================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 1999
------------------
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:
In general, the first half of 1999 presented a good environment for growth
equity investing, and the performance of Leveraged Growth Investors reflects
that positive backdrop. The early months of the year saw a continuation of a
powerful rally that started the previous October. And though a difficult period
for growth stocks arose during the springtime (described more fully below),
during the last few weeks of June performance again picked up materially. The
actual returns for the six- and twelve-month periods that ended on June 30,
1999, compared to the unmanaged benchmark S&P 500 Composite Index, are as
follows:
Leveraged
Growth
Investors S&P 500
--------- -------
First half ................................... 12.97% 12.38%
Trailing twelve months ....................... 28.31% 22.75%
A number of events between late April and mid-June combined to divert the
market's attention from the growth-oriented stocks that are our focus. Oil
prices, which had been depressed for over a year, began to rise as expanding
demand and production constraints fell into place. The expanding demand reflects
the reemergence of several overseas markets, which had endured a series of
financial crises beginning in 1997 and had played a major role in U.S. equity
corrections in 1997 and 1998. These developments, along with fears of tight
domestic labor markets and the possibility of other industrial commodity prices
rising, sparked concerns that inflation might again be heating up. The bond
market reacted negatively and long-term interest rates jumped from the mid-5%
range to over 6%.
Amid all of this activity, the equity market changed its focus.
Small-capitalization stocks, which had been dormant for years, began to
outperform large-cap issues. Stocks of cyclical or commodity-based companies
began to outperform growth stocks. And with the increasing health of
emerging-market economies, investors funneled funds into those markets at the
expense of U.S. issues. The bottom line is that funds devoted to domestic
large-cap growth, including Leveraged Growth Investors, swooned for the better
part of two months.
The catch phrase during May and June was "cyclical rotation," which assumed that
the stocks that had been leaders for years were about to be bumped by the newly
beloved cyclical and commodity sector. Though it's too soon to rule out that
hypothesis completely, we believe that the recent market action represents a
broadening of the market beyond an exclusively growth orientation rather than a
rotation of the market away from a growth focus. Overall, we believe growth
investing, as defined by The Value Line Timeliness Ranking System, will provide
superior returns in general.
As the final months of the millennium unfold, our outlook for equity investing
is as bright as ever. As always, we appreciate your confidence in Value Line.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 6, 1999
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2
<PAGE>
Value Line Leverage Growth Investors, Inc.
Growth Investors Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The economy is now starting to turn in more of a mixed performance. Evidence of
this uneven pattern began to emerge in the second quarter, when GDP growth
slowed to a 2.3% rate. More recently, we've seen a moderation in the rate of
manufacturing activity and some selective weakening in retail sales. On the
other hand, housing is still quite strong and the level of employment continues
to increase at a healthy pace. Overall, this less even growth trend does not
imply that the long-running expansion is about to falter. But it does suggest
that growth is likely to hold nearer to the recent 2%-3% level over the next
several quarters than to the earlier, and more frenetic, 4%-5% pace.
