================================================================================
SEMI-ANNUAL REPORT
------------------
June 30, 1998
------------------
Value Line
Leveraged Growth
Investors, Inc.
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Leveraged Growth Investors, Inc.
To Our Value Line Leveraged
- --------------------------------------------------------------------------------
To Our Shareholders:
The first six months of 1998 has provided a challenging environment for
investing in growth equities, but we are proud of the returns Leveraged Growth
has provided over this period. Your Fund beat the benchmark Standard & Poor's
500 Index in both of the first two quarters of this year, and ended up the first
half better than the index by more than five percentage points. The quarterly
breakdowns are as follows:
Leveraged
Growth* S&P 500*
-------- -------
First Quarter ................ 14.87% 13.95%
Second Quarter ............... 7.02% 3.30%
Six months ................... 22.94% 17.71%
* Includes reinvested dividends.
The "challenging environment" mentioned above reflects the volatility we have
seen in the U.S. stock market this year. Beginning in January, stocks rose
almost continuously, from about 7500 (as measured by the Dow Jones Industrial
Average) to new records of over 9200 in mid-April. At that point, the markets
were faced with the second wave of the economic crisis in the Pacific Rim (with
its specter of diminished demand for exported U.S. goods and its pressure on an
already weak Japanese economy), and the market fell to about 8600. At that
level, investors realized that economic conditions in the U.S. were still
conducive to long-term equity investment, and the Dow snapped back sharply,
peaking at over 9350 in early July.
The story of the first part of the third quarter has been mostly negative. So
far, the investment community has been worried about decelerating economic
growth, soft corporate earnings (most of which beat analysts' consensus in the
second quarter, but perhaps not by enough), and the evolving fallout from Asia.
We believe that the overlooked jewel in the U.S. economy is the continued low
rate of inflation, and the positive effect that has on stable and declining
interest rates. Assuming that domestic economic activity continues to grow
modestly (as articulated in the second-quarter preview of 1.4% expansion in the
Gross Domestic Product), we think corporate earnings won't deviate materially
from their long-term uptrend. Moreover, the interest-rate environment suggests
that price earnings multiples will remain steady to up somewhat, which spells
further advances in stock prices.
Finally, the stocks that we believe are poised to participate most fully in this
benign scenario are those we use in Leveraged Growth, which are ranked to
outperform the broad market by the Value Line Timeliness Ranking System. We
appreciate your continued confidence in the Value Line mutual funds, and pledge
our best efforts to meet your investment needs now and in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 10, 1998
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2
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Growth Investors Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The U.S. economy has slowed considerably since the early part of this year,
principally as a result of the fallout from the deepening financial crisis now
gripping much of Asia. Specifically, GDP, which expanded at a frenetic 5.5% pace
during the opening three months of 1998, came in with just a modest 1.4% gain in
the second quarter. Moreover, based on the data released since then, we believe
that the current expansion will not strengthen appreciably over the final six
months of the year.
At this point, though, we do not believe that this slower pace of economic
activity is the forerunner of a recession. Our sense is that the Asian crisis
will gradually recede over the next year and that the continuing low rate of
inflation in this country will encourage the Federal Reserve to keep a steady
hand on the monetary reins. That combination should help to keep this nation's
economy moving forward, albeit slowly.
