<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 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
Paul Craig Roberts
John W. Chandler
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Michael Romanowski
VICE PRESIDENT
Stephen E. Grant
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT and
SECRETARY/TREASURER
Jack M. Houston
ASSISTANT SECRETARY/TREASURER
Stephen La Rosa
ASSISTANT SECRETARY/TREASURER
</TABLE>
THIS 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).
VLF612155
------------------------------------
ANNUAL REPORT
------------------------------------
DECEMBER 31, 1996
----------------------------------------
THE VALUE LINE
FUND, INC.
[LOGO]
<PAGE>
THE VALUE LINE FUND, INC.
TO OUR VALUE LINE
- ---------------------------------------------------------------------
TO OUR SHAREHOLDERS:
The Value Line Fund had a total return of 22.52% for 1996, as compared to a
total return of 22.96% for the unmanaged Standard & Poor's 500 Index.
In a continuation of recent trends, 1996 saw large capitalization stocks, like
those in the S&P 500, significantly out-perform small and mid-sized
capitalization stocks. As the economy appeared to slow in the second half of
last year, investors moved money into stocks of large multinational companies
whose global presence could serve to insulate earnings growth against a slowdown
in the U.S. (Please see the accompanying Economic Observations for a fuller
discussion on the economy.) The S&P Midcap 400 index, which had a total return
of 19.19% last year, and the Russell 2000 small-cap index, which had a total
return of 16.49%, were both well below the return on the S&P 500. The average
market capitalization of the stocks in the Fund was considerably less than that
of the S&P 500, making it difficult to match the return of the index in 1996.
However, the Fund's performance did compare favorably to the 19.5% average
return of general equity funds, as measured by Lipper Analytical Services.
After starting 1996 with a strong rally, the stock market suffered a sharp
correction in early summer as a result of conflicting concerns about poor
corporate profitability and a strengthening and possibly inflationary economy.
The market bottomed out in July and resumed its upward momentum in the second
half of the year as corporate earnings were in line and interest rates declined
as the economy slowed down. The best performing sectors of the market were
technology, led by networking stocks, financial services, and capital goods,
particularly stocks benefiting from the commercial aerospace upcycle. Utilities
and transportation stocks underperformed. The Value Line Fund's main
overweighting last year was in technology, mostly networking and software
related stocks and energy, primarily oil service and drillers. In addition, the
Fund had significant positions in bank and insurance stocks, two industries with
excess capacity that are undergoing consolidation. We expect to maintain a lot
of exposure to these economic sectors in 1997, as they are producing strong
earnings growth compared to other economic sectors.
The Value Line Timeliness Ranking System has a long record of success as the
Rank 1 and Rank 2 stocks have significantly outperformed the lower ranked
issues. The higher ranked stocks have superior near-term earnings and price
momentum as well as attractive valuations. Your Fund selects stocks primarily
from the top two ranks. As such, our style is "growth" oriented, seeking
companies that are growing earnings faster than the overall market. The stocks
of such companies tend to have relatively high price/earnings multiples and are
more often found in growth sectors, such as technology and healthcare, as
opposed to slower growth sectors such as utilities. In order to reduce the risks
associated with such a style the Fund's holdings are well diversified with
representation in all major economic sectors, and with no significant
overweighting in any one sector. In addition, up to 15% of the Fund's assets can
be in Rank 3 stocks, in order to improve diversification.
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,
[SIGNATURE]
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
February 26, 1997
- --------------------------------------------------------------------------------
2
<PAGE>
THE VALUE LINE FUND, INC.
FUND SHAREHOLDERS
- ---------------------------------------------------------------------
ECONOMIC OBSERVATIONS
The signs continue to point toward a moderation in the rate of economic growth.
For example, not only are the nation's factories a little less busy these days,
but improvements in the auto, housing, and retail markets all appear to be
leveling off. To be sure, there are still isolated instances in which selected
sectors are gaining in strength. On the whole, though, the next few quarters
should see a somewhat slower rate of economic expansion, with real,
inflation-adjusted gross domestic product increasing on an average of 2.0%-2.5%.
