<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1998
FILE NO. 2-10827
FILE NO. 811-568
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 83 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 83 /X/
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THE VALUE LINE FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
220 East 42nd Street
New York, New York 10017-5891
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's Telephone Number, Including Area Code: (212) 907-1500
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David T. Henigson
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5891
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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Copy to:
Peter D. Lowenstein
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
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It is proposed that this filing will become effective (check appropriate box)
<TABLE>
<C> <S>
/ / Immediately upon filing pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/X/ On May 1, 1998 pursuant to paragraph (b)
/ / On (date) pursuant to paragraph (a)(1)
/ / On (date) pursuant to paragraph (a)(2) of rule 485
</TABLE>
If appropriate, check the following box:
<TABLE>
<C> <S>
/ / This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
</TABLE>
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Title of Securities Being Registered: Common Stock, $1 par value
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<PAGE>
THE VALUE LINE FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
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<C> <S> <C>
PART A (PROSPECTUS)
Item 1. Cover Page....................................... Cover Page
Item 2. Synopsis......................................... Omitted
Item 3. Condensed Financial Information.................. Summary of Fund Expenses; Financial Highlights
Item 4. General Description of Registrant................ Cover Page; Investment Objectives and Policies;
Investment Restrictions; Additional Information
Item 5. Management of the Fund........................... Summary of Fund Expenses; Management of the Fund;
Additional Information
Item 6. Capital Stock and Other Securities............... Dividends, Distributions and Taxes; Additional
Information
Item 7. Purchase of Securities Being Offered............. How to Buy Shares; Calculation of Net Asset
Value; Investor Services
Item 8. Redemption or Repurchase of Securities........... How to Redeem Shares
Item 9. Pending Legal Proceedings........................ Not Applicable
PART B (STATEMENT OF ADDITIONAL INFORMATION)
Item 10. Cover Page....................................... Cover Page
Item 11. Table of Contents................................ Table of Contents
Item 12. General Information and History.................. Additional Information (Part A)
Item 13. Investment Objectives and Policies............... Investment Objectives and Policies; Investment
Restrictions
Item 14. Management of the Fund........................... Directors and Officers
Item 15. Control Persons and Principal Holders of
Securities..................................... Management of the Fund (Part A); Directors and
Officers
Item 16. Investment Advisory and Other Services........... Management of the Fund (Part A); The Adviser
Item 17. Brokerage Allocation............................. Management of the Fund (Part A); Brokerage
Arrangements
Item 18. Capital Stock and Other Securities............... Additional Information (Part A)
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered.................................. How to Buy Shares; Calculation of Net Asset Value
(Part A); Suspension of Redemptions
Item 20. Tax Status....................................... Taxes
Item 21. Underwriters..................................... Not Applicable
Item 22. Calculation of Performance Data.................. Performance Information (Part A); Performance
Data
Item 23. Financial Statements............................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
<TABLE>
<S> <C>
THE
VALUE LINE PROSPECTUS
FUND, INC. May 1, 1998
</TABLE>
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
www.valueline.com
The Value Line Fund, Inc. (the "Fund") is a no-load
investment company whose primary investment
objective is long-term growth of capital. Current
income is a secondary objective.
The Fund invests substantially all of its assets in
common stocks or securities convertible into common
stock. From time to time, a portion of the Fund's
assets may be invested in debt securities,
short-term indebtedness, bonds or preferred stocks
or may be held in cash.
The Fund's investment adviser is Value Line, Inc.
(the "Adviser").
Shares of the Fund are offered at net asset value.
There are no sales charges or redemption fees.
This Prospectus sets forth concise information about the Fund that a
prospective investor ought to know before investing. This Prospectus
should be retained for future reference. Additional information about
the Fund is contained in a Statement of Additional Information, dated
May 1, 1998, which may be obtained at no charge by writing or
telephoning the Fund at the address or telephone numbers listed above.
The Statement, which is incorporated into this Prospectus by reference,
has been filed with the Securities and Exchange Commission and is
available along with other related materials on the Commission's
Internet Web site at http://www.sec.gov.
DISTRIBUTOR
Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Sales Load on Purchases...................................................... None
Sales Load on Reinvested Dividends........................................... None
Deferred Sales Load.......................................................... None
Redemption Fees.............................................................. None
Exchange Fee................................................................. None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees.............................................................. .67%
12b-1 Fees................................................................... None
Other Expenses............................................................... .11%
Total Fund Operating Expenses................................................ .78%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:............................................................. $8 $25 $43 $97
</TABLE>
The foregoing is based upon the expenses for the year ended December 31, 1997,
and is designed to assist investors in understanding the various costs and
expenses that an investor in the Fund will bear directly or indirectly. This
example should not be considered a representation of past or future expenses;
actual expenses in the future may be greater or less than these shown.
2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
The following information on selected per share data and ratios, with
respect to each of the five years in the period ended December 31, 1997, and the
related financial statements, have been audited by Price Waterhouse LLP,
independent accountants, whose unqualified report thereon appears in the Fund's
Annual Report to Shareholders which is incorporated by reference in the
Statement of Additional Information. This information should be read in
conjunction with the financial statements and notes thereto which appear in the
Fund's Annual Report to Shareholders available from the Fund without charge.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $19.29 $17.63 $14.36 $17.90 $18.16
---------- ---------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income............... .14 .11 .12 .10 .08
Net gains or losses on securities
(both realized and unrealized)..... 3.79 3.88 4.47 (.93) 1.13
---------- ---------- -------- -------- --------
Total income (loss) from investment
operations......................... 3.93 3.99 4.59 (.83) 1.21
---------- ---------- -------- -------- --------
Less distributions:
Dividends from net investment
income............................. (.14) (.11) (.12) (.10) (.08)
Distributions from net realized
gains.............................. (3.79) (2.22) (1.20) (2.61) (1.39)
---------- ---------- -------- -------- --------
Total distributions............... (3.93) (2.33) (1.32) (2.71) (1.47)
---------- ---------- -------- -------- --------
Net asset value, end of year............ $19.29 $19.29 $17.63 $14.36 $17.90
---------- ---------- -------- -------- --------
---------- ---------- -------- -------- --------
Total return............................ 21.59% 22.52% 32.12% -4.47% 6.82%
---------- ---------- -------- -------- --------
---------- ---------- -------- -------- --------
Ratios/Supplemental Data:
Net assets, end of year (in
thousands)............................. $382,431 $348,871 $317,569 $272,763 $331,095
Ratio of operating expenses to average
net assets............................. .78%(1) .80%(1) .83% .82% .80%
Ratio of net investment income to
average net assets..................... .63% .55% .73% .54% .41%
Portfolio turnover rate................. 68% 54% 78% 150% 120%
Average commissions paid per share of
common stock investments
purchased/sold......................... $.049(2) $.049(2)
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
1992 1991 1990 1989 1988
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $20.17 $14.42 $15.06 $13.15 $12.51
-------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income............... .16 .22 .25 .36 .40
Net gains or losses on securities
(both realized and unrealized)..... .73 6.69 (.38) 3.70 .80
-------- -------- -------- -------- --------
Total income (loss) from investment
operations......................... .89 6.91 (.13) 4.06 1.20
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income............................. (.17) (.24) (.27) (.41) (.32)
Distributions from net realized
gains.............................. (2.73) (.92) (.24) (1.74) (.24)
-------- -------- -------- -------- --------
Total distributions............... (2.90) (1.16) (.51) (2.15) (.56)
-------- -------- -------- -------- --------
Net asset value, end of year............ $18.16 $20.17 $14.42 $15.06 $13.15
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return............................ 4.69% 48.86% -0.76% 31.43% 9.69%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental Data:
Net assets, end of year (in
thousands)............................. $327,431 $320,635 $202,061 $194,785 $180,977
Ratio of operating expenses to average
net assets............................. .84% .71% .71% .70% .71%
Ratio of net investment income to
average net assets..................... .90% 1.35% 1.83% 2.00% 2.67%
Portfolio turnover rate................. 129% 109% 84% 125% 108%
Average commissions paid per share of
common stock investments
purchased/sold.........................
</TABLE>
- ------------------------------
(1) Before offset for custody credits.
(2) Disclosure effective for fiscal years beginning on or after 9/1/95.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is long-term growth of capital.
Current income is a secondary objective. The Fund's investment objective cannot
be changed without shareholder approval. There can be no assurance that the Fund
will achieve its investment objective. There are risks in all investments,
including any stock investment, and in all mutual funds that invest in stocks.
BASIC INVESTMENT STRATEGY
The Fund seeks to achieve its investment objective by investing
substantially all of its assets in common stocks or securities convertible into
common stock. However, a portion of its assets may be held from time to time in
cash, debt securities, bonds or preferred stocks when the Adviser deems such a
position appropriate in the light of economic or market conditions. The Fund may
also purchase restricted securities, write covered call options, purchase and
sell stock index futures contracts and options thereon, and enter into
repurchase agreements.