Inflationary pressures, meanwhile, are starting to build. Here, as well, we
aren't forecasting a dramatic change in trend. Nevertheless, the sharp runup in
oil prices in recent months, the recent escalation in wage costs, and the runup
in mortgage rates all indicate that the cost of living is increasing. A gradual
uptrend in pricing now seems likely over the next several quarters. The Federal
Reserve, taking note of these rising cost pressures is likely to maintain a
somewhat more restrictive monetary stance in the months ahead.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/99 ....................... 28.31% $12,831
5 years ended 6/30/99 ...................... 28.64% $35,234
10 years ended 6/30/99 ...................... 19.41% $58,917
* 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, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ten Largest Holdings
Value Percentage
Issue Shares (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cisco Systems, Inc. .......................................... 400,000 $25,800 3.8%
America Online, Inc. ......................................... 200,000 22,100 3.2
EMC Corp. .................................................... 400,000 22,000 3.2
American International Group, Inc. ........................... 180,000 21,071 3.1
Gap, Inc. .................................................... 405,000 20,402 3.0
Dell Computer Corp. .......................................... 500,000 18,500 2.7
Microsoft Corp. .............................................. 200,000 18,037 2.6
Harley-Davidson, Inc. ........................................ 320,000 17,400 2.6
Intel Corp. .................................................. 280,000 16,660 2.4
Omnicom Group, Inc. .......................................... 200,000 16,000 2.3
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ....................................... $77,932 11.4%
Retail-Special Lines ......................................... 47,038 6.9
Drug ......................................................... 45,469 6.7
Telecommunications Equipment ................................. 40,689 6.0
Computer Software & Services ................................. 40,254 5.9
<CAPTION>
Five Largest Security Purchases*
Cost
Issue (in thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Mandalay Resort Group ........................................ $6,763
Safeway Inc. ................................................. 6,448
AT & T Corp. ................................................. 6,409
General Motors Corp. ......................................... 5,937
Best Buy Co., Inc. ........................................... 5,691
<CAPTION>
Five Largest Security Sales*
Proceeds
Issue (in thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
American International Group, Inc. ........................... $18,247
EMC Corp. .................................................... 10,152
Dollar General Corp. ......................................... 8,365
MGIC Investment Corp. ........................................ 5,891
Eastman Kodak Co. ............................................ 5,252
</TABLE>
* For the six month period ended 06/30/99
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4
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS (95.3%)
- --------------------------------------------------------------------------------
ADVERTISING (2.3%)
200,000 Omnicom Group, Inc. ........................... $ 16,000
AEROSPACE/
DEFENSE (0.8%)
80,000 Gulfstream Aerospace Corp.*.................... 5,405
AIR TRANSPORT (0.5%)
60,000 Delta Air Lines, Inc. ......................... 3,457
ALTERNATE
ENERGY (0.9%)
100,000 AES Corp.*..................................... 5,813
AUTO & TRUCK (0.7%)
70,000 General Motors Corp. .......................... 4,620
BANK (2.4%)
40,000 Chase Manhattan Corp. ......................... 3,465
80,000 State Street Corp.............................. 6,830
100,000 Zions Bancorporation........................... 6,350
--------
16,645
BANK--MIDWEST (2.2%)
225,000 Fifth Third Bancorp............................ 14,977
COMPUTER &
PERIPHERALS (11.4%)
400,000 Cisco Systems, Inc.*........................... 25,800
500,000 Dell Computer Corp.*........................... 18,500
400,000 EMC Corp.*..................................... 22,000
90,000 International Business
Machines Corp. ............................ 11,632
--------
77,932
COMPUTER SOFTWARE
& SERVICES (5.9%)
200,000 Ceridian Corp.*................................ 6,538
189,000 Computer Associates
International, Inc. ....................... 10,395
168,750 Fiserv, Inc.*.................................. 5,284
200,000 Microsoft Corp.*............................... 18,037
--------
40,254
DIVERSIFIED
COMPANIES (3.0%)
80,000 AlliedSignal Inc. ............................. 5,040
100,000 Tyco International, Ltd. ...................... 9,475
80,000 United Technologies Corp. ..................... 5,735
--------
20,250
DRUG (6.7%)
60,000 Amgen Inc.*.................................... 3,652
70,000 Biogen, Inc.*.................................. 4,502
60,000 Genzyme Corp.--
General Division*.......................... 2,910
45,000 Lilly (Eli) & Co. ............................. 3,223
100,000 Merck & Co., Inc. ............................. 7,400
72,000 Pfizer, Inc. .................................. 7,902
250,000 Schering-Plough Corp. ......................... 13,250
75,000 Watson Pharmaceuticals,
Inc.*...................................... 2,630
--------
45,469
ELECTRICAL
EQUIPMENT (1.7%)
