<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
SERVICING AGENT Co.
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite
100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Francis C. Oakley
Marion N. Ruth
Frances T. Newton
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
David T. Henigson
VICE PRESIDENT
SECRETARY/TREASURER
Nathan N.J. Grant
VICE PRESIDENT
Bruce H. Alston
VICE PRESIDENT
Jack M. Houston
ASSISTANT SECRETARY/TREASURER
Stephen La Rosa
ASSISTANT SECRETARY/TREASURER
</TABLE>
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN TAKEN FROM THE
RECORDS OF THE FUND WITHOUT EXAMINATION BY THE INDEPENDENT ACCOUNTANTS
AND, ACCORDINGLY, THEY DO NOT EXPRESS AN OPINION THEREON.
THIS UNAUDITED REPORT IS ISSUED FOR INFORMATION OF SHAREHOLDERS. IT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS
PRECEDED OR ACCOMPANIED BY A CURRENTLY EFFECTIVE PROSPECTUS OF THE
TRUST (OBTAINABLE FROM THE DISTRIBUTOR).
VLF704041
------------------------------------
SEMI-ANNUAL REPORT
------------------------------------
APRIL 30, 1997
----------------------------------------
VALUE LINE
INTERMEDIATE
BOND FUND, INC.
[LOGO]
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
To Our Value Line
- -------------------------------------------
To Our Shareholders:
As of April 30, 1997, the Value Line Intermediate Bond Fund held a highly
diversified portfolio of intermediate-duration fixed-income securities. The
fund's breakdown consisted of the following sectors: U.S. Treasuries 19%, U.S.
Government Agencies 20%, Asset-Backeds 22%, Corporates 13%, and Mortgage-Backeds
21%. Your Fund returned 0.70% over the first half, as intermediate bond prices
fell in line with a modest rise in interest rates. The mortgage-backed and
asset-backed sectors performed particularly well, and thus the Fund's return was
enhanced by its position in these areas. As of April 30, 1997, the Fund's
average duration was approximately 3.5 years, in keeping with its objective to
invest in a diversified portfolio of intermediate-maturity securities with
relatively low volatility of principal.
During the six months ended April 30, 1997, the fixed-income markets experienced
some significant events, causing substantial movements in interest rates. Toward
the end of 1996, bond prices rose as a result of economic weakness displayed in
the third quarter of that year. Bond prices tend to rise and yields fall when
slowing economic activity eases credit demands. The 30-year Treasury bond
reached a low yield for the period of 6.35% at the end of November, and yields
on shorter-maturity instruments followed suit. As 1997 began, however, the
economy started to exhibit renewed strength, and yields began to rise in most
maturity categories. Fears of increased inflation, and of a possible
counteraction by the Federal Reserve in the form an interest rate hike, caused
the long bond yield to rise above 7.0%. The markets' fears were realized when
the Federal Reserve did, in fact, move to tighten credit on March 25th, raising
the Fed Funds rate from 5.25% to 5.50%. Bond yields peaked during the first half
of 1997 at 7.2%, which was also the high for all of 1996. In early April,
investors attempted to determine whether this action by the Fed was an isolated
incident, an "insurance" tightening, or just the first of a series of rate hikes
needed to rein in an overheating economy. By the end of April, interest rates
had fallen, with the long bond falling below 7%. Market participants began to
sense a "cooling" of economic activity, reducing pressures on the Fed to raise
interest rates again.
We thank you for your interest in the Value Line Intermediate Bond Fund, and we
look forward to serving your investment needs in the future.
Sincerely,
[SIGNATURE]
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
June 26, 1997
- --------------------------------------------------------------------------------
2
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Intermediate Bond Fund Shareholders
- -------------------------------------------
Economic Observations
The current economic expansion is now in its seventh year. Although this does
not yet qualify as the longest peacetime period of growth in our nation's
history (both the 1960s and the 1980s experienced somewhat longer upcycles), it
is still quite noteworthy, especially since there are as yet few signs that this
lengthy run of uninterrupted prosperity is about to draw to a close. In fact,
recent reports show that there is still a good deal of strength around, with
high doses of consumer confidence, continuing solid job growth, and healthy
levels of retail, housing, and manufacturing activity pointing to relatively
good levels of economic growth over the next few quarters.