Inflation, meanwhile, continues to be practically nonexistent, with prices at
both the producer (or wholesale) and consumer levels either falling or going up
marginally. This healthy inflation trend, moreover, is unlikely to be reversed
anytime soon given the lack of serious shortages on either the labor or the raw
materials fronts.
Interest rates, meanwhile, reflecting the very modest rate of economic growth
and the benign nature of inflation, are unlikely to change all that much over
the next year. Nevertheless, we caution that recent remarks by Federal Reserve
Chairman Alan Greenspan, in which he noted that the Fed has, in the past,
occasionally raised rates before higher inflation actually took hold would seem
to suggest that whatever changes in borrowing costs may evolve over the next few
quarters will probably involve a move toward higher rather than lower rates.
Finally, we believe that these basic themes, in which moderation prevails on the
economic growth, inflation, and interest-rate fronts, will remain in place over
the course of the current year. In fact, barring an unsettling series of
currency, political, or military shocks in the international markets, overall
stability should persist into 1998.
*PERFORMANCE DATA:
<TABLE>
<CAPTION>
GROWTH OF
AN ASSUMED
AVERAGE ANNUAL INVESTMENT OF
TOTAL RETURN $10,000
--------------- -------------
<S> <C> <C>
1 year ended 12/31/96..... 22.52% $ 12,252
5 years ended 12/31/96.... 11.58% $ 17,293
10 years ended 12/31/96.... 14.50% $ 38,743
</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>
THE VALUE LINE FUND, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
<S> <C> <C>
VALUE LINE FUND AND THE S&P 500 INDEX*
1/1/87 Value Line Fund S&P 500
12/31/87 10000 10000
12/31/88 10521 10527
12/31/89 11540 12269
12/31/90 15166 16148
12/31/91 15051 15655
12/31/92 22404 20425
12/31/93 23455 21981
12/31/94 25054 24197
12/31/95 23934 24517
12/31/96 31620 33730
38743 41474
</TABLE>
(PERIOD COVERED IS 1/1/87 TO 12/31/96)
- --------------------------------------------------------------------------------
*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>
THE VALUE LINE FUND, INC.
PORTFOLIO HIGHLIGHTS AT DECEMBER 31, 1996 (UNAUDITED)
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS*
<S> <C> <C> <C>
VALUE PERCENTAGE OF
ISSUE SHARES (IN THOUSANDS) NET ASSETS
- -----------------------------------------------------------------------------------------------
Transocean Offshore Inc......................... 125,000 $ 7,828 2.2 %
Safeway, Inc.................................... 170,000 7,267 2.1
Cardinal Health, Inc............................ 122,250 7,121 2.0
McDonnell Douglas Corp.......................... 110,000 7,040 2.0
BMC Software Inc................................ 170,000 7,034 2.0
Cisco Systems, Inc.............................. 110,000 6,999 2.0
Louisiana Land & Exploration Co................. 130,000 6,971 2.0
Pfizer, Inc..................................... 84,000 6,962 2.0
Johnson & Johnson............................... 130,000 6,468 1.9
Conseco, Inc.................................... 100,000 6,375 1.8
<CAPTION>
FIVE LARGEST INDUSTRY CATEGORIES*
VALUE PERCENTAGE OF
INDUSTRY (IN THOUSANDS) NET ASSETS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Oilfield Services/Equipment..................... $ 28,328 8.1%
Computer & Peripherals.......................... 23,399 6.7
Computer Software & Services.................... 22,071 6.3
Medical Supplies................................ 18,160 5.2
Aerospace/Defense............................... 11,390 3.3
<CAPTION>
FIVE LARGEST NET SECURITY PURCHASES*+
COST
ISSUE (IN THOUSANDS)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Cascade Communications Corp..................... $ 5,406
Conseco, Inc.................................... 4,999
Compaq Computer Corp............................ 4,115
Citicorp........................................ 4,071
Mellon Bank Corp................................ 3,271
<CAPTION>
FIVE LARGEST NET SECURITY SALES*+
PROCEEDS
ISSUE (IN THOUSANDS)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Newbridge Networks Corp......................... $ 8,195
Equifax, Inc.................................... 6,696
Halliburton Co.................................. 4,817
Ross Stores Inc................................. 4,493
Black & Decker Corp............................. 3,507
</TABLE>
* EXCLUSIVE OF FIXED INCOME SECURITIES
+ FOR THE SIX MONTH PERIOD ENDED 12/31/96
- --------------------------------------------------------------------------------
5
<PAGE>
THE VALUE LINE FUND, INC.
