead, with such important indicators as the level
of manufacturing activity and the rate of employment growth exhibiting a
reasonably good degree of strength. Such trends, and a continuing healthy level
of consumer confidence, suggest that growth will average 2.5%-3.0% during the
closing half of the year. Thereafter, we would expect the expansion pace to
moderate somewhat, with real, inflation-adjusted GDP growth holding in the range
of 2.0%-2.5% in 1998.
Inflation, meanwhile, continues to be remarkably subdued. This healthy pricing
trend, which is all the more impressive given the longevity of the business
upcycle, is, moreover, unlikely to change dramatically in the months ahead.
Underscoring our optimism in this area is the recent hammering out of a budget
package (which should reduce the government's need to borrow to finance the
deficit) and the fact that there is still a lack of serious shortages on either
the labor or the raw-materials fronts.
Interest rates, meantime, reflecting the current, relatively moderate pace of
economic growth and the subdued pricing structure, are unlikely to increase much
over the next few months. Nevertheless, we caution that given the seeming
resiliency of the business expansion, an inflation-wary Federal Reserve will
probably not shy away from tightening the monetary reins if the present pricing
stability gives way. And an upward move in rates, if sufficiently pronounced,
would be poorly recieved, in our opinion, by both the stock and the bond markets
and, as well, by the U.S. economy down the road. The recent increase in
volatility in the financial markets suggests that many are now questioning
whether the current, benign environment can last much longer. We think a
cautious investment strategy is now in order.
*Performance Data:
Growth
Average an Assumed
Annual Investment of
Total Return $10,000
--------- ---------
1 year ended 6/30/97............................. 22.44% $12,244
5 years ended 6/30/97............................ 19.25% $24,120
10 years ended 6/30/97............................ 13.06% $34,135
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and
capital-gains distributions accepted in shares. The investment return and
principal value of an investment will fluctuate so that an investment, when
redeemed, may be worth more or less than its original cost.
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3
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Portfolio Highlights at June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Ten Largest Holdings
<TABLE>
<CAPTION>
Value Percentage of
Issue Shares (in thousands) Net Assets
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dell Computer Corp. .......................................... 120,000 $14,092 3.6%
SunAmerica Inc. .............................................. 270,000 13,163 3.4
EMC Corp. .................................................... 300,000 11,700 3.0
Intel Corp. .................................................. 70,000 9,927 2.5
Gillette Co. ................................................. 100,000 9,475 2.4
Coca-Cola Co. ................................................ 140,000 9,450 2.4
Deere & Co. .................................................. 170,000 9,329 2.4
Fifth Third Bancorp. ......................................... 113,000 9,273 2.4
Microsoft Corp. .............................................. 70,000 8,846 2.3
Citicorp ..................................................... 70,000 8,439 2.2
<CAPTION>
Five Largest Industry Categories
Value Percentage of
Industry (in thousands) Net Assets
- -----------------------------------------------------------------------------------------------------------
Computer & Peripherals ....................................... $39,380 10.0%
Computer Software & Services ................................. 32,900 8.4
Telecommunications Equipment ................................. 29,182 7.4
Drug ......................................................... 23,822 6.1
Medical Supplies ............................................. 22,817 5.8
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- -----------------------------------------------------------------------------------------------------------
Ascend Communications, Inc. .................................. $ 4,637
