<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 Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company c/o NFDS
P.O. Box 419729, Kansas City, MO 64141-6729
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas, New York, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF DIRECTORS
Jean Bernhard Buttner
Charles E. Reed Paul Craig Roberts
Leo R. Futia John W. Chandler
OFFICERS
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
David T. Henigson
VICE PRESIDENT, SECRETARY/TREASURER
Alan N. Hoffman Stephen Grant
VICE PRESIDENT VICE PRESIDENT
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY/TREASURER SECRETARY/TREASURER
This report is issued for the 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.)
VLF511208
----------------------------
ANNUAL REPORT
December 31, 1995
---------------------
THE VALUE LINE
FUND, INC.
[LOGO]
VALUE LINE MUTUAL FUNDS
<PAGE>
[LOGO] TO OUR VALUE LINE FUND SHAREHOLDERS
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
For many equity funds, 1995 was a banner year. This was the case, as well, for
The Value Line Fund, Inc. The total return for the 12-month period ended
December 31, 1995, was 32.12%, one of our best performances ever. These results
compare very favorably with the average total return of 30.79% for growth mutual
funds and of 30.82% for growth and income funds, as calculated by Lipper
Analytical Services.
Like the coverage of THE VALUE LINE INVESTMENT SURVEY, the Fund's portfolio is
broadly diversified. Holdings in small-capitalization and mid-sized companies
are significant. The total return last year of small-cap stocks, represented by
the Russell 2000 Index, was 28.44%; mid-capitalization stocks overall,
represented by the S&P Midcap 400 Index, achieved a total return of 30.95%. The
Value Line Fund out performed both of these indexes but was outpaced by the
37.4% return of the Standard & Poor's 500.
For the past year, your Fund has maintained a broader diversification in its
portfolio to reduce investment risk. We avoid overweighting specific industries,
and individual holdings generally comprise less than 2% of total net assets.
Most stocks in the Fund's portfolio have Timeliness-TM- Ranks of 1 or 2,
indicating that their current earnings and price momentum are superior, and
their valuations are attractive. In addition, the Fund holds some stocks with
Timeliness-TM- Ranks of 3, primarily to increase diversification and to enhance
the dividend yield of the portfolio. Because the Fund's general orientation is
"growth," many holdings are in the technology and healthcare sectors, as opposed
to energy, utilities, and other slower-growing industries.
The Fund currently holds about 160 stocks, with the 10 largest positions
representing different industry sectors. With this approach, we are relying on
the results of the Value Line Timeliness-TM- Ranking System to drive investment
performance. Those results have been superior for the past three decades: Stocks
ranked 1 or 2 for Timeliness-TM-, as a group, have consistently outperformed the
groups of lower-ranked stocks in each of the past 30 years. We also are focusing
on our historical strength in selecting individual stocks.
As always, we appreciate the confidence you have demonstrated in Value Line and
The Value Line Fund, and we intend to work hard to continue to serve your
investment needs in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
January 25, 1996
2
<PAGE>
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ECONOMIC OBSERVATIONS
The economy is continuing to slow. Indeed, whereas until recently it looked as
though the business expansion still had enough strength left in it for growth to
average well above 2% in 1996, the latest statistics paint a somewhat weaker
picture. For example, the nation's manufacturers report a continuing drop in
activity, while employment growth is down from where it was late last year.
Furthermore, American consumers are now less upbeat about the nation's near-term
prospects and their own situation than they were earlier in the expansion cycle.
All of this now suggests that the economy will grow by just over 1% in the
opening quarter of the year and by a bit less than 2% for the full 12 months.
There are good and bad sides to the current economic story. On the plus side is
the fact that slow growth will keep labor and materials shortages--which can
often lead to higher inflation--at bay. A slowing economy might also nudge the
Federal Reserve, which has already lowered interest rates three times since last
July, toward a still easier monetary stance in the months ahead, although this
scenario is by no means assured. The flip side of the equation is that a
softening economy is often a harbinger of a pending deceleration on the
corporate earnings front. The first indications of this profit slowdown, in
fact, may already be at hand.
For now, at least, our sense is that the current weakening in business will not
prove to be the opening act in a recession. Instead, we see several quarters of
weak growth followed by a modestly healthier pace of activity in 1997 and 1998.
At the same time, we do not envision a protracted drop in corporate profits, but
rather a several-quarter-long slowdown followed by a modest recovery later this
year or in 1997. All of this assumes, of course, that a workable budget
agreement will ultimately come out of Washington.
