The adviser seeks to identify companies in which an unusual and possibly non-repetitive development is taking place that in the opinion of the adviser will probably cause the stock of the company to attain a higher market value independently, to a degree, of the trend of the securities markets in general.

Since every "special situation" to some extent involves a break with past experience, the uncertainties in the appraisal of future value and risk of possible loss are greater than in the case of old, well-established companies carrying on according to long-established patterns.

To qualify as a "special situation," a security may be one of many different types. For example:

a technological improvement or important discovery or acquisition;

a recapitalization or other development involving a security exchange or conversion;

a merger, liquidation or distribution of cash, securities or other assets;

a breakup or workout of a holding company;

litigation which, if resolved favorably, would improve the value of the company's stock;

a new or changed management;

Most smaller companies are not widely followed by "Wall Street," and so extensive research can provide a big advantage in stock selection.

In making their investment decisions, The Value Line Special Situations Fund managers draw on the talents of a dedicated team of "special situation" analysts as well as the over 70 analysts who provide research for the acclaimed Value Line Investment Survey.