================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 1998
------------------
The Value Line
Cash Fund, Inc.
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
The Value Line Cash Fund, Inc.
To Our Value Line
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To Our Shareholders:
We are pleased to send you this Value Line Cash Fund semi-annual report for the
six months ended June 30, 1998. The total net assets of your Fund at the end of
June were $325 million; the average maturity of the Fund's holdings was 51 days.
The Fund's annualized yield for the six months ended June 30, 1998 was 5.09%.
For both the 7-day and the 30-day periods ended June 30, the Fund's yield was
5.06% and 5.03%, respectively. Given our focus on credit quality, the Fund's
performance continues to successfully fulfill its investment objective of
securing as high a level of current income as is consistent with liquidity and
preservation of capital.
We continue to maintain the majority of the Fund's holdings in either U.S.
Government and Agency securities (37%) or first-tier corporate securities (24%).
(First-tier securities refer to those assigned the highest short-term rating by
at least two nationally recognized rating organizations--for example, P-1 by
Moody's Investor Service and A-1 by Standard & Poor's Corporation.) At present,
we are not considering any new holdings rated below the first-tier level. In
addition to our focus on first-tier securities, in evaluating corporate
securities we also look for a minimum Safety Rank of 3 and a Financial Strength
Rating of B, or higher, according to The Value Line Investment Survey.
The domestic economy was notably strong in the beginning of this year. In fact,
many market observers thought that the Federal Reserve was going to raise the
Federal Funds rate to hold back expected increased inflationary pressures.
However, the financial crisis that developed in Asia last October got
progressively worse in the first half of this year. Concerns about these
problems created a "flight-to-quality" demand for fixed-income instruments,
pushing yields down. Moreover, the financial crisis in Asia has begun to fend
off the effects of a strong domestic economy. The reduction in demand for goods
has helped to soften the domestic economy, which has helped to keep inflation
low. Accordingly, interest rates continued to fall through June as the threat
that a strong economy would force the Federal Reserve to tighten the monetary
reins diminished. Please see the accompanying "Economic Observations" insert for
our current thinking on the economy.
Thank you for investing with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 10, 1998
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2
<PAGE>
The Value Line Cash Fund, Inc.
Cash Fund Shareholders
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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.
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3
<PAGE>
The Value Line Cash Fund, Inc.
Schedule of Investments
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<TABLE>
<CAPTION>
Principal Value
Amount Maturity (in
(in thousands) Yield+ Date+ thousands)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (37.1%)
$ 25,000 Federal Farm Credit Banks.................................. 5.42%(3) 1/29/99 $ 24,993
10,000 Federal Home Loan Banks.................................... 5.68 10/16/98 9,999
5,000 Federal Home Loan Banks.................................... 5.90(2) 10/23/98 4,999
25,000 Federal Home Loan Banks.................................... 5.43(3) 3/25/99 24,991
10,000 Federal Home Loan Banks.................................... 5.60(2) 6/17/99 9,998
20,000 Federal National Mortgage Association...................... 5.53(2) 3/16/99 19,993
5,500 Student Loan Marketing Association......................... 5.88(2) 4/16/99 5,514
20,000 Student Loan Marketing Association......................... 5.53(2) 1/12/00 19,997
--------- --------
120,500 TOTAL U. S. GOVERNMENT AGENCY OBLIGATIONS ................. 120,484
--------- --------
COMMERCIAL PAPER (23.6%)
AUTO & TRUCK (2.2%)
7,000 Ford Motor Credit Corp..................................... 5.51 7/21/98 6,979
--------- ---------
BEVERAGE--SOFT DRINK (2.2%)
7,000 Coca-Cola Co............................................... 5.48 7/24/98 6,975
--------- ---------
CHEMICAL--SPECIALTY (2.2%)
7,000 Great Lakes Chemical Corp.................................. 5.50 7/13/98 6,987
--------- ---------
DIVERSIFIED COMPANIES (4.3%)
7,000 Fortune Brands Inc......................................... 5.50 7/28/98 6,971
7,000 General Electric Capital Corp.............................. 5.44 7/6/98 6,995
--------- ---------
14,000 13,966
--------- ---------
DRUG (2.1%)
7,000 American Home Products Corp................................ 5.50 8/28/98 6,938
--------- ---------
ELECTRIC UTILITY--CENTRAL (2.1%)
7,000 Central Louisiana Electric Co.............................. 5.64 9/10/98 6,923
--------- ---------
</TABLE>
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4
<PAGE>
The Value Line Cash Fund, Inc.