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*PERFORMANCE DATA:
<TABLE>
<CAPTION>
AVERAGE ANNUAL GROWTH OF AN ASSUMED
TOTAL RETURN INVESTMENT OF $10,000
---------------- ---------------------
<S> <C> <C>
1 year ended 12/31/95. . . . . . . . . 32.12% $ 13,212
5 year ended 12/31/95. . . . . . . . . 16.01% $ 21,009
10 years ended 12/31/95. . . . . . . . 13.94% $ 36,863
</TABLE>
*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.
3
<PAGE>
[GRAPH]
(Period covered is 1/1/86 to 12/31/95)
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*THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX THAT IS REPRESENTATIVE OF
THE LARGER-CAPITALIZATION STOCKS TRADED IN THE UNITED STATES.
4
<PAGE>
PORTFOLIO HIGHLIGHTS AT DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS PERCENTAGE
ISSUE SHARES (IN THOUSANDS) OF NET ASSETS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
McDonnell Douglas Corp. 77,000 $7,084 2.2%
Medtronic Inc. 105,000 5,867 1.8
Philip Morris Companies, Inc. 60,000 5,430 1.7
Safeway, Inc. 94,400 4,862 1.5
Oakwood Homes Corp. 122,000 4,682 1.5
Omnicom Group, Inc. 123,400 4,597 1.4
Equifax, Inc. 214,000 4,574 1.4
Cardinal Health, Inc. 81,500 4,462 1.4
Staples, Inc. 179,125 4,365 1.4
Clayton Homes, Inc. 203,125 4,342 1.4
- -----------------------------------------------------------------------------------------------------
</TABLE>
FIVE LARGEST INDUSTRY CATEGORIES*
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS PERCENTAGE
INDUSTRY (IN THOUSANDS) OF NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Medical Supplies $26,097 8.2%
Financial Services 20,709 6.5
Aerospace/Defense 13,223 4.2
Computer Software & Services 13,167 4.1
Computer & Peripherals 11,104 3.5
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</TABLE>
FIVE LARGEST NET SECURITY PURCHASES *+
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<TABLE>
<CAPTION>
COST
ISSUE (IN THOUSANDS)
- ------------------------------------------------------------------------------
<S> <C>
Philip Morris Companies, Inc. $5,083
Travelers Group, Inc. 2,488
Evergreen Media Corp. Class "A" 2,423
Sanifill, Inc. 2,309
Intel Corp. 2,277
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</TABLE>
FIVE LARGEST NET SECURITY SALES *+
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<TABLE>
<CAPTION>
PROCEEDS
ISSUE (IN THOUSANDS)
- ------------------------------------------------------------------------------
<S> <C>
Cordis Corp. $4,236
Capital Cities/ABC, Inc. 4,117
XTRA Corp. 3,496
IBP, Inc. 3,459
Xerox Corp. 3,086
- ------------------------------------------------------------------------------
</TABLE>
* EXCLUSIVE OF FIXED-INCOME SECURITIES.
+ FOR THE SIX MONTHS ENDED DECEMBER 31, 1995.
5
<PAGE>
SCHEDULE OF INVESTMENTS DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (95.1%)
ADVERTISING (1.7%)
29,000 *Heritage Media Corp. Class "A" . . . . . . . . . . $ 743
123,400 Omnicom Group, Inc.. . . . . . . . . . . . . . . . 4,597
-------
5,340
AEROSPACE/DEFENSE (4.2%)
24,000 Logicon, Inc.. . . . . . . . . . . . . . . . . . . 660
40,000 Loral Corp.. . . . . . . . . . . . . . . . . . . . 1,415
77,000 McDonnell Douglas Corp.. . . . . . . . . . . . . . 7,084
47,000 Northrop Grumman Corp. . . . . . . . . . . . . . . 3,008