In selecting securities for purchase or sale, the Adviser relies on the
Value Line Timeliness-TM- Ranking System or the Value Line Performance-TM-
Ranking System. The Value Line Timeliness Ranking System has evolved after many
years of research and has been used in substantially its present form since
1965. It is based upon historical prices and reported earnings, recent earnings
and price momentum and the degree to which the last reported earnings deviated
from estimated earnings, among other factors. The Timeliness Rankings are
published weekly in the Standard Edition of The Value Line Investment Survey for
approximately 1,700 stocks. On a scale of 1 (highest) to 5 (lowest), the
rankings compare the Adviser's estimate of the probable market performance of
each stock during the coming twelve months relative to all 1,700 stocks under
review. The Rankings are updated weekly to reflect the most recent information.
The Value Line Performance Ranking System for common stocks was introduced
in 1995. It is a variation of the Value Line Small-Capitalization Ranking
System, which has been employed in managing pension client assets since 1981,
and in managing the Value Line Small-Cap Growth Fund, Inc. since 1993. The
Performance Ranking System evaluates the approximately 1,800 stocks in the
Expanded Edition of The Value Line Investment Survey. This stock selection
system relies on factors similar to those found in the Value Line Timeliness
Ranking System except that it does not rely on earnings estimates. The
Performance Ranks use a scale of 1 (highest) to 5 (lowest) to compare the
Adviser's estimate of the probable market performance of each Expanded Edition
stock during the coming twelve months relative to all 1,800 stocks under review
in the Expanded Edition.
Neither the Value Line Timeliness Ranking System nor the Value Line
Performance Ranking System eliminates market risk, but the Adviser believes that
they provide objective standards for determining whether the market is
undervaluing or overvaluing a particular security. The Fund will usually invest
in Common Stocks ranked 1 or 2 but it may also invest in common stocks ranked 3.
Reliance upon the rankings, whenever feasible, is a fundamental policy of the
Fund which may not be changed without shareholder approval. The utilization of
these Rankings is no assurance that the Fund will perform more favorably than
the market in general over any particular period.
MISCELLANEOUS INVESTMENT PRACTICES
COVERED CALL OPTIONS. The Fund may write covered call options on stocks
held in its portfolio ("covered options") in an attempt to earn additional
income on its portfolio or to partially offset an
4
<PAGE>
expected decline in the price of a security. When the Fund writes a covered call
option, it gives the purchaser of the option the right to buy the underlying
security at the price specified in the option (the "exercise price") at any time
during the option period. If the option expires unexercised, the Fund will
realize income to the extent of the amount received for the option (the
"premium"). If the option is exercised, a decision over which the Fund has no
control, the Fund must sell the underlying security to the option holder at the
exercise price. By writing a covered option, the Fund foregoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. The Fund will not write call options in an
aggregate amount greater than 25% of its net assets.
The Fund will purchase call options only to close out a position. When an
option is written on securities in the Fund's portfolio and it appears that the
purchaser of that option is likely to exercise the option and purchase the
underlying security, it may be considered appropriate to avoid liquidating the
Fund's position, or the Fund may wish to extinguish a call option sold by it so
as to be free to sell the underlying security. In such instances the Fund may
purchase a call option on the same security with the same exercise price and
expiration date which had been previously written. Such a purchase would have
the effect of closing out the option which the Fund has written. The Fund
realizes a gain if the amount paid to purchase the call option is less than the
premium received for writing a similar option and a loss if the amount paid to
purchase a call option is greater than the premium received for writing a
similar option. Generally, the Fund realizes a short-term capital loss if the
amount paid to purchase the call option with respect to a stock is greater than
the premium received for writing the option. If the underlying security has
substantially risen in value, it may be difficult or expensive to purchase the
call option for the closing transaction.
STOCK INDEX FUTURES CONTRACTS AND OPTIONS THEREON. The Fund may trade in
stock index futures contracts and in options on such contracts. Such contracts
will be entered into on exchanges designated by the Commodity Futures Trading
Commission ("CFTC").
The Fund's futures and options on futures transactions must constitute bona
fide hedging or other risk management purposes pursuant to regulations
promulgated by the CFTC. In addition, the Fund may not engage in such activities
generally if the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity options would exceed 5% of the fair market value of the
Fund's net assets, after taking into account unrealized profits and unrealized
losses on such contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in calculating the 5%. In instances involving entering
into long futures or options contracts by the Fund, an amount equal to the
market value of the futures contract will be deposited in a segregated account
with the Fund's custodian of cash and liquid debt securities to collateralize
the position and thereby insure that the use of such futures contract is
unleveraged. No more than 25% of the Fund's net assets may be deposited in such
segregated account.
There can be no assurance of the Fund's successful use of stock index
futures as a hedging device. Hedging transactions involve certain risks. One
risk arises because of the imperfect correlation between movements in the price
of the stock index future and movements in the price of the securities which are
the subject of the hedge. The risk of imperfect correlation increases as the
composition of the Fund's securities portfolio diverges from the securities
included in the applicable stock index. In addition to the possibility that
there may be an imperfect correlation, or no correlation
5
<PAGE>
at all, between movements in the stock index future and the portion of the
portfolio being hedged, the price of stock index futures may not correlate
perfectly with the movement in the stock index due to certain market
distortions. Increased participation by speculators in the futures market also
may cause temporary price distortions. Due to the possibility of price
distortions in the futures market and because of the imperfect correlation
between movements in the stock index and movements in the price of stock index
futures, a correct forecast of general market trends by the Adviser still may
not result in a successful hedging transaction.
REPURCHASE AGREEMENTS. The Fund may invest temporary cash balances in
repurchase agreements. A repurchase agreement involves a sale of securities to
the Fund, with the concurrent agreement of the seller (a member bank of the
Federal Reserve System or a securities dealer which the Adviser believes to be
financially sound) to repurchase securities at the same price plus an amount
equal to an agreed-upon interest rate, within a specified time, usually less
than one week, but, on occasion, at a later time. The Fund will pay for such
securities only upon physical delivery or evidence of book-entry transfer to the
account of the custodian or a bank acting as agent for the Fund. Repurchase
agreements may also be viewed as loans made by the Fund which are collateralized
by the securities subject to repurchase. The value of the underlying securities
will be at least equal at all times to the total amount of the repurchase
obligation, including the interest factor. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses, including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible subnormal levels of
income and lack of access to income during this period; and (c) expenses of
enforcing its rights. The Board of Directors monitors the creditworthiness of
parties with which the Fund enters into repurchase agreements.
RISK FACTORS
Investors should be aware of the following:
- There are risks in all investments, including any stock investment, and in
all mutual funds. The Fund's net asset value will fluctuate to reflect the
investment performance of the securities held by the Fund.
- The value a shareholder receives upon redemption may be greater or less
than the value of such shares when acquired.
- The use of investment techniques such as investing in repurchase
agreements and trading in stock index futures contracts and in options on
such contracts involves costs and greater risk than does an investment in
a fund that does not engage in these activities.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of investment restrictions which may not be
changed without shareholder approval. These are set forth in the Statement of
Additional Information and provide, among other things, that the Fund may not:
(a) borrow in excess of 10% of the value of its assets and then only as a
temporary measure;
6
<PAGE>
(b) purchase securities (other than U.S. government securities) if the
purchase would cause the Fund, at the time, to have more than 5% of the value of
its total assets invested in the securities of any one company or to own more
than 10% of the outstanding voting securities of any one company; or
(c) invest 25% or more of the value of the Fund's assets in securities of
issuers in one particular industry.
MANAGEMENT OF THE FUND
The management and affairs of the Fund are supervised by the Fund's Board of
Directors. The Fund's officers conduct and supervise the daily business
operations of the Fund. The Fund's investment decisions are made by an
investment committee of employees of the Adviser.
THE ADVISER. The Adviser was organized in 1982 and is the successor to
substantially all of the operations of Arnold Bernhard & Co., Inc. ("AB&Co.").
The Adviser was formed as part of a reorganization of AB&Co., a sole
proprietorship formed in 1931 which became a New York corporation in 1946.
AB&Co. currently owns approximately 81% of the outstanding shares of the
Adviser's common stock. Jean Bernhard Buttner, Chairman, Chief Executive Officer
and President of the Adviser, owns all of the voting stock of AB&Co.
Substantially all of the non-voting stock is owned by or for the benefit of the
Bernhard family. The Adviser currently acts as investment adviser to the other
Value Line mutual funds and furnishes investment counseling services to private
and institutional accounts with combined assets in excess of $5 billion. Value
Line Securities, Inc., the Fund's distributor, is a subsidiary of the Adviser.
Another subsidiary of the Adviser publishes The Value Line Investment Survey and
other publications. The Adviser manages the Fund's investments, provides various
administrative services and supervises the Fund's daily business affairs,
subject to the authority of the Board of Directors. The Adviser is paid an
advisory fee at an annual rate of 0.70% on the first $100 million of the Fund's
average daily net assets during the year and 0.65% of such average daily net
assets in excess thereof. For more information about the Fund's management fees
and expenses, see the "Summary of Fund Expenses" on page 2.
BROKERAGE. The Fund pays a portion of its total brokerage commissions to
Value Line Securities, Inc., a subsidiary of the Adviser, which clears
transactions for the Fund through unaffiliated broker-dealers.
