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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 1999
FILE NO. 2-10827
FILE NO. 811-568
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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. 84 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 84 /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
David T. Henigson
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5891
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copy to:
Peter D. Lowenstein
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
It is proposed that this filing will become effective (check
appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) 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 3, 1999 pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
THE VALUE LINE FUND, INC.
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PROSPECTUS
MAY 3, 1999
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[LOGO]
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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FUND SUMMARY
What are the Fund's goals? PAGE 2
What are the Fund's main investment strategies? PAGE 2
What are the main risks of investing in the Fund? PAGE
2
How has the Fund performed? PAGE 3
What are the Fund's fees and expenses? PAGE 4
HOW WE MANAGE THE FUND
Our investment strategies PAGE 5
The risks of investing in the Fund PAGE 6
WHO MANAGES THE FUND
Investment Adviser PAGE 7
Management fees PAGE 7
Portfolio management PAGE 7
ABOUT YOUR ACCOUNT
How to buy shares PAGE 8
How to sell shares PAGE 10
Special services PAGE 11
Dividends, distributions and taxes PAGE 12
FINANCIAL HIGHLIGHTS
Financial Highlights PAGE 13
<PAGE>
FUND SUMMARY
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WHAT ARE THE FUND'S GOALS?
The Fund primarily seeks long-term growth of capital. Current
income is a secondary objective. Although the Fund will
strive to achieve these goals, there is no assurance that it
will.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
To achieve the Fund's goals, we invest substantially all of
the Fund's net assets in common stocks or securities
convertible into common stock. In selecting securities for
purchase or sale, we rely on the Value Line Timeliness-TM-
Ranking System or the Value Line Performance-TM- Ranking
System. These Ranking Systems compare the Adviser's estimate
of the probable market performance of each stock during the
next twelve months relative to all of the stocks under
review.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Investing in any mutual fund involves risk, including the
risk that you may lose part or all of the money you invest.
The price of Fund shares will increase and decrease according
to changes in the value of the Fund's investments. The Fund
will be affected by changes in stock prices which tend to
fluctuate more than bond prices. An investment in the Fund is
not a complete investment program and you should consider it
just one part of your total investment program. For a more
complete discussion of risk, please turn to page 6.
2
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HOW HAS THE FUND PERFORMED?
This bar chart and table can help you evaluate the potential
risks of investing in the Fund. We show how returns for the
Fund's shares have varied over the past ten calendar years,
as well as the average annual returns of these shares for
one, five, and ten years all compared to the performance of
the S&P 500-Registered Trademark-, a broad based market
index. You should remember that unlike the Fund, this index
is unmanaged and does not include the costs of buying,
selling, and holding the securities. The Fund's past
performance is not necessarily an indication of how it will
perform in the future.
YEAR BY YEAR RETURNS (%)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C>
1989 31.43%
1990 -0.76%
1991 48.86%
1992 4.69%
1993 6.82%
1994 -4.47%
1995 32.11%
1996 22.53%
1997 21.59%
1998 20.25%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: Q4 1998 +23.89%
WORST QUARTER: Q3 1990 (14.65%)
</TABLE>
AVERAGE ANNUAL RETURN AS OF 12/31/98
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
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FUND 20.25% 17.72% 17.25%
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S&P 500-REGISTERED TRADEMARK- INDEX 28.58% 24.06% 19.21%
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</TABLE>
3
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WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you pay in
connection with an investment in the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------------
MAXIMUM SALES CHARGES (LOAD) IMPOSED ON PURCHASES NONE
AS A PERCENTAGE OF OFFERING PRICE
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MAXIMUM DEFERRED SALES CHARGES (LOAD) AS A NONE
PERCENTAGE OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PRICE, WHICHEVER IS LOWER
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MAXIMUM SALES CHARGES (LOAD) IMPOSED ON REINVESTED
DIVIDENDS NONE
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REDEMPTION FEE NONE
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EXCHANGE FEE NONE
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MAXIMUM ACCOUNT FEE NONE
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</TABLE>
Annual Fund operating expenses are expenses that are deducted
from the Fund's assets.