15,000 Sudstrand Corp.. . . . . . . . . . . . . . . . . . 1,058
-------
13,223
APPAREL (0.2%)
23,000 Warnaco Group, Inc. Class "A". . . . . . . . . . . 575
AUTO PARTS-ORIGINAL
EQUIPMENT (0.1%)
12,000 *ITT Industries, Inc. . . . . . . . . . . . . . . . 288
BANK (1.1%)
38,000 Midlantic Corp.. . . . . . . . . . . . . . . . . . 2,494
41,600 SouthTrust Corp. . . . . . . . . . . . . . . . . . 1,066
-------
3,560
BANK-MIDWEST (0.2%)
10,000 Star Banc Corp.. . . . . . . . . . . . . . . . . . 595
BEVERAGE-ALCOHOLIC (0.8%)
16,000 *Canadaigua Wine Co., Inc. Class "A". . . . . . . . 522
75,000 *Mondavi (Robert) Corp. (The) Class "A" . . . . . . 2,071
-------
2,593
BEVERAGE-SOFT DRINK (0.5%)
55,000 Coca-Cola Enterprises, Inc.. . . . . . . . . . . . 1,471
BROADCASTING/CABLE TV (1.7%)
1,000 Capital Cities/ABC, Inc. . . . . . . . . . . . . . 123
53,000 *Evergreen Media Corp, Class "A". . . . . . . . . . 1,696
76,196 *Viacom, Inc. Class "B" . . . . . . . . . . . . . . 3,610
-------
5,429
CANADIAN ENERGY (0.3%)
30,000 Imperial Oil Ltd.. . . . . . . . . . . . . . . . . 1,084
CHEMICAL-DIVERSIFIED (1.9%)
19,000 First Mississippi Corp.. . . . . . . . . . . . . . 504
44,000 IMC Global Inc.. . . . . . . . . . . . . . . . . . 1,798
35,000 Norsk Hydro A.S. (ADR) . . . . . . . . . . . . . . 1,466
30,000 Pall Corp. . . . . . . . . . . . . . . . . . . . . 806
103,000 Terra Industries, Inc. . . . . . . . . . . . . . . 1,455
-------
6,029
CHEMICAL-SPECIALTY (3.1%)
14,000 *Airgas, Inc. . . . . . . . . . . . . . . . . . . . 465
33,000 Engelhard Corp.. . . . . . . . . . . . . . . . . . 718
55,000 Hercules, Inc. . . . . . . . . . . . . . . . . . . 3,101
84,000 Praxair, Inc.. . . . . . . . . . . . . . . . . . . 2,824
52,000 Sigma-Aldrich Corp.. . . . . . . . . . . . . . . . 2,574
-------
9,682
COMPUTER AND
PERIPHERALS (3.5%)
18,000 *Cabletron Sysyems, Inc.. . . . . . . . . . . . . . 1,458
20,000 *Cisco Systems, Inc.. . . . . . . . . . . . . . . . 1,493
34,000 *Compaq Computer Corp.. . . . . . . . . . . . . . . 1,632
83,000 *Inter-Tel, Inc.. . . . . . . . . . . . . . . . . . 1,281
39,000 International Business Machines Corp.. . . . . . . 3,578
27,000 *SCI Systems, Inc.. . . . . . . . . . . . . . . . . 837
30,000 *Silicon Graphics, Inc. . . . . . . . . . . . . . . 825
-------
11,104
COMPUTER SOFTWARE
& SERVICES (4.1%)
79,000 *Ceridian Corp. . . . . . . . . . . . . . . . . . . 3,259
72,000 Computer Associates International, Inc.. . . . . . 4,095
46,000 National Data Corp.. . . . . . . . . . . . . . . . 1,138
75,000 *Oracle Systems Corp. . . . . . . . . . . . . . . . 3,178
24,000 *Sterling Software Inc. . . . . . . . . . . . . . . 1,497
-------
13,167
6
<PAGE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED COMPANIES (2.5%)
38,000 *Anixter International Inc.. . . . . . . . . . . $ 708
121,000 Danaher Corp. . . . . . . . . . . . . . . . . . 3,842
109,725 Mark IV Industries, Inc.. . . . . . . . . . . . 2,167
14,000 United Technologies Corp. . . . . . . . . . . . 1,328
-------
8,045
DRUG (2.8%)
40,000 *Genzyme Corp. . . . . . . . . . . . . . . . . . 2,495
106,500 Mylan Laboratories Inc. . . . . . . . . . . . . 2,503
42,000 Pfizer, Inc.. . . . . . . . . . . . . . . . . . 2,646
