================================================================================
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SEMI-ANNUAL REPORT
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June 30, 1997
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The Value Line
Fund, Inc.
[LOGO]
<PAGE>
The Value Line Fund, Inc.
To Our Value Line
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To Our Shareholders
The Value Line Fund had a total return of 11.8 % for the first six months of
1997, as compared to a total return of 20.6% for the Standard & Poor's 500
Index.
After a strong first quarter, during which GDP grew at nearly a 5% rate, the
economy cooled off in the second quarter with GDP growth slowing to
approximately 2%. The stock market started the year on a strong note with the
Dow Jones Industrial Average moving from approximately 6,500 to nearly 7,200 in
early March. As concerns grew about an overheating economy, interest rates rose,
with the yield on the long bond moving from 6.5% to nearly 7.25%, and the stock
market suffered a 10% correction in early April. The combination of slower
economic growth in the second quarter, benign inflation, declining interest
rates, and strong corporate profits fueled a powerful stock market rally that
carried the Dow Jones from about 6,350 in mid-April to nearly 7,800 by the end
of June, a more than 20% gain. The S&P 500 Index experienced a similar rally.
Large capitalization stocks, like those in the S&P 500 and the Dow Jones
Industrial Average significantly out-performed small and mid-sized
capitalization stocks during this rally. The S&P Midcap 400 Index was up 13.0%
and the Russell 2000 small-cap index up 10.2% for the first six months of the
year, compared to the 20.6% return of the S&P 500. While the Value Line Fund has
a well diversified portfolio, its holdings include significant positions in
small and mid-sized capitalization stocks. The average market capitalization of
the stocks in the Fund is well below that of the S&P 500. In the current market
environment we believe that small and mid-capitalization stocks offer greater
opportunities as their price/earnings multiples are generally more attractive in
comparison to their earnings growth rates than are large capitalization stocks.
Your Fund benefited, during the period, from strong returns in financial
services stocks, such as banks and insurance companies, like BankAmerica and
Travelers Group, and in consumer staple stocks, as large capitalization food,
beverage and cosmetic firms like Campbell Soup, Coca- Cola and Procter & Gamble
performed well. However overweightings in the technology sector, mainly business
software and networking stocks, and in the energy sector, primarily oil service
and drilling companies, contributed to underperformance, as these stocks lagged
the market. The computer networking stocks saw some product transition problems
and a temporary slowdown in spending by the Regional Bell Operating Companies
and long distance carriers, while the drillers and oil service stocks suffered
as a pullback in the price of the commodity from a high of $26 a barrel to $18 a
barrel caused concerns about overall exploration and production spending plans.
Recent market action has seen a rebound in both the technology and energy areas
which has helped the fund's performance improve relative to the S&P 500.
The Value Line Timeliness Ranking System recently concluded another year with a
continuation of its long record of success. The higher ranked stocks, Ranks 1
and 2, have strong trailing earnings growth, good near term price momentum and
attractive valuations. Your Fund selects stocks primarily from these top two
ranks. As such, our investment style is "growth" oriented, seeking companies
that are growing earnings faster than the overall market. The stocks of such
companies tend to have relatively higher price/earnings multiples and are more
often found in faster growing economic sectors, such as technology and
healthcare. They also tend to have somewhat higher investment risk than the
market in general, as defined by the S&P 500. As such your Fund
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2
<PAGE>
The Value Line Fund, Inc.
Fund Shareholders
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maintains a broad industry diversification and individual stock positions
generally comprise less than 2% of total net assets. In addition the Fund may
hold a number of Rank 3 stocks in order to increase diversification and enhance
the dividend yield.
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 best serve your
investment needs.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 26, 1997
Economic Observations
The economy continues to push ahead, with such important indicators as the level
of manufacturing activity and the rate of employment growth exhibiting a
reasonably good degree of strength. Such trends, and a continuing healthy level
of consumer confidence, suggest that growth will average 2.5%-3.0% during the
closing half of the year. Thereafter, we would expect the expansion pace to
moderate somewhat, with real, inflation-adjusted GDP growth holding in the range
of 2.0%-2.5% in 1998.