ANNUAL FUND OPERATING EXPENSES (% OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
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MANAGEMENT FEES 0.66%
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DISTRIBUTION AND SERVICE (12B-1) FEES NONE
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OTHER EXPENSES 0.11%
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TOTAL ANNUAL FUND OPERATING EXPENSES 0.77%
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</TABLE>
EXAMPLE
This example is intended to help you compare the cost of
investing in the Fund to the cost of investing in other
mutual funds. We show the cumulative amount of Fund expenses
on a hypothetical investment of $10,000 with an annual 5%
return over the time shown. This is an example only, and does
not represent future expenses, which may be greater or less
than those shown here.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C>
$79 $246 $428 $954
</TABLE>
4
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HOW WE MANAGE THE FUND
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OUR INVESTMENT STRATEGIES
We analyze economic and market conditions, seeking to
identify the market sector or securities that we think make
the best investments. The following is a description of how
the Adviser pursues the Fund's objectives.
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.
TEMPORARY DEFENSIVE POSITION
From time to time in response to adverse market or other
conditions, we may invest a portion of the Fund's net assets
in cash or cash equivalents, debt
5
<PAGE>
securities, bonds, or preferred stocks for temporary
defensive purposes. This could help the Fund avoid losses but
may mean lost opportunities.
PORTFOLIO TURNOVER
The Fund may engage in active and frequent trading of
portfolio securities in order to take advantage of better
investment opportunities to achieve its investment objectives
which would result in higher brokerage commissions and other
expenses. High portfolio turnover may negatively affect the
Fund's performance. Portfolio turnover may also result in
capital gain distributions that could raise your income tax
liability.
THE RISKS OF INVESTING IN THE FUND
Investing in any mutual fund involves risk, including the
risk that you may receive little or no return on your
investment, and the risk that you may lose part or all of the
money you invest. Therefore, before you invest in this Fund
you should carefully evaluate the risks. Because of the
nature of the Fund, you should consider an investment in it
to be a long-term investment that will best meet its
objectives when held for a number of years. The Fund's use of
the Value Line Ranking Systems involves the risk that over
certain periods of time the price of securities not covered
by the Ranking Systems, or lower ranked securities, may
appreciate to a greater extent than those securities in the
Fund's portfolio. Please see the Statement of Additional
Information for a further discussion of risks. Information on
the Fund's recent holdings can be found in the Fund's current
annual or semi-annual report.
YEAR 2000 RISKS
Like other mutual funds, the Fund could be adversely affected
if the computer systems used by the Adviser and the Fund's
service providers do not properly process and calculate
date-related information and data after January 1, 2000. The
Adviser is working to avoid such problems and to obtain
assurances from service providers that they are taking
similar steps.
6
<PAGE>
WHO MANAGES THE FUND
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The business and affairs of the Fund are managed by the
Fund's officers under the direction of the Fund's Board of
Directors.
INVESTMENT ADVISER
Value Line, Inc. serves as the Fund's investment adviser and
manages the Fund's business affairs. Value Line also acts as
investment adviser to the other Value Line mutual funds and
furnishes investment counseling services to private and
institutional clients with combined assets of over $5
billion.
The Adviser was organized in 1982 and is the successor to
substantially all of the operations of Arnold Bernhard & Co.,
Inc. which with its predecessor had been in business since
1931. 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.
MANAGEMENT FEES
For managing the Fund and its investments, the Adviser is
paid a yearly fee of 0.70% on the first $100 million of the
Fund's average daily net assets and 0.65% on such additional
assets.
PORTFOLIO MANAGEMENT
A committee of employees of the Investment Adviser is jointly
and primarily responsible for the day-to-day management of
the Fund's portfolio.
7
<PAGE>
ABOUT YOUR ACCOUNT
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HOW TO BUY SHARES
/ / BY TELEPHONE
Once you have opened an account, you can buy additional
shares by calling 800-243-2729 between 9:00 a.m. and 4:00
p.m. New York time. You must pay for these shares within
three business days of placing your order.
/ / BY WIRE
If you are making an initial purchase by wire, you must call
us at 800-243-2729 so we can assign you an account number.
Request your bank to wire the amount you want to invest to
State Street Bank and Trust Company, ABA #011000028,
attention DDA # 99049868. Include your name, account number,
tax identification number and the name of the Fund in which
you want to invest.
/ / THROUGH A BROKER-DEALER
You can open an account and buy shares through a
broker-dealer, who may charge a fee for this service.
/ / BY MAIL
Complete the Account Application and mail it with your check
payable to NFDS, Agent, to Value Line Funds, c/o National
Financial Data Services, Inc., P.O. Box 419729, Kansas City,
MO 64141-6729. If you are making an initial purchase by mail,
you must include a completed Account Application, or an
appropriate retirement plan application if you are opening a
retirement account, with your check.