CALCULATION OF NET ASSET VALUE
The net asset value of the Fund's shares for purposes of both purchases and
redemptions is determined once daily as of the scheduled close of regular
trading on the New York Stock Exchange (generally 4:00 p.m., New York time) on
each day that the New York Stock Exchange is open for trading except on days on
which no orders to purchase, sell or redeem Fund shares have been received. The
New York Stock Exchange is currently closed on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is
determined by dividing the total value of the investments and other assets of
the Fund, less any liabilities, by the total outstanding shares. Securities
listed on a securities exchange and over-the-counter securities traded on the
NASDAQ national market are valued at the closing sales price 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
7
<PAGE>
representative asked and bid prices. Securities for which market quotations are
not readily available or which are not readily marketable and all other assets
of the Fund are valued at fair value as the Board of Directors or persons acting
at their discretion 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.
HOW TO BUY SHARES
PURCHASE BY CHECK. To buy shares, send a check made payable to "NFDS-Agent"
and a completed and signed application form to Value Line Funds, c/o NFDS, P.O.
Box 419729, Kansas City, MO, 64141-6729. Third party checks will not be accepted
for either initial or subsequent investments. For assistance in completing the
application and for information on pre-authorized telephone purchases, call
Value Line Securities at 1-800-223-0818 during New York business hours. Upon
receipt of the completed and signed purchase application and a check, National
Financial Data Services, Inc. ("NFDS"), the Fund's shareholder servicing agent,
will buy full and fractional shares (to three decimal places) at the net asset
value next computed after the funds are received and will confirm the investment
to the investor. Subsequent investments may be made by attaching a check to the
confirmation's "next payment" stub, by telephone or by federal funds wire.
Investors may also buy shares through broker-dealers other than Value Line
Securities. Such broker-dealers may charge investors a reasonable service fee.
Neither Value Line Securities nor the Fund receives any part of such fees when
charged (and which can be avoided by investing directly). If an order to buy
shares is cancelled due to nonpayment or because the purchaser's check does not
clear, the purchaser will be responsible for any loss incurred by the Fund or
Value Line Securities by reason of such cancellation. If the purchaser is a
shareholder, Value Line Securities reserves the right to redeem sufficient
shares from the shareholder's account to protect the Fund against loss. Minimum
orders are $1,000 for an initial purchase and $100 for each subsequent purchase.
The Fund reserves the right to waive the initial and subsequent investment
minimums at any time and may refuse any order for the purchase of shares.
WIRE PURCHASE -- $1,000 MINIMUM. An investor should call 1-800-243-2729 to
obtain an account number. After receiving an account number, instruct your
commercial bank to wire transfer "federal funds" via the Federal Reserve System
as follows:
State Street Bank and Trust Company, Boston, MA
ABA #011000028
Attn: Mutual Fund Division
DDA #99049868
Value Line Fund, Inc.
A/C #
-----------------------------
Shareholder's name and account information
Tax ID #
- ----------------------
NOTE: A COMPLETED AND SIGNED APPLICATION MUST BE MAILED IMMEDIATELY AND
RECEIVED BY NFDS BEFORE IT CAN HONOR ANY WITHDRAWAL OR EXCHANGE TRANSACTIONS.
After your account has been opened, you may wire additional investments in
the same manner.
For an initial investment made by federal funds wire purchase, the wire must
include a valid social security number or tax identification number. Investors
purchasing shares in this manner will
8
<PAGE>
then have 30 days after purchase to provide the certification and signed account
application. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn on only U.S. banks. Until receipt of the above, any
distributions from the account will be subject to 31% withholding.
SUBSEQUENT TELEPHONE PURCHASES -- $250 MINIMUM. Upon completion of the
telephone purchase authorization section of the account application,
shareholders who own Fund shares with a current value of $500 or more may also
purchase additional shares in amounts of $250 or more up to twice the value of
their shares by calling 1-800-243-2729 between 9:00 a.m. and 4:00 p.m. New York
time. Such orders will be priced at the closing net asset value on the day
received and payment will be due within three business days. If payment is not
received within the required time or a purchaser's check does not clear, the
order is subject to cancellation and the purchaser will be responsible for any
loss incurred by the Fund or Value Line Securities. Shares may not be purchased
by telephone for a qualified retirement plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to distribute net investment income quarterly and any net
realized capital gains at least annually. Income dividends and capital gains
distributions are automatically reinvested in additional shares of the Fund
unless the shareholder has requested otherwise.
The following discussion is intended for general information only. A
prospective investor should consult with his or her own tax advisor as to the
tax consequences of an investment in the Fund.
The Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify, the Fund must meet certain income, distribution and
diversification requirements. In any year in which the Fund qualifies as a
regulated investment company and timely distributes all of its taxable income,
the Fund generally will not pay any U.S. federal income or excise tax.
Dividends paid out of the Fund's investment company taxable income
(including dividends, interest and net short-term capital gains) will be taxable
to U.S. shareholders as ordinary income. Because a portion of the Fund's income
will consist of dividends paid by U.S. corporations, a portion of the dividends
paid by the Fund will be eligible for the corporate dividends-received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated as capital
gain dividends may be taxable to individuals and certain other shareholders at
the maximum federal 20% or 28% capital gains rates (depending upon the Fund's
holding period for the assets giving rise to the capital gains), regardless of
how long the shareholder has held the Fund's shares. Dividends are taxable to
shareholders in the same manner whether received in cash or reinvested in
additional Fund shares.
A distribution will be treated as paid on December 31 of a calendar year if
it is declared by the Fund in October, November or December with a record date
within such period and paid by the Fund during January of the following calendar
year. Such distributions will be taxable to shareholders in the calendar year in
which the distributions are declared, rather than the calendar year in which the
distributions are received. Each year the Fund will notify shareholders of the
tax status of dividends and distributions paid or declared with respect to the
Fund.
9
<PAGE>
Upon the sale or other disposition of shares of the Fund, including an
exchange of shares in the Fund for shares of another Value Line fund, a
shareholder may realize a capital gain or loss for federal income tax purposes.
Capital gains may be taxable to individuals and certain other shareholders at
the maximum federal 20% or 28% capital gains rate (depending upon the
shareholder's holding period for the shares).
The Fund may be required to withhold U.S. federal income tax at the rate of
31% of all taxable distributions payable to certain shareholders who fail to
provide the Fund with their correct taxpayer identification number or to make
required certifications, or who have been notified by the Internal Revenue
Service that they are subject to backup withholding. Backup withholding is not
an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. federal income tax liability. The Fund reserves the right to
close, by redemption, accounts for which the holder fails to provide a valid
social security or taxpayer identification number when required to do so.
Further information relating to U.S. income tax matters is contained in the
Statement of Additional Information. Prospective investors should consult their
own tax advisors with regard to the federal tax consequences of the purchase,
ownership, or disposition of Fund shares, as well as the tax consequences
arising under the laws of any state, foreign country or other taxing
jurisdiction.
PERFORMANCE INFORMATION
The Fund may from time to time include information regarding its total
return performance in advertisements or in information furnished to existing or
prospective shareholders. When information regarding total return is furnished,
it will be based upon changes in the Fund's net asset value and will assume the
reinvestment of all capital gains distributions and income dividends. It will
take into account nonrecurring charges, if any, which the Fund may incur but
will not take into account taxes due on Fund distributions.
The table below illustrates the total return performance of the Fund for the
periods indicated by showing the value of a hypothetical $1,000 investment made
at the beginning of each period. The information contained in the table has been
computed by applying the Fund's average annual total return to the hypothetical
$1,000 investment. The table assumes reinvestment of all capital gains
distributions and income dividends, but does not take into account income taxes
due on Fund distributions or dividends.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any period should
not be considered as a representation or what an investment may earn or what an
investor's total return may be in any future period.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
TOTAL RETURN
------------
<S> <C> <C>
For the year ended December 31, 1997................................. $1,216 21.59%
For the five years ended December 31, 1997........................... $2,008 14.97%
For the ten years ended December 31, 1997............................ $4,478 16.17%
</TABLE>
Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical Services,
Inc. and other industry or financial publications. The Fund may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other relevant indices. From time to time, articles about the Fund
10
<PAGE>
regarding its performance or ranking may appear in national publications such as
Kiplinger's Personal Finance, Money Magazine, Financial World, Morningstar,
Personal Investors, Forbes, Fortune, Business Week, Wall Street Journal,
Investor's Business Daily, Donoghue, and Barron's. Some of these publications
may publish their own rankings or performance reviews of mutual funds, including
the Fund. Reference to or reprints of such articles may be used in the Fund's
promotional literature.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value next determined after NFDS receives a request in proper form. ALL REQUESTS
FOR REDEMPTION SHOULD BE SENT TO NFDS, P.O. BOX 419729, KANSAS CITY, MO
64141-6729. The value of shares of the Fund on redemption may be more or less
than the shareholder's cost, depending upon the market value of the Fund's
assets at the time. A shareholder holding certificates for shares must surrender
the certificates properly endorsed with signature guaranteed. A signature
guarantee may be executed by any "eligible" guarantor. Eligible guarantors
include domestic banks, savings associations, credit unions, member firms of a
national securities exchange, and participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. A guarantee from a Notary
Public is not an acceptable source. The signature on any request for redemption
of shares not represented by certificates, or on any stock power in lieu
thereof, must be similarly guaranteed. In each case the signature or signatures
must correspond to the names in which the account is registered. Additional
documentation may be required when shares are registered in the name of a
corporation, agent or fiduciary. For further information, you should contact
NFDS.