Inflation, meanwhile, continues to be remarkably subdued. This healthy pricing
trend, which is all the more impressive given the longevity of the business
upcycle, is, moreover, unlikely to change dramatically in the months ahead.
Underscoring our optimism in this area is the recent hammering out of a budget
package (which should 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.
Interest rates, meantime, reflecting the current, relatively moderate pace of
economic growth and the subdued pricing structure, are unlikely to increase much
over the next few months. Nevertheless, we caution that given the seeming
resiliency of the business expansion, an inflation-wary Federal Reserve will
probably not shy away from tightening the monetary reins if the present pricing
stability gives way. And an upward move in rates, if sufficiently pronounced,
would be poorly recieved, in our opinion, by both the stock and the bond markets
and, as well, by the U.S. economy down the road. The recent increase in
volatility in the financial markets suggests that many are now questioning
whether the current, benign environment can last much longer. We think a
cautious investment strategy is now in order.
*Performance Data:
Growth
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/97 ....................... 19.62% $11,962
5 years ended 6/30/97 ...................... 17.02% $21,943
10 years ended 6/30/97 ...................... 13.55% $35,634
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and capital-gains
distributions accepted in shares. The investment return and principal value
of an investment will fluctuate so that an investment, when redeemed, may be
worth more or less than its original cost.
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3
<PAGE>
The Value Line Fund, Inc.
Portfolio Highlights at June 30, 1997 (unaudited)
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<TABLE>
<CAPTION>
Ten Largest Holdings
Value Percentage of
Issue Shares (in thousands) Net Assets
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<S> <C> <C> <C>
Pfizer, Inc. ................................................. 80,000 $ 9,560 2.6%
Transocean Offshore, Inc. .................................... 125,000 9,078 2.5
Johnson & Johnson ............................................ 130,000 8,369 2.3
BMC Software, Inc. ........................................... 150,000 8,306 2.3
Louisiana Land & Exploration Co. ............................. 130,000 7,426 2.0
Travelers Group, Inc. ........................................ 110,000 6,937 1.9
McDonnell Douglas Corp. ...................................... 100,000 6,850 1.9
Coca-Cola Co. ................................................ 100,000 6,750 1.8
Frontier Insurance Group, Inc. ............................... 100,000 6,475 1.8
Safeway, Inc. ................................................ 140,000 6,457 1.8
<CAPTION>
Five Largest Industry Categories
Value Percentage of
Industry (in thousands) Net Assets
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oilfield Services/Equipment .................................. $ 36,993 10.1%
Medical Supplies ............................................. 19,695 5.4
Telecommunications Equipment ................................. 18,136 5.0
Insurance-Life ............................................... 17,206 4.7
Drug ......................................................... 16,325 4.4
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
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<S> <C>
Ascend Communications, Inc. .................................. $ 6,713
Procter & Gamble Co. ......................................... 4,219
Lilly (Eli) & Co. ............................................ 3,703
Western National Corp. ....................................... 3,662
PairGain Technologies, Inc. .................................. 3,461
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
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<S> <C>
Compaq Computer Corp. ........................................ $ 3,786
USA Waste Services, Inc. ..................................... 3,702
Danaher Corp. ................................................ 3,458
Cascade Communications Corp. ................................. 2,943
HBO & Co. .................................................... 2,684
* For the six month period ended 06/30/97
</TABLE>
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4
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments June 30, 1997 (unaudited)
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Value
Shares (in thousands)
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COMMON STOCKS (87.3%)
ADVERTISING (1.7%)
100,000 Omnicom Group, Inc. ........................... $ 6,163
AEROSPACE/
DEFENSE (3.4%)
24,000 Logicon, Inc. ................................. 1,272
100,000 McDonnell Douglas Corp. ....................... 6,850
70,000 Precision Castparts Corp. ..................... 4,174
--------
12,296
BANK (3.8%)
70,000 BankAmerica Corp. ............................. 4,519
40,000 Citicorp. ..................................... 4,823
100,000 Mellon Bank Corp. ............................. 4,512
--------
13,854
BANK-MIDWEST (1.0%)
40,000 Norwest Corp. ................................. 2,250
30,000 Star Banc Corp. ............................... 1,267
--------
3,517
BEVERAGE-SOFT
DRINK (1.8%)
100,000 Coca-Cola Co. ................................. 6,750
CHEMICAL-BASIC (1.0%)
60,000 Du Pont (E.I.)