100,000 General Electric Co. .......................... 11,300
ENTERTAINMENT (1.5%)
150,000 Clear Channel
Communications, Inc.*...................... 10,341
FINANCIAL
SERVICES (3.0%)
30,000 American Express Co. .......................... 3,904
262,500 Citigroup Inc. ................................ 12,469
80,000 FINOVA Group, Inc. (The)....................... 4,210
--------
20,583
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5
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
FOREIGN
TELECOMMUNICATIONS
(1.4%)
50,000 Vodafone AirTouch
PLC (ADR).................................. $ 9,850
GROCERY (1.0%)
140,000 Safeway Inc.*.................................. 6,930
HOMEBUILDING (1.0%)
175,000 Centex Corp. .................................. 6,573
HOTEL/GAMING (0.8%)
265,000 Mandalay Resort Group* ........................ 5,598
HOUSEHOLD
PRODUCTS (2.0%)
45,000 Clorox Company (The)........................... 4,806
90,000 Dial Corp. (The)............................... 3,347
60,000 Procter & Gamble Co. .......................... 5,355
--------
13,508
INSURANCE--
DIVERSIFIED (3.1%)
180,000 American International
Group, Inc. ............................... 21,071
INTERNET (3.2%)
200,000 America Online, Inc.*.......................... 22,100
MACHINERY (0.7%)
75,000 Ingersoll-Rand Co. ............................ 4,847
MEDICAL SUPPLIES
(4.6%)
60,000 Cardinal Health, Inc. ......................... 3,848
10,740 Genzyme Corp.--Surgical
Products Divison*.......................... 47
100,000 Guidant Corp.*................................. 5,144
100,000 Johnson & Johnson.............................. 9,800
160,000 Medtronic, Inc. ............................... 12,460
--------
31,299
OFFICE EQUIPMENT &
SUPPLIES (1.9%)
417,655 Staples, Inc.*................................. 12,921
OILFIELD SERVICES/
EQUIPMENT (0.5%)
120,000 Transocean Offshore, Inc. ..................... 3,150
RECREATION (3.7%)
150,000 Electronic Arts Inc.*.......................... 8,137
320,000 Harley-Davidson, Inc. ......................... 17,400
--------
25,537
RETAIL BUILDING
SUPPLY (3.5%)
240,000 Home Depot, Inc. (The)......................... 15,465
150,000 Lowe's Companies, Inc. ........................ 8,503
--------
23,968
RETAIL--
SPECIAL LINES (6.9%)
150,000 Bed Bath & Beyond Inc.*........................ 5,775
120,000 Best Buy Co., Inc.*............................ 8,100
405,000 Gap, Inc. ..................................... 20,402
140,000 Tandy Corp. ................................... 6,843
170,000 Williams-Sonoma, Inc.*......................... 5,918
--------
47,038
RETAIL STORE (4.1%)
65,000 Costco Companies, Inc.*........................ 5,204
100,000 Dayton Hudson Corp. ........................... 6,500
140,000 Kohl's Corp.*.................................. 10,806
110,000 Wal-Mart Stores, Inc. ......................... 5,308
--------
27,818
SECURITIES
BROKERAGE (1.9%)
120,000 Schwab (Charles) Corp. ........................ 13,185
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6
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
SEMICONDUCTOR (2.4%)
280,000 Intel Corp. ................................... $ 16,660
TELECOMMUNICATIONS EQUIPMENT (6.0%)
200,000 ADC Telecommunications,
Inc.*...................................... 9,112
200,000 Loral Space &
Communications Ltd*........................ 3,600
140,000 Lucent Technologies Inc. ...................... 9,441
35,000 QUALCOMM Inc.*................................. 5,023
200,000 Tellabs, Inc.*................................. 13,513
--------
40,689
TELECOMMUNICATION
SERVICES (1.8%)
120,000 AT&T Corp. .................................... 6,698
65,000 MCI WorldCom, Inc.*............................ 5,594
--------
12,292
THRIFT (1.3%)
80,000 Federal Home Loan
Mortgage Corp. ............................ 4,640
60,000 Federal National Mortgage
Association................................ 4,102
--------
8,742
TRUCKING/
TRANSPORTATION
LEASING (0.5%)
80,000 CNF Transportation Inc. ....................... 3,070
--------
TOTAL COMMON STOCKS
AND TOTAL
INVESTMENT
SECURITIES (95.3%)
(Cost $272,307,000) ....................... 649,892
--------
Value
Principal (in thousands)
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (4.1%)
(including accrued interest)
$26,900 Collateralized by $26,835,000
U.S. Treasury Inflation
Indexed Notes 33/8%,
due 1/15/07 with a value of
$27,453,000 (with State
Street Bank & Trust Company
4.70%, dated 6/30/99, due
7/1/99, delivery value
$26,903,512)............................... $ 26,904
900 Collateralized by $905,000
U.S. Treasury Notes 61/2%,
due 5/31/01 with a value of
$928,000 (with State Street
Bank & Trust Company
4.00%, dated 6/30/99,
due 7/1/99, delivery
value $900,000)............................ 900
--------
TOTAL REPURCHASE
AGREEMENTS
(Cost $27,804,000) ............................ 27,804
--------
CASH AND RECEIVABLES LESS
LIABILITIES (0.6%) .......................................... 4,424
--------
NET ASSETS (100.0%) ........................................... $682,120
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($682,120,222 / 12,471,050 shares of
capital stock outstanding) .................................. $ 54.70
========
* Non-income producing
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
7
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Statement of Assets
and Liabilities at June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost--$272,307) ......................................... $ 649,892
Repurchase agreement
(Cost--$27,804) .......................................... 27,804