But even a modest deceleration in U.S. economic activity is likely to mean a
further slowing in overall corporate profit growth. With equity valuations at
elevated levels, such a slowing in profit growth will lead to accentuated
volatility in the financial markets.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/98 ................... 36.89% $13,689
5 years ended 6/30/98 .................. 21.47% $26,445
10 years ended 6/30/98 .................. 17.86% $51,704
* 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, 1998 (unaudited)
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Ten Largest Holdings
<TABLE>
<CAPTION>
Value Percentage
Issue Shares (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dell Computer Corp. .......................... 250,000 $23,203 4.4%
EMC Corp. .................................... 500,000 22,406 4.3
SunAmerica Inc. .............................. 360,000 20,678 4.0
Cisco Systems, Inc. .......................... 165,000 15,190 2.9
Microsoft Corp. .............................. 140,000 15,173 2.9
Schering-Plough Corp. ........................ 160,000 14,660 2.8
Fifth Third Bancorp .......................... 225,000 14,175 2.7
HBO & Co. .................................... 400,000 14,100 2.7
Harley-Davidson, Inc. ........................ 320,000 12,400 2.4
Gillette Co. ................................. 200,000 11,338 2.2
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ....................... $68,094 13.0%
Computer Software & Services ................. 33,468 6.4
Drug ......................................... 32,675 6.3
Retail-Special Lines ......................... 25,815 4.9
Medical Supplies ............................. 22,923 4.4
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- -------------------------------------------------------------------------------------------
<S> <C>
Bed Bath & Beyond Inc. ....................... $7,696
Clear Channel Communications, Inc. ........... 4,887
Colgate-Palmolive Co. ........................ 4,498
American International Group, Inc. ........... 4,421
America Online, Inc. ......................... 4,365
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
- -------------------------------------------------------------------------------------------
<S> <C>
Dell Computer Corp. .......................... $11,492
Oracle Systems Corp. ......................... 6,097
Praxair, Inc. ................................ 5,646
Parametric Technology Corp. .................. 4,629
CompUSA, Inc. ................................ 4,117
</TABLE>
* For the six month period ended 06/30/98
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4
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments June 30, 1998 (unaudited)
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Value
Shares (in thousands)
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COMMON STOCKS (102.4%)
ADVERTISING (1.9%)
200,000 Omnicom Group, Inc. ........................... $ 9,975
AIR TRANSPORT (2.4%)
110,000 Airborne Freight Corp. ........................ 3,843
60,000 Alaska Air Group, Inc.*........................ 3,274
70,000 U.S. Airways Group, Inc.*...................... 5,547
--------
12,664
APPAREL (0.8%)
150,000 Nautica Enterprises, Inc.*..................... 4,022
AUTO & TRUCK (0.5%)
50,000 PACCAR Inc. ................................... 2,612
AUTO PARTS--
REPLACEMENT (0.6%)
45,000 Federal-Mogul Corp. ........................... 3,038
BANK (4.4%)
180,000 BankBoston Corp. .............................. 10,013
70,000 Citicorp....................................... 10,447
35,000 State Street Corp. ............................ 2,432
--------
22,892
BANK--MIDWEST (3.9%)
225,000 Fifth Third Bancorp............................ 14,175
170,000 Norwest Corp. ................................. 6,354
--------
20,529
BEVERAGE--
SOFT DRINK (0.9%)
125,000 Coca-Cola Enterprises Inc. .................... 4,906
COAL/ALTERNATE
ENERGY (0.8%)
80,000 AES Corp.*..................................... 4,205
COMPUTER &
PERIPHERALS (13.0%)
165,000 Cisco Systems, Inc.*........................... 15,190
75,000 Compaq Computer Corp. ......................... 2,128
250,000 Dell Computer Corp.*........................... 23,203
500,000 EMC Corp.*..................................... 22,406
45,000 International Business
Machines Corp. ............................ 5,167
--------
68,094
COMPUTER SOFTWARE
& SERVICES (6.4%)
189,000 Computer Associates
International, Inc. ....................... 10,501
112,500 Fiserv Inc.*................................... 4,778
140,000 Microsoft Corp.*............................... 15,173
63,000 Network Associates, Inc.*...................... 3,016
--------
33,468
DIVERSIFIED
COMPANIES (0.6%)
50,000 Tyco International Ltd. ....................... 3,150
DRUG (6.3%)
50,000 Merck & Co., Inc. ............................. 6,687
72,000 Pfizer, Inc. .................................. 7,826
160,000 Schering-Plough Corp. ......................... 14,660
75,000 Watson Pharmaceuticals,
Inc.*...................................... 3,502
--------
32,675
ENTERTAINMENT (1.0%)
