================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 1998
------------------
The Value Line
Fund, Inc.
[LOGO]
VALUE LINE
No Load
Mutual
Funds
<PAGE>
The Value Line Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
The first six months of 1998 has provided a challenging environment for
investing in growth equities, and the performance of the Value Line Fund
reflects these challenges. Your Fund trailed the unmanaged benchmark Standard &
Poor's 500 Index in both of the first two quarters of this year, and ended up
the first half behind the index by almost six percentage points. The quarterly
breakdowns are as follows:
The Fund* S&P 500
--------- -------
First Quarter ............................ 8.94% 13.95%
Second Quarter ........................... 2.60% 3.30%
Six Months ............................... 11.77% 17.71%
* Includes reinvested dividends.
These disappointing results stem from an investment posture, which seemed
correct at the end of 1997, but which was negated by market action as 1998
unfolded. The primary drag resulted from the energy sector, in which the Fund
was overweighted relative to the benchmark late last year and which still has a
powerful secular story in place given the long-term worldwide demand for
hydrocarbons. However, a number of factors (including the mild winter in the
U.S. and sluggish demand from developing nations in Asia) combined to send the
price of crude oil plummeting, and the stocks followed the commodity's lead.
The "challenging environment" mentioned above reflects the volatility we have
seen in the U.S. stock market this year. Beginning in January, stocks rose
almost continuously, from about 7500 (as measured by the Dow Jones Industrial
Average) to new records of over 9200 in mid-April. At that point, the markets
were faced with the second wave of the economic crisis in the Pacific Rim (with
its specter of diminished demand for exported U.S. goods and its pressure on an
already weak Japanese economy), and the market fell to about 8600. At that
point, investors realized that economic conditions in the U.S. were still
conducive to long-term equity investment, and the Dow snapped back sharply,
peaking at over 9350 in July.
The story of the first part of the third quarter has been mostly negative. So
far, the investment community has been worried about weakening economic growth,
soft corporate earnings (most of which beat analysts' consensus in the second
quarter, but perhaps not by enough), and the evolving fallout from Asia.
We believe that the overlooked jewel in the U.S. economy is the continued low
rate of inflation, and the positive effect that has on stable and declining
interest rates. Assuming that domestic economic activity continues to grow
modestly (as articulated in the second-quarter preview of 1.4% expansion in the
Gross Domestic Product), we think corporate earnings won't deviate materially
from their long-term uptrend. Moreover, the interest-rate environment suggests
that price earnings multiples will remain steady to up somewhat, which spells
further advances in stock prices.
Finally, the stocks that we believe are poised to participate most fully in this
benign scenario are those we use in the Value Line Fund, which are ranked to
outperform the broad market by the Value Line Timeliness Ranking System. We
appreciate your continued confidence in the Value Line mutual funds, and pledge
our best efforts to meet your investment needs now and in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 10, 1998
- --------------------------------------------------------------------------------
2
<PAGE>
The Value Line Fund, Inc.
Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The U.S. economy has slowed considerably since the early part of this year,
principally as a result of the fallout from the deepening financial crisis now
gripping much of Asia. Specifically, GDP, which expanded at a frenetic 5.5% pace
during the opening three months of 1998, came in with just a modest 1.4% gain in
the second quarter. Moreover, based on the data released since then, we believe
that the current expansion will not strengthen appreciably over the final six
months of the year.
At this point, though, we do not believe that this slower pace of economic
activity is the forerunner of a recession. Our sense is that the Asian crisis
will gradually recede over the next year and that the continuing low rate of
inflation in this country will encourage the Federal Reserve to keep a steady
hand on the monetary reins. That combination should help to keep this nation's
economy moving forward, albeit slowly.
But even a modest deceleration in U.S. economic activity is likely to mean a
further slowing in overall corporate profit growth. With equity valuations at
elevated levels, such a slowing in profit growth will lead to accentuated
volatility in the financial markets.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/98 .................. 21.55% $12,155
5 years ended 6/30/98 ................. 16.28% $21,258
10 years ended 6/30/98 ................. 16.24% $45,033
* 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.