/ / MINIMUM/ADDITIONAL INVESTMENTS
Once you have completed an application, you can open an
account with an initial investment of $1,000, and make
additional investments at any time for as little as $100. The
price you pay for shares will depend on when we receive your
purchase order.
/ / TIME OF PURCHASE
If we or an authorized agent receives your order before the
close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on a business day, you
will pay that day's closing share price which is based
8
<PAGE>
on the Fund's net asset value. If we receive your order after
the close of trading, you will pay the next business day's
price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject
any purchase order and to waive the initial and subsequent
investment minimums at any time.
/ / NET ASSET VALUE
We determine the Fund's net asset value (NAV) per share as of
the close of regular trading on the New York Stock Exchange
each day that exchange is open for business. We calculate NAV
by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and
dividing the resulting number by the number of shares
outstanding. The result is the net asset value per share. We
price securities for which market prices or quotations are
available at their market value. We price securities for
which market valuations are not available at their fair
market value as determined by the Board of Directors. Any
investments which have a maturity of less than 60 days we
price at amortized cost. The amortized cost method of
valuation involves valuing a security at its cost and
accruing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest
rates on the market value of the security.
9
<PAGE>
HOW TO SELL SHARES
/ / BY MAIL
You can redeem your shares (sell them back to the Fund) by
mail by writing to: Value Line Funds, c/o National Financial
Data Services, Inc., P.O. Box 419729, Kansas City, MO
64141-6729. The request must be signed by all owners of the
account, and you must include a signature guarantee for each
owner. Signature guarantees are also required when redemption
proceeds are going to anyone other than the account holder(s)
of record. If you hold your shares in certificates, you must
submit the certificates properly endorsed with signature
guaranteed with your request to sell the shares. A signature
guarantee can be obtained from most banks or securities
dealers, but not from a notary public. A signature guarantee
helps protect against fraud.
/ / THROUGH A BROKER-DEALER
You may sell your shares through a broker-dealer, who may
charge a fee for this service.
The Fund has authorized brokers to accept purchase and
redemption orders on behalf of the Fund. The Fund has also
authorized these brokers to designate others to accept
purchase and redemption orders on behalf of the Fund.
We treat any order to buy or sell shares that you place with
one of these brokers, or anyone they have designated, as if
you had placed it directly with the Fund. The shares that you
buy or sell through brokers or anyone they have designated
are priced at the next net asset value that is computed after
they accept your order.
/ / BY EXCHANGE
You can exchange all or part of your investment in the Fund
for shares in other Value Line funds. You may have to pay
taxes on your exchange. When you exchange shares, you are
purchasing shares in another fund so you should be sure to
get a copy of that fund's prospectus and read it carefully
before buying shares through an exchange. To execute an
exchange, call 800-243-2729.
When you send us a properly completed request to sell or
exchange shares, you will receive the net asset value as
determined on the business day we receive your request. You
may have to pay taxes on the gain from your sale of shares.
We will pay you promptly, normally the next business day, but
no later than seven days after we receive your request to
sell your shares. If you purchased your shares by check, we
will wait until your check has cleared, which can take up to
15 days, before we send the proceeds to you.
10
<PAGE>
ACCOUNT MINIMUM
If as a result of redemption your account balance falls below
$500, the Fund may ask you to increase your balance within 30
days. If your account is not at the minimum by the required
time, the Fund may redeem your account, after first notifying
you in writing.
SPECIAL SERVICES
To help make investing with us as easy as possible, and to
help you build your investments, we offer the following
special services. You can get further information about these
programs by calling Shareholder Services at 800-223-0818.
/ / Valu-Matic-Registered Trademark- allows you to make
regular monthly investments of $25 or more automatically
from your checking account.
/ / Through our Systematic Cash Withdrawal Plan you can
arrange a regular monthly or quarterly payment from your
account payable to you or someone you designate. If your
account is $5,000 or more, you can have monthly or
quarterly withdrawals of $25 or more.
/ / You may buy shares in the Fund for your individual or
group retirement plan, including your Regular or Roth
IRA. You may establish your IRA account even if you
already are a member of an employer-sponsored retirement
plan. Not all contributions to an IRA account are tax
deductible; consult your tax advisor about the tax
consequences of your contribution.