50,000 Clear Channel
Communications, Inc.*...................... 5,456
FINANCIAL SERVICES (2.7%)
25,000 Capital One Financial Corp. ................... 3,105
80,000 FINOVA Group, Inc. (The)....................... 4,530
120,000 Franklin Resources, Inc. ...................... 6,480
--------
14,115
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5
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
FURNITURE/HOME
FURNISHINGS (0.6%)
60,000 Ethan Allen Interiors, Inc. ................... $ 2,996
HEALTHCARE
INFORMATION
SYSTEMS (2.7%)
400,000 HBO & Co. ..................................... 14,100
HOUSEHOLD
PRODUCTS (1.9%)
50,000 Colgate-Palmolive Co. ......................... 4,400
60,000 Procter & Gamble Co. .......................... 5,464
--------
9,864
INDUSTRIAL
SERVICES (1.9%)
150,000 AccuStaff Inc.*................................ 4,687
97,500 Robert Half
International, Inc.*....................... 5,448
--------
10,135
INSURANCE--
DIVERSIFIED (2.7%)
50,000 American International
Group, Inc. ............................... 7,300
120,000 MGIC Investment Corp. ......................... 6,847
--------
14,147
INSURANCE--LIFE (4.0%)
360,000 SunAmerica Inc. ............................... 20,678
INTERNET (1.0%)
50,000 America Online, Inc.*.......................... 5,300
MACHINERY (2.0%)
27,000 Caterpillar, Inc. ............................. 1,427
170,000 Deere & Co. ................................... 8,989
--------
10,416
MANUFACTURED
HOUSING/
RECREATIONAL
VEHICLES (0.6%)
100,000 Oakwood Homes Corp. ........................... 3,000
MEDICAL SERVICES (2.3%)
160,000 Omnicare, Inc. ................................ 6,100
90,000 United Healthcare Corp. ....................... 5,715
--------
11,815
MEDICAL SUPPLIES (4.4%)
75,000 Guidant Corp. ................................. 5,348
100,000 Johnson & Johnson.............................. 7,375
160,000 Medtronic, Inc. ............................... 10,200
--------
22,923
OFFICE EQUIPMENT
& SUPPLIES (1.5%)
278,437 Staples, Inc.*................................. 8,057
OILFIELD SERVICES/
EQUIPMENT (3.8%)
130,000 BJ Services Co.*............................... 3,778
70,000 Smith International, Inc.*..................... 2,437
95,000 Tidewater, Inc. ............................... 3,135
120,000 Transocean Offshore, Inc. ..................... 5,340
60,000 Western Atlas, Inc.*........................... 5,093
--------
19,783
PACKAGING &
CONTAINER (1.0%)
120,000 Owens-Illinois, Inc.*.......................... 5,370
RECREATION (2.4%)
320,000 Harley-Davidson, Inc. ......................... 12,400
RETAIL BUILDING
SUPPLY (1.9%)
120,000 Home Depot, Inc. .............................. 9,968
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6
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1998 (unaudited)
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Value
Shares (in thousands)
- --------------------------------------------------------------------------------
RETAIL--
SPECIAL LINES (4.9%)
150,000 AutoZone, Inc.*................................ $ 4,791
150,000 Bed Bath & Beyond Inc.*........................ 7,772
180,000 Gap, Inc. ..................................... 11,092
45,000 Tiffany & Co. ................................. 2,160
--------
25,815
RETAIL STORE (4.0%)
60,000 Dayton Hudson Corp. ........................... 2,910
274,657 Dollar General Corp. .......................... 10,866
140,000 Kohl's Corp.*.................................. 7,263
--------
21,039
SECURITIES
BROKERAGE (0.5%)
35,000 Lehman Brothers
Holdings, Inc. ............................ 2,715
SEMICONDUCTOR (2.0%)
140,000 Intel Corp. ................................... 10,377
SEMICONDUCTOR
CAPITAL
EQUIPMENT (0.4%)
75,000 Applied Materials, Inc.*....................... 2,213
SHOE (0.5%)
120,000 Wolverine World Wide, Inc. .................... 2,602
TELECOMMUNICATIONS
EQUIPMENT (3.9%)
200,000 ADC Telecommunications,
Inc.*...................................... 7,306
200,000 Loral Space &
Communications Ltd*........................ 5,650
100,000 Tellabs, Inc.*................................. 7,163
--------
20,119
TELECOMMUNICATION
SERVICES (1.7%)
100,000 AirTouch Communications,
Inc.*...................................... 5,844
65,000 WorldCom, Inc.*................................ 3,148
--------
8,992
THRIFT (1.4%)
80,000 Federal Home Loan
Mortgage Corp. ............................ 3,765
60,000 Federal National Mortgage
Association................................ 3,645
--------
7,410
TOILETRIES/
COSMETICS (2.2%)
200,000 Gillette Co. .................................. 11,338
--------
TOTAL COMMON STOCKS
AND TOTAL
INVESTMENT
SECURITIES (102.4%)
(Cost $248,319,000) ....................... 535,373
--------
EXCESS OF LIABILITIES OVER
CASH AND RECEIVABLES (-2.4%) ................................ (12,638)
--------
NET ASSETS (100%) ................................... $522,735
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($522,735,253 / 11,950,034 shares of
capital stock outstanding) .................................. $ 43.74
========
* Non-income producing
See Notes to Financial Statements.