Cash ....................................................... 25
Receivable for capital shares sold ......................... 2,910
Receivable for securities sold ............................. 2,707
Dividends receivable ....................................... 273
Prepaid insurance expense .................................. 15
---------
Total Assets ......................................... 683,626
---------
Liabilities:
Payable for capital shares repurchased ..................... 1,048
Accrued expenses:
Advisory fee ............................................. 391
Other .................................................... 67
---------
Total Liabilities .................................... 1,506
---------
Net Assets ................................................. $ 682,120
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 12,471,050 shares) ........................... $ 12,471
Additional paid-in capital ................................. 224,878
Accumulated net investment loss ............................ (875)
Undistributed net realized gain
on investments ........................................... 68,061
Net unrealized appreciation
of investments ........................................... 377,585
---------
Net Assets ................................................. $ 682,120
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($682,120,222 / 12,471,050
shares outstanding) ...................................... $ 54.70
=========
Statement of Operations
for the six months ended June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
--------------
Investment Income:
Dividends ................................................. $ 1,370
Interest .................................................. 376
--------
Total Income ........................................ 1,746
--------
Expenses:
Advisory fee .............................................. 2,375
Transfer agent fees ....................................... 83
Custodian fees ............................................ 29
Printing .................................................. 25
Registration and filing fees .............................. 20
Postage ................................................... 19
Auditing and legal fees ................................... 18
Commitment fee ............................................ 18
Telephone ................................................. 17
Directors' fees and expenses .............................. 8
Insurance, dues and other ................................. 6
Interest expense .......................................... 5
--------
Total Expenses Before
Custody Credits ................................... 2,623
Less: Custody Credits ............................... (2)
--------
Net Expenses ........................................ 2,621
--------
Net Investment Loss ....................................... (875)
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ....................................... 42,282
Change in Net Unrealized
Appreciation .......................................... 35,712
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments .......................................... 77,994
--------
Net Increase in Net Assets
from Operations ......................................... $ 77,119
========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
<PAGE>
Value Line Leveraged Growth Investors, Inc.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
for the six months ended June 30, 1999 (unaudited) and for the year ended December 31, 1998
- ------------------------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1999 Year Ended
(unaudited) 1998
-----------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment loss ................................................ $ (875) $ (1,061)
Net realized gain on investments ................................... 42,282 38,523
Change in net unrealized appreciation .............................. 35,712 133,597
--------------------------------
Net increase in net assets from operations ......................... 77,119 171,059
--------------------------------
Distributions to Shareholders:
Net investment income .............................................. -- --
Net realized gain from investment transactions ..................... -- (14,660)
--------------------------------
Total distributions ................................................ -- (14,660)
--------------------------------
Capital Share Transactions:
Proceeds from sale of shares ....................................... 374,676 411,246
Proceeds from reinvestment of distributions to shareholders ........ -- 13,826
Cost of shares repurchased ......................................... (378,173) (405,788)
--------------------------------
Net (decrease) increase from capital share transactions ............ (3,497) 19,284
--------------------------------
Total Increase ....................................................... 73,622 175,683
Net Assets:
Beginning of period ................................................ 608,498 432,815
--------------------------------
End of period ...................................................... $ 682,120 $ 608,498
================================
Accumulated net investment (loss) income, at end of period ........... $ (875) $ --
================================
</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.
- --------------------------------------------------------------------------------
10
<PAGE>
Value Line Leveraged Growth Investors, Inc.