The Fund does not impose a redemption charge but shares redeemed through
brokers or dealers may be subject to a service charge by such firms. A check for
the redemption proceeds will be mailed within seven days following receipt of
all required documents. However, payment may be postponed under unusual
circumstances such as when normal trading is not taking place on the New York
Stock Exchange. In addition, shares purchased by check may not be redeemed until
the check has cleared which may take up to 15 calendar days from the purchase
date.
If the Board of Directors determines that it is in the best interests of the
Fund, the Fund may redeem, upon prior written notice, at net asset value all
shareholder accounts which due to redemptions fall below $500 in net asset
value. In such event, an investor will have 30 days to increase the shares in
his account to the minimum level.
The Fund will ordinarily pay in cash all redemptions by any shareholder of
record. However, the Fund has reserved the right under the Investment Company
Act of 1940 to make payment in whole or in part in securities of the Fund, if
the Directors determine that such action is in the best interests of the other
shareholders. Under such circumstances, the Fund will, nevertheless, pay to each
shareholder of record in cash all redemptions by such shareholder, during any
90-day period, up to the lesser of $250,000 or 1% of the Fund's net assets.
Securities delivered in payment of redemptions are valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities may incur brokerage costs on their sales.
11
<PAGE>
INVESTOR SERVICES
VALU-MATIC.-Registered Trademark- The Fund offers a free service to its
shareholders, Valu-Matic-Registered Trademark-, through which monthly
investments of $25 or more may be made automatically into the shareholder's Fund
account. The shareholder authorizes the Fund to debit the shareholder's bank
account monthly for the purchase of Fund shares on or about the 3rd or 18th of
each month. Further information regarding this service can be obtained from
Value Line Securities by calling 1-800-223-0818.
EXCHANGE OF SHARES. Shares of the Fund may be exchanged for shares of the
other Value Line funds in any identically registered account on the basis of the
respective net asset values next computed after receipt of the exchange order.
No telephone exchanges can be made for less than $1,000. If shares of the Fund
are being exchanged for shares of The Value Line Cash Fund, Inc. or The Value
Line Tax Exempt Fund--Money Market Portfolio and the shares (including shares in
accounts under the control of one investment adviser) have a value in excess of
$500,000, then, at the discretion of the Adviser, the shares to be purchased
will be purchased at the closing price on the third business day following the
redemption of the shares being exchanged to allow the Fund to utilize normal
securities settlement procedures in transferring the proceeds of the redemption.
The exchange privilege may be exercised only if the shares to be acquired
may be sold in the investor's State. Prospectuses for the other Value Line funds
may be obtained from Value Line Securities by calling 1-800-223-0818. Each such
exchange involves a redemption and a purchase for tax purposes. Broker-dealers
are not prohibited from charging a commission for handling the exchange of Fund
shares. To avoid paying such a commission, send the request in proper form to
NFDS. The Fund reserves the right to terminate the exchange privilege of any
account making more than eight exchanges a year. (An exchange out of The Value
Line Cash Fund, Inc. or The Value Line Tax Exempt Fund--Money Market Portfolio
is not counted for this purpose.) The exchange privilege may be modified or
terminated at any time, and any of the Value Line funds may discontinue offering
its shares generally or in any particular State without prior notice. To make an
exchange, call 1-800-243-2729. Although it has not been a problem in the past,
shareholders should be aware that a telephone exchange may be difficult during
periods of major economic or market changes.
SYSTEMATIC CASH WITHDRAWAL PLAN. A shareholder who has invested a minimum
of $5,000 in the Fund, or whose shares have attained that value, may request a
transfer of his shares to a Value Line Systematic Cash Withdrawal Account which
NFDS will maintain in his name on the Fund's books. Under the Systematic Cash
Withdrawal Plan (the "Plan") the shareholder will request that NFDS, acting as
his agent, redeem monthly or quarterly a sufficient number of shares to provide
for payment to him, or someone he designates, of any specified dollar amount
(minimum $25). All certificated shares must be placed on deposit under the Plan
and dividends and capital gains distributions, if any, are automatically
reinvested at net asset value. The Plan will automatically terminate when all
shares in the account have been redeemed. The shareholder may at any time
terminate the Plan, change the amount of the regular payment, or request
liquidation of the balance of his account on written notice to NFDS. The Fund
may terminate the Plan at any time on written notice to the shareholder.
QUALIFIED RETIREMENT PLANS. Shares of the Fund may be purchased for various
types of retirement plans. For more complete information, contact Value Line
Securities at 1-800-223-0818 during New York business hours.
12
<PAGE>
ADDITIONAL INFORMATION
The Fund is an open-end, diversified management investment company
incorporated in Delaware in 1949 and reincorporated in Maryland in 1972. The
Fund has 50,000,000 authorized shares of common stock, $1 par value. Each share
has one vote with fractional shares voting proportionately. Shares have no
preemptive rights, are freely transferable, are entitled to dividends as
declared by the Directors, and, if the Fund were liquidated, would receive the
net assets of the Fund.
INQUIRIES. All inquiries regarding the Fund should be directed to the Fund
at the telephone numbers or address set forth on the cover page of this
Prospectus. Inquires from shareholders regarding their accounts and account
balances should be directed to NFDS, servicing agent for State Street Bank and
Trust Company, the Fund's transfer agent, at 1-800-243-2729. Shareholders should
note that they may be required to pay a fee for special requests such as
historical transcripts of an account. Our Info-Line (1-800-243-2739) provides
the latest account information 24 hours a day, every day, and is available to
shareholders with push button phones. The Fund's Annual Report contains a
discussion of the Fund's performance which will be made available upon request
and without charge.
SHAREHOLDER MEETINGS. The Fund does not intend to hold routine annual
meetings of shareholders. However, special meetings of shareholders will be held
as required by law, for purposes such as changing fundamental policies or
approving an advisory agreement.
YEAR 2000. Like other mutual funds, the Fund could be adversely affected if
the computer systems used by the Adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser
is taking steps that it believes are reasonably designed to address the Year
2000 Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
13
<PAGE>
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 of
its net 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, low-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.
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 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 E. 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.
14
<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
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary of Fund Expenses....................... 2
Financial Highlights........................... 3
Investment Objectives and Policies............. 4
Risk Factors................................... 6
Investment Restrictions........................ 6
Management of the Fund......................... 7
Calculation of Net Asset Value................. 7
How to Buy Shares.............................. 8
Dividends, Distributions and Taxes............. 9
Performance Information........................ 10
How to Redeem Shares........................... 11
Investor Services.............................. 12
Additional Information......................... 13
Value Line Family of Funds..................... 14
</TABLE>
- -------------------------------------------
PROSPECTUS
- ------------------
MAY 1, 1998
The
Value Line
Fund, Inc.
(800) 223-0818
[LOGO]
<PAGE>
THE VALUE LINE FUND, INC.
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
www.valueline.com
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and must be
read in conjunction with the Prospectus of The Value Line Fund, Inc. (the
"Fund") dated May 1, 1998, a copy of which may be obtained without charge by
writing or telephoning the Fund.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Investment Objectives and Policies...................................................... B-1
Other Investment Strategies............................................................. B-2
Investment Restrictions................................................................. B-4
Directors and Officers.................................................................. B-6
The Adviser............................................................................. B-7
Brokerage Arrangements.................................................................. B-8
How to Buy Shares....................................................................... B-9
Suspension of Redemptions............................................................... B-10
Taxes................................................................................... B-10
Performance Data........................................................................ B-13
Additional Information.................................................................. B-13
Financial Statements.................................................................... B-13
</TABLE>
--------------
INVESTMENT OBJECTIVES AND POLICIES
(SEE ALSO "INVESTMENT OBJECTIVES AND POLICIES" IN THE FUND'S PROSPECTUS)
The Fund will not concentrate its investment in any particular industry but
reserves the right to invest up to 25% of its total assets (taken at market
value) in any one industry. The Fund does not invest for the purposes of
management or control of companies whose securities the Fund owns. It is the
policy of the Fund to purchase and hold securities which are believed to have
potential for long-term capital appreciation. The Fund generally does not
attempt to realize short-term trading profits.
B-1
<PAGE>
The investment policies set forth in the Fund's Prospectus and in this
Statement of Additional Information and the policies set forth below under
"Investment Restrictions" are, unless otherwise indicated, fundamental policies
of the Fund and may not be changed without the affirmative vote of a majority of
the outstanding voting securities of the Fund. As used in this Statement of
Additional Information and in the Prospectus, a "majority of the outstanding
voting securities of the Fund" means the lesser of (1) the holders of more than
50% of the outstanding shares of capital stock of the Fund or (2) 67% of the
shares present if more than 50% of the shares are present at a meeting in person
or by proxy.