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
Principal Value
Amount Maturity (in
(in thousands) Yield Date thousands)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSURANCE--DIVERSIFIED (2.2%)
$ 7,000 American General Financial Corp............................ 5.52% 7/17/98 $ 6,983
--------- ---------
INSURANCE--LIFE (2.1%)
7,000 Jefferson-Pilot Corp....................................... 5.57 7/28/98 6,971
--------- ---------
MACHINERY (2.1%)
7,000 Deere (John) Capital Corp.................................. 5.52 8/21/98 6,945
--------- ---------
TOILETRIES/COSMETICS (2.1%)
7,000 Colgate-Palmolive Co....................................... 5.51 9/29/98 6,904
--------- ---------
77,000 TOTAL COMMERCIAL PAPER .................................... 76,571
--------- --------
CORPORATE BONDS & NOTES (15.2%)
BANK (8.0%)
5,000 Key Bank National Association.............................. 5.60 1/29/99 5,000
7,000 Morgan (J.P.) & Co., Inc................................... 5.75 3/10/99 6,998
7,000 National City Bank of Indianapolis......................... 5.54 4/20/99 6,997
7,000 Northern Trust Co., Bank................................... 5.69 4/9/99 6,997
--------- ---------
26,000 25,992
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ELECTRIC UTILITY--EAST (1.6%)
5,000 Gulf Power Co.............................................. 5.00 7/1/98 5,000
--------- ---------
FINANCIAL SERVICES (1.9%)
6,175 Associates Corp. North America............................. 6.48 5/6/99 6,214
--------- ---------
SECURITIES BROKERAGE (3.7%)
5,000 Lehman Brothers Holdings Inc............................... 7.00 5/13/99 5,054
7,000 Merrill Lynch & Co., Inc................................... 5.76 6/10/99 7,000
--------- ---------
12,000 12,054
--------- ---------
49,175 TOTAL CORPORATE BONDS & NOTES ............................. 49,260
--------- ---------
</TABLE>
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5
<PAGE>
The Value Line Cash Fund, Inc.
Schedule of Investments
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<TABLE>
<CAPTION>
Principal Value
Amount Maturity (in
(in thousands) Yield Date thousands)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAXABLE MUNICIPAL SECURITIES (8.3%)
$ 7,000 Arkansas, Development Financial Authority,
Industrial Facilities Revenue, (Potlatch Corp. Projects)
Ser. 1995-B Letter of Credit-Credit Swiss (Weekly put) . 5.70%(2) 8/1/30 $ 7,000
---------
6,300 Carolina Medi-Plan Inc., variable rate
Demand Bonds, Series 1997, Gtd.,
Letter of credit by Wachovia Bank
of North Carolina, N.A. (Weekly put) ................... 5.64(2) 6/1/22 6,300
---------
7,000 Mississippi Business Financial Corp.,
Industrial Development Revenue Bonds,
Series 1994, (Bryan Foods, Inc.
Project) Gtd.-Sara Lee Corp.
(Weekly Put.) .......................................... 5.70(2) 2/1/19 7,000
---------
6,475 State of Texas, Veterans Housing
--------- Assistance, Refunding Revenue Bonds,
Series 1994 A-2, General Obligation Unlimited
(Weekly Put.) .......................................... 5.61(2) 12/1/33 6,475
---------
26,775 TOTAL TAXABLE MUNICIPAL SECURITIES ........................ 26,775
--------- ---------
ASSET BACKED SECURITIES (6.2%)
1,034 Advanta Automobile Receivables Trust,
Series 1997-2, Class A-1, Asset Backed
Notes, (Monthly Paydown, Interest and
Principal) ............................................. 5.86 1/15/99 1,034
---------
2,697 Americredit Automobile Receivable Trust,
Series 1998-A, Class A-1 Asset Backed
Notes, (Monthly Paydown, Interest and
Principal) ............................................. 5.56 4/5/99 2,697
---------
2,183 BankAmerica Manufactured Housing Contract
Trust III, Senior/Subordinate Pass-
through Certificates, Series 1997-2,
Class A-1, (Monthly Paydown, Interest
and Principal) ......................................... 5.83 12/10/98 2,183
---------
7,500 Carco Auto Loan Master Trust, Series
1993-2, Class A-1, Money Market
Extendible Certificates ................................ 5.60(3) 11/16/98 7,500
---------
</TABLE>
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6
<PAGE>
The Value Line Cash Fund, Inc.