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7
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Assets
and Liabilities at June 30, 1998 (unaudited)
- -------------------------------------------------------------------------------
Dollars
(in thousands
except per
share amount)
-------------
Assets:
Investment securities, at value
(Cost-$248,319) ......................................... $ 535,373
Cash ...................................................... 47
Receivable for capital shares sold ........................ 963
Dividends receivable ...................................... 186
---------
Total Assets ........................................ 536,569
---------
Liabilities:
Payable for loan outstanding .............................. 10,450
Payable for securities purchased .......................... 2,825
Payable for capital shares repurchased .................... 153
Accrued expenses:
Advisory fee ............................................ 309
Other ................................................... 97
---------
Total Liabilities ................................... 13,834
---------
Net Assets ................................................ $ 522,735
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 11,950,034 shares) .......................... $ 11,950
Additional paid-in capital ................................ 202,852
Accumulated net investment loss ........................... (224)
Undistributed net realized gain
on investments .......................................... 21,103
Net unrealized appreciation
of investments .......................................... 287,054
---------
Net Assets ................................................ $ 522,735
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($522,735,253 / 11,950,034
shares outstanding) ..................................... $ 43.74
=========
Statement of Operations
for the six months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
-------------
Investment Income:
Dividends .............................................. $ 1,126
Interest ............................................... 684
--------
Total Income ..................................... 1,810
--------
Expenses:
Advisory fee ........................................... 1,775
Transfer agent fees .................................... 79
Postage ................................................ 29
Registration and filing fees ........................... 27
Custodian fees ......................................... 26
Auditing and legal fees ................................ 21
Telephone .............................................. 20
Commitment fee ......................................... 15
Printing ............................................... 15
Interest expense ....................................... 13
Directors' fees and expenses ........................... 8
Insurance, dues and other .............................. 8
--------
Total Expenses Before
Custody Credits ................................ 2,036
Less: Custody Credits ............................ (2)
--------
Net Expenses ..................................... 2,034
--------
Net Investment Loss .................................... (224)
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain .................................... 19,870
Change in Net Unrealized
Appreciation ....................................... 78,778
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ....................................... 98,648
--------
Net Increase in Net Assets
from Operations ...................................... $ 98,424
========
See Notes to Financial Statements.
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8
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Changes in Net Assets for the six months ended June 30, 1998
(unaudited) and for the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1998 December 31,
(unaudited) 1997
-----------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment loss ....................................... $ (224) $ (683)
Net realized gain on investments .......................... 19,870 37,875
Change in net unrealized appreciation ..................... 78,778 46,969
-----------------------------
Net increase in net assets from operations ................ 98,424 84,161
-----------------------------
Distributions to Shareholders:
Net investment income ..................................... -- --
Net realized gain from investment transactions ............ -- (35,549)
-----------------------------
Total distributions ....................................... -- (35,549)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 139,494 163,122
Proceeds from reinvestment of distributions to shareholders -- 33,787
Cost of shares repurchased ................................ (147,998) (183,766)
-----------------------------
(Decrease) Increase from capital share transactions ....... (8,504) 13,143
-----------------------------
Total Increase .............................................. 89,920 61,755
Net Assets:
Beginning of period ....................................... 432,815 371,060
-----------------------------
End of period ............................................. $ 522,735 $ 432,815
=============================
Accumulated net investment (loss) income, at end of period .. $ (224) $ --
=============================
</TABLE>
See Notes to Financial Statements.