32,000 *Quintiles Transnational Corp. . . . . . . . . . 1,312
-------
8,956
DRUGSTORE (0.4%)
35,000 Rite Aid Corp.. . . . . . . . . . . . . . . . . 1,199
ELECTRIC UTILITY-
CENTRAL (0.2%)
24,000 Illinova Corp.. . . . . . . . . . . . . . . . . 720
ELECTRICAL EQUIPMENT (0.2%)
12,000 Honeywell, Inc. . . . . . . . . . . . . . . . . 583
ELECTRONICS (2.9%)
22,000 AMP Inc.. . . . . . . . . . . . . . . . . . . . 844
18,750 Molex, Inc. . . . . . . . . . . . . . . . . . . 595
104,000 *Symbol Technologies, Inc. . . . . . . . . . . . 4,108
111,300 *Vishay Intertechnology, Inc . . . . . . . . . . 3,506
-------
9,053
ENVIRONMENTAL (1.4%)
50,000 Browning-Ferris Industries, Inc . . . . . . . . 1,475
73,000 *Sanifill, Inc.. . . . . . . . . . . . . . . . . 2,437
13,000 *United Waste Systems, Inc.. . . . . . . . . . . 484
-------
4,396
EUROPEAN DIVERSIFIED (0.2%)
20,000 Danka Business Systems Plc (ADR). . . . . . . . 740
FINANCIAL SERVICES (6.5%)
50,000 American Express Co.. . . . . . . . . . . . . . 2,069
84,000 *CUC International, Inc. . . . . . . . . . . . . 2,867
42,000 Countrywide Credit Industries, Inc. . . . . . . 913
16,000 *Credit Acceptance Corp. . . . . . . . . . . . . 332
25,000 First Data Corp.. . . . . . . . . . . . . . . . 1,672
114,000 Green Tree Financial Corp.. . . . . . . . . . . 3,007
20,000 Household International, Inc. . . . . . . . . . 1,182
16,000 Loews Corp. . . . . . . . . . . . . . . . . . . 1,254
62,500 Money Store, Inc. (The) . . . . . . . . . . . . 977
63,500 Paychex, Inc. . . . . . . . . . . . . . . . . . 3,167
52,000 Travelers Group Inc.. . . . . . . . . . . . . . 3,269
-------
20,709
FOOD PROCESSING (0.5%)
30,000 Heinz (H.J.) Co.. . . . . . . . . . . . . . . . 994
9,000 Pioneer Hi-Bred International, Inc. . . . . . . 500
-------
1,494
FOOD WHOLESALERS (0.6%)
80,000 *General Nutrition Companies, Inc. . . . . . . . 1,840
FOREIGN ELECTRONICS/
ENTERTAINMENT (0.6%)
53,000 Philips Electronics N.V. (N.Y. Shares). . . . . 1,901
FOREIGN
TELECOMMUNICATIONS (0.8%)
20,000 Reuters Holdings Plc Class "B" (ADR). . . . . . 1,103
20,000 Telecom Corp. of
New Zealand Ltd. (ADR). . . . . . . . . . . . . 1,387
-------
2,490
GOLD/SILVER MINING (0.1%)
13,460 *FirstMiss Gold, Inc.. . . . . . . . . . . . . . 299
GROCERY (2.2%)
60,000 *Kroger Co.. . . . . . . . . . . . . . . . . . . 2,250
94,400 *Safeway, Inc. . . . . . . . . . . . . . . . . . 4,862
-------
7,112
7
<PAGE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE INFORMATION
SYSTEMS (1.2%)
35,000 HBO & Co. . . . . . . . . . . . . . . . . . . . $ 2,682
18,000 *Medic Computer Systems, Inc.. . . . . . . . . . 1,089
-------
3,771
HOME APPLIANCE (1.2%)
106,000 Black & Decker Corp.. . . . . . . . . . . . . . 3,737
HOMEBUILDING (0.3%)
60,000 *Host Marriott Corp. . . . . . . . . . . . . . . 795
HOTEL/GAMING (2.8%)
60,000 *Bally Entertainment Corp. . . . . . . . . . . . 840
45,000 *Circus Circus Enterprises, Inc. . . . . . . . . 1,254
8,000 *HFS, Inc. . . . . . . . . . . . . . . . . . . . 654
50,000 *Harrahs Entertainment, Inc. . . . . . . . . . . 1,213
12,000 ITT Corp. . . . . . . . . . . . . . . . . . . . 636
85,500 La Quinta Inns, Inc.. . . . . . . . . . . . . . 2,340
60,000 *Mirage Resorts, Inc.. . . . . . . . . . . . . . 2,070
-------
9,007
HOUSEHOLD PRODUCTS (1.5%)