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
Value (in
thousands)
Principal except
Amount Maturity per-share
(in thousands) Yield+ Date+ amount)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,241 Chase Manhattan Auto Owner Trust, Series
1998-A, Class A-1, Money Market Asset
Backed Notes. (Monthly Paydown, Interest
and Principal) ......................................... 5.55% 3/12/99 $ 2,241
---------
1,716 Caterpillar Financial Asset Trust,
Series 1997-B, Class A-1, Asset Backed Notes
(Monthly Paydown, Interest and Principal)............... 5.81 11/25/98 1,717
---------
2,807 Green Tree Lease Financial LLC, Series
--------- 1997-1, Class A-1, Lease-Backed Notes,
(Monthly Paydown, Interest and Principal) .............. 5.91 1/20/99 2,807
---------
20,178 TOTAL ASSET BACKED SECURITIES ............................. 20,179
--------- ---------
293,628 TOTAL INVESTMENTS (90.4%) ................................. 293,269
--------- ---------
REPURCHASE AGREEMENTS (8.9%)
(including accrued interest)
28,900 Collateralized by U.S. Treasury Bond,
- --------- $20,723,000 91/4%, due 2/15/16 value
$29,474,496 (with UBS Securities LLC,
5.75%, dated 6/30/98, due 7/1/98,
delivery value of $28,904,616) ......................... 28,905
EXCESS OF CASH AND OTHER ASSETS
OVER LIABILITIES (0.7%) ................................ 2,361
- --------- ---------
$ 322,528 NET ASSETS (100.0%) ....................................... $ 324,535
========= =========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER OUTSTANDING SHARE ............................ $ 1.00
=========
</TABLE>
+ Rate frequency for floating rate notes at June 30, 1998: (1) Daily (2)
Weekly (3) Monthly (4) Quarterly (5) Interest and Principal Monthly.
+ The yield shown on floating rate securities represents the rate at the end
of the reporting period. The maturity dates on these types of securities
reflect the final maturity dates.
See Notes to Financial Statements
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7
<PAGE>
The Value Line Cash Fund, Inc.
Statement of Asset and Liabilities
at June 30, 1998 (unaudited)
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Dollars
(in thousands
except per
share amount)
-------------
Assets:
Investments at value:
(Amortized cost-- $293,269) .............................. $ 293,269
Repurchase agreement ....................................... 28,905
Cash ....................................................... 60
Receivable for capital shares sold ......................... 1,689
Interest receivable ........................................ 1,515
---------
Total Assets ........................................... 325,438
---------
Liabilities:
Payable for capital shares repurchased ..................... 602
Accrued expenses:
Advisory fee ............................................. 107
Other .................................................... 194
---------
Total Liabilities ...................................... 903
---------
Net Assets ................................................. $ 324,535
=========
Net Assets:
Capital Stock, at $.10 par value
(authorized 2 billion shares,
outstanding 324,589,097 shares) .......................... $ 32,459
Additional paid-in capital ................................. 292,130
Accumulated net realized loss
on investments ........................................... (54)
---------
Net Assets ............................................. $ 324,535
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share ........................................ $ 1.00
=========
Statement of Operations for the
Six Months Ended June 30, 1998 (unaudited)
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Dollars
(in thousands)
-------------
Investment Income:
Interest income ............................................ $ 8,774
-------
Expenses:
Advisory fee ............................................... 626
Transfer agent ............................................. 130
Postage and other expenses ................................. 37
Insurance, dues and Misc ................................... 29
Registration and filing fees ............................... 24
Telephone and wire charges ................................. 17
Custodian fees ............................................. 16
Auditing and legal ......................................... 15
Printing, checks and stationery ............................ 13
Directors' fees and expenses ............................... 7
-------
Total Expenses before
Custody Credits ...................................... 914
Less: custody credits .................................. (2)
-------
Net Expenses ........................................... 912
-------
Net Investment Income ...................................... 7,862
Net Realized Gain on Investments ........................... 16
-------
Net Increase in Net Assets
from Operations .......................................... $ 7,878
=======
See Notes to Financial Statements.
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8
<PAGE>
The Value Line Cash Fund, 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 income ............................... $ 7,862 $ 16,127
Net realized gain on investments .................... 16 90
----------------------
Net Increase in Net Assets from Operations .......... 7,878 16,217
----------------------
Distributions to Shareholders:
Net investment income ............................... (7,862) (16,127)
----------------------
Capital Share Transactions:
Net proceeds from sale of shares .................... 323,277 484,462
Net proceeds from reinvestment of dividends ......... 7,862 16,127
----------------------
331,139 500,589
Cost of shares repurchased .......................... (309,714) (559,382)
----------------------
Increase (Decrease) from capital share transactions 21,425 (58,793)
----------------------
Total Increase (Decrease) in Net Assets ............... 21,441 (58,703)
Net Assets:
Beginning of period ................................. 303,094 361,797
----------------------
End of period ....................................... $ 324,535 $ 303,094
======================
</TABLE>
See Notes to Financial Statements.
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9
<PAGE>
The Value Line Cash Fund, Inc.
Notes to Financial Statements (unaudited)
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1. Significant Accounting Policies
The Value Line Cash Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified management
investment company. The Fund's investment objective is to secure as high a level
of current income as is consistent with preservation of capital and liquidity.