Inflation, meanwhile, continues to be reasonably subdued. This healthy pricing
trend, which is remarkable given the longevity of the business expansion, is,
moreover, unlikely to change dramatically in the months ahead. Underscoring our
optimism in this area is the likelihood that a definitive budget package will be
worked out (which would reduce the government's need to borrow to finance the
deficit) and the fact that there is still a lack of serious shortages on either
the labor or the raw-materials fronts. On this latter score, though, we do note
that the recent pickup in wage pressures could, if unchecked, pose a threat
later in the year or in 1998.
Interest rates, meantime, reflecting the likely moderate pace of upcoming
economic growth and the fairly subdued pricing structure, are unlikely to
increase all that much over the next year. Nevertheless, we caution that
previous remarks by Federal Reserve Chairman Alan Greenspan, in which he
indicated that the central bank has, in the past, occasionally raised rates
before higher inflation actually took hold, and the one-quarter of a percentage
point increase in short-term interest rates that was tacked on earlier in the
year, would seem to suggest that the Fed will not be shy about tightening the
credit reins further, if it sees the need. An additional upward move in rates,
if sufficiently pronounced, would not be good news for either the stock or the
bond markets, or, ultimately, for the U.S. economy.
Performance Data:*
<TABLE>
<CAPTION>
From
4/10/92+
1 Year ended to
3/31/97 3/31/97(A)
------------- -------------
<S> <C> <C>
Average Annual Total
Return.................. 2.66% 1.46%
Growth of an Assumed
Investment of $10,000... $10,266 $10,866
</TABLE>
* THE TOTAL RETURNS FOR THE ONE-YEAR PERIOD ENDED 4/30/97 AND THE PERIOD FROM
4/10/92+ TO 4/30/97 WERE 2.39% AND 0.99%(A), RESPECTIVELY. THE PERFORMANCE
DATA QUOTED REPRESENTS PART PERFORMANCE AND ARE NO GUARANTEE OF FUTURE
PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN AND GROWTH OF AN ASSUMED
INVESTMENT OF $10,000 INCLUDE DIVIDENDS REINVESTED AND CAPITAL GAINS
DISTRIBUTIONS ACCEPTED AS 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.
(A) RESULTS PERTAIN TO VALUELINE ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND
INC. FROM 4/10/92+ TO 10/31/95. (SEE NOTE 1 TO THE FINANCIAL STATEMENTS.)
+ COMMENCEMENT OF OPERATIONS.
- --------------------------------------------------------------------------------
3
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Schedule of Investments (unaudited)
- -------------------------------------------
<TABLE>
<CAPTION>
Principal Maturity
Amount Rate Date Value
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (19.0%)
$ 600,000 U.S. Treasury Notes........................................ 6.000% 05/31/98 $ 599,898
500,000 U.S. Treasury Notes........................................ 6.000 08/15/99 496,370
750,000 U.S. Treasury Notes........................................ 6.250 10/31/01 741,165
1,000,000 U.S. Treasury Notes........................................ 6.500 10/15/06 982,740
- ----------- -----------
2,850,000 TOTAL U.S. TREASURY OBLIGATIONS (COST $2,864,496)..................................... 2,820,173
- ----------- -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (19.9%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (13.1%)
500,000 Federal National Mortgage Association Global Note.......... 6.400 05/02/01 494,350
1,000,000 Federal National Mortgage Association Medium Term Note..... 6.320 07/28/03 968,600
500,000 Federal National Mortgage Association Debenture............ 6.850 09/12/05 488,155
- ----------- -----------
2,000,000 1,951,105
- ----------- -----------
TENNESSEE VALLEY AUTHORITY (6.8%)
1,000,000 Tennessee Valley Authority Power Bonds Series 1991-A....... 7.450 10/15/01 1,006,800