de Nemours & Co., Inc. ...................... 3,773
CHEMICAL-SPECIALTY
(1.7%)
40,000 Avery Dennison Corp. .......................... 1,605
84,000 Praxair, Inc. ................................. 4,704
--------
6,309
COAL/ALTERNATE
ENERGY (1.0%)
50,000 AES Corp.* .................................... 3,538
COMPUTER AND
PERIPHERALS (3.3%)
30,000 Adaptec, Inc.* ................................ $ 1,043
80,000 Cisco Systems, Inc.* .......................... 5,370
120,000 Gateway 2000, Inc.* ........................... 3,892
27,000 SCI Systems, Inc.* ............................ 1,721
--------
12,026
COMPUTER SOFTWARE &
SERVICES (3.5%)
150,000 BMC Software, Inc.* ........................... 8,306
80,000 Computer Associates
International, Inc. ....................... 4,455
--------
12,761
DIVERSIFIED
COMPANIES (1.8%)
30,000 Danaher Corp. ................................. 1,524
60,000 United Technologies Corp. ..................... 4,980
--------
6,504
DRUG (4.4%)
60,000 Dura Pharmaceuticals, Inc.* ................... 2,392
40,000 Lilly (Eli) & Co. ............................. 4,373
80,000 Pfizer, Inc. .................................. 9,560
--------
16,325
ELECTRONICS (1.7%)
100,000 Dynatech Corp.* ............................... 3,575
75,000 Symbol Technologies, Inc. ..................... 2,522
--------
6,097
ENVIRONMENTAL (0.3%)
26,000 United Waste Systems, Inc.* ................... 1,066
FINANCIAL SERVICES
(4.2%)
80,000 Green Tree Financial Corp. .................... 2,850
62,500 Money Store, Inc. (The)........................ 1,793
30,000 Student Loan Marketing
Association................................ 3,810
110,000 Travelers Group, Inc. ......................... 6,937
--------
15,390
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5
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments
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Value
Shares (in thousands)
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FOOD PROCESSING (1.7%)
60,000 Campbell Soup Co. ............................. $ 3,000
60,000 Hershey Foods Corp. ........................... 3,319
--------
6,319
GROCERY (2.4%)
80,000 Kroger Co.* ................................... 2,320
140,000 Safeway, Inc.* ................................ 6,457
--------
8,777
HOTEL/GAMING (0.2%)
16,000 HFS Inc.* ..................................... 928
HOUSEHOLD PRODUCTS
(1.4%)
35,000 Procter & Gamble Co. .......................... 4,943
INSURANCE-DIVERSIFIED
(0.2%)
6,000 CNA Financial Corp.* .......................... 633
INSURANCE-LIFE (4.7%)
160,000 Conseco, Inc. ................................. 5,920
50,000 ReliaStar Financial Corp. ..................... 3,656
74,000 SunAmerica Inc. ............................... 3,608
150,000 Western National Corp. ........................ 4,022
--------
17,206
INSURANCE-PROPERTY &
CASUALTY (3.2%)
70,000 Allstate Corp. (The)........................... 5,110
100,000 Frontier Insurance Group, Inc. ................ 6,475
--------
11,585
MEDICAL SERVICES (1.1%)
160,000 HEALTHSOUTH Corp.* ............................ 3,990
MEDICAL SUPPLIES (5.4%)
60,000 Becton, Dickinson & Co. ....................... 3,038
112,250 Cardinal Health, Inc. ......................... 6,426
130,000 Johnson & Johnson.............................. 8,369
50,000 United States Surgical Corp. .................. 1,862
--------
19,695
METAL FABRICATING
(0.5%)
40,000 Illinois Tool Works, Inc. ..................... $ 1,998
NATURAL GAS-
DIVERSIFIED (1.0%)
85,500 Williams Companies, Inc. ...................... 3,741
OFFICE EQUIPMENT &
SUPPLIES (1.0%)
150,000 Staples, Inc.* ................................ 3,488
OILFIELD SERVICES/
EQUIPMENT (10.1%)
80,000 BJ Services Co.* .............................. 4,290