43,680 Kimberly-Clark Corp.. . . . . . . . . . . . . . 3,615
12,000 Procter & Gamble Co.. . . . . . . . . . . . . . 996
-------
4,611
INDUSTRIAL SERVICES (2.1%)
214,000 Equitax, Inc. . . . . . . . . . . . . . . . . . 4,574
65,000 Manpower, Inc.. . . . . . . . . . . . . . . . . 1,828
30,000 Uniforce Services, Inc. . . . . . . . . . . . . 330
-------
6,732
INSURANCE-DIVERSIFIED (1.0%)
34,000 American Bankers Insurance Group,
Inc.. . . . . . . . . . . . . . . . . . . . . . 1,326
6,000 *CNA Financial Corp. . . . . . . . . . . . . . . 681
23,000 MGIC Investment Corp. . . . . . . . . . . . . . 1,248
-------
3,255
INSURANCE-PROPERTY
& CASUALTY (1.2%)
12,000 ITT Hartford Group, Inc.. . . . . . . . . . . . 580
75,000 *20th Century Industries . . . . . . . . . . . . 1,491
104,000 USF & G Corp. . . . . . . . . . . . . . . . . . 1,755
MACHINERY (2.6%)
40,000 Dover Corp. . . . . . . . . . . . . . . . . . . 1,475
94,300 IDEX Corp.. . . . . . . . . . . . . . . . . . . 3,843
72,000 Parker-Hannifin Corp. . . . . . . . . . . . . . 2,466
15,750 *Raymond Corp. . . . . . . . . . . . . . . . . . 358
-------
8,142
MACHINERY-CONSTRUCTION
& MINING (1.1%)
45,000 Hamischleger Industries, Inc. . . . . . . . . . 1,496
64,000 JLG Industries, Inc.. . . . . . . . . . . . . . 1,904
-------
3,400
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (2.8%)
203,000 Clayton Homes, Inc. . . . . . . . . . . . . . . 4,342
122,000 Oakwood Homes Corp. . . . . . . . . . . . . . . 4,682
-------
9,024
MARITIME (0.1%)
15,000 Stolt-Nielsen S.A.. . . . . . . . . . . . . . . 433
MEDICAL SERVICES (1.5%)
40,000 *Healthcare COMPARE Corp.. . . . . . . . . . . . 1,740
85,000 Surgical Care Affilates, Inc. . . . . . . . . . 2,890
-------
4,630
8
<PAGE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<C> <S> <C>
MEDICAL SUPPLIES (8.2%)
38,000 Becton, Dickinson & Co. . . . . . . . . . . . . $ 2,850
18,000 *Bio-Rad Laboratories, Inc. Class "A". . . . . . 765
35,000 *Boston Scientific Corp. . . . . . . . . . . . . 1,715
81,500 Cardinal Health, Inc. . . . . . . . . . . . . . 4,462
56,600 Invacare Corp . . . . . . . . . . . . . . . . . 1,429
41,000 Johnson & Johnson . . . . . . . . . . . . . . . 3,511
105,000 Medtronic Inc.. . . . . . . . . . . . . . . . . 5,867
43,640 *Nellcor Puritan-Bennett, Inc. . . . . . . . . . 2,531
69,000 *St. Jude Medical, Inc.. . . . . . . . . . . . . 2,967
-------
26,097
NATURAL GAS-DIVERSIFIED (1.7%)
72,000 Panhandle Eastern Corp. . . . . . . . . . . . . 2,007
20,000 Tenneco Inc.. . . . . . . . . . . . . . . . . . 992
57,000 Williams Companies, Inc.. . . . . . . . . . . . 2,501
-------
5,500
NEWSPAPER (0.8%)
84,000 New York Times Co. Class "A". . . . . . . . . . 2,489
OFFICE EQUIPMENT
& SUPPLIES (2.6%)
80,000 *Office Depot, Inc.. . . . . . . . . . . . . . . 1,580
60,000 Reynolds & Reynolds Co. Class "A" . . . . . . . 2,333
179,125 *Staples, Inc. . . . . . . . . . . . . . . . . . 4,366
-------
8,279
OILFIELD SERVICES/
EQUIPMENT (2.1%)
24,000 *BJ Services Co. . . . . . . . . . . . . . . . . 696
80,000 Haliburton Co.. . . . . . . . . . . . . . . . . 4,050
19,000 Schlumberger Ltd. . . . . . . . . . . . . . . . 1,316
20,000 *Smith International, Inc. . . . . . . . . . . . 470
-------
6,532
PACKAGING & CONTAINER (0.1%)