- ----------- -----------
1,000,000 1,006,800
- ----------- -----------
3,000,000 TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $3,048,865)............................ 2,957,905
- ----------- -----------
ASSET BACKED SECURITIES (22.4%)
AUTOMOBILE LEASING (6.1%)
251,924 Premier Auto Trust Series 1994-2 Class A4.................. 6.000 05/02/00 252,174
659,441 World Omni Automobile Lease Securitization Trust Series
---------- 1995-A Class A........................................... 6.050 11/25/01 653,638
-----------
911,365 905,812
- ----------- -----------
CREDIT CARD FINANCING (5.3%)
800,000 Standard Credit Card Master Trust Series 1995-10 Class A... 5.900% 02/07/01 791,912
- ----------- -----------
800,000 791,912
- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
April 30, 1997
- -------------------------------------------
<TABLE>
<CAPTION>
Principal Maturity
Amount Rate Date Value
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OTHER (11.0%)
$ 597,269 Advanta Home Equity Loan Trust Series 1993-2 Class A1...... 6.150 10/25/09 $ 576,556
560,838 AFC Home Equity Loan Trust Series 1993-3 Class A........... 5.450 06/20/13 536,211
534,806 Old Stone Credit Corp. Home Equity Loan Trust Series 1993-2
---------- Class A1................................................. 6.025 06/15/08 516,109
-----------
1,692,913 1,628,876
- ----------- -----------
3,404,278 TOTAL ASSET BACKED SECURITIES (COST $3,381,349)....................................... 3,326,600
- ----------- -----------
CORPORATE BONDS & NOTES (12.9%)
FINANCE (5.1%)
800,000 General Motors Acceptance Corp. Medium Term Note........... 6.500 12/05/05 753,264
- ----------- -----------
800,000 753,264
- ----------- -----------
INDUSTRIAL (3.0%)
472,738 Union Pacific Railroad Co. Pass Through Trust Series
1995-B................................................... 6.290 09/25/07 454,188
- ----------- -----------
472,738 454,188
- ----------- -----------
YANKEE BONDS (4.8%)
750,000 Province of Quebec......................................... 6.500 01/17/06 709,410
- ----------- -----------
750,000 709,410
- ----------- -----------
2,022,738 TOTAL CORPORATE BONDS & NOTES (COST $2,028,064)....................................... 1,916,862
- ----------- -----------
MORTGAGE-BACKED SECURITIES (21.1%)
500,000 Residential Funding Mortgage Securities I Series 1993-S15
Class A5................................................. 6.700 04/25/08 490,120
843,760 Federal National Mortgage Association Pool #50751.......... 7.000 06/01/08 842,824
808,948 Federal National Mortgage Association Pool #190836......... 7.000 06/01/09 802,573
1,000,000 PNC Mortgage Securities Corp. Series 1996-2 Class A6....... 6.600 02/15/11 933,437
105,862 Federal Home Loan Mortgage Corporation #1505 ND............ 7.252(1)(2) 12/15/22 69,604
- ----------- -----------
3,258,570 TOTAL MORTGAGE-BACKED SECURITIES (COST $3,227,041).................................... 3,138,558
- ----------- -----------
14,535,586 TOTAL INVESTMENT SECURITIES (95.3%) (COST $14,549,815)................................ 14,160,098
- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Schedule of Investments (unaudited) April 30, 1997
- -------------------------------------------
<TABLE>
<C> <S> <C> <C> <C>
Value
-----------
EXCESS OF CASH AND OTHER ASSETS OVER LIABILITES (4.7%)............................................. $ 692,662
-----------
NET ASSETS (100.0%)................................................................................ $14,852,760
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER OUTSTANDING SHARE
($14,852,760 DIVIDED BY 1,757,255 SHARES OUTSTANDING)........................................... $8.45
-----------
</TABLE>
(1)RESETS MONTHLY. RATE IN EFFECT ON 04/30/97.