Portfolio Highlights at June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ten Largest Holdings
Value Percentage
Issue Share (in thousands) of Net Assets
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pfizer, Inc. ................................................. 100,000 $10,869 2.7%
Cardinal Health, Inc. ........................................ 112,250 10,523 2.6
Compuware Corp. .............................................. 200,000 10,225 2.5
Omnicom Group, Inc. .......................................... 200,000 9,975 2.5
Clear Channel Communications, Inc. ........................... 85,000 9,276 2.3
Cisco Systems, Inc. .......................................... 100,000 9,206 2.3
EMC Corp. .................................................... 200,000 8,962 2.2
Allstate Corp. (The) ......................................... 90,000 8,240 2.0
PeopleSoft, Inc. ............................................. 175,000 8,225 2.0
BMC Software, Inc. ........................................... 150,000 7,791 1.9
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer Software & Services ................................. $40,232 9.9%
Computer & Peripherals ....................................... 32,982 8.2
Drug ......................................................... 29,589 7.3
Bank ......................................................... 26,576 6.6
Medical Supplies ............................................. 25,845 6.4
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- --------------------------------------------------------------------------------
<S> <C>
PeopleSoft, Inc. ............................................. $ 8,827
Parametric Technology Corp. .................................. 7,718
Albertson's, Inc. ............................................ 6,548
Bed Bath & Beyond Inc. ....................................... 6,324
Zions Bancorporation ......................................... 5,288
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
- --------------------------------------------------------------------------------
<S> <C>
Pfizer, Inc. ................................................. $ 6,780
Safeway, Inc. ................................................ 6,027
BMC Software, Inc. ........................................... 6,026
Transocean Offshore, Inc. .................................... 5,722
Brightpoint, Inc. ............................................ 5,208
</TABLE>
* For the six month period ended 06/30/98
- --------------------------------------------------------------------------------
4
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited) June 30, 1998
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS (94.6%)
ADVERTISING (2.5%)
200,000 Omnicom Group, Inc. ........................... $ 9,975
AIR TRANSPORT (1.6%)
50,000 Airborne Freight Corp. ........................ 1,747
90,000 Alaska Air Group, Inc.*........................ 4,911
---------
6,658
AUTO PARTS--
REPLACEMENT (0.5%)
30,000 Federal-Mogul Corp. ........................... 2,025
BANK (6.6%)
45,000 BankAmerica Corp............................... 3,890
40,000 Citicorp....................................... 5,970
100,000 Mellon Bank Corp. ............................. 6,963
60,000 State Street Corp. ............................ 4,170
105,100 Zions Bancorporation........................... 5,583
---------
26,576
BANK--MIDWEST (1.5%)
110,000 Norwest Corp. ................................. 4,111
30,000 Star Banc Corp. ............................... 1,916
---------
6,027
COAL/ALTERNATE
ENERGY (1.3%)
100,000 AES Corp.*..................................... 5,256
COMPUTER AND
PERIPHERALS (8.2%)
100,000 Cisco Systems, Inc.*........................... 9,206
140,000 Compaq Computer Corp. ......................... 3,973
70,000 Dell Computer Corp.*........................... 6,497
200,000 EMC Corp.*..................................... 8,962
100,000 Sun Microsystems, Inc.*........................ 4,344
---------
32,982
COMPUTER SOFTWARE
& SERVICES (9.9%)
150,000 BMC Software, Inc.*............................ 7,791