95,000 Baker Hughes Inc. ............................. 3,675
50,000 ENSCO International Inc.* ..................... 2,638
65,000 Helmerich & Payne, Inc. ....................... 3,746
100,000 Rowan Companies, Inc.* ........................ 2,819
90,000 Smith International, Inc.* .................... 5,467
120,000 Tidewater, Inc. ............................... 5,280
125,000 Transocean Offshore, Inc....................... 9,078
--------
36,993
PACKAGING &
CONTAINER (0.5%)
40,000 Sealed Air Corp.* ............................. 1,900
PETROLEUM-
INTEGRATED (2.3%)
46,000 British Petroleum Co. PLC (ADR)................ 3,444
50,000 Occidental Petroleum Corp. .................... 1,253
20,000 Phillips Petroleum Co. ........................ 875
100,000 USX-Marathon Group............................. 2,888
--------
8,460
PETROLEUM-
PRODUCING (3.5%)
60,000 Falcon Drilling Company, Inc.* ................ 3,458
130,000 Louisiana Land &
Exploration Co. ........................... 7,426
90,000 Oryx Energy Co.* .............................. 1,901
--------
12,785
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6
<PAGE>
The Value Line Fund, Inc.
June 30, 1997 (unaudited)
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Value
Shares (in thousands)
- --------------------------------------------------------------------------------
RETAIL-SPECIAL LINES
(0.9%)
120,000 TJX Companies, Inc. ........................... $ 3,165
RETAIL STORE (2.6%)
101,562 Consolidated Stores Corp.* .................... 3,529
121,043 Dollar General Corp. .......................... 4,539
51,400 Shopko Stores, Inc.* .......................... 1,311
--------
9,379
SEMICONDUCTOR-
CAPITAL
EQUIPMENT (1.0%)
50,000 Applied Materials, Inc.* ...................... 3,540
SHOE (0.9%)
60,000 NIKE, Inc. Class "B" .......................... 3,502
TELECOMMUNICATIONS
EQUIPMENT (5.0%)
85,000 ADC Telecommunications, Inc.* ................. 2,837
113,100 Andrew Corp.* ................................. 3,181
95,000 Ascend Communications, Inc.* .................. 3,741
180,000 PairGain Technologies, Inc.* .................. 2,790
100,000 Tellabs, Inc.* ................................ 5,587
--------
18,136
TELECOMMUNICATION
SERVICES (1.7%)
100,000 Cincinnati Bell, Inc. ......................... 3,150
100,000 WorldCom, Inc.* ............................... 3,200
--------
6,350
TOBACCO (1.4%)
120,000 Philip Morris Companies, Inc. ................. 5,325
--------
TOTAL COMMON STOCKS
AND TOTAL
INVESTMENT
SECURITIES (87.3%)
(Cost $198,616,000) ....................... 319,207
--------
Value
Principal (in thousands
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (13.1%)
U.S. GOVERNMENT AGENCY
OBLIGATIONS (8.2%)
$20,000 Federal Farm Credit Bank Notes,
5.55%, 7/1/97 ............................. $ 20,000
10,000 Federal Farm Credit Bank Notes,
5.50%, 9/2/97 ............................. 10,000
--------
30,000
--------
REPURCHASE AGREEMENT
(4.9%)
(including accrued interest)
17,800 Collateralized by
$18,400,000 U.S.
Treasury Notes 5 7/8%, due
11/30/01, with a value of
$18,172,000 (with Morgan
Stanley & Co., Inc. 5.70%,
dated 6/30/97, due 7/1/97,
delivery value of
$17,803,000) .............................. 17,803
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $47,803,000) ............................................ 47,803
--------
EXCESS OF LIABILITIES OVER
CASH AND RECEIVABLES (-0.4%) .................................. (1,480)
--------
NET ASSETS (100%) ............................................. $365,530
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE
($365,530,000/17,004,322 shares of
capital stock outstanding) .................................... $ 21.50
========
* Non-income producing
See Notes to Financial Statements.