(2)INVERSE FLOATER--FLOATING RATE MORTGAGE-BACKED SECURITY WHOSE INTEREST RATE
FLUCTUATES IN THE OPPOSITE DIRECTION OF GENERAL MARKET RATES.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Statement of Assets and Liabilities
at April 30, 1997 (unaudited)
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investment securities, at value
(cost--$14,549,815).................. $14,160,098
Cash................................... 625,413
Interest receivable.................... 127,012
-----------
Total Assets....................... 14,912,523
-----------
Liabilities:
Dividends payable to shareholders...... 6,003
Accrued expenses:
Advisory fee payable................. 6,058
Plan fee payable..................... 3,029
Other................................ 44,673
-----------
Total Liabilities.................. 59,763
-----------
Net Assets............................. $14,852,760
-----------
Net Assets consist of:
Capital stock, at $.001 par value
(authorized 300,000,000, outstanding
1,757,255 shares).................... 1,757
Additional paid-in capital............. 21,593,683
Accumulated net realized loss on
investments.......................... (6,352,963)
Unrealized net depreciation of
investments.......................... (389,717)
-----------
Net Assets............................. $14,852,760
-----------
Net Asset Value, Offering and
Redemption Price, per Outstanding
Share ($14,852,760 DIVIDED BY
1,757,255 shares outstanding)........ $ 8.45
-----------
</TABLE>
Statement of Operations
for the six months April 30, 1997 (unaudited)
<TABLE>
<S> <C>
Investment Income:
Interest income......................... $ 478,408
---------
Expenses:
Advisory fee............................ 37,191
Registration and filing fees............ 22,365
Service and distribution plan fee....... 18,595
Auditing and legal fees................. 18,352
Custodian fees.......................... 16,366
Accounting and bookkeeping expense...... 16,200
Printing................................ 8,645
Amortization of deferred organization
costs (note 2)........................ 6,712
Directors' fees and expenses............ 6,210
Postage, insurance and dues............. 2,765
Transfer agent fees..................... 2,473
Telephone and other..................... 1,666
---------
Total Expenses Before Custody
Credits............................ 157,540
Less: Custody Credits............... (12,328)
---------
Net Expenses........................ 145,212
---------
Investment Income--Net.................. 333,196
---------
Realized and Unrealized Loss on
Investments--Net:
Realized Loss--Net.................... (1,336)
Change in Unrealized Depreciation..... (222,001)
---------
Net Realized Loss and Change in
Unrealized Depreciation on
Investments........................... (223,337)
---------
Net Increase in Net Assets from
Operations............................ $ 109,859
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Statement of Changes in Net Assets
for the six months ended April 30, 1997 (unaudited) and for the year ended
October 31, 1996
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997 Year Ended
(unaudited) October 31, 1996
<S> <C> <C>
-----------------------------------
Operations:
Investment income--net............................................... $ 333,196 $ 689,490
Realized loss on investments--net.................................... (1,336) (35,502)
Change in unrealized depreciation.................................... (222,001) (150,715)
-----------------------------------
Net increase in net assets from operations........................... 109,859 503,273
-----------------------------------
Distributions to Shareholders:
Investment income-net................................................ (333,196) (689,490)
-----------------------------------
Capital Share Transactions:
Net proceeds from sale of shares..................................... 347,383 1,105,303
Net proceeds from reinvestment of distributions to shareholders...... 296,418 604,879
Cost of shares repurchased........................................... (755,214) (3,225,395)
-----------------------------------
Decrease from capital share transactions............................. (111,413) (1,515,213)
-----------------------------------
Total Decrease......................................................... (334,750) (1,701,430)
Net Assets:
Beginning of period.................................................. 15,187,510 16,888,940
-----------------------------------
End of period........................................................ $14,852,760 $15,187,510
-----------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Notes to Financial Statements (unaudited) April 30, 1997
- -------------------------------------------
1.Significant Accounting Policies
Value Line Intermediate Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
On November 1, 1995, with the approval of shareholders, the Fund changed its
name from Value Line Adjustable Rate U.S. Government Securities Fund, Inc. The
primary objective of high current income consistent with low volatility of
principal remains the same, but the means of meeting this objective has changed.
The Fund seeks to meet its investment objective by investing in a diversified
portfolio of investment-grade debt securities with a dollar-weighted average
portfolio maturity of between three and 10 years. This will replace a portfolio
consisting primarily of adjustable-rate mortgage-backed securities.