SCHEDULE OF INVESTMENTS
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
<C> <S> <C>
- ---------------------------------------------------------
COMMON STOCKS (82.4%)
ADVERTISING (1.3%)
100,000 Omnicom Group, Inc............ $ 4,575
AEROSPACE/DEFENSE (3.3%)
24,000 Logicon, Inc.................. 876
110,000 McDonnell Douglas Corp. ...... 7,040
70,000 Precision Castparts Corp...... 3,474
--------------
11,390
BANK (3.2%)
35,000 BankAmerica Corp. ............ 3,491
40,000 Citicorp...................... 4,120
50,000 Mellon Bank Corp.............. 3,550
--------------
11,161
BANK-MIDWEST (0.8%)
40,000 Norwest Corp. ................ 1,740
10,000 Star Banc Corp................ 919
--------------
2,659
BEVERAGE-
SOFT DRINK (1.6%)
105,000 Coca-Cola Co. ................ 5,526
CEMENT AND
AGGREGATES (0.1%)
10,800 Texas Industries, Inc......... 547
CHEMICAL-SPECIALTY (1.7%)
28,000 *Airgas, Inc.................. 616
40,000 Avery Dennison Corp. ......... 1,415
84,000 Praxair, Inc. ................ 3,875
--------------
5,906
COAL/ALTERNATE
ENERGY (0.7%)
50,000 *AES Corp..................... 2,325
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
<C> <S> <C>
- ---------------------------------------------------------
COMPUTER AND
PERIPHERALS (6.7%)
30,000 *Adaptec, Inc................. $ 1,200
75,000 *Cascade Communications
Corp........................ 4,134
110,000 *Cisco Systems, Inc........... 6,999
50,000 *Compaq Computer Corp......... 3,712
60,000 *Gateway 2000, Inc............ 3,214
27,000 *SCI Systems, Inc............. 1,205
40,000 *3Com Corp.................... 2,935
--------------
23,399
COMPUTER SOFTWARE &
SERVICES (6.3%)
170,000 *BMC Software, Inc............ 7,034
60,000 *Ceridian Corp................ 2,430
110,000 Computer Associates
International, Inc.......... 5,472
50,000 First Data Corp............... 1,825
55,250 Paychex, Inc.................. 2,842
70,000 *Sterling Commerce, Inc....... 2,468
--------------
22,071
DIVERSIFIED
COMPANIES (2.6%)
110,000 Danaher Corp.................. 5,129
60,000 United Technologies Corp...... 3,960
--------------
9,089
DRUG (2.0%)
84,000 Pfizer, Inc................... 6,962
ELECTRIC
UTILITY-CENTRAL (1.1%)
24,000 Illinova Corp................. 660
75,000 Texas Utilities Co............ 3,056
--------------
3,716
ELECTRONICS (1.6%)
80,000 *Dynatech Corp................ 3,540
50,000 *Symbol Technologies, Inc..... 2,212
--------------
5,752
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
THE VALUE LINE FUND, INC.