14,000 *Sealed Air Corp.. . . . . . . . . . . . . . . . 394
PAPER & FOREST
PRODUCTS (0.5%)
15,000 Boise Cascade Corp. . . . . . . . . . . . . . . 519
40,000 James River Corp. of Virginia . . . . . . . . . 965
-------
1,484
PETROLEUM-INTEGRATED (2.5%)
34,000 Amoco Corp. . . . . . . . . . . . . . . . . . . 2,444
23,000 British Petroleum Co. Plc. (ADR). . . . . . . . 2,349
9,000 Mobil Corp. . . . . . . . . . . . . . . . . . . 1,008
50,000 Occidental Petroleum Corp.. . . . . . . . . . . 1,069
20,000 Phillips Petroleum Co.. . . . . . . . . . . . . 682
40,000 USX-Marathon Group. . . . . . . . . . . . . . . 780
-------
8,332
PRECISION INSTRUMENTS (1.5%)
10,000 *Dionex Corp.. . . . . . . . . . . . . . . . . . 567
8,000 Pacific Scientific Co.. . . . . . . . . . . . . 198
32,000 Perkin-Elmer Corp.. . . . . . . . . . . . . . . 1,208
55,000 Tektronix, Inc. . . . . . . . . . . . . . . . . 2,702
-------
4,675
RAILROAD (0.5%)
20,000 Burlington Northern Santa Fe, Inc.. . . . . . . 1,560
RECREATION (0.5%)
29,000 Disney (Walt) Co. . . . . . . . . . . . . . . . 1,711
RESTAURANT (0.4%)
52,000 Applebee's International, Inc.. . . . . . . . . 1,183
RETAIL-SPECIAL LINES (0.6%)
26,000 *Micro Warehouse, Inc. . . . . . . . . . . . . . 1,125
40,000 *Waban, Inc. . . . . . . . . . . . . . . . . . . 750
-------
1,875
RETAIL STORE (0.7%)
35,000 *Consolidated Stores Corp. . . . . . . . . . . . 761
77,468 Dollar General Corp.. . . . . . . . . . . . . . 1,608
-------
2,369
9
<PAGE>
<CAPTION>
Value
Shares (IN THOUSANDS)
- --------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTOR (0.6%)
32,000 Intel Corp. . . . . . . . . . . . . . . . . . . $ 1,816
SHOE (0.7%)
34,000 NIKE, Inc. Class "B". . . . . . . . . . . . . . 2,367
TELECOMMUNICATIONS
EQUIPMENT (0.6%)
50,000 *ADC Telecommunications, Inc.. . . . . . . . . . 1,825
54,000 *Andrew Corp.. . . . . . . . . . . . . . . . . . 2,065
20,000 *Colonial Data Technologies Corp.. . . . . . . . 410
20,000 *Qualcomm Incorporated . . . . . . . . . . . . . 860
-------
5,160
TELECOMMUNICATIONS
SERVICE (1.6%)
37,000 Century Telephone Enterprises, Inc. . . . . . . 1,175
50,000 Cincinnati Bell Inc.. . . . . . . . . . . . . . 1,737
58,000 *Worldcom, Inc.. . . . . . . . . . . . . . . . . 2,045
-------
4,957
TOBACCO (1.7%)
60,000 Philip Morris Companies, Inc. . . . . . . . . . 5,430
TOILETRIES/COSMETICS (0.1%)
22,000 *Helen of Troy Ltd.. . . . . . . . . . . . . . . 462
TRUCKING/TRANSPORTATION
LEASING (0.4%)
50,000 Consolidated Freightways, Inc.. . . . . . . . . 1,325
OTHER (0.9%)
60,000 Blount International, Inc. Class "A". . . . . . 1,575
15,000 *GTECH Holdings Corp.. . . . . . . . . . . . . . 390
40,000 Jostens, Inc. . . . . . . . . . . . . . . . . . 970
-------
2,935
-------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (95.1%)
(COST $223,758) . . . . . . . . . . . . . . . . $ 301,972
---------
<CAPTION>
Principal Value
Amount (IN THOUSANDS EXCEPT
(IN THOUSANDS) PER-SHARE AMOUNT)
- --------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS (4.8%)
U.S. GOVERNMENT AGENCY
OBLIGATIONS (4.7%)
$ 15,000 Federal National Mortgage
Association Discount Notes,
5.67%, 1/17/96. . . . . . . . . . . . . . . . 14,962
REPURCHASE AGREEMENT (0.1%)
(INCLUDING ACCRUED INTEREST)