OTHER INVESTMENT STRATEGIES
(SEE ALSO "INVESTMENT OBJECTIVES AND POLICIES" IN THE FUND'S PROSPECTUS)
The Fund may trade in stock index futures contracts and in options on such
contracts. Such contracts will be entered into on exchanges designated by the
Commodity Futures Trading Commission ("CFTC"). These transactions may be entered
into for bona fide hedging and other permissible risk management purposes
including protecting against anticipated changes in the value of portfolio
securities the Fund owns or intends to purchase.
For example, should the Fund anticipate a decrease in the value of its
portfolio securities, it could enter into futures contracts to sell stock
indexes thereby partially hedging its portfolio against the anticipated losses.
Losses in the portfolio, if realized, should be partially offset by gains on the
futures contracts. Conversely, if the Fund anticipated purchasing additional
portfolio securities in a rising market, it could enter into futures contracts
to purchase stock indexes thereby locking in a price. The implementation of
these strategies by the Fund should be less expensive and more efficient than
buying and selling the individual securities at inopportune times.
A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the contract is entered into. There can
be no assurance of the Fund's successful use of stock index futures as a hedging
device.
The contractual obligation is satisfied by either a cash settlement or by
entering into an opposite and offsetting transaction on the same exchange prior
to the delivery date. Entering into a futures contract to deliver the index
underlying the contract is referred to as entering into a short futures
contract. Entering into a futures contract to take delivery of the index is
referred to as entering into a long futures contract. An offsetting transaction
for a short futures contract is effected by the Fund entering into a long
futures contract for the same date, time and place. If the price of the short
contract exceeds the price in the offsetting long, the Fund is immediately paid
the difference and thus realizes a gain. If the price of the long transaction
exceeds the short price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a long futures contract is effected by the Fund
entering into a short futures contract. If the offsetting short price exceeds
the long price, the Fund realizes a gain, and if the offsetting short price is
less than the long price, the Fund realizes a loss.
No consideration will be paid or received by the Fund upon entering into a
futures contract. Initially, the Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 1% to 10% of
the contract amount. This amount is subject to change by the board of trade on
which the contract is traded and members of such board of trade may charge a
higher amount. This amount is known as "initial margin" and is in the nature of
a performance bond or good faith deposit on
B-2
<PAGE>
the contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker will be made daily
as the price of the index underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market."
The Fund may also purchase put and call options on stock index futures
contracts on commodity exchanges or write covered options on such contracts. A
call option gives the purchaser the right to buy, and the writer the obligation
to sell, while a put option gives the purchaser the right to sell and the writer
the obligation to buy. Unlike a stock index futures contract, which requires the
parties to buy and sell the stock index on a set date, an option on a stock
index futures contract entitles its holder to decide on or before a future date
whether to enter into such a futures contract. If the holder decides not to
enter into the contract, the premium paid for the option is lost. Since the
value of the option is fixed at the point of sale, the purchase of an option
does not require daily payments of cash in the nature of "variation" or
"maintenance" margin payments to reflect the change in the value of the
underlying contract. The value of the option purchased by the Fund does change
and is reflected in the net asset value of the Fund. The writer of an option,
however, must make margin payments on the underlying futures contract. Exchanges
provide trading mechanisms so that an option once purchased can later be sold
and an option once written can later be liquidated by an offsetting purchase.
Successful use of stock index futures by the Fund also is subject to the
Adviser's ability to predict correctly movements in the direction of the market.
If the Adviser's judgment about the several directions of the market is wrong,
the Fund's overall performance may be worse than if no such contracts had been
entered into. For example, if the Fund has hedged against the possibility of a
decline in the market adversely affecting stocks held in its portfolio and stock
prices increase instead, the Fund will lose part or all of the benefit of the
increased value of its stock which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so. When stock
index futures are purchased to hedge against a possible increase in the price of
stocks before the Fund is able to invest its cash (or cash equivalents) in
stocks in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest in stocks at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction in
the price of securities purchased.
Use of options on stock index futures entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase these options unless its
investment adviser is satisfied with the development, depth and liquidity of the
market and the investment adviser believes the options can be closed out.
Options and futures contracts entered into by the Fund will be subject to
special tax rules. These rules may accelerate income to the Fund, defer Fund
losses, cause adjustments in the holding periods of Fund securities, convert
capital gain into ordinary income and convert short-term capital losses into
long-term capital losses. As a result, these rules could affect the amount,
timing and character of Fund distributions. However, the Fund anticipates that
these investment activities will not prevent the Fund from qualifying as a
regulated investment company.
B-3
<PAGE>
MISCELLANEOUS INVESTMENT PRACTICES
RESTRICTED SECURITIES. On occasion, the Fund may purchase securities which
would have to be registered under the Securities Act of 1933 if they were to be
publicly distributed. However, it will not do so if the value of such securities
and other securities which are not readily marketable (including repurchase
agreements maturing in more than seven days) would exceed 10% of the market
value of its total assets. It is management's policy to permit the occasional
acquisition of such restricted securities only if (except in the case of
short-term non-convertible debt securities) there is an agreement by the issuer
to register such securities, ordinarily at the issuer's expense, when requested
to do so by the Fund. The acquisition in limited amounts of restricted
securities is believed to be helpful toward the attainment of the Fund's
investment objective of capital appreciation without unduly restricting its
liquidity or freedom in the management of its portfolio. However, because
restricted securities may only be sold privately or in an offering registered
under the Securities Act of 1933, or pursuant to an exemption from such
registration, substantial time may be required to sell such securities, and
there is greater than usual risk of price decline prior to sale.
In addition, the Fund may purchase certain restricted securities ("Rule 144A
securities") for which there is a secondary market of qualified institutional
buyers, as contemplated by Rule 144A under the Securities Act of 1933. Rule 144A
provides an exemption from the registration requirements of the Securities Act
for the resale of certain restricted securities to qualified institutional
buyers.
The Adviser, under the supervision of the Board of Directors, will consider
whether securities purchased under Rule 144A are liquid or illiquid for purposes
of the Fund's limitation on investment in securities which are not readily
marketable or are illiquid. Among the factors to be considered are the frequency
of trades and quotes, the number of dealers and potential purchasers, dealer
undertakings to make a market and the nature of the security and the time needed
to dispose of it.
To the extent that the liquid Rule 144A securities that the Fund holds
become illiquid, due to lack of sufficient qualified institutional buyers or
market or other conditions, the percentage of the Fund's assets invested in
illiquid assets would increase. The Adviser, under the supervision of the Board
of Directors, will monitor the Fund's investments in Rule 144A securities and
will consider appropriate measures to enable the Fund to maintain sufficient
liquidity for operating purposes and to meet redemption requests.
INVESTMENT RESTRICTIONS
The Fund may not:
(1) Engage in arbitrage transactions, short sales, purchases on margin
or participate on a joint or joint and several basis in any trading account
in securities except that these prohibitions will not apply to futures
contracts or options on futures contracts entered into by the Fund for
permissable purposes or to margin payments made in connection with such
contracts.
(2) Purchase or sell any put or call options or any combination
thereof, except that the Fund may write and sell covered call option
contracts on securities owned by the Fund. The Fund may also purchase call
options for the purpose of terminating its outstanding obligations with
respect to securities upon which covered call option contracts have been
written (i.e., "closing purchase transactions"). The Fund may also purchase
and sell put and call options on stock index futures contracts.
B-4
<PAGE>
(3) Borrow money in excess of 10% of the value of its assets and then
only as a temporary measure to meet unusually heavy redemption requests or
for other extraordinary or emergency purposes. Securities will not be
purchased while borrowings are outstanding. No assets of the Fund may be
pledged, mortgaged or otherwise encumbered, transferred or assigned to
secure a debt except in connection with the Fund's entering into stock index
futures.
(4) Engage in the underwriting of securities, except to the extent
that the Fund may be deemed an underwriter as to restricted securities under
the Securities Act of 1933 in selling portfolio securities.
(5) Invest in real estate, mortgages or illiquid securities of real
estate investment trusts although the Fund may purchase securities of
issuers which engage in real estate operations.
(6) Invest in commodities or commodity contracts except that the Fund
may invest in stock index futures contracts and options on stock index
futures contracts.
(7) Lend money except in connection with the purchase of debt
obligations or by investment in repurchase agreements, provided that
repurchase agreements maturing in more than seven days when taken together
with other illiquid investments do not exceed 10% of the Fund's assets.
(8) Invest more than 5% of the value of its total assets in the
securities of any one issuer or purchase more than 10% of the outstanding
voting securities, or any other class of securities, of any one issuer. For
purposes of this restriction, all outstanding debt securities of an issuer
are considered as one class, and all preferred stock of an issuer is
considered as one class. This restriction does not apply to obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
(9) Purchase securities of other investment companies.
(10) Invest 25% or more of its assets in securities of issuers in any
one industry.
(11) Invest more than 5% of its total assets in securities of issuers
having a record, together with predecessors, of less than three years of
continuous operation. The restriction does not apply to any obligation
issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
(12) Purchase or retain the securities of any issuer if, to the
knowledge of the Fund, those officers and directors of the Fund and of Value
Line, Inc. (the "Adviser"), who each owns more than 0.5% of the outstanding
securities of such issuer, together own more than 5% of such securities.
(13) Invest more than 2% of the value of its total assets in warrants
(valued at the lower of cost or market), except that warrants attached to
other securities are not subject to these limitations.