Merck & Co., Inc. ............................................ 4,286
Procter & Gamble Co. ......................................... 4,163
Tidewater, Inc. .............................................. 4,143
Western Atlas, Inc. .......................................... 4,127
Five Largest Net Security Sales*
<CAPTION>
Proceeds
Issue (in thousands)
- -----------------------------------------------------------------------------------------------------------
CUC International, Inc. ...................................... $ 7,260
First Data Corp. ............................................. 7,041
Green Tree Financial Corp. ................................... 5,770
Hilton Hotels Corp. .......................................... 4,579
Danka Business Systems PLC (ADR) ............................. 4,569
</TABLE>
* For the six month period ended 06/30/97
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4
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS (99.8%)
ADVERTISING (1.6%)
100,000 Omnicom Group, Inc. ........................... $ 6,163
AEROSPACE/
DEFENSE (1.6%)
90,000 McDonnell Douglas Corp. ....................... 6,165
AUTO & TRUCK (1.4%)
100,000 Ford Motor Co. ................................ 3,775
40,000 Paccar, Inc. .................................. 1,858
--------
5,633
BANK (3.8%)
90,000 BankBoston Corp. .............................. 6,486
70,000 Citicorp ...................................... 8,439
--------
14,925
BANK-MIDWEST (3.6%)
113,000 Fifth Third Bancorp ........................... 9,273
85,000 Norwest Corp. ................................. 4,781
--------
14,054
BEVERAGE-
SOFT DRINK (2.4%)
140,000 Coca-Cola Co. ................................. 9,450
CHEMICAL-BASIC (1.6%)
23,500 Du Pont (E.I.) de Nemours
& Co., Inc. ............................... 1,477
110,000 Monsanto Co. .................................. 4,737
--------
6,214
CHEMICAL-
SPECIALTY (1.7%)
120,000 Praxair, Inc. ................................. 6,720
COMPUTER &
PERIPHERALS (10.0%)
50,000 Adaptec, Inc.* ................................ $ 1,738
110,000 Cisco Systems, Inc.* .......................... 7,384
15,000 Compaq Computer Corp.* ........................ 1,489
120,000 Dell Computer Corp.* .......................... 14,092
300,000 EMC Corp.* .................................... 11,700
80,000 Sun Microsystems, Inc.* ....................... 2,977
--------
39,380
COMPUTER SOFTWARE
& SERVICES (8.4%)
126,000 Computer Associates
International, Inc. ....................... 7,017
75,000 Fiserv Inc.* .................................. 3,347
42,000 McAfee Associates Inc.* ....................... 2,651
70,000 Microsoft Corp.* .............................. 8,846
160,000 Oracle Systems Corp.* ......................... 8,060
70,000 Parametric Technology Corp.* .................. 2,979
--------
32,900
DIVERSIFIED
COMPANIES (2.0%)
17,500 AlliedSignal, Inc. ............................ 1,470
100,000 Danaher Corp. ................................. 5,081
17,000 United Technologies Corp. .................... 1,411
--------
7,962
DRUG (6.1%)
90,000 Amgen Inc.* ................................... 5,231
13,300 Lilly (Eli) & Co. ............................. 1,454
50,000 Merck & Co., Inc. ............................. 5,175
36,000 Pfizer, Inc. .................................. 4,302
160,000 Schering-Plough Corp. ......................... 7,660
--------
23,822
FINANCIAL SERVICES
(2.8%)
40,000 FINOVA Group, Inc. (The) ...................... 3,060
60,000 Franklin Resources, Inc. ...................... 4,354
130,000 Money Store, Inc. (The) ....................... 3,729
--------
11,143
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5
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
FOOD PROCESSING (0.4%)
30,000 Campbell Soup Co. ............................. $ 1,500
HEALTHCARE
INFORMATION
SYSTEMS (1.8%)
100,000 HBO & Co. ..................................... 6,888
HOUSEHOLD
PRODUCTS (1.1%)
30,000 Procter & Gamble Co. .......................... 4,237
INDUSTRIAL SERVICES
(1.4%)
100,000 AccuStaff Inc.* ............................... 2,369
65,000 Robert Half International, Inc.* .............. 3,059
--------
5,428
INSURANCE-
DIVERSIFIED (1.8%)
10,000 American International
Group, Inc. ............................... 1,494
120,000 MGIC Investment Corp. ......................... 5,752
--------
7,246