The following significant accounting policies are 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. Where market quotations are readily available, portfolio
securities are valued at the midpoint between the latest available and
representative asked and bid prices, or when stock exchange valuations are used,
at the latest quoted sale price as of the close of business of the New York
Stock Exchange on the valuation date. The Fund values some mortgage-backed
securities on the basis of valuations provided by dealers in such securities.
Some of the general factors which may be considered by the dealers in arriving
at such valuations include the fundamental analytic data relating to the
security and an evaluation of the forces which influence the market in which
these securities are purchased and sold. Determination of values may involve
subjective judgment, as the actual market value of a particular security can be
established only by negotiations between the parties in a sales transaction. All
other values are determined on the valuation date by reference to valuations
obtained from an independent pricing service that determines valuations for
normal institutional size trading units of debt securities, without exclusive
reliance upon quoted prices. This service takes into account appropriate factors
such as institutional size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other
market data in determining valuations.
Short-term instruments with maturities of 60 days or less at the date of
purchase are valued at amortized cost, which approximates market value.
Short-term instruments with maturities greater than 60 days, at date of
purchase, are valued at the midpoint between the latest available and
representative asked and bid prices, and, commencing 60 days prior to maturity,
such securities are valued at amortized cost.
(B) Repurchase Agreement. 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
- --------------------------------------------------------------------------------
9
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Notes to Financial Statements (unaudited)
- -------------------------------------------
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. Realized gains and losses
on securities transactions are determined using the identified cost method and
interest income is accrued as earned. 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.
2.Organization Costs
Costs of $76,603 incurred in connection with the Fund's organization and initial
registration had been deferred and were being amortized over sixty months
beginning at the commencement of operations of the Fund. At April 30, 1997 the
Fund had fully amortized its organization costs.
3.Capital Share Transactions
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six Months
Ended April
30, 1997 Year Ended
(unaudited) Oct. 31, 1996
<S> <C> <C>
------------------------------
Shares sold.......... 40,522 127,591
Shares issued to
shareholders in
reinvestment of
dividends.......... 34,832 70,805
------------------------------
75,354 198,396
Shares repurchased... (88,391) (376,727)
------------------------------
Net decrease......... (13,037) (178,331)
------------------------------
</TABLE>
4.Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997
(unaudited)
<S> <C>
------------------
PURCHASES:
U.S. Treasury Obligations....... $ 1,016,250
Other Investment Securities..... 960,469
------------------
$ 1,976,719
------------------
SALES AND MATURITIES:
U.S. Treasury Obligations....... $ 401,687
Other Investment Securities..... 1,694,331
------------------
$ 2,096,018
------------------
</TABLE>
At April 30, 1997, the aggregate cost of investment securities for federal
income tax purposes was $14,549,815. The aggregate appreciation and depreciation
of investments at April 30, 1997, based on a comparison of investment values and
their costs for federal income tax purposes was $3,711 and $393,428,
respectively, resulting in a net depreciation of $389,717.
- --------------------------------------------------------------------------------
10
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
April 30, 1997
- -------------------------------------------
At October 31, 1996 the Fund had a carryover loss of $6,351,627 of which $28,176
will expire on October 31, 2001, $3,907,636 on October 31, 2002, $2,380,313 on
October 31, 2003 and the balance of $35,502 on October 31, 2004. To the extent
future capital gains are offset by such carryover capital losses, the Fund does
not anticipate distributing any such gains to its shareholders.
5.Advisory Fees, Service and Distribution Plan Fees and
Transactions With Affiliates
An advisory fee of $37,191 was paid or payable to Value Line, Inc. (the
"Adviser") for the six months ended April 30, 1997. This was computed at the
rate of 1/2 of 1% of average daily net assets during the period and paid
monthly. The Adviser provides research, investment programs, supervision of the
investment portfolio and pays costs of certain administrative services, and
office space. 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.