(14) Issue senior securities except evidences of indebtedness permitted
by restriction No. 3 above.
(15) Purchase securities for the purpose of exercising control over
another company.
In addition, management of the Fund has adopted a policy that it will not
recommend that the Fund purchase interest in oil, gas or other mineral type
development programs or leases, although the Fund may invest in the securities
of companies which operate, invest in or sponsor such programs.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction. For purposes of industry
classifications, the Fund follows the industry classifications in The Value Line
Investment Survey.
B-5
<PAGE>
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ----------------------------------------- ----------------------------------- ---------------------------------------------
<S> <C> <C> <C>
* Jean Bernhard Buttner Chairman of the Board of Directors Chairman, President and Chief Executive
Age 63 and President Officer of the Adviser and Value Line
Publishing, Inc. Chairman and President of
the Value Line Funds and the Distributor.
John W. Chandler Director Consultant, Academic Search Consultation Ser-
2801 New Mexico Ave., N.W. vice, Inc.; Trustee Emeritus and Chairman
Washington, DC 20007 (1993-1994) of Duke University; President
Age 74 Emeritus, Williams College.
* Leo R. Futia Director Retired Chairman and Chief Executive Officer
201 Park Avenue South of The Guardian Life Insurance Company of
New York, NY 10003 America and Director since 1970. Director
Age 78 (Trustee) of The Guardian Insurance & Annuity
Company, Inc., Guardian Investor Services
Corporation, and the Guardian-sponsored
mutual funds.
David H. Porter Director President of Skidmore College; Director of
813 North Broadway Adirondack Trust Company.
Saratoga Springs, NY 12866
Age 62
Paul Craig Roberts Director Chairman, Institute for Political Economy;
505 South Fairfax Street Director, A. Schulman Inc. (plastics).
Alexandria, VA 22320
Age 59
Nancy-Beth Sheerr Director Chairman, Radcliffe College Board of
1409 Beaumont Drive Trustees.
Gladwyne, PA 19035
Age 49
Philip J. Orlando, CFA Vice President Chief Investment Officer with the Adviser's
Age 39 Asset Management Division since 1995; Senior
Vice President, First Capital Advisers, Inc.,
1993-1995.
Alan Hoffman, CFA Vice President Portfolio Manager with the Adviser.
Age 44
David T. Henigson Vice President, Secretary and Vice President, Director and Compliance
Age 40 Treasurer Officer of the Adviser. Director and Vice
President of the Distributor.
</TABLE>
- ------------------------
* "Interested" director as defined in the Investment Company Act of 1940 (the
"1940 Act").
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY.
Directors and certain officers of the Fund are also directors and officers
of other investment companies for which the Adviser acts as investment adviser.
The following table sets forth information regarding compensation of Directors
by the Fund and by the Fund and the eleven other Value Line Funds of which
B-6
<PAGE>
each of the Directors is a director or trustee for the fiscal year ended
December 31, 1997. Directors who are officers or employees of the Adviser do not
receive any compensation from the Fund or any of the Value Line funds.
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND
AGGREGATE BENEFITS BENEFITS AND FUND
COMPENSATION ACCRUED AS PART UPON COMPLEX
NAME OF PERSON FROM FUND OF FUND EXPENSES RETIREMENT (12 FUNDS)
- ------------------------------------------------- --------------- --------------------- --------------- --------------
<S> <C> <C> <C> <C>
Jean B. Buttner.................................. $ -0- N/A N/A $ -0-
John W. Chandler................................. 2,968 N/A N/A 35,620
Leo R. Futia..................................... 2,718 N/A N/A 32,620
David H. Porter.................................. 553 N/A N/A 6,633
Paul Craig Roberts............................... 2,968 N/A N/A 35,620
Nancy-Beth Sheerr................................ 2,968 N/A N/A 35,620
</TABLE>
As of December 31, 1997, no person owned of record or, to the knowledge of
the Fund, owned beneficially, 5% or more of the outstanding stock of the Fund.
The Adviser and its affiliates and First Union National Bank, as Trustee of the
Value Line, Inc. Profit Sharing and Savings Plan, owned 1,064,338 shares, or
5.4% of the outstanding shares of the Fund. In addition, the officers and
directors of the Fund as a group owned 164,031 shares (less than 1% of the
outstanding shares of the Fund.)
THE ADVISER
(SEE ALSO "MANAGEMENT OF THE FUND" IN THE FUND'S PROSPECTUS)
The investment advisory agreement between the Fund and the Adviser, dated
September 26, 1991, provides for an advisory fee at an annual rate of 0.70% on
the first $100 million of the Fund's average daily net assets during the year
and 0.65% of such net assets in excess thereof. During 1995, 1996 and 1997, the
Fund paid or accrued to the Adviser advisory fees of $1,999,000, $2,380,000 and
$2,463,000, respectively. In determining the advisory fee, the net amount of any
tender fees received by Value Line Securities from acting as tendering broker
with respect to any portfolio securities of the Fund will be subtracted from the
advisory fee.
The investment advisory agreement provides that the Adviser shall render
investment advisory and other services to the Fund including, at its expense,
all administrative services, office space and the services of all officers and
employees of the Fund. The Fund pays all other expenses not assumed by the
Adviser including taxes, interest, brokerage commissions, insurance premiums,
fees and expenses of the custodian and shareholder servicing agents, legal and
accounting fees, fees and expenses in connection with qualification under
federal and state securities laws and costs of shareholder reports and proxy
materials. The Fund has agreed that it will use the words "Value Line" in its
name only so long as Value Line, Inc. serves as investment adviser to the Fund.
The Adviser acts as investment adviser to 14 other investment companies
constituting The Value Line Family of Funds and furnishes investment advisory
services to private and institutional accounts with combined assets in excess of
$5 billion.
B-7
<PAGE>
Certain of the Adviser's clients may have investment objectives similar to
the Fund and certain investments may be appropriate for the Fund and for other
clients advised by the Adviser. From time to time, a particular security may be
bought or sold for only one client or in different amounts and at different
times for more than one but less than all such clients. In addition, a
particular security may be bought for one or more clients when one or more other
clients are selling such security, or purchases or sales of the same security
may be made for two or more clients at the same time. In such event, such
transactions, to the extent practicable, will be averaged as to price and
allocated as to amount in proportion to the amount of each order. In some cases,
this procedure could have a detrimental effect on the price or amount of the
securities purchased or sold by the Fund. In other cases, however, it is
believed that the ability of the Fund to participate, to the extent permitted by
law, in volume transactions will produce better results for the Fund.
The Fund does not purchase or sell a security based solely on information
contained in the Value Line Investment Survey or in one of the other Value Line
services prior to the publication date of the service when the information
therein is available to the subscribers of the service. The Adviser and/or its
affiliates, officers, directors and employees may from time to time own
securities which are also held in the portfolio of the Fund. The Adviser has
imposed rules upon itself and such persons requiring monthly reports of security
transactions for their respective accounts and restricting trading in various
types of securities in order to avoid possible conflicts of interest. The
Adviser may from time to time, directly or through affiliates, enter into
agreements to furnish for compensation special research or financial services to
companies, including services in connection with acquisitions, mergers or
financings. In the event that such agreements are in effect with respect to
issuers of securities held in the portfolio of the Fund, specific reference to
such agreements will be made in the "Schedule of Investments" in shareholder
reports of the Fund. As of the date of this Statement of Additional Information,
no such agreements exist.
BROKERAGE ARRANGEMENTS
(SEE ALSO "MANAGEMENT OF THE FUND" IN THE FUND'S PROSPECTUS)
Orders for the purchase and sale of portfolio securities are placed with
brokers and dealers who, in the judgment of the Adviser, are able to execute
them as expeditiously as possible and at the best obtainable price. Purchases
and sales of securities which are not listed or traded on a securities exchange
will ordinarily be executed with primary market makers acting as principal,
except when it is determined that better prices and executions may otherwise be
obtained. The Adviser is also authorized to place purchase or sale orders with
brokers or dealers who may charge a commission in excess of that charged by
other brokers or dealers if the amount of the commission charged is reasonable
in relation to the value of the brokerage and research services provided. Such
allocation will be in such amounts and in such proportions as the Adviser may
determine. Orders may also be placed with brokers or dealers who sell shares of
the Fund or other funds for which the Adviser acts as investment adviser, but
this fact, or the volume of such sales, is not a consideration in their
selection. During 1995, 1996 and 1997, the Fund paid brokerage commissions of
$431,642, $416,879 and $342,166, respectively, of which $299,642 (69%), $256,286
(61%) and $212,386 (62%), respectively, was paid to Value Line Securities, Inc.,
the Fund's distributor and a subsidiary of the Adviser. Value Line Securities,
Inc. clears transactions for the Fund through unaffiliated broker-dealers.
The Board of Directors has adopted procedures incorporating the standards of
Rule 17e-1 under the 1940 Act which requires that the commissions paid to Value
Line Securities or any other "affiliated
B-8
<PAGE>
person" be "reasonable and fair" compared to the commissions paid to other
brokers in connection with comparable transactions. The procedures require that
the Adviser furnish reports to the Directors with respect to the payment of
commissions to affiliated brokers and maintain records with respect thereto.