INSURANCE-LIFE (3.4%)
270,000 SunAmerica Inc. ............................... 13,163
MACHINERY (2.7%)
13,500 Caterpillar, Inc. ............................. 1,449
170,000 Deere & Co. ................................... 9,329
--------
10,778
MEDICAL SERVICES (1.9%)
80,000 Omnicare, Inc. ................................ 2,510
70,000 Oxford Health Plans, Inc.* .................... 5,022
--------
7,532
MEDICAL SUPPLIES (5.8%)
21,300 Abbott Laboratories ........................... $ 1,422
40,000 Boston Scientific Corp.* ...................... 2,458
27,000 Guidant Corp. ................................. 2,295
100,000 Johnson & Johnson ............................. 6,437
80,000 Medtronic, Inc. ............................... 6,480
100,000 United States Surgical Corp. .................. 3,725
--------
22,817
OFFICE EQUIPMENT
& SUPPLIES (1.1%)
185,625 Staples, Inc.* ................................ 4,316
OILFIELD SERVICES/
EQUIPMENT (5.3%)
65,000 BJ Services Co.* .............................. 3,486
70,000 Smith International, Inc.* .................... 4,253
95,000 Tidewater, Inc. ............................... 4,180
60,000 Transocean Offshore, Inc. ..................... 4,357
60,000 Western Atlas, Inc.* .......................... 4,395
--------
20,671
PACKAGING &
CONTAINER (0.5%)
60,000 Owens-Illinois, Inc.* ......................... 1,860
RAILROAD (0.9%)
95,000 Wisconsin Central
Transportion Corp.* ....................... 3,539
RECREATION (2.0%)
160,000 Harley-Davidson, Inc. ......................... 7,670
RETAIL BUILDING
SUPPLY (1.4%)
80,000 Home Depot, Inc. .............................. 5,515
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6
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
RETAIL-SPECIAL LINES
(2.9%)
220,000 CompUSA, Inc.* ................................ $ 4,730
120,000 Gap, Inc. ..................................... 4,665
45,000 Tiffany & Co. ................................. 2,078
--------
11,473
RETAIL STORE (3.0%)
175,781 Dollar General Corp. .......................... 6,592
70,000 Kohl's Corp.* ................................. 3,706
55,000 Shopko Stores, Inc.* .......................... 1,402
--------
11,700
SEMICONDUCTOR (2.5%)
70,000 Intel Corp. ................................... 9,927
SHOE (1.6%)
70,000 NIKE, Inc. Class "B" .......................... 4,087
67,500 Wolverine World Wide, Inc. .................... 2,050
--------
6,137
TELECOMMUNICATIONS
EQUIPMENT (7.4%)
200,000 ADC Telecommunications, Inc.* ................. 6,675
101,250 Andrew Corp.* ................................. 2,848
65,000 Ascend Communications, Inc.* .................. 2,559
260,000 Loral Space &
Communications Ltd* ....................... 3,900
175,000 Newbridge Networks Corp.* ..................... 7,613
100,000 Tellabs, Inc.* ................................ 5,587
--------
29,182
TELECOMMUNICATION
SERVICES (1.5%)
53,000 AirTouch Communications, Inc.* ............... 1,451
70,000 Cincinnati Bell, Inc. ......................... 2,205
65,000 WorldCom, Inc.* ............................... 2,080
--------
5,736
Shares or Value
Principal (in thousands)
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
TOILETRIES/COSMETICS
(2.4%)
100,000 Gillette Co. .................................. $ 9,475
--------
TOTAL COMMON STOCKS
AND TOTAL
INVESTMENT
SECURITIES (99.8%)
(Cost $216,820,000) ....................... 391,321
--------
SHORT-TERM INVESTMENTS (0.9%)
U.S. TREASURY
OBLIGATIONS (0.4%)
$1,600 U.S. Treasury Bills 5.185%,
12/11/97 .................................. 1,562
REPURCHASE
AGREEMENT (0.5%)
(including accrued interest)
1,800 Collateralized by $1,470,000
U.S. Treasury Notes 11 5/8%,
due 11/15/02, with a value of
$1,840,000 (with Morgan
Stanley & Co., Inc. 5.70%,
dated 6/30/97, due 7/1/97,
delivery value of $1,800,000) ............. 1,800
--------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $3,362,000) ......................... 3,362
--------
EXCESS OF LIABILITIES OVER
CASH AND RECEIVABLES (-0.7%) ................................ (2,629)
--------
NET ASSETS (100%) ........................................... $392,054
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE
($392,054,000 / 11,190,967 shares of
capital stock outstanding) .................................... $ 35.03
========
* Non-income producing
See Notes to Financial Statements.