11
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to pay dividends from its net investment
income quarterly and distributes any capital gains that it
has realized annually. We automatically reinvest all
dividends and any capital gains, unless you instruct us
otherwise in your application to purchase shares.
Tax laws are subject to change, so we urge you to consult
your tax adviser about your particular tax situation and how
it might be affected by current tax law. The tax status of
your dividends from the Fund is not affected by whether you
reinvest your dividends or receive them in cash.
Distributions from a fund's long-term capital gains are
taxable as capital gains, while dividends from short-term
capital gains and net investment income are generally taxable
as ordinary income. In addition, you may be subject to state
and local taxes on distributions.
We will send you a statement by January 31 each year
detailing the amount and nature of all dividends and capital
gains that you were paid during the prior year.
12
<PAGE>
FINANCIAL HIGHLIGHTS
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The financial highlights table is intended to help you
understand the Fund's financial performance for the past five
years. Certain information reflects financial results for a
single Fund share. The total returns in the table represent
the rate that an investor would have earned or lost on an
investment in the Fund assuming reinvestment of all dividends
and distributions. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the
Fund's financial statements, is included in the Fund's annual
report, which is available upon request by calling
800-223-0818.
FINANCIAL HIGHLIGHTS
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<TABLE>
<S> <C> <C> <C> <C> <C>
SELECTED DATA FOR A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH YEAR:
YEAR ENDED DECEMBER 31,
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1998 1997 1996 1995 1994
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NET ASSET VALUE, BEGINNING OF YEAR $19.29 $19.29 $17.63 $14.36 $17.90
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INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income .03 .14 .11 .12 .10
Net gains or losses on securities (both
realized and unrealized) 3.85 3.79 3.88 4.47 (.93)
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Total income (loss) from investment
operations 3.88 3.93 3.99 4.59 (.83)
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LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.14) (.11) (.12) (.10)
Distributions from capital gains (.49) (3.79) (2.22) (1.20) (2.61)
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Total distributions (.52) (3.93) (2.33) (1.32) (2.71)
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NET ASSET VALUE, END OF YEAR $22.65 $19.29 $19.29 $17.63 $14.36
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TOTAL RETURN 20.25% 21.59% 22.53% 32.12% (4.47)%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $418,439 $382,431 $348,871 $317,569 $ 272,763
Ratio of expenses to average net assets .77%(1) .78%(1) .80%(1) .83% .82%
Ratio of net income to average net assets .16% .63% .55% .73% .54%
Portfolio turnover rate 98% 68% 54% 78% 150%
</TABLE>
(1)After offset of custody credits. Excluding the custody
credits would not have changed the expense ratio.
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13
<PAGE>
FOR MORE INFORMATION
Additional information about the Fund's investments is
available in the Fund's annual and semi-annual reports to
shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year. You can find more detailed information
about the Fund in the current Statement of Additional
Information dated May 3, 1999, which we have filed
electronically with the Securities and Exchange Commission
(SEC) and which is legally a part of this prospectus. If you
want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any
questions about investing in this Fund, you can write to us
at 220 East 42nd Street, New York, NY 10017-5891 or call
toll-free 800-223-0818. You may also obtain the prospectus
from our Internet site at http:// www.valueline.com.
You can find reports and other information about the Fund on
the SEC Web site (http://www.sec.gov), or you can get copies
of this information, after payment of a duplicating fee, by
writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund,
including its Statement of Additional Information, can be
reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You
can get information on operation of the public reference room
by calling the SEC at 1-800-SEC-0330.
<TABLE>
<S> <C>
INVESTMENT ADVISER SERVICE AGENT
Value Line, Inc. State Street Bank and Trust Company
220 East 42nd Street c/o NFDS
New York, NY 10017-5891 P.O. Box 419729
Kansas City, MO 64141-6729
CUSTODIAN DISTRIBUTOR
State Street Bank and Trust Company Value Line Securities, Inc.
225 Franklin Street 220 East 42nd Street
Boston, MA 02110 New York, NY 10017-5891
</TABLE>
<TABLE>
<S> <C>
Value Line Securities, Inc.