June 30, 1999 (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
1999 December 31,
(unaudited) 1998
------------------------------
Shares sold ................................... 7,254 10,027
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... -- 298
----------------------
7,254 10,325
Shares repurchased ............................ 7,351 9,921
----------------------
Net (decrease) increase ....................... (97) 404
======================
Distributions per share from ..................
net realized gains .......................... $ -- $ 1.206
======================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1999
(unaudited)
--------------
(in thousands)
Purchases:
Investment Securities ...................................... $ 78,274
========
Sales:
Investment Securities ...................................... $105,496
========
At June 30, 1999, the aggregate cost of investments securities and repurchase
agreements for federal income tax purposes, was $301,257,000. The aggregate
appreciation and depreciation of investments at June 30, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $379,006,000 and $2,567,000, respectively, resulting in a net appreciation
of $376,439,000.
4. Investment Advisory Contract, Management Fees, and Transactions With
Affiliates
An advisory fee of $2,375,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1999.
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, 1999, the Fund paid brokerage commissions totalling
$98,234 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 963,307 shares of the Fund's capital stock, representing
7.7% of the outstanding shares at June 30, 1999.
- --------------------------------------------------------------------------------
11
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Notes to Financial Statements June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
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, 1999. The weighted average
amount of bank loans outstanding for the six months ended June 30, 1999,
amounted to approximately $153,000 at a weighted average interest rate of 5.8%.
For the six months ended June 30, 1999, interest expense of approximately $5,000
and commitment fees of approximately $18,000 relating to borrowings under the
agreement were paid or payable to SSBT.
- --------------------------------------------------------------------------------
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, 1999 ---------------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............. $ 48.42 $ 35.58 $ 31.51 $ 28.50 $ 23.18 $ 24.67
--------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment (loss) income .... (.07) (.08) (.06) (.01) .09 .12
Net gains or losses on securities
(both realized and unrealized) 6.35 14.13 7.37 6.40 8.48 (1.05)
--------------------------------------------------------------------------------------
Total from investment operations 6.28 14.05 7.31 6.39 8.57 (.93)
--------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ............. -- -- -- # (.09) (.12)
Distributions from capital gains -- (1.21) (3.24) (3.38) (3.16) (.31)
Distributions in excess of
capital gains ................. -- -- -- -- -- (.13)
--------------------------------------------------------------------------------------
Total distributions ......... -- (1.21) (3.24) (3.38) (3.25) (.56)
--------------------------------------------------------------------------------------
Net asset value, end of period .... $ 54.70 $ 48.42 $ 35.58 $ 31.51 $ 28.50 $ 23.18
======================================================================================
Total return ...................... 12.97%+ 39.63% 23.79% 22.31% 37.06% -3.71%
======================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .................. $682,120 $608,498 $432,815 $371,060 $337,280 $264,803
Ratio of expenses to average
net assets (including
interest expense) ............... .82%*(1) .87%(1) .86%(1) .88%(1) .88% .89%
Ratio of expenses to average
net assets (excluding
interest expense) ............... .82%*(1) .84%(1) .86%(1) .87%(1) -- --
Ratio of net investment (loss)
income to average net assets .... (.28)%* (.22)% (0.17)% (.02)% .31% .49%
Portfolio turnover rate ........... 13%+ 54% 37% 34% 54% 49%
</TABLE>
# Dividend paid was less than one cent.
(1) Before offset for custody credits.
+ Not annualized
* Annualized.
See Notes to Financial Statements
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13
<PAGE>
Value Line Leveraged Growth Investors, Inc.
Other Information (unaudited)
- --------------------------------------------------------------------------------
Year 2000. Like other mutual funds, the Fund could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser is
taking steps that it believes are reasonably designed to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
satisfactory asssurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
- --------------------------------------------------------------------------------
14
<PAGE>
Value Line Leveraged Growth Investors, Inc.
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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. Current income is a
secondary objective.
1952--Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983--Value Line Centurion Fund* seeks long-term growth of capital.
1984--The Value Line Tax Exempt Fund seeks to provide investors with the maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: The Money Market Portfolio
and the National Bond Portfolio.
1985--Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--Value Line Aggressive Income Trust seeks to maximize current income.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal.
1987--Value Line Strategic Asset Management Trust* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line Small-Cap Growth Fund invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
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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 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).
#507984