DECEMBER 31, 1996
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
- ---------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT (0.4%)
50,000 *Evergreen Media Corp. Class
"A"......................... $ 1,250
ENVIRONMENTAL (1.2%)
100,000 *USA Waste Services, Inc...... 3,187
26,000 *United Waste Systems, Inc.... 894
--------------
4,081
FINANCIAL SERVICES (2.8%)
80,000 Green Tree Financial Corp..... 3,090
62,500 Money Store, Inc. (The)....... 1,727
110,000 Travelers Group, Inc.......... 4,991
--------------
9,808
GROCERY (2.6%)
40,000 *Kroger Co.................... 1,860
170,000 *Safeway, Inc................. 7,267
--------------
9,127
HEALTHCARE INFORMATION
SYSTEMS (0.9%)
50,000 HBO & Co...................... 2,969
HOTEL/GAMING (0.8%)
16,000 *HFS Inc...................... 956
90,000 *Mirage Resorts, Inc.......... 1,946
--------------
2,902
INSURANCE-
DIVERSIFIED (0.5%)
20,000 American Bankers Insurance
Group, Inc.................. 1,022
6,000 *CNA Financial Corp........... 642
--------------
1,664
INSURANCE-LIFE (2.8%)
100,000 Conseco, Inc.................. 6,375
74,000 SunAmerica, Inc............... 3,284
--------------
9,659
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
<C> <S> <C>
- ---------------------------------------------------------
INSURANCE-PROPERTY &
CASUALTY (1.9%)
70,000 Allstate Corp. (The).......... $ 4,051
64,000 Frontier Insurance Group,
Inc. ....................... 2,448
--------------
6,499
MACHINERY (0.6%)
40,000 Dover Corp.................... 2,010
MANUFACTURED
HOUSING/RECREATIONAL
VEHICLES (0.8%)
125,100 Oakwood Homes Corp............ 2,862
MEDICAL SERVICES (1.6%)
80,000 *HEALTHSOUTH Corp............. 3,090
80,000 Omnicare, Inc................. 2,570
--------------
5,660
MEDICAL SUPPLIES (5.2%)
60,000 Becton, Dickinson & Co. ...... 2,602
122,250 Cardinal Health, Inc. ........ 7,121
130,000 Johnson & Johnson............. 6,468
50,000 United States Surgical
Corp........................ 1,969
--------------
18,160
METAL FABRICATING (0.6%)
60,000 *Oregon Metallurgical Corp.... 1,935
NATURAL GAS-
DIVERSIFIED (1.6%)
50,000 PanEnergy Corp................ 2,250
85,500 Williams Companies, Inc....... 3,206
--------------
5,456
OFFICE EQUIPMENT &
SUPPLIES (1.9%)
120,000 Reynolds & Reynolds Co. Class
"A"......................... 3,120
200,000 *Staples, Inc................. 3,612
--------------
6,732
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
THE VALUE LINE FUND, INC.
SCHEDULE OF INVESTMENTS
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
- ---------------------------------------------------------
<C> <S> <C>
OILFIELD SERVICES/
EQUIPMENT (8.1%)
80,000 *BJ Services Co............... $ 4,080
95,000 Baker Hughes, Inc............. 3,278
12,600 *Ensco International, Inc..... 611
50,000 Helmerich & Payne, Inc........ 2,606
100,000 *Rowan Companies, Inc......... 2,263
80,000 *Smith International, Inc..... 3,590
90,000 Tidewater, Inc................ 4,072
125,000 Transocean Offshore, Inc. .... 7,828
--------------
28,328
PACKAGING &
CONTAINER (0.5%)
40,000 *Sealed Air Corp.............. 1,665
PETROLEUM-
INTEGRATED (1.8%)
23,000 British Petroleum Co. PLC
(ADR)....................... 3,251
50,000 Occidental Petroleum Corp..... 1,169
20,000 Phillips Petroleum Co......... 885
40,000 USX-Marathon Group............ 955
--------------
6,260
PETROLEUM-
PRODUCING (2.6%)
130,000 Louisiana Land & Exploration
Co.......................... 6,971
90,000 *Oryx Energy Co............... 2,228
--------------
9,199
<CAPTION>
VALUE
SHARES (IN THOUSANDS)
<C> <S> <C>
- ---------------------------------------------------------
RECREATION (0.5%)
40,000 Harley-Davidson, Inc.......... $ 1,880
RETAIL-
SPECIAL LINES (0.4%)
50,000 Gap, Inc...................... 1,506
RETAIL STORE (1.6%)
81,250 *Consolidated Stores Corp..... 2,610
96,835 Dollar General Corp........... 3,099
--------------
5,709
SEMICONDUCTOR (0.4%)
50,000 *LSI Logic Corp............... 1,338
SHOE (1.0%)
60,000 NIKE, Inc. Class "B".......... 3,585
TELECOMMUNICATIONS
EQUIPMENT (3.1%)
100,000 *ADC Telecommunications,
Inc......................... 3,113
75,400 *Andrew Corp.................. 4,001
100,000 *Tellabs, Inc................. 3,762
--------------
10,876
TELECOMMUNICATIONS
SERVICES (1.9%)
30,000 Century Telephone Enterprises,
Inc......................... 926
50,000 Cincinnati Bell, Inc.......... 3,081
100,000 *WorldCom, Inc................ 2,606
--------------
6,613
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
THE VALUE LINE FUND, INC.