220 East 42nd Street, New York, NY 10017-5891 File no. 811-568
</TABLE>
<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
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STATEMENT OF ADDITIONAL INFORMATION
MAY 3, 1999
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of The Value Line Fund, Inc. dated May
3, 1999, a copy of which may be obtained without charge by writing or
telephoning the Fund. The financial statements, accompanying notes and report of
independent auditors appearing in the Fund's 1998 Annual Report to Shareholders
are incorporated by reference in this Statement. A copy of the Annual Report is
available from the Fund upon request and without charge by calling 800-223-0818.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Description of the Fund and Its Investments and Risks............................... B-2
Management of the Fund.............................................................. B-8
Investment Advisory and Other Services.............................................. B-10
Brokerage Allocation and Other Practices............................................ B-12
Capital Stock....................................................................... B-13
Purchase, Redemption and Pricing of Shares.......................................... B-13
Taxes............................................................................... B-14
Performance Data.................................................................... B-16
Financial Statements................................................................ B-16
</TABLE>
B-1
<PAGE>
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
CLASSIFICATION. The Fund is an open-end, diversified management investment
company incorporated in Delaware in 1949 and reincorporated in Maryland in 1972.
The Fund's investment adviser is Value Line, Inc. (the "Adviser").
INVESTMENT STRATEGIES AND RISKS. 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.
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.
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 net 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 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
B-2
<PAGE>
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.
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 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.
B-3
<PAGE>
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 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.
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 as 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 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
B-4
<PAGE>
"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-5
<PAGE>
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 the 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 make payment 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.
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.
FUND POLICIES.
(i)
The Fund may not issue senior securities except evidences of
indebtedness permitted under clause (ii) below.
(ii)
The Fund may not 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.
(iii)
The Fund may not 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.
B-6
<PAGE>
(iv)
The Fund may not invest 25% or more of its assets in securities of
issuers in any one industry.
(v)
The Fund may not purchase securities of other investment companies
or 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.
(vi)
The Fund may not 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.
(vii)
The Fund may not 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.
(viii)
The Fund may not 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.
(ix)
The Fund may not invest more than 5% 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.
(x)
The Fund may not invest more than 5% of its total assets in
securities of issuers having a record, together with its
predecessors, of less than three years of continuous operation. This
restriction does not apply to any obligation issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
(xi)
The Fund may not purchase securities for the purpose of exercising
control over another company.
(xii)
The Fund may not 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.
(xiii)
The Fund may not invest in commodities or commodity contracts except
that the Fund may invest in stock index futures contracts and
options on stock index futures contracts.
(xiv)
The Fund may not purchase the securities of any issuer if, to the
knowledge of the Fund, those officers and directors of the Fund and
of the Adviser, who each owns more than 0.5% of the outstanding securities
of such issuer, together own more than 5% of such securities.
B-7
<PAGE>
(xv)
The primary investment objective of the Fund is long-term growth of
capital. Current income is a secondary objective.
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.
The policies set forth above may not be changed without the affirmative vote
of the majority of the outstanding voting securities of the Fund which 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.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed by the Fund's officers
under the direction of the Board of Directors. Set forth below is certain
information regarding the Directors and Officers of the Fund.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
*Jean Bernhard Buttner Chairman of the Board Chairman, President and Chief Executive
Age 64 of Directors and Officer of the Adviser and Value Line Pub-
President lishing, Inc. Chairman and President of the
Value Line Funds and Value Line Securities,
Inc. (the "Distributor"); Chairman and
President of each of the 15 Value Line Funds.
John W. Chandler Director Consultant, Academic Search Consultation
2801 New Mexico Ave., N.W. Service, Inc. Trustee Emeritus and Chairman
Washington, DC 20007 (1993-1994) of Duke University; President
Age 75 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 79 (Trustee) of The Guardian Insurance & Annuity
Company, Inc., Guardian Investor Services
Corporation and the Guardian-sponsored mutual
funds.
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
David H. Porter Director President Emeritus, Skidmore College since
813 North Broadway January 1, 1999; President, Skidmore College,
Saratoga Springs, NY 12866 1987-1998; Director of Adirondack Trust
Age 63 Company.
Paul Craig Roberts Director Chairman, Institute for Political Economy;
505 S. Fairfax Street Director, A. Schulman Inc. (plastics).
Alexandria, VA 22320
Age 60
Nancy-Beth Sheerr Director Chairman, Radcliffe College Board of
1409 Beaumont Drive Trustees.
Gladwyne, PA 19035
Age 49
Alan N. Hoffman, CFA Vice President Portfolio Manager with the Adviser.
Age 45
Philip J. Orlando, CFA Vice President Chief Investment Officer with the Adviser's
Age 40 Asset Management Division since 1995.