300 Collateralized by $320,000 U.S.
Treasury Bills due 9/19/96, with
a value of $308,340 (with First
Chicago Capital Markets, Inc.,
5.70%, dated 12/29/95, due 1/2/96,
delivery value of $300,190) . . . . . . . . . 300
-------
TOTAL SHORT-TERM
INVESTMENTS (COST $15,262). . . . . . . . . . . 15,262
-------
CASH AND RECEIVABLES LESS
LIABILITIES (0.1%) . . . . . . . . . . . . . . . . . . . . . 335
-------
NET ASSETS (100%). . . . . . . . . . . . . . . . . . . . . . $ 317,569
-------
-------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER OUTSTANDING
SHARE ($317,569,000 DIVIDED BY 18,017,439
SHARES OF CAPITAL STOCK OUTSTANDING) . . . . . . . . . . . . $ 17.63
-------
-------
</TABLE>
* Non-income producing
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
AT DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars
(IN THOUSANDS
EXCEPT PER-
SHARE AMOUNT)
-------------
<S> <C>
ASSETS:
Investment securities, at value
(cost-$223,758). . . . . . . . . . . . . . . . . . . . . . $ 301,972
Short-term investments (cost-$15,262). . . . . . . . . . . . 15,262
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Receivable for capital shares sold . . . . . . . . . . . . . 455
Dividends receivable . . . . . . . . . . . . . . . . . . . . 320
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 318,091
-----------
LIABILITIES:
Payable for capital shares repurchased . . . . . . . . . . . 209
Accrued expenses:
Advisory fee . . . . . . . . . . . . . . . . . . . . . . . 181
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 132
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 522
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 317,569
-----------
-----------
NET ASSETS CONSIST OF:
Capitol stock, at $1.00 par value
(authorized 50,000,000, outstanding
18,017,439 shares) . . . . . . . . . . . . . . . . . . . . $ 18,017
Additional paid-in capital . . . . . . . . . . . . . . . . . 220,139
Undistributed net realized gain on
investments. . . . . . . . . . . . . . . . . . . . . . . . 1,199
Unrealized net appreciation of investments . . . . . . . . . 78,214
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 317,569
-----------
-----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE ($317,569,000
DIVIDED BY 18,017,439 SHARES OUTSTANDING). . . . . . . . . $ 17.63
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars
(IN THOUSANDS)
--------------
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding. . . . . . . . . $ 2,758
taxes of $32)
Interest . . . . . . . . . . . . . . . . . . . . . . . 1,902
-----------
TOTAL INCOME. . . . . . . . . . . . . . . . . . . . 4,660
-----------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . . . . 1,999
Transfer agent fees. . . . . . . . . . . . . . . . . . 192
Custodian fees . . . . . . . . . . . . . . . . . . . . 51
Auditing and legal fees. . . . . . . . . . . . . . . . 49
Postage. . . . . . . . . . . . . . . . . . . . . . . . 48
Telephone and wire charges . . . . . . . . . . . . . . 36
Printing and stationery. . . . . . . . . . . . . . . . 35
Registration and filing fees . . . . . . . . . . . . . 34
Insurance, dues, and other . . . . . . . . . . . . . . 16
Directors' fees and expenses . . . . . . . . . . . . . 12
-----------
TOTAL EXPENSES. . . . . . . . . . . . . . . . . . . 2,472
-----------
INVESTMENT INCOME-NET. . . . . . . . . . . . . . . . . 2,188
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS-NET:
Realized Gain-Net . . . . . . . . . . . . . . . . . 23,442
Change in Unrealized Appreciation . . . . . . . . . 56,791
-----------
NET REALIZED GAIN AND CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS . . . . . . . . . . . . 80,233
-----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS. . . . . . . . . . . . . . . . . . . . . $ 82,421
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR YEARS ENDED DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATIONS:
Investment income-net . . . . . . . . . . . . . . . . . . $ 2,188 $ 1,592
Realized gain on investments-net. . . . . . . . . . . . . 23,442 20,073
Change in unrealized appreciation . . . . . . . . . . . . 56,791 (35,685)
----------- ----------
Net increase (decrease) in net assets from operations . . 82,421 (14,020)
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net . . . . . . . . . . . . . . . . . . (2,188) (1,623)
Realized gain from investment transactions-net. . . . . . (20,199) (42,328)
----------- ----------
Total distributions . . . . . . . . . . . . . . . . . . . (22,387) (43,951)
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares. . . . . . . . . . . . . 36,240 32,423
Net proceeds from reinvestment of distributions
to shareholders. . . . . . . . . . . . . . . . . . . . . 20,990 41,389
Cost of shares repurchased. . . . . . . . . . . . . . . . (72,458) (74,173)
----------- ----------
Decrease from capital share transactions. . . . . . . . . (15,228) (361)
----------- ----------
TOTAL INCREASE (DECREASE) . . . . . . . . . . . . . . . . 44,806 (58,332)
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . 272,763 331,095
----------- ----------
End of year . . . . . . . . . . . . . . . . . . . . . . . $ 317,569 $ 272,763
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS DECEMBER 31,1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company whose primary investment
objective is long-term growth of capital.