During 1997, $255,336 (75%) of the Fund's brokerage commissions were paid to
brokers or dealers solely for their services in obtaining the best prices and
executions; the balance, or $86,830 (25%), went to brokers or dealers who
provided information or services to the Adviser and, therefore, indirectly to
the Fund and to shareholders of the Value Line funds. The information and
services furnished to the Adviser include the furnishing of research reports and
statistical compilations and computations and the providing of current
quotations for securities. The services and information were furnished to the
Adviser at no cost to it; no such services or information were furnished
directly to the Fund, but certain of these services might have relieved the Fund
of expenses which it would otherwise have had to pay. Such information and
services are considered by the Adviser, and brokerage commissions are allocated
in accordance with its assessment of such information and services, but only in
a manner consistent with the placing of purchase and sale orders with brokers
and/or dealers, which, in the judgment of the Adviser, are able to execute such
orders as expeditiously as possible and at the best obtainable price. The Fund
is advised that the receipt of such information and services has not reduced in
any determinable amount the overall expenses of the Adviser.
PORTFOLIO TURNOVER. The Fund's annual portfolio turnover rate may exceed
100%. A rate of portfolio turnover of 100% would occur if all of the Fund's
portfolio were replaced in a period of one year. To the extent that the Fund
engages in short-term trading in attempting to achieve its objective, it may
increase portfolio turnover and incur higher brokerage commissions and other
expenses than might otherwise be the case. The Fund's portfolio turnover rate
for recent fiscal years is shown under "Financial Highlights" in the Fund's
Prospectus.
HOW TO BUY SHARES
(SEE ALSO "CALCULATION OF NET ASSET VALUE", "HOW TO BUY SHARES"
AND "INVESTOR SERVICES" IN THE FUND'S PROSPECTUS)
Minimum orders are $1,000 for an initial purchase and $100 for each
subsequent purchase. The Fund reserves the right to reduce or waive the minimum
purchase requirements in certain cases such as pursuant to payroll deduction
plans, etc., where subsequent and continuing purchases are contemplated.
The Fund has entered into a distribution agreement with Value Line
Securities, Inc. (the "Distributor") pursuant to which the Distributor acts as
principal underwriter and distributor of the Fund for the sale and distribution
of its shares. For its services under the agreement, the Distributor receives no
compensation. The Distributor also serves as distributor to other Value Line
funds.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders and such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or its authorized designee accepts the order, in which event
customer orders will be priced at the Fund's net asset value next computed after
they are accepted by the authorized broker or the broker's authorized designee.
B-9
<PAGE>
AUTOMATIC PURCHASES: The Fund offers a free service to its shareholders,
Valu-Matic, through which monthly investments of $25 or more may be made
automatically into the shareholder's Fund account. The required form to enroll
in this program is available upon request from the Distributor.
RETIREMENT PLANS: Shares of the Fund may be purchased as the investment medium
for various retirement plans. Upon request, the Distributor will provide
information regarding eligibility and permissible contributions. Because a
retirement plan is designed to provide benefits in future years, it is important
that the investment objectives of the Fund be consistent with the participant's
retirement objectives. Premature withdrawals from a retirement plan may result
in adverse tax consequences. For more complete information, contact the
Distributor at 1-800-223-0818 during New York business hours.
SUSPENSION OF REDEMPTIONS
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday closing, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practicable, or (b) it is
not reasonably practicable for the Fund to determine the fair value of its net
assets; and (3) for such other periods as the Securities and Exchange Commission
may by order permit for the protection of the Fund's shareholders.
TAXES
(SEE "DIVIDENDS, DISTRIBUTIONS AND TAXES" IN THE FUND'S PROSPECTUS)
Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Fund and the purchase, ownership and disposition of Fund shares.
This discussion does not purport to be complete or to deal with all aspects of
federal income taxation that may be relevant to shareholders in light of their
particular circumstances, nor to certain types of shareholders subject to
special treatment under the federal income tax laws. This discussion is based
upon present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisors with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.
FUND STATUS. The Fund intends to qualify and elect to be treated each year
as a regulated investment company under Subchapter M of the Code. Accordingly,
the Fund generally must, among other things, (i) derive in each taxable year at
least 90% of its gross income from dividends, interest, payments from certain
securities loans, and gains from the sale of stock, securities or foreign
currencies or other income (such as gains from options, futures or forward
contracts) from investing in stock, securities or currencies; and (ii) hold as
of the close of each quarter, at least 50% of its assets in certain investment
assets, such as cash, U.S. Government securities, securities of other regulated
investment companies and other securities, with such other securities limited as
to any issuer to not more than 5% of the value of
B-10
<PAGE>
the Fund's total assets and 10% of the outstanding voting securities of such
issuer, and hold not more than 25% of the value of the Fund's assets in the
securities of any issuer (other than U.S. Government securities or securities of
other regulated investment companies).
FUND DISTRIBUTIONS. As a regulated investment company, the Fund generally
will not be subject to U.S. federal income tax on income and gains that it
distributes to shareholders, if at least 90% of the Fund's investment company
income -- dividends, interest and net short-term capital gains in excess of net
long-term capital losses -- for the taxable year is distributed. The Fund
intends to distribute substantially all of its investment company income and net
capital gains to shareholders for federal income tax purposes although such
distributions will be automatically reinvested in additional shares of the Fund
unless the shareholder has requested otherwise.
Amounts not timely distributed by the Fund are subject to a nondeductible 4%
excise tax at the Fund level. To avoid the tax, the Fund must distribute during
a calendar year at least 98% of its ordinary income, 98% of its capital gains in
excess of capital losses for the one year period ended October 31 of such year,
and all ordinary income and capital gains for previous years that were not
distributed in earlier years. The Fund will satisfy the annual distribution
requirement if it distributes the required amount on or before December 31 of
such year or if the distribution is declared in October, November or December of
such year with a record date within such period and paid by the Fund during
January of the following calendar year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received. The Fund
anticipates that it will make sufficient timely distributions to avoid
imposition of the excise tax.
Options, futures contracts and short sales entered into by the Fund will be
subject to special tax rules. These rules may accelerate income to the Fund,
defer Fund losses, cause adjustments in the holding periods of Fund securities,
convert capital gain into ordinary income and convert short-term capital losses
into long-term capital losses. As a result, these rules could affect the amount,
timing and character of Fund distributions.
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or reinvested. Dividends
paid to a corporate shareholder may qualify for the dividends-received
deduction, to the extent such dividends are attributable to dividends received
from a U.S. corporation. It is expected that dividends from U.S. corporations
will constitute most of the Fund's gross income and that a substantial portion
of the dividends paid by the Fund will qualify for the dividends-received
deduction for corporate shareholders of the Fund. Upon request, the Fund will
advise Fund shareholders of the amount of dividends which qualify for the
dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital
gains over net short-term capital losses), if any, designated as capital gain
dividends may be taxable to individuals and certain other shareholders at the
maximum federal 20% or 28% capital gains rates (depending upon the Fund's
holding period for the assets giving rise to the capital gains), regardless of
how long the shareholder has held the Fund's shares. The maximum 20% capital
gains rate generally applies to gains from the sale of assets held for more than
18 months; the maximum 28% capital gains rate generally applies to gains from
the sale of assets held for more than one year but not more than 18 months.
Capital gain from the sale of assets held for one year or less will generally be
taxed as ordinary income.
Investors purchasing Fund shares prior to a distribution should be aware of
the tax consequences of purchasing such Fund shares. The purchase price paid for
such shares may reflect the amount of the
B-11
<PAGE>
forthcoming distribution. Although distributions from the Fund shortly after the
purchase of Fund shares may be viewed in substance as a return of capital,
nevertheless, such a distribution will be attributed to the dividend or capital
gain income of the Fund and, therefore, be taxable to the shareholder.
REDEMPTION, SALE OR EXCHANGE OF FUND SHARES. Upon a redemption or sale of
shares of the Fund, a shareholder may realize a gain or loss for federal income
tax purposes depending upon his or her basis in the shares. A gain or loss will
be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Capital gains may be taxable to individuals and certain
other shareholders at the maximum federal 20% or 28% capital gains rate
(depending upon the shareholder's holding period for the shares). Any loss
realized on a redemption or sale of Fund shares will be disallowed to the extent
the Fund shares disposed of are replaced (including through reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after the Fund shares are disposed of. In such a case, the basis of the
Fund shares acquired will be adjusted to reflect the disallowed loss. If a
shareholder held Fund shares for six months or less and during that period
received a distribution taxable to the shareholder as long-term capital gain,
any loss realized on the sale of such Fund shares during such six-month period
would be a long-term loss to the extent of such distribution.
An exchange of shares in the Fund for shares of another Value Line fund will
be treated as a taxable sale of the exchanged Fund shares. Accordingly, a
shareholder may recognize a gain or loss for federal income tax purposes
depending upon his or her basis in the Fund shares exchanged. A gain or loss
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Capital gains may be taxable to individuals and certain
other shareholders at the maximum federal 20% or 28% capital gains rate
(depending upon the shareholder's holding period for the shares). The
shareholder will have a tax basis in the newly-acquired Fund shares equal to the
amount invested and will begin a new holding period for federal income tax
purposes.