David T. Henigson Vice President, Director, Vice President and Compliance
Age 41 Secretary and Officer of the Adviser. Director and Vice
Treasurer President of the Distributor. Vice Presi-
dent, Secretary and Treasurer of each of the
15 Value Line Funds.
</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 of the Fund are also directors/trustees of 11 other Value Line
Funds.
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 each of the Directors is a director or trustee for the fiscal year ended
December 31, 1998. Directors who are officers or employees of the Adviser do not
receive any compensation from the Fund or any of the Value Line Funds.
B-9
<PAGE>
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND
AGGREGATE BENEFITS BENEFITS AND FUND
COMPENSATION ACCRUED AS PART UPON COMPLEX
NAME OF PERSONS 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 2,968 N/A N/A 35,620
Paul Craig Roberts 2,718 N/A N/A 32,620
Nancy-Beth Sheer 2,968 N/A N/A 35,620
</TABLE>
As of February 5, 1999, 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 owned 470,245 shares of record or approximately
2.6%. In addition, First Union National Bank as Trustee of the Value Line, Inc.
Profit Sharing and Savings Plan owned 423,956 shares (2.4%). Officers and
directors of the Fund as a group owned less than 1% of the outstanding shares.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund's investment adviser is Value Line, Inc. (the "Adviser"). Arnold
Bernhard & Co., Inc., 220 East 42nd Street, New York, NY 10017, a holding
company, owns approximately 81% of the outstanding shares of the Adviser's
common stock. Jean Bernhard Buttner, Chairman, President and Chief Executive
Officer of the Adviser and Chairman and President of the Fund, owns all of the
voting stock of Arnold Bernhard & Co., Inc.
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 1996, 1997 and 1998, the
Fund paid or accrued to the Adviser advisory fees of $2,380,000, $2,463,000 and
$2,529,000, respectively.
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 agreement will terminate upon its assignment.
B-10
<PAGE>
The Adviser acts as investment adviser to 14 other investment companies
constituting The Value Line Family of Funds and furnishes investment counseling
services to private and institutional accounts with combined assets in excess of
$5 billion.
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 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.
The Fund has entered into a distribution agreement with Value Line
Securities, Inc. (the "Distributor") whose address is 220 East 42nd Street, New
York, NY 10017, pursuant to which the Distributor acts as principal underwriter
and distributor of the Fund for the sale and distribution of its shares. The
Distributor is a wholly-owned subsidiary of the Adviser. For its services under
the agreement, the Distributor is not entitled to receive any compensation. The
Distributor also serves as distributor to the other Value Line funds. Jean
Bernhard Buttner is Chairman and President of the Distributor.
The Adviser has retained State Street Bank and Trust Company ("State
Street") to provide certain bookkeeping and accounting services for the Fund.
The Adviser pays State Street $32,400 per annum for each Value Line fund for
which State Street provides these services. State Street, whose address is 225
Franklin Street, Boston, MA 02110, also acts as the Fund's custodian, transfer
agent and dividend-paying agent. As custodian, State Street is responsible for
safeguarding the Fund's cash and securities, handling the receipt and delivery
of securities and collecting interest and dividends on the Fund's investments.
As transfer agent and dividend-paying agent, State Street effects transfers of
Fund shares by the registered owners and transmits payments for dividends and
distributions declared by the Fund. National Financial Data Services, Inc., a
State Street affiliate, whose address is 330 W. 9th Street, Kansas City, MO
64105, provides certain transfer agency functions to the Fund as an agent for
State Street. PricewaterhouseCoopers LLP, whose address is 1177 Avenue of the
Americas, New York, NY 10036, acts as the Fund's independent accountants and
also performs certain tax preparation services.
B-11
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
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. Debt
securities are traded principally in the over-the-counter market on a net basis
through dealers acting for their own account and not as brokers. 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 1996, 1997 and 1998, the Fund paid brokerage commissions of
$416,879, $342,166 and $574,609, respectively, of which $256,286 (61%), $212,386
(62%) and $350,987 (61%), 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 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 1998, $444,374 (77%) 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 $130,235 (23%),
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,
B-12
<PAGE>
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.
CAPITAL STOCK
Each share of the Fund's common stock, $1 par value, 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.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASES: Shares of the Fund are purchased at net asset value next calculated
after receipt of a purchase order. 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.
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 tax-sheltered 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 Shareholder Services at 1-800-223-0818.