The following summary of significant accounting policies is in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
(A) Security Valuation. Securities held by the Fund are valued on the basis of
amortized cost, which approximates market value and does not take into account
unrealized gains or losses. This involves valuing an instrument at cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
The valuation of securities based upon their amortized cost is permitted by Rule
2a-7 under the Investment Company Act of 1940, as amended. The rule requires
that the Fund maintain a dollar-weighted average portfolio maturity of 90 days
or less, purchase instruments that have remaining maturities of 13 months or
less only, and invest only in securities determined by the Board of Directors to
be of good quality with minimal credit risks. The Directors have established
procedures designed to achieve these objectives.
(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, including accrued
interest, of the repurchase transaction. 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 of proceeds may be subject to legal proceedings.
(C) Security Transactions. Security transactions are accounted for on the date
the securities are purchased or sold. In computing net investment income,
premiums and discounts on portfolio securities are amortized. Realized gains and
losses on securities transactions are determined on the identified-cost method.
(D) 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, on a daily basis, all of its taxable income to its
shareholders. Therefore, no Federal income tax or excise tax provision is
required.
2. Dividends, Distributions to Shareholders and Capital Share Transactions
The Fund earns interest daily on its investments and distributes daily on each
day the Fund is open for business all of its net investment income. Net realized
gains, if any, will be distributed once a year. Earnings for Saturdays, Sundays
and holidays are paid as a dividend on the next business day. All such
distributions are automatically credited to shareholder accounts in additional
shares at net asset value of the day declared.
Because the Fund has maintained a $1.00 net asset value per share from
inception, the number of shares sold, shares issued to shareholders in
reinvestment of dividends declared, and shares repurchased, are equal to the
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10
<PAGE>
The Value Line Cash Fund, Inc.
dollar amounts shown in the Statement of Changes in Net Assets for the
corresponding capital share transactions.
3. Tax Information
At June 30, 1998 the aggregate cost of investments in securities and repurchase
agreement for Federal income tax purposes is approximately $322,174,000. At June
30, 1998, there is no unrealized appreciation or depreciation of investments.
For Federal income-tax purposes, the Fund utilized approximately $90,000 of its
capital loss carryover to offset a realized gain during the year ended December
31, 1997. The Fund had a net capital loss carryover at December 31, 1997 of
approximately $70,000, which will expire in the year 2002. To the extent future
capital gains are offset by such capital losses, the Fund does not anticipate
distributing any such gains to the shareholders.
4. Investment Advisory Contract, Management Fees, and Transactions with
Affiliates
An advisory fee of $625,908 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 an annual rate of 4/10 of 1% per year of the average
daily net asset value of the Fund during the year and paid monthly. The Adviser
provides research, investment programs and supervision of the investment
portfolio and pays costs of administrative services, office space, 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 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 subsidiary, Value Line
Securities, Inc. (the Fund's distributor and a registered broker/dealer), are
also officers and directors of the Fund.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 53,362,752 shares of the Fund's capital stock,
representing 16.44% of the outstanding shares at June 30, 1998. In addition,
certain officers and directors of the Fund owned 8,372,558 shares of the Fund,
representing 2.58% of the outstanding shares.
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11
<PAGE>
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 ..................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-------------------------------------------------------------------------------------------
Net investment income ......... .025 .051 .050 .054 .037 .031
Dividends from net
investment income ........... (.025) (.051) (.050) (.054) (.037) (.031)
-------------------------------------------------------------------------------------------
Net realized loss on securities -- -- -- -- (.005) --
Voluntary capital contribution
from Adviser ................ -- -- -- -- .005 --
-------------------------------------------------------------------------------------------
Change in net asset value ..... -- -- -- -- -- --
-------------------------------------------------------------------------------------------
Net asset value, end of period .. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-------------------------------------------------------------------------------------------
Total return .................... 2.52%+ 5.10% 4.99% 5.40% 3.69%(1) 3.06%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................ $324,535 $303,094 $361,797 $359,343 $341,632 $345,769
Ratio of expenses to average
net assets .................... .58%* .59% .55% .57% .61% .60%
Ratio of net investment income
to average net assets ......... 5.02%* 4.97% 4.86% 5.27% 3.63% 3.02%
</TABLE>
(1) The total return for 1994 reflects the effect of a voluntary capital
contribution from the Adviser. Without such contribution, the total return
would have been 3.18%.
+ Not annualized, for six months period only.
* 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 10036-2798
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
Nathan Grant
Vice President
Charles Heebner
Vice President
David T. Henigson
Vice President
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
An Investment in The Value Line Cash Fund, Inc. is not guaranteed or insured by
the U.S. Government and there is no assurance that the Fund will maintain its
per-share net asset value.
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).
501002