DECEMBER 31, 1996
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNTS
(IN VALUE
THOUSANDS) (IN THOUSANDS)
- -----------------------------------------------------------
<C> <S> <C>
TOBACCO (1.3%)
40,000 Philip Morris Companies,
Inc..................... $ 4,505
--------------
TOTAL COMMON STOCKS AND
TOTAL INVESTMENT
SECURITIES (82.4%) (COST
$192,280)............... 287,316
--------------
SHORT-TERM INVESTMENTS (17.6%)
U.S. GOVERNMENT
AGENCY
OBLIGATIONS (10.0%)
$ 25,000 Federal Home Loan Mortgage
Corp. 5.5% Discount
Notes, 1/17/97.......... 24,939
10,000 Federal Farm Credit Bank
Notes, 5.32%, 2/3/97.... 10,000
--------------
34,939
<CAPTION>
VALUE
PRINCIPAL (IN THOUSANDS
AMOUNT EXCEPT PER
(IN THOUSANDS) SHARE AMOUNT)
<C> <S> <C>
- -----------------------------------------------------------
REPURCHASE
AGREEMENT (7.6%)
(INCLUDING ACCRUED INTEREST)
$ 26,500 Collateralized by
$26,565,000 U.S.
Treasury Notes 6%, due
9/30/98, with a value of
$27,076,000 (with First
Chicago Capital Markets,
Inc., 6%, dated
12/31/96, due 1/2/97,
delivery value of
$26,509,000)............ $ 26,504
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST
$61,443)................ 61,443
--------------
CASH AND RECEIVABLES LESS LIABILITIES
(0.0%).................................. 112
--------------
NET ASSETS (100%).......................... $ 348,871
--------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER OUTSTANDING SHARE ($348,871,000
DIVIDED BY 18,083,159 SHARES OF CAPITAL
STOCK OUTSTANDING).........................