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7
<PAGE>
The Value Line Fund, Inc.
Statement of Assets
and Liabilities at June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except per
share amount)
-------------
Assets:
Investment securities, at value
(Cost--$198,616) ........................................... $319,207
Short-term investments (Cost--$47,803) ....................... 47,803
Cash ......................................................... 59
Dividends & interest receivable .............................. 517
Receivable for capital shares sold ........................... 129
--------
Total Assets ........................................... 367,715
--------
Liabilities:
Payable for securities purchased ............................. 1,285
Payable for capital shares repurchased ....................... 612
Accrued expenses:
Advisory fee ............................................... 198
Other ...................................................... 90
--------
Total Liabilities ...................................... 2,185
--------
Net Assets ................................................... $365,530
========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 17,004,322 shares) ............................. $ 17,004
Additional paid-in capital ................................... 197,418
Undistributed investment income--net ......................... 154
Undistributed net realized gain on
investments ................................................ 30,363
Unrealized net appreciation of
investments ................................................ 120,591
--------
Net Assets ................................................... $365,530
========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($365,530,000/17,004,322
shares outstanding) ........................................ $ 21.50
========
Statement of Operations
for the six months ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
--------------
Investment Income:
Interest .................................................... $ 1,338
Dividends (Net of foreign withholding
taxes of $5) .............................................. 1,263
--------
Total Income .......................................... 2,601
--------
Expenses:
Advisory fee ................................................ 1,147
Transfer agent fees ......................................... 87
Custodian fees .............................................. 23
Auditing and legal fees ..................................... 21
Postage ..................................................... 20
Printing and stationery ..................................... 20
Telephone and wire charges .................................. 19
Registration and filing fees ................................ 14
Directors' fees and expenses ................................ 8
Insurance, dues and other ................................... 8
Taxes and other ............................................. 1
--------
Total Expenses before
Custody Credits ..................................... 1,368
Less: Custody Credits ................................. (1)
--------
Net Expenses .......................................... 1,367
--------
Investment Income--Net ...................................... 1,234
--------
Realized and Unrealized Gain on
Investments-Net:
Realized Gain-Net ......................................... 12,175
Change in Unrealized Appreciation ......................... 25,555
--------
Net Realized Gain and Change in
Unrealized Appreciation
on Investments ............................................ 37,730
--------
Net Increase in Net Assets
from Operations ........................................... $ 38,964
========
See Notes to Financial Statements.
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8
<PAGE>
The Value Line Fund, Inc.
Statement of Changes in Net Assets
for the six months ended June 30, 1997
(unaudited) and for the year ended December 31, 1996
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<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31,
(unaudited) 1996
-------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Investment income-net ............................................... $ 1,234 $ 1,942
Realized gain on investments-net .................................... 12,175 53,096
Change in unrealized appreciation ................................... 25,555 16,822
-------------------------
Net increase in net assets from operations........................... 38,964 71,860
-------------------------
Distributions to Shareholders:
Investment income-net ............................................... (1,115) (1,907)
Realized gain from investment transactions-net ...................... -- (36,107)
-------------------------
Total distributions ................................................. (1,115) (38,014)
-------------------------
Capital Share Transactions:
Net proceeds from sale of shares..................................... 80,433 62,912
Net proceeds from reinvestment of distributions to shareholders...... 1,044 35,580
Cost of shares repurchased .......................................... (102,667) (101,036)
-------------------------
Decrease from capital share transactions ............................ (21,190) (2,544)
-------------------------
Total Increase ........................................................ 16,659 31,302
Net Assets:
Beginning of period ................................................. 348,871 317,569
-------------------------
End of period ....................................................... $365,530 $348,871
=========================
Undistributed investment income-net,
at end of period .................................................... $ 154 $ 35
=========================
</TABLE>
See Notes to Financial Statements.