120,000 Computer Associates
International, Inc. ....................... 6,667
200,000 Compuware Corp.*............................... 10,225
270,000 Parametric Technology
Corp.*..................................... 7,324
175,000 PeopleSoft, Inc.*.............................. 8,225
--------
40,232
DIVERSIFIED
COMPANIES (0.4%)
60,000 Nortek, Inc.*.................................. 1,845
DRUG (7.3%)
52,500 ICN Pharmaceuticals, Inc. ..................... 2,399
105,000 Lilly (Eli) & Co. ............................. 6,936
100,000 Pfizer, Inc. .................................. 10,869
105,000 Warner-Lambert Co. ............................ 7,284
45,000 Watson Pharmaceuticals,
Inc.*...................................... 2,101
---------
29,589
DRUGSTORE (1.2%)
50,912 CVS Corp. ..................................... 1,982
70,000 Walgreen Co. .................................. 2,892
---------
4,874
ELECTRICAL
EQUIPMENT (1.1%)
50,000 General Electric Co. .......................... 4,550
ENTERTAINMENT (2.3%)
85,000 Clear Channel
Communications, Inc.*...................... 9,276
ENVIRONMENTAL (0.4%)
70,000 Allied Waste Industries, Inc.*................. 1,680
- --------------------------------------------------------------------------------
5
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
FINANCIAL
SERVICES (1.5%)
100,000 Travelers Group, Inc. ......................... $ 6,063
FOOD WHOLESALERS
(1.0%)
120,000 U.S. Foodservice, Inc.*........................ 4,207
FURNITURE/HOME
FURNISHINGS (1.0%)
120,000 HON INDUSTRIES, Inc............................ 4,080
GROCERY (3.9%)
135,000 Albertson's, Inc. ............................. 6,995
115,000 Safeway, Inc.*................................. 4,679
70,000 Whole Foods Market, Inc.*...................... 4,235
---------
15,909
HOMEBUILDING (0.8%)
70,000 Centex Corp. .................................. 2,642
35,000 Standard Pacific Corp. ........................ 722
---------
3,364
INSURANCE--LIFE (3.5%)
55,000 Conseco, Inc. ................................. 2,571
30,000 Equitable Companies,
Inc. (The)................................. 2,248
100,000 ReliaStar Financial Corp. ..................... 4,800
81,000 SunAmerica Inc. ............................... 4,652
---------
14,271
INSURANCE-PROPERTY
& CASUALTY (4.8%)
90,000 Allstate Corp. (The)........................... 8,240
85,000 Executive Risk Inc. ........................... 6,269
35,000 Progressive Corp. ............................. 4,935
---------
19,444
INTERNET (0.7%)
25,000 American Online, Inc.*......................... 2,650
MANUFACTURED HOUSING/
RECREATIONAL
VEHICLES (1.2%)
165,000 Oakwood Homes Corp. ........................... 4,950
MEDICAL SERVICES (1.1%)
160,000 HEALTHSOUTH Corp.*............................. 4,270
MEDICAL SUPPLIES (6.4%)
112,250 Cardinal Health, Inc. ......................... 10,523
70,000 Guidant Corp. ................................. 4,992
50,000 Medtronic, Inc. ............................... 3,187
100,000 Safeskin Corp.*................................ 4,113
35,000 Sofamor Danek Group, Inc.*..................... 3,030
---------
25,845
METAL FABRICATING
(0.7%)
40,000 Illinois Tool Works, Inc. ..................... 2,668
NEWSPAPER (1.0%)
50,000 New York Times Co. (The)
Class "A" ................................. 3,962
OFFICE EQUIPMENT
& SUPPLIES (1.6%)
225,000 Staples, Inc.*................................. 6,511
OILFIELD SERVICES/
EQUIPMENT (5.1%)
100,000 BJ Services Co.*............................... 2,906
95,000 Baker Hughes Inc. ............................. 3,283
60,000 Halliburton Co. ............................... 2,674
50,000 Schlumberger Ltd. ............................. 3,416
50,000 Smith International, Inc.*..................... 1,741
145,000 Transocean Offshore, Inc. ..................... 6,452
---------
20,472
PETROLEUM--
PRODUCING (0.7%)
120,000 R & B Falcon Corp.*............................ 2,715
- --------------------------------------------------------------------------------
6
<PAGE>
The Value Line Fund, Inc.