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, for the payment of certain
expenses incurred by Value Line Securities, Inc. (the "Distributor"), a
wholly-owned subsidiary of the Adviser, in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets. In the six months
ended April 30, 1997, fees amounting to $18,596 were paid or payable under the
Plan. Effective May 1, 1997, the Distributor has agreed to waive this fee.
Certain officers and directors of the Adviser and the Distributor, are also
officers and a director of the Fund.
At April 30, 1997, the Adviser owned 1,115,814 shares of the Fund's capital
stock, representing 63% of the outstanding shares.
- --------------------------------------------------------------------------------
11
<PAGE>
VALUE LINE INTERMEDIATE BOND FUND
Financial Highlights
- -------------------------------------------
Selected Data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
April 10, 1992
Six Months Ended Years Ended October 31, (commencement of
April 30, 1997 ----------------------------------------- operations) to
(unaudited) 1996 1995(A) 1994(A) 1993(A) Oct. 31, 1992(A)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $8.58 $8.67 $8.70 $10.01 $ 9.99 $10.00
-------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ .19 .37 .38 .50 .54(2) .33(1)
Net gains or losses on securities
(both realized and
unrealized)................... (.13) (.09) (.03) (1.31) .05 (.01)
-------------------------------------------------------------------------------
Total from investment
opeations........................ .06 .28 .35 (.81) .59 .32
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income....................... (.19) (.37) (.38) (.50) (.54) (.33)
Distributions from capital
gains........................ -- -- -- -- (.03) --
-------------------------------------------------------------------------------
Total distributions.............. (.19) (.37) (.38) (.50) (.57) (.33)
-------------------------------------------------------------------------------
Net asset value, end of period......... $8.45 $8.58 $8.67 $ 8.70 $10.01 $ 9.99
-------------------------------------------------------------------------------
Total return........................... 0.70%+ 3.28% 4.14% -8.37% 6.04% 3.26%+
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $14,853 $15,188 $16,889 $28,431 $44,508 $33,763
Ratio of operating expenses to average
net assets........................... 2.12%*(3) 1.98%(3) 1.57% .98% .88%(2) 0%(1)
Ratio of interest expense to average
net assets........................... -- -- -- .38% 0.18% 0.07%*
Ratio of net investment income to
average net assets................... 4.48%* 4.27% 4.52% 5.23% 5.35%(2) 5.83%*(1)
Portfolio turnover rate................ 14%+ 159% 177% 175% 126% 85%
Amount of debt outstanding at end of
period (in thousands)................ $ -- $ -- $ -- $ -- $ -- $ 3,940
Average amount of debt outstanding
during the period (in thousands)..... $ -- $ -- $ -- $ 3,947 $ 1,926 $ 524
Average number of shares outstanding
during the period (in thousands)..... 1,763 1,884 1,887 4,366 3,766 1,968
Average amount of debt per outstanding
share during the period.............. $ -- $ -- $ -- $ .90 $ .51 $ .27
</TABLE>
+ NOT ANNUALIZED
* ANNUALIZED
(A)RESULTS PERTAIN TO VALUE LINE ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES
FUND, INC. (SEE NOTE 1 TO THE FINANCIAL STATEMENTS).
(1)NET OF EXPENSE REIMBURSEMENT. HAD THESE EXPENSES BEEN FULLY PAID BY THE FUND,
INVESTMENT INCOME-NET PER SHARE WOULD HAVE BEEN $.25 AND RATIOS OF ANNUALIZED
OPERATING EXPENSES AND NET INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE
BEEN 1.46% AND 4.37%, RESPECTIVELY.
(2)NET OF ADVISORY FEE WAIVED BY THE ADVISER FROM 11/1/92 TO 1/31/93. HAD THIS
FEE BEEN PAID BY THE FUND, INVESTMENT INCOME-NET PER SHARE WOULD HAVE BEEN
$.53 AND THE RATIO OF OPERATING EXPENSES AND NET INVESTMENT INCOME TO AVERAGE
NET ASSETS WOULD HAVE BEEN 0.99% AND 5.24%, RESPECTIVELY.
(3)BEFORE CUSTODY CREDITS.
SEE NOTES TO FINANCIAL STATEMENTS.
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