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7
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statements of Assets
and Liabilities at June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except per
share amount)
-------------
Assets:
Investment securities, at value
(Cost--$216,820)........................................... $391,321
Short-term investments (Cost--$3,362) ....................... 3,362
Cash ....................................................... 57
Receivable for securities sold ............................. 13,577
Dividends receivable ....................................... 193
Receivable for capital shares sold.......................... 68
--------
Total Assets ......................................... 408,578
--------
Liabilities:
Payable for securities purchased ........................... 16,116
Payable for capital shares repurchased ..................... 56
Accrued expenses:
Advisory fee ............................................. 241
Other .................................................... 111
--------
Total Liabilities .................................... 16,524
--------
Net Assets ................................................. $392,054
========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 11,190,967 shares)............................ $ 11,191
Additional paid-in capital ................................. 180,526
Accumulated net investment loss ............................ (351)
Accumulated net realized gain on
investments .............................................. 26,187
Unrealized net appreciation of
investments............................................... 174,501
--------
Net Assets ................................................. $392,054
========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($392,054,000 / 11,190,967
shares outstanding) ...................................... $ 35.03
========
Statement of Operations
for the six months ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
-----------
Investment Income:
Dividends .................................................. $ 1,056
Interest ................................................... 179
-------
Total Income ......................................... 1,235
-------
Expenses:
Advisory fee ............................................... 1,375
Transfer agent fees ........................................ 72
Auditing and legal fees .................................... 22
Custodian fees ............................................. 20
Telephone and wire charges ................................. 19
Postage .................................................... 17
Commitment fee ............................................. 16
Printing and stationery .................................... 15
Registration and filing fees ............................... 13
Directors' fees and expenses ............................... 8
Insurance, dues and other .................................. 6
Interest expense ........................................... 5
-------
Total Expenses Before
Custody Credits .................................... 1,588
Less: Custody Credits ................................ (2)
-------
Net Expenses ......................................... 1,586
-------
Investment Loss--Net ........................................ (351)
-------
Realized and Unrealized Gain on
Investments--Net:
Realized Gain--Net
(includes $8,294 loss on
futures contracts)...................................... 26,597
Change in Unrealized Appreciation ........................ 13,194
-------
Net Realized Gain and Change in
Unrealized Appreciation
on Investments ........................................... 39,791
-------
Net Increase in Net Assets
from Operations .......................................... $39,440
========
See Notes to Financial Statements
- --------------------------------------------------------------------------------
8
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Changes in Net Assets
for the six months ended June 30, 1997 (unaudited)
and for the year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31,
(unaudited) 1996
--------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Investment (loss) income-net ................................................. $ (351) $ (72)
Realized gain on investments-net ............................................. 26,597 32,084
Change in unrealized appreciation ............................................ 13,194 43,388
--------------------------------------
Net increase in net assets from operations.................................... 39,440 75,400
--------------------------------------
Distributions to Shareholders:
Investment income-net ........................................................ -- (4)
Realized gain from investment transactions-net ............................... -- (35,996)
--------------------------------------
Total distributions .......................................................... -- (36,000)
--------------------------------------
Capital Share Transactions:
Proceeds from sale of shares ................................................. 66,690 143,236
Proceeds from reinvestment of distributions to shareholders................... -- 34,250
Cost of shares repurchased ................................................... (85,136) (183,106)
--------------------------------------
(Decrease) from capital share transactions ................................... (18,446) (5,620)
--------------------------------------
Total Increase ................................................................. 20,994 33,780
Net Assets:
Beginning of period .......................................................... 371,060 337,280
--------------------------------------
End of period ................................................................ $392,054 $371,060
======================================
Accumulated Investment Loss-net,
at end of period ............................................................. $ (351) $ --
======================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
9
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Leveraged Growth Investors, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company whose sole investment objective is to realize
capital growth. The Fund may employ "leverage" by borrowing money and using it
for the purchase of additional securities. Borrowing for investment increases
both investment opportunity and investment risk.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales 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 of federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
Permanent book-tax differences relating to shareholder distributions have been
reclassified. Net investment loss, net realized gain (loss), and net assets are
not affected. In the current year the net investment loss of $72,000 was
reclassified within the composition of net assets to paid-in capital.