June 30, 1998
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
RETAIL--SPECIAL
LINES (3.6%)
125,000 Bed Bath & Beyond Inc.*........................ $ 6,476
52,500 Dollar Tree Stores, Inc.*...................... 2,133
240,000 TJX Companies, Inc. ........................... 5,790
---------
14,399
RETAIL BUILDING
SUPPLY (1.2%)
30,000 Home Depot, Inc. (The)......................... 2,492
60,000 Lowes Companies, Inc. ......................... 2,434
---------
4,926
RETAIL STORE (2.8%)
101,562 Consolidated Stores Corp.*..................... 3,682
160,000 Dayton Hudson Corp. ........................... 7,760
---------
11,442
SEMICONDUCTOR (0.8%)
45,000 Intel Corp. ................................... 3,336
TELECOMMUNICATIONS
EQUIPMENT (1.8%)
100,000 Tellabs, Inc.*................................. 7,163
TELECOMMUNICATION
SERVICES (2.5%)
90,000 AirTouch Communications,
Inc.*...................................... 5,259
100,000 WorldCom, Inc.*................................ 4,844
---------
10,103
THRIFT (0.9%)
50,000 Ahmanson (H.F.) & Co. ......................... 3,550
TOBACCO (1.2%)
120,000 Philip Morris Companies, Inc. ................ 4,725
---------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (94.6%)
(Cost $249,929,000) ........................... 382,570
---------
Value
Principal (in thousands
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (5.4%)
(including accrued interest)
$21,700 Collateralized by $17,420,000
U.S. Treasury Notes 13.375%,
due 8/15/01, with a value of
$22,154,000 (with Morgan
Stanley & Co., Inc. 5.72%,
dated 6/30/98, due 7/1/98,
delivery value
of $21,703,000)................................ $ 21,703
CASH AND RECEIVABLES LESS
LIABILITIES (0.0%) ............................................ 49
---------
NET ASSETS (100%) ........................................... $ 404,322
=========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($404,322,499 / 18,798,738 shares of
capital stock outstanding) .................................... $ 21.51
=========
* Non-income producing
See Notes to Financial Statements
- --------------------------------------------------------------------------------
7
<PAGE>
The Value Line Fund, Inc.
Statement of Assets
and Liabilities at June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except per share
amount)
-------------
Assets:
Investment securities, at value
(Cost--$249,929) ....................................... $ 382,570
Repurchase agreement
(Cost--$21,703) ........................................ 21,703
Cash ..................................................... 89
Receivable for securities sold ........................... 2,268
Receivable for capital shares sold ....................... 839
Dividends & interest receivable .......................... 160
---------
Total Assets ....................................... 407,629
---------
Liabilities:
Payable for securities purchased ......................... 3,000
Payable for capital shares repurchased ................... 18
Accrued expenses:
Advisory fee ........................................... 218
Other .................................................. 71
---------
Total Liabilities .................................. 3,307
---------
Net Assets ............................................... $ 404,322
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 18,798,738 shares) ......................... $ 18,799
Additional paid-in capital ............................... 224,108
Distributions in excess of net
investment income ...................................... (671)
Undistributed net realized gain on
investments ............................................ 29,445
Net unrealized appreciation of
investments ............................................ 132,641
---------
Net Assets ............................................... $ 404,322
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($404,322,499 / 18,798,738
shares outstanding) .................................... $ 21.51
=========
Statement of Operations
for the six months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
--------------
Investment Income:
Dividends ................................................. $ 974
Interest .................................................. 799
--------
Total Income .......................................... 1,773
--------
Expenses:
Advisory fee .............................................. 1,295
Transfer agent fees ....................................... 86
Postage ................................................... 35
Custodian fees ............................................ 23
Auditing and legal fees ................................... 21
Telephone and wire charges ................................ 20
Printing and stationery ................................... 15
Registration and filing fees .............................. 8
Directors' fees and expenses .............................. 8
Insurance, dues and other ................................. 7
--------
Total Expenses before
Custody Credits ..................................... 1,518
Less: Custody Credits ................................. (2)
--------
Net Expenses .......................................... 1,516
--------
Net Investment Income ..................................... 257
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ..................................... 26,057
Change in Net Unrealized
Appreciation ........................................ 17,627
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments .......................................... 43,684
--------
Net Increase in Net Assets
from Operations ......................................... $ 43,941
========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
<PAGE>
The Value Line Fund, Inc.