REDEMPTION: 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
practical, or (b) it is not reasonably practical for the Fund to determine the
fair value of its net assets; (3) For such other periods as the Securities and
Exchange Commission may by order permit for the protection of the Fund's
shareholders.
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. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board
B-13
<PAGE>
may authorize payment to be made in portfolio securities or other property of
the Fund. However, the Fund has obligated itself under the 1940 Act to redeem
for cash all shares presented for redemption by any one shareholder up to
$250,000 (or 1% of the Fund's net assets if that is less) in any 90-day period.
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.
The net asset value of the Fund's shares for purposes of both purchases and
redemptions is determined once daily as of the 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 and on the preceding Friday or subsequent
Monday if one of those days falls on a Saturday or Sunday, respectively. 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 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 direction 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.
TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund so
qualified during the Fund's last fiscal year. By so qualifying, the Fund is not
subject to Federal income tax on its net investment income or net realized
capital gains which are distributed to shareholders (whether or not reinvested
in additional Fund shares).
The Code requires each regulated investment company to pay a nondeductible
4% excise tax to the extent the company does not distribute, during each
calendar year, 98% of its ordinary income, determined on a calendar year basis,
and 98% of its capital gains, determined, in general, on an October 31 year end,
plus certain undistributed amounts from previous years. The Fund anticipates
that it will make sufficient timely distributions to avoid imposition of the
excise tax.
Realized losses incurred after October 31, if so elected by the Fund, are
deemed to arise on the first day of the following fiscal year. In the year ended
December 31, 1998, the Fund did not incur such losses.
B-14
<PAGE>
Distributions of net investment income and of the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income. Distributions of the excess of net long-term capital gain over
net short-term capital loss (net capital gains) are taxable to the shareholders
as long-term capital gain, regardless of the length of time the shares of the
Fund have been held by such shareholders and regardless of whether the
distribution is received in cash or in additional shares of the Fund. 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. Upon request, the Fund will inform
shareholders of the amounts of qualifying dividends.
A distribution by the Fund will reduce the Fund's net asset value per share.
Such a distribution is taxable to the shareholder as ordinary income or capital
gain as described above even though, from an investment standpoint, it may
constitute a return of capital. In particular, investors should be careful to
consider the tax implications of buying shares just prior to a distribution. The
price of shares purchased at that time (at the net asset value per share) may
include the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will then receive a return of capital upon the distribution
which will nevertheless be taxable to them. All distributions, whether received
in shares or cash, must be reported by each shareholder on his Federal income
tax return. Furthermore, under the Code, dividends declared by the Fund in
October, November or December of any calendar year, and payable to shareholders
of record in such a month, shall be deemed to have been received by the
shareholder on December 31 of such calendar year if such dividend is actually
paid in January of the following calendar year.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the Fund. The tax consequences of a sale or redemption
depend upon several factors, including the shareholder's tax basis in the shares
sold or redeemed and the length of time the shares have been held. Basis in the
shares may be the actual cost of those shares (net asset value of Fund shares on
purchase or reinvestment date). Under certain circumstances, a loss on the sale
or redemption of shares held for twelve months or less may be treated as a
long-term capital loss to the extent that the Fund has distributed long-term
capital gain dividends on such shares. Moreover, a loss on sale or redemption of
Fund shares will be disallowed if shares of the Fund are purchased within 30
days before or after the shares are sold or redeemed.
For shareholders who fail to furnish to the Fund their social security or
taxpayer identification numbers and certain related information or who fail to
certify that they are not subject to back-up withholding, dividends,
distributions of capital gains and redemption proceeds paid by the Fund will be
subject to a 31% Federal income tax withholding requirement. If the withholding
provisions are applicable, any such dividends or capital-gains distributions to
these shareholders, whether taken in cash or reinvested in additional shares,
and any redemption proceeds will be reduced by the amounts required to be
withheld.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents, domestic
corporations and partnerships, and certain trusts and estates) and is not
intended to be a complete discussion of all Federal tax consequences.
Shareholders are advised to consult with their tax advisers concerning the
application of Federal, state and local taxes to an investment in the Fund.
B-15
<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 compounded rate of return for the periods of one year,
five years and ten years, all ended on the last day of a recent calendar
quarter. The Fund may also advertise aggregate total return information for
different periods of time.
The Fund's average annual compounded rate of 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:
P(1+T) to the power of n = ERV
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.
The Fund's average annual total returns for the one, five and ten year
periods ending December 31, 1998 were 20.25%, 17.72% and 17.25%, respectively.