If a shareholder exchanges shares in the Fund for shares in another Value
Line fund pursuant to a reinvestment right, the sales charge incurred in the
purchase of the Fund shares exchanged may not be added to tax basis in
determining gain or loss for federal income tax purposes. Instead, the sales
charge for the exchanged Fund shares shall be added to basis for purposes of
determining gain or loss on the disposition of the newly-acquired Fund shares,
if such newly-acquired Fund shares are not disposed of in a similar exchange
transaction.
REPORTING AND BACKUP WITHHOLDING. The Fund will be required to report to
the Internal Revenue Service ("IRS") all distributions and gross proceeds from
the redemption of the Fund's shares, except in the case of certain exempt
shareholders. The Fund may be required to withhold U.S. federal income tax at
the rate of 31% of all taxable distributions and redemption proceeds payable to
shareholders who fail to provided the Fund with their correct taxpayer
identification number or to make certain certifications, or who have been
notified by the IRS that they are subject to backup withholding. Corporate
shareholders and certain other shareholders specified in the Code generally are
exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's U.S. federal
income tax. If the backup withholding provisions are applicable to a
shareholder, distributions and gross proceeds payable to such shareholder will
be reduced by the amounts required to be withheld, regardless of whether such
distributions are paid or reinvested.
B-12
<PAGE>
PERFORMANCE DATA
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
or other performance data on the Fund will be accompanied by information on the
Fund's average annual total return over the most recent four calendar quarters
and the period from the Fund's inception of operations. The Fund may also
advertise aggregate annual total return information over different periods of
time.
The Fund's average annual total return is determined by reference to a
hypothetical $1,000 investment that includes capital appreciation and
depreciation for the stated period, according to the following formula:
n
P(1+T) = ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial purchase order of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period
</TABLE>
ADDITIONAL INFORMATION
EXPERTS
The financial statements of the Fund and the financial highlights included
in the Fund's Annual Report to Shareholders and incorporated by reference in
this Statement of Additional Information have been so incorporated by reference
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.
CUSTODIAN
The Fund employs State Street Bank and Trust Company, Boston, MA as
custodian for the Fund. The custodian's responsibilities include safeguarding
and controlling the Fund's cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Fund's
investments. The custodian does not determine the investment policies of the
Fund or decide which securities the Fund will buy or sell.
FINANCIAL STATEMENTS
The Fund's financial statements for the year ended December 31, 1997,
including the financial highlights for each of the five fiscal years in the
period ended December 31, 1997, appearing in the 1997 Annual Report to
Shareholders and the report thereon of Price Waterhouse LLP, independent
accountants, appearing therein, are incorporated by reference in this Statement
of Additional Information.
The Fund's 1997 Annual Report to Shareholders is enclosed with this
Statement of Additional Information.
B-13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ----------- ------------------------------------------------------------------------------------------------ -----
<S> <C> <C>
1 Calculation of Performance Data.................................................................
</TABLE>
<PAGE>
THE VALUE LINE FUND, INC.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
a. Financial Statements
Included in Part A of this Registration Statement:
Financial Highlights for each of the ten years in the period ended
December 31, 1997
Incorporated by reference in Part B of this Registration Statement:*
Schedule of Investments at December 31, 1997
Statement of Assets and Liabilities at December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statement of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Notes to Financial Statements
Financial Highlights for each of the five years in the period ended
December 31, 1997
Report of Independent Accountants
Statements, schedules and historical information other than those listed
above have been omitted since they are either not applicable or are not
required.
- ---------
* Incorporated by reference from the Annual Report to Shareholders for
the year ended
December 31, 1997.
b. Exhibits
16. Calculation of Performance Data--Exhibit 1
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of December 31, 1997, there were 14,884 record holders of the
Registrant's Capital Stock ($1.00 par value).
ITEM 27. INDEMNIFICATION.
Incorporated by reference from Post-Effective Amendment No. 73 (filed with
the Commission March 3, 1988).
C-1
<PAGE>
ITEM 28. BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER.
Value Line, Inc., Registrant's investment adviser, acts as investment
adviser for a number of individuals, trusts, corporations and institutions, in
addition to the registered investment companies in the Value Line Family of
Funds listed in Item 29.
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
- ---------------------------- ---------------------------------- ------------------------------------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Board, President, Chairman of the Board and Chief Executive
and Chief Executive Officer Officer of Arnold Bernhard & Co., Inc. 220 East
42nd Street, New York, NY 10017; Chairman of
each of the Value Line Funds and the Distributor
Samuel Eisenstadt Senior Vice President and Director --------------------------------------
David T. Henigson Vice President, Treasurer and Vice President and a Director of Arnold Bernhard
Director & Co., Inc. and the Distributor
Howard A. Brecher Vice President, Secretary and Vice President, Secretary, Treasurer and a
Director Director of Arnold Bernhard & Co., Inc.
Harold Bernard, Jr. Director Retired Administrative Law Judge
William S. Kanaga Director Retired Chairman of Arthur Young (now Ernst &
Young)
W. Scott Thomas Director Partner, Brobeck, Phleger & Harrison, attorneys,
One Market Plaza, San Francisco, CA 94105
</TABLE>
C-2
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a)Value Line Securities, Inc., acts as principal underwriter for the
following Value Line funds: The Value Line Fund, Inc.; The Value Line
Income Fund, Inc.; The Value Line Special Situations Fund, Inc.; Value
Line Leveraged Growth Investors, Inc.; The Value Line Cash Fund, Inc.;
Value Line U.S. Government Securities Fund, Inc.; Value Line Centurion
Fund, Inc.; The Value Line Tax Exempt Fund, Inc.; Value Line Convertible
Fund, Inc.; Value Line Aggressive Income Trust; Value Line New York Tax
Exempt Trust; Value Line Strategic Asset Management Trust; Value Line
Small-Cap Growth Fund, Inc.; Value Line Asset Allocation Fund, Inc.;
Value Line U.S. Multinational Company Fund, Inc.
(b)
<TABLE>
<CAPTION>
(2)
POSITION AND (3)
(1) OFFICES POSITION AND
NAME AND PRINCIPAL WITH VALUE LINE OFFICES WITH
BUSINESS ADDRESS SECURITIES, INC. REGISTRANT
- -------------------------- ------------------- ---------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Chairman of the Board
Board and President
David T. Henigson Vice President, Vice President,
Secretary, Secretary and
Treasurer and Treasurer
Director
Stephen LaRosa Asst. Vice Asst. Treasurer
President
</TABLE>
The business address of each of the officers and directors is 220 East
42nd Street, New York, NY 10017-5891.
(c)Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Value Line, Inc., 220 East 42nd Street, New York, NY 10017 for records
pursuant to Rule 31a-1(b)(4),(5),(6),(7),(10),(11), Rule 31a-(i). State Street
Bank and Trust Company, c/o NFDS, P.O. Box 419729, Kansas City, MO 64141 for
records pursuant to Rule 31a-1(b)(2)(iv), State Street Bank and Trust Company,
225 Franklin Street, Boston, MA 02110 for all other records.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
C-3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information, constituting parts of this Post-Effective
Amendment No. 83 to the registration statement on Form N-1A (the "Registration
Statement"), of our report dated February 20, 1998, relating to the financial
statements and financial highlights appearing in the December 31, 1997 Annual
Report to Shareholders of The Value Line Fund, Inc., which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Financial Highlights" in the Prospectus and under the
headings "Additional Information" and "Financial Statements" in the Statement of
Additional Information.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
April 21, 1998
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of the Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York, on
the 21st day of April, 1998.
THE VALUE LINE FUND, INC.
By: DAVID T. HENIGSON
...................................
DAVID T. HENIGSON, VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
----------------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
*JEAN B. BUTTNER Chairman and Director; President; April 21, 1998
(JEAN B. BUTTNER) Principal Executive Officer
*JOHN W. CHANDLER Director April 21, 1998
(JOHN W. CHANDLER)
*LEO R. FUTIA Director April 21, 1998
(LEO R. FUTIA)
*DAVID H. PORTER Director April 21, 1998
(DAVID H. PORTER)
*NANCY-BETH SHEERR Director April 21, 1998
(NANCY-BETH SHEERR)
*PAUL CRAIG ROBERTS Director April 21, 1998
(PAUL CRAIG ROBERTS)
DAVID T. HENIGSON Treasurer; Principal Financial and April 21, 1998
............................................... Accounting Officer
(DAVID T. HENIGSON)
</TABLE>
* By DAVID T. HENIGSON
..................................
(DAVID T. HENIGSON,
ATTORNEY-IN-FACT)
C-5
<PAGE>
THE VALUE LINE FUND, INC.
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATION
EXHIBIT 16
<TABLE>
<CAPTION>
Year(s) Ended 12/31/97: 1 year 5 years 10 years
-------- --------- -----------
<S> <C> <C> <C>
Initial Investment: 1,000 1,000 1,000
Balance at End of Period: 1,216 2,008 4,478
Change: 216 1,008 3,478
Percentage Change: 21.59% 100.84% 347.76%
Average Annual Total Return: 21.59% 14.97% 16.17%
</TABLE>