Statement of Changes in Net Assets for the six months ended June 30, 1998
(unaudited) and for the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998 Year Ended
(unaudited) December 31,1997
-------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment income ..................................... $ 257 $ 2,391
Net realized gain on investments .......................... 26,057 48,276
Change in net unrealized appreciation ..................... 17,627 19,978
-----------------------------
Net increase in net assets from operations .................. 43,941 70,645
-----------------------------
Distributions to Shareholders:
Net investment income ..................................... (962) (2,392)
Net realized gain from investment transactions ............ -- (63,076)
-----------------------------
Total distributions ....................................... (962) (65,468)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 25,964 110,688
Proceeds from reinvestment of distributions to shareholders 945 61,277
Cost of shares repurchased ................................ (47,997) (143,582)
-----------------------------
(Decrease) Increase from capital share transactions ....... (21,088) 28,383
-----------------------------
Total Increase .............................................. 21,891 33,560
Net Assets:
Beginning of period ....................................... 382,431 348,871
-----------------------------
End of period ............................................. $ 404,322 $ 382,431
=============================
Accumulated net investment (loss) income, at end of period .. $ (671) $ 34
=============================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
9
<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 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 revenue 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.
- --------------------------------------------------------------------------------
10
<PAGE>
The Value Line Fund, Inc.
June 30, 1998
- --------------------------------------------------------------------------------
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 Ended
June 30, 1998 December 31,
(unaudited) 1997
-----------------------------
Shares sold ................................. 1,252 5,344
Shares issued to shareholders
in reinvestment of dividends
and distributions ......................... 43 3,348
-----------------------
1,295 8,692
Shares repurchased .......................... 2,323 6,949
-----------------------
Net (decrease) increase ..................... (1,028) 1,743
=======================
Dividends per share ......................... $ .05 $.1416
=======================
Distributions per share from
net realized gains ........................ $ -- $3.792
=======================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1998
(unaudited)
--------------
(in thousands)
Purchases:
Investment Securities ............................ $148,716
========
Sales:
Investment Securities ............................ $145,710
========
At June 30, 1998, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $271,632,000. The aggregate
appreciation and depreciation of investments at June 30, 1998, based on a
comparison of investment values and their costs for federal income tax purposes
was $136,941,000 and $4,300,000, respectively, resulting in a net appreciation
of $132,641,000.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $1,295,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1998.
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, 1998, the Fund paid brokerage commissions totalling
$129,662 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 913,570 shares of the Fund's capital stock, representing
4.9% of the outstanding shares at June 30, 1998. In addition, certain officers
and directors of the Fund owned 164,254 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, 1998 -----------------------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .............. $ 19.29 $ 19.29 $ 17.63 $ 14.36 $ 17.90 $ 18.16
-----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income ............ .01 .14 .11 .12 .10 .08
Net gains or losses on securities
(both realized and unrealized) . 2.26 3.79 3.88 4.47 (.93) 1.13
-----------------------------------------------------------------------------------------
Total from investment operations . 2.27 3.93 3.99 4.59 (.83) 1.21
-----------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ............ (.05) (.14) (.11) (.12) (.10) (.08)
Distributions from capital gains -- (3.79) (2.22) (1.20) (2.61) (1.39)
-----------------------------------------------------------------------------------------
Total distributions ............ (.05) (3.93) (2.33) (1.32) (2.71) (1.47)
-----------------------------------------------------------------------------------------
Net asset value, end of period ..... $ 21.51 $ 19.29 $ 19.29 $ 17.63 $ 14.36 $ 17.90
=========================================================================================
Total return ....................... 11.77%+ 21.59% 22.52% 32.12% -4.47% 6.82%
=========================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 404,322 $ 382,431 $ 348,871 $ 317,569 $ 272,763 $ 331,095
Ratio of operating expenses to
average net assets ............... .77%*(1) .78%(1) .80%(1) .83% .82% .80%
Ratio of net investment income to
average net assets ............... .13%* .63% .55% .73% .54% .41%
Portfolio turnover rate ............ 40%+ 68% 54% 78% 150% 120%
</TABLE>
(1) Before offset for custody credits.
+ Not annualized
* Annualized
See Notes to Financial Statements
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12
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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 PricewaterhouseCoopers 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
John W. Chandler
Leo R. Futia
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Philip J. Orlando
Vice President
Alan Hoffman
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).
#501004