- --------------------------------------------------------------------------------
10
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
(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.
(F) Financial Futures Contracts. A financial futures contract is an agreement
between two parties to buy or sell financial instruments at a set price on a
future date. Upon entering into such a contract the Fund is required to pledge
to the broker cash, or U.S. Government securities, equal to the minimum "initial
margin" requirements of the applicable futures exchange. Pursuant to the
contract, the Fund agrees to receive from or to pay the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows: (in thousands except per share
amounts)
Six Months
Ended Year
June 30, Ended
1997 December 31,
(unaudited) 1996
---------------------------
Shares sold .................................... 2,099 4,499
Shares issued to shareholders in
reinvestment of dividends and
distributions................................. -- 1,077
--------------------
2,099 5,576
Shares repurchased ............................. 2,685 5,633
--------------------
Net decrease ................................... (586) ( 57)
====================
Dividends per share ............................ $ -- $ .0004
====================
Distributions per share from
net realized gains............................ $ -- $3.3810
====================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1997
(unaudited)
----------------
(in thousands)
Purchases:
Investment Securities ...................................... $84,992
==========
Sales:
Investment Securities ...................................... $103,126
==========
At June 30, 1997, the aggregate cost of investments securities and short-term
investments for federal income tax purposes, was $220,182,000. The aggregate
appreciation and depreciation of investments at June 30, 1997, based on a
comparison of investment values and their costs for federal income tax purposes
was $177,640,000 and $3,139,000, respectively, resulting in a net appreciation
of $174,501,000.
4. Investment Advisory Contract, Management Fees, and Transactions With
Affiliates
An advisory fee of $1,375,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the period ended June 30, 1997.
This was computed at the rate of 3/4 of 1% of average daily net assets for the
period and paid monthly. The Adviser provides research, investment programs and
supervision of the investment portfolio and pays costs of administrative
services, office space, equipment and compensation of administrative,
bookkeeping and clerical personnel necessary for managing the affairs of the
Fund. The Adviser also provides persons, satisfactory to the Fund's Board of
Directors, to act as officers and employees of the Fund and pays their salaries
and wages. The Fund bears all other costs and expenses.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers
- --------------------------------------------------------------------------------
11
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
and a director of the Fund. During the six months ended June 30, 1997, the Fund
paid brokerage commissions totalling $83,253 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 716,626 shares of the Fund's capital stock, representing
6.4% of the outstanding shares at June 30, 1997.
5. Borrowing Arrangement
The Fund has a line of credit agreement with State Street Bank and Trust (SSBT),
in the amount of $37,500,000. The terms of the agreement are as follows: The
first $12.5 million is available on a committed basis which at the Fund's option
may be either at the Bank's prime rate or at the Federal Funds Rate plus 1%,
whichever is less, and will be subject to a commitment fee of 1/4 of 1% on the
unused portion thereof; amounts in excess of $12.5 million are made available on
an unsecured basis at the same interest rate options stated above.
The Fund had no borrowings outstanding at June 30, 1997. The weighted average
amount of bank loans outstanding for the six months ended June 30, 1997,
amounted to approximately $147,000 at a weighted average interest rate of 6.62%.
For the six months ended June 30, 1997, interest expense of approximately $5,000
and commitment fees of approximately $16,000 relating to borrowings under the
agreement were paid or payable to SSBT.
6. Financial Instruments with Off-Balance Sheet Risk
At June 30, 1997, the Fund had no future contracts outstanding. During the six
month period ended June 30, 1997, the Fund sold stock index futures contracts to
hedge its portfolio positions against price fluctuations. Futures contracts
involve elements of credit and market risk in excess of the amounts reflected in
the Statement of Assets and Liabilities. The contract amounts of these futures
contracts reflect the extent of the Fund's exposure to off-balance sheet risk.