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. Securities listed on a securities exchange and over-
the-counter securities traded on the NASDAQ national market are valued at the
closing sales prices 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 that 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.
2. CAPITAL SHARE TRANSACTIONS, DIVIDENDS
AND DISTRIBUTIONS TO SHAREHOLDERS
Transactions in capital stock were as follows (in thousands, except per-share
amounts):
13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1995 1994
-------- --------
<S> <C> <C>
Shares sold. . . . . . . . . . . . . . . . . . . . 2,229 1,879
Shares issued to shareholders in
reinvestment of dividends and
distributions . . . . . . . . . . . . . . . . . 1,205 2,912
-------- ----------
3,434 4,791
Shares repurchased . . . . . . . . . . . . . . . . 4,406 4,295
-------- ----------
Net (decrease) increase. . . . . . . . . . . . . . (972) 496
-------- ----------
-------- ----------
Dividends per share. . . . . . . . . . . . . . . . $ .123 $ .09500
-------- ----------
-------- ----------
Distributions per share from
net realized gains. . . . . . . . . . . . . . . $ 1.197 $ 2.61005
-------- ----------
-------- ----------
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
<TABLE>
<CAPTION>
1995
(in thousands)
--------------
<S> <C>
PURCHASES:
Investment Securities. . . . . . . . . . . . . . . $ 209,496
--------------
--------------
SALES:
Investment Securities. . . . . . . . . . . . . . . $ 212,748
--------------
--------------
</TABLE>
At December 31, 1995, the aggregate cost of investment securities and short-term
investments for federal income-tax purposes was $239,038,000. The aggregate
appreciation and depreciation of investments at December 31, 1995, based on a
comparison of investment values and their costs for federal income-tax purposes,
were $81,325,000 and $3,129,000, respectively, resulting in a net appreciation
of $78,196,000.
4. INVESTMENT ADVISORY CONTRACT,
MANAGEMENT FEES, AND TRANSACTIONS
WITH AFFILIATES
An advisory fee of $1,999,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the year ended December 31, 1995.
This was computed at the annual rate of .70% of the first $100 million of the
Fund's average daily net assets, plus .65% on the excess thereof, 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. If the aggregate expenses of the Fund, other
than taxes, interest, brokerage commissions, and extraordinary expenses,
exceed the expense limitation imposed by any state in which the Fund's shares
are sold, the advisory fee will be reduced by the amount of such excess, or the
amount of such excess will be refunded. No such reimbursement was required for
the year ended December 31, 1995.
A fee of $5,760 for printing services was paid or payable to the Adviser for
the year ended December 31, 1995.
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 year
ended December 31, 1995, the Fund paid brokerage commissions totalling $300,000
to the distributor, which clears its transactions through unaffiliated brokers.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 2,216,962 shares of the Fund's capital stock,
representing 12.3% of the outstanding shares at December 31, 1995. In addition,
certain officers and directors of the Fund owned 136,527 shares of the Fund,
representing 0.8% of the outstanding shares.
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR. . . . . . $ 14.36 $ 17.90 $ 18.16 $ 20.17 $ 14.42
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . .12 .10 .08 .16 .22
Net gains or losses on securities
(both realized and unrealized). . . . . 4.47 (.93) 1.13 .73 6.69
---------- ---------- ---------- ---------- ----------
Total from investment operations. . . . . 4.59 (.83) 1.21 .89 6.91
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income. . . (.12) (.10) (.08) (.17) (.24)
Distributions from capital gains. . . . . (1.20) (2.61) (1.39) (2.73) (.92)
---------- ---------- ---------- ---------- ----------
Total distributions . . . . . . . . . . . (1.32) (2.71) (1.47) (2.90) (1.16)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR . . . . . . . . $ 17.63 $ 14.36 $ 17.90 $ 18.16 $ 20.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN . . . . . . . . . . . . . . . . 32.12% -4.47% 6.82% 4.69% 48.86%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) . . . $ 317,569 $272,763 $ 331,095 $ 327,431 $ 320,635
Ratio of operating expenses to
average net assets. . . . . . . . . . . . .83% .82% .80% .84% .71%
Ratio of net investment income to
average net assets. . . . . . . . . . . . .73% .54% .41% .90% 1.35%
Portfolio turnover rate. . . . . . . . . . . 78% 150% 120% 128% 109%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF THE VALUE LINE FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Value Line Fund, Inc. (the
"Fund") at December 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
February 16, 1996
16