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9
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales 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. Short-term instruments with maturities
greater than 60 days at the 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 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 sale 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.
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10
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
2. Capital Share Transactions, Dividends and
Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Six Months
Ended Year
June 30, Ended
1997 December 31,
(unaudited) 1996
----------------------------
Shares sold ..................................... 4,037 3,181
Shares issued to shareholders in
reinvestment of dividends and
distributions ................................. 50 1,826
-----------------------
4,087 5,007
Shares repurchased .............................. 5,166 4,941
-----------------------
Net (decrease) increase ......................... (1,079) 66
=======================
Dividends per share ............................. $ .065 $ .112
=======================
Distributions per share from
net realized gains ............................ $ -- $2.218
=======================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1997
(unaudited)
----------------
(in thousands)
PURCHASES:
Investment Securities .................................... $62,246
=======
SALES:
Investment Securities .................................... $68,085
=======
At June 30, 1997, the aggregate cost of investment securities and short-term
investments for federal income tax purposes was $246,419,000. The aggregate
appreciation and depreciation of investments at June 30, 1997, based on a
comparison of investment values and their costs for federal income tax purposes
was $124,497,000 and $3,906,000, respectively, resulting in a net appreciation
of $120,591,000.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $1,147,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1997.
This was computed at the 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, supervision of the investment
portfolio and pays costs of administrative services, office space, equipment and
compensation of administrative, bookkeeping and clerical personnel necessary for
managing the affairs of the Fund. The Adviser also provides persons,
satisfactory to the Fund's Board of Directors, to act as officers and employees
of the Fund and pays their salaries and wages. The Fund bears all other costs
and expenses.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers and a director of the Fund. During the six
months ended June 30, 1997, the Fund paid brokerage commissions totalling
$71,430 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 833,911 shares of the Fund's capital stock, representing
4.9% of the outstanding shares at June 30, 1997. In addition, certain officers
and directors of the Fund owned 153,592 shares of the Fund, representing 0.9% of
the outstanding shares.
- --------------------------------------------------------------------------------
11
<PAGE>
The Value Line Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1997 -----------------------------------------------------------------------
(unaudited) 1996 1995 1994 1993 1992
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ............................. $ 19.29 $ 17.63 $ 14.36 $ 17.90 $ 18.16 $ 20.17
--------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income ............... .07 .11 .12 .10 .08 .16
Net gains or losses on securities
(both realized and unrealized)..... 2.20 3.88 4.47 (.93) 1.13 .73
--------------------------------------------------------------------------------------
Total from investment
operations ........................ 2.27 3.99 4.59 (.83) 1.21 .89
--------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income ............................ (.06) (.11) (.12) (.10) (.08) (.17)
Distributions from capital gains..... -- (2.22) (1.20) (2.61) (1.39) (2.73)
--------------------------------------------------------------------------------------
Total distributions ................. (.06) (2.33) (1.32) (2.71) (1.47) (2.90)
--------------------------------------------------------------------------------------
Net asset value, end of period .......... $21.50 $19.29 $17.63 $14.36 $17.90 $18.16
======================================================================================
Total return ............................ 11.81%+ 22.52% 32.12% -4.47% 6.82% 4.69%
======================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ........................ $365,530 $348,871 $317,569 $272,763 $331,095 $327,431
Ratio of operating expenses to
average net assets .................... .79%*(1) .80%(1) .83% .82% .80% .84%
Ratio of net investment income to
average net assets .................... .71%* .55% .73% .54% .41% .90%
Portfolio turnover rate ................. 21%+ 54% 78% 150% 120% 129%
Average commissions paid per share
of common stock investments
purchased/sold ........................ $ .0493 $ .0490(2)
</TABLE>
(1) Before offset for custody credits.
(2) Disclosure effective for fiscal years beginning on or after 9/1/95.
* Annualized
+ Not 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 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
Charles E. Reed
Leo R. Futia
John W. Chandler
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Michael Romanowski
Vice President
Steven E. Grant
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and, accordingly, they
do not express an opinion thereon.
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Fund (obtainable from the
Distributor).
VLF706140