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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 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.
(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.
- --------------------------------------------------------------------------------
10
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
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
June 30, Year Ended
1998 December 31,
(unaudited) 1997
-------------------------------
Shares sold .................. 3,502 4,587
Shares issued to shareholders
in reinvestment of dividends
and distributions .......... -- 1,006
--------------------------
3,502 5,593
Shares repurchased ........... 3,716 5,206
--------------------------
Net (decrease) increase ...... (214) 387
==========================
Dividends per share from net
investment income .......... $ -- $ --
==========================
Distributions per share from
net realized gains ......... $ -- $ 3.235
==========================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1998
(unaudited)
--------------
(in thousands)
Purchases:
Investment Securities ............................... $96,110
=======
Sales:
Investment Securities ............................... $59,925
=======
At June 30, 1998, the aggregate cost of investments securities for federal
income tax purposes, was $248,319,000. The aggregate appreciation and
depreciation of investments at June 30, 1998, based on a comparison of
investment values and their costs for federal income tax purposes was
$289,663,000 and $2,609,000, respectively, resulting in a net appreciation of
$287,054,000.
4. Investment Advisory Contract, Management Fees, and Transactions With
Affiliates
An advisory fee of $1,775,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1998.
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 and a director of the Fund. During the six
months ended June 30, 1998, the Fund paid brokerage commissions totalling
$62,000 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 890,815 shares of the Fund's capital stock,
representing 7.5% of the outstanding shares at June 30, 1998.
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 borrowings outstanding of $10,450,000 at June 30, 1998. The
weighted average amount of bank loans outstanding for the period ended June 30,
1998, amounted to approximately $373,000 at a weighted average interest rate of
6.8%. For the six months ended June 30, 1998, interest expense of approximately
$13,000 and commitment fees of approximately $15,000 relating to borrowings
under the agreement were paid or payable to SSBT.
- --------------------------------------------------------------------------------
11
<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, 1998 ------------------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............... $ 35.58 $ 31.51 $ 28.50 $ 23.18 $ 24.67 $ 22.15
----------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment (loss) income ...... (.02) (.06) (.01) .09 .12 .06
Net gains or losses on securities
(both realized and unrealized) .. 8.18 7.37 6.40 8.48 (1.05) 3.50
----------------------------------------------------------------------------------
Total from investment operations .. 8.16 7.31 6.39 8.57 (.93) 3.56
----------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ............... -- -- # (.09) (.12) (.06)
Distributions from capital gains .. -- (3.24) (3.38) (3.16) (.31) (.98)
Distributions in excess of
capital gains ................... -- -- -- -- (.13) --
----------------------------------------------------------------------------------
Total distributions ............... -- (3.24) (3.38) (3.25) (.56) (1.04)
----------------------------------------------------------------------------------
Net asset value, end of period ...... $ 43.74 $ 35.58 $ 31.51 $ 28.50 $ 23.18 $ 24.67
==================================================================================
Total return ........................ 22.94%+ 23.79% 22.31% 37.06% -3.71% 16.20%
==================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .................... $ 522,735 $ 432,815 $ 371,060 $ 337,280 $ 264,803 $ 302,345
Ratio of expenses to average net
assets (including interest expense) .86%*(1) .86%(1) .88%(1) .88% .89% .92%
Ratio of net investment (loss)
income to average net assets ...... (.09)%* (0.17)% (.02)% .31% .49% .22%
Portfolio turnover rate ............. 13%+ 37% 34% 54% 49% 80%
Average amount of debt outstanding
during the period (in thousands) .. $ 373 $ 97 $ 398 $ 44 -- $ 1,651
Average number of shares
outstanding during the period
(in thousands) .................... 12,085 11,411 11,752 11,357 11,635 12,410
Average amount of debt per
outstanding share during
the period ........................ $ .03 $ .0085 $ .03 $ .004 -- $ .13
</TABLE>
# Dividend paid was less than one cent.
(1) Before offset for custody credits.
+ Not annualized
* Annualized.
See Notes to Financial Statements
- --------------------------------------------------------------------------------
12
<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 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
John W. Chandler
Leo R. Futia
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Alan N. Hoffman
Vice 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
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).
#501005