$ 19.29
--------------
</TABLE>
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<PAGE>
THE VALUE LINE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1996
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS
EXCEPT PER
SHARE AMOUNT)
----------------
<S> <C>
ASSETS:
Investment securities, at value
(Cost--$192,280)....................... $ 287,316
Short-term investments (Cost--$61,443)... 61,443
Cash..................................... 15
Dividends & interest receivable.......... 311
Receivable for capital shares sold....... 210
--------
TOTAL ASSETS......................... 349,295
--------
LIABILITIES:
Payable for capital shares repurchased... 118
Accrued expenses:
Advisory fee........................... 198
Other.................................. 108
--------
TOTAL LIABILITIES.................... 424
--------
NET ASSETS............................... $ 348,871
--------
NET ASSETS CONSIST OF:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
18,083,159 shares)..................... $ 18,083
Additional paid-in capital............... 217,529
Undistributed investment income--Net..... 35
Undistributed net realized gain on
investments............................ 18,188
Unrealized net appreciation of
investments............................ 95,036
--------
NET ASSETS............................... $ 348,871
--------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER OUTSTANDING SHARE
($348,871,000 DIVIDED BY 18,083,159
SHARES OUTSTANDING).................... $ 19.29
--------
</TABLE>
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS)
----------------
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding
taxes of $23)........................... $ 2,834
Interest.................................. 1,938
---------
Total Income.......................... 4,772
---------
EXPENSES:
Advisory fee.............................. 2,380
Transfer agent fees....................... 147
Printing and stationery................... 67
Custodian fees............................ 51
Auditing and legal fees................... 46
Postage................................... 45
Telephone and wire charges................ 34
Registration and filing fees.............. 31
Insurance, dues and other................. 18
Directors' fees and expenses.............. 13
Taxes and other........................... 1
---------
Total Expenses before Custody
Credits.............................. 2,833
Less: Custody Credits................. (3)
---------
Net Expenses.......................... 2,830
---------
INVESTMENT INCOME--NET.................... 1,942
---------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS--NET:
Realized Gain--Net...................... 53,096
Change in Unrealized Appreciation....... 16,822
---------
NET REALIZED GAIN AND CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS............. 69,918
---------
NET INCREASE IN NET ASSETS FROM
OPERATIONS.............................. $ 71,860
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
THE VALUE LINE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
------------------
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
OPERATIONS:
Investment income--net................ $ 1,942 $ 2,188
Realized gain on investments--net..... 53,096 23,442
Change in unrealized appreciation..... 16,822 56,791
------------------
Net increase in net assets from
operations............................ 71,860 82,421
------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income--net................ (1,907) (2,188)
Realized gain from investment
transactions--net..................... (36,107) (20,199)
------------------
Total distributions................... (38,014) (22,387)
------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares...... 62,912 36,240
Net proceeds from reinvestment of
distributions to shareholders......... 35,580 20,990
Cost of shares repurchased............ (101,036) (72,458)
------------------
Decrease from capital share
transactions.......................... (2,544) (15,228)
------------------
TOTAL INCREASE.......................... 31,302 44,806
NET ASSETS:
Beginning of year..................... 317,569 272,763
------------------
End of year........................... $348,871 $317,569
------------------
Undistributed investment income--net
at end of year........................ $ 35 --
------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
11
<PAGE>
THE VALUE LINE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
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 of certain reported amounts in the financial
statements. Actual results may 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 system 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 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.
- --------------------------------------------------------------------------------
12
<PAGE>
THE VALUE LINE FUND, INC.
- ---------------------------------------------------------------------
2.CAPITAL SHARE TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS
Transactions in capital stock were as follows (in thousands except per share
amounts):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
--------------------
Shares sold........................ 3,181 2,229
Shares issued to shareholders in
reinvestment of dividends and
distributions.................... 1,826 1,205
--------------------
5,007 3,434
Shares repurchased................. 4,941 4,406
--------------------
Net increase (decrease)............ 66 (972)
--------------------
Dividends per share from net
investment income................ $ .112 $ .123
--------------------
Distributions per share from net
realized gains................... $ 2.218 $ 1.197
--------------------
</TABLE>
3.PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
<TABLE>
<CAPTION>
1996
<S> <C>
--------------
<CAPTION>
(IN THOUSANDS)
<S> <C>
PURCHASES:
Investment Securities............... $ 172,005
--------------
SALES:
Investment Securities............... $ 256,579
--------------
</TABLE>
At December 31, 1996, the aggregate cost of investment securities and short-term
investments for federal income tax purposes was $253,723,000. The aggregate
appreciation and depreciation of investments at December 31, 1996, based on a
comparison of investment values and their costs for federal income tax purposes
was $97,736,000 and $2,700,000, respectively, resulting in a net appreciation of
$95,036,000.