The Fund purchases or sells futures contracts only on exchanges or a board of
trade. The exchange or board of trade acts as the counterparty to the Fund's
futures transactions; therefore, the Fund's credit risk is limited to the
failure of the exchange or board of trade. The Fund bears the market risk which
arises from any changes in security values.
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12
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 1997 -----------------------------------------------------------------------
(unaudited) 1996 1995 1994 1993 1992
---------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 31.51 $ 28.50 $ 23.18 $ 24.67 $ 22.15 $ 25.64
------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment (loss) income ...... (.03) (.01) .09 .12 .06 .16
Net gains or losses on securities
(both realized and unrealized) .. 3.55 6.40 8.48 (1.05) 3.50 (.81)
------------------------------------------------------------------------------------------
Total from investment operations .. 3.52 6.39 8.57 (.93) 3.56 (.65)
------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income ........................ -- # (.09) (.12) (.06) (.15)
Distributions from capital gains -- (3.38) (3.16) (.31) (.98) (2.69)
Distributions in excess of
capital gains ............... -- -- -- (.13) -- --
------------------------------------------------------------------------------------------
Total distributions ............. -- (3.38) (3.25) (.56) (1.04) (2.84)
------------------------------------------------------------------------------------------
Net asset value, end of period ...... $ 35.03 $ 31.51 $ 28.50 $ 23.18 $ 24.67 $ 22.15
==========================================================================================
Total return ........................ 11.17%+ 22.31% 37.06% -3.71% 16.20% -2.46%
==========================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .................... $ 392,054 $ 371,060 $ 337,280 $ 264,803 $ 302,345 $ 290,547
Ratio of operating expenses to
average net assets ................ .86%*(1) .87%(1) .88% .89% .90% .93%
Ratio of interest expense to
average net assets ................ -- .01% -- -- .02% --
Ratio of net investment (loss) income
to average net assets ............. (.19)%* (.02)% .31% .49% .22% .62%
Portfolio turnover rate ............. 23%+ 34% 54% 49% 80% 208%
Average commissions paid per share
of common stock investments
purchased/sold .................... $ .0494 $ .0490(2) -- -- -- --
Average amount of debt outstanding
during the period (in thousands) .. $ 147 $ 398 $ 44 $ -- $ 1,651 $ --
Average number of shares
outstanding during the period
(in thousands) .................... 11,491 11,752 11,357 11,635 12,410 12,530
Average amount of debt per
outstanding share during the period $ .013 $ .03 $ .004 $ -- $ .13 $ --
</TABLE>
# Dividend paid was less than one cent.
(1) Before offset for custody credits.
(2) Disclosure effective for fiscal years beginning on or after 9/1/95.
* Annualized
+ Not annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
<PAGE>
Value Line Leveraged Growth Investors, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14
<PAGE>
Value Line Leveraged Growth Investors, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
15
<PAGE>
Value Line Leveraged Growth Investors, Inc.
The Value Line Family of Funds
- --------------------------------------------------------------------------------
1950--The Value Line Fund seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952--The Value Line Income Fund's primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks to obtain long-term growth of
capital by investing not less than 80% of its assets in "special situations". No
consideration is given to achieving current income.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979--The Value Line Cash Fund, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value to
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.
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 Convetible Ranking System.
1986--Value Line Aggressive Income Trust seeks to maximize current income by
investing in high-yielding, lower-rated, fixed-income corporate 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
individual 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.
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 detemine the correct 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, 7days a week. Read the prospectus carefully before you invest or
send money.
- --------------------------------------------------------------------------------
16
<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 419729
Kansas City, MO 64141-6729
INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Charles E. Reed
Leo R. Futia
John W. Chandler
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Alan N. Hoffman
Vice President
Steven E. Grant
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant 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
information of shareholders. It is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
prospectus of the Trust (obtainable from the Distributor).
VLF706141