4.INVESTMENT ADVISORY CONTRACT, MANAGEMENT FEES AND
TRANSACTIONS WITH AFFILIATES
An advisory fee of $2,380,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the year ended December 31, 1996.
This was computed at an 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, 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.
A fee of $2,880 for printing services was paid to the Adviser for the year ended
December 31, 1996.
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, 1996, the Fund paid brokerage commissions totalling $256,000
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 776,655 shares of the Fund's capital stock, representing
4.3% of the outstanding shares at December 31, 1996. In addition, certain
officers and directors of the Fund owned 153,290 shares of the Fund,
representing 0.8% of the outstanding shares.
- --------------------------------------------------------------------------------
13
<PAGE>
THE VALUE LINE FUND, INC.
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR................ $17.63 $14.36 $17.90 $18.16 $20.17
----------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income....................... .11 .12 .10 .08 .16
Net gains or losses on securities
(both realized and unrealized)............ 3.88 4.47 (.93 ) 1.13 .73
----------------------------------------------------------
Total from investment operations............ 3.99 4.59 (.83 ) 1.21 .89
----------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income................................... (.11 ) (.12 ) (.10 ) (.08 ) (.17 )
Distributions from capital gains............ (2.22 ) (1.20 ) (2.61 ) (1.39 ) (2.73 )
----------------------------------------------------------
Total distributions......................... (2.33 ) (1.32 ) (2.71 ) (1.47 ) (2.90 )
----------------------------------------------------------
NET ASSET VALUE, END OF YEAR...................... $19.29 $17.63 $14.36 $17.90 $18.16
----------------------------------------------------------
TOTAL RETURN...................................... 22.52 % 32.12 % (4.47 %) 6.82 % 4.69 %
----------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)............ $ 348,871 $ 317,569 $ 272,763 $ 331,095 $ 327,431
Ratio of operating expenses to average net
assets.......................................... .80 (1) .83 % .82 % .80 % .84 %
Ratio of net investment income
to average net assets........................... .55 % .73 % .54 % .41 % .90 %
Portfolio turnover rate........................... 54 % 78 % 150 % 120 % 129 %
Average commissions paid per share of common stock
investments purchased/sold...................... $.049 (2)
</TABLE>
(1)BEFORE OFFSET FOR CUSTODY CREDITS.
(2)DISCLOSURE EFFECTIVE FOR FISCAL YEARS BEGINNING ON OR AFTER 9/1/95.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
<PAGE>
THE VALUE LINE FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------------------------------------------
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, 1996, 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, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
February 18, 1997
- --------------------------------------------------------------------------------
15
<PAGE>
THE VALUE LINE FUND, INC.
THE VALUE LINE FAMILY OF FUNDS
- ---------------------------------------------------------------------
1950--THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952--THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956--THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth of
capital by investing not less than 80% of its assets in "special situations". No
consideration is given to achieving current income.
1972--VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979--THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981--VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value to
its assets will be invested in issues of the U.S. Government and its agencies
and instrumentalities.
1983--VALUE LINE CENTURION FUND* seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984--THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield Portfolio.
1985--VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income by
investing in high-yielding, lower-rated, fixed-income corporate securities.
1987--VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with maximum income exempt from New York State, New York City and federal
individual income taxes while avoiding undue risk to principal.
1987--VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* invests in stocks, bonds and
cash equivalents according to computer trend models developed by Value Line. The
objective is to professionally manage the optimal allocation of these
investments at all times.
1992--VALUE LINE INTERMEDIATE BOND FUND seeks high current income consistent
with low volatility of principal by investing in a diversified portfolio of
investment-debt securities with a dollar-weighted average portfolio maturity of
between three and ten years.
1993--VALUE LINE SMALL-CAP GROWTH FUND invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the correct
asset mix.
1995--VALUE LINE U.S. MULTINATIONAL COMPANY FUND'S investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
*ONLY AVAILABLE THROUGH THE PURCHASE OF GUARDIAN INVESTOR, A TAX DEFERRED
VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
- --------------------------------------------------------------------------------
16