The Fund's total return may be compared to relevant indices and data from
Lipper Analytical Services, Inc., Morningstar or Standard & Poor's Indices.
From time to time, evaluations of the Fund's performance by independent
sources may also be used in advertisements and in information furnished to
present or prospective investors in the Fund.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield, total return or
distribution rate for any period should not be considered as a representation of
what an investment may earn or what an investor's total return, yield or
distribution rate may be in any future period.
FINANCIAL STATEMENTS
The Fund's financial statements for the year ended December 31, 1998,
including the financial highlights for each of the five fiscal years in the
period ended December 31, 1998, appearing in the 1998 Annual Report to
Shareholders and the report thereon of PricewaterhouseCoopers LLP, independent
accountants, appearing therein, are incorporated by reference in this Statement
of Additional Information.
B-16
<PAGE>
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Incorporation, as amended.
(b) By-laws.
(c) Instruments Defining Rights of Security Holders. Reference is made to
Article Fifth of the Articles of Incorporation filed as Exhibit (a)
hereto.
(d) Investment Advisory Agreement.
(e) Underwriting Contract.
(f) Not applicable.
(g) Custodian Agreement.
(h) Not applicable.
(i) Legal Opinion.
(j) Consent of independent accountants.
(k) Not applicable.
(l) Not applicable.
(m) Not applicable.
(27) Financial data schedule.
(o) Not applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 25. INDEMNIFICATION.
Incorporated by reference to Article Seventh (7)(c) of the Articles of
Incorporation filed as Exhibit (a) hereto.
ITEM 26. 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 27.
<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 Officer
and Chief Executive Officer of Arnold Bernhard & Co., Inc. and Chairman 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
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
- -------------------------- -------------------------------- ---------------------------------------------------
<S> <C> <C>
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
W. Scott Thomas Director Partner, Brobeck, Phleger & Harrison, attorneys,
One Market Plaza, San Francisco, CA 94105
Linda S. Wilson Director President, Radcliffe College, 10 Garden Street,
Cambridge, MA 02138
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Value Line Securities, Inc., acts as principal underwriter for the
following Value Line funds, including the Registrant: 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, NY 10017-5891.
(c) Not applicable.
ITEM 28. 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-1(f)
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)
C-2
<PAGE>
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
For all other records
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
None.
--------------
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. 84 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 12, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 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
heading "Financial Statements" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 22, 1999
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 22nd day of February, 1999.
THE VALUE LINE FUND, INC.
By: /s/ 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; February 22, 1999
(JEAN B. BUTTNER) Principal Executive Officer
*JOHN W. CHANDLER Director February 22, 1999
(JOHN W. CHANDLER)
*LEO R. FUTIA Director February 22, 1999
(LEO R. FUTIA)
*DAVID H. PORTER Director February 22, 1999
(DAVID H. PORTER)
*PAUL CRAIG ROBERTS Director February 22, 1999
(PAUL CRAIG ROBERTS)
*NANCY-BETH SHEERR Director February 22, 1999
(NANCY-BETH SHEERR)
/s/ DAVID T. HENIGSON Treasurer; Principal Financial February 22, 1999
................................................ and Accounting Officer
(DAVID T. HENIGSON)
</TABLE>
*By /s/ DAVID T. HENIGSON
...................................
(DAVID T. HENIGSON,
ATTORNEY-IN-FACT)
C-5
<PAGE>
Exhibit (a)
ARTICLES OF INCORPORATION
of
THE VALUE LINE FUND, INC.
THIS IS TO CERTIFY:
FIRST: We, the subscribers, Mitchel J. Valicenti, Hoch Reid and Donald
F. French, the post office address of all of whom is 70 Pine Street, New
York, N.Y. 10005, all being of full legal age, do, under and by virtue of the
General Laws of the State of Maryland authorizing the formation of
corporations, associate ourselves with the intention of forming a corporation.
SECOND: The name of the corporation is The Value Line Fund, Inc.,
(hereinafter called the "Corporation").
THIRD: The purpose or purposes for which the Corporation is formed and
the business or objects to be transacted, carried on and promoted by it, are
as follows:
(1) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, assign, negotiate,
transfer, exchange or otherwise dispose of or turn to account or realize
upon, securities (which term "securities" shall for the purposes of these
Articles of Incorporation, without limitation of the generality thereof, be
deemed to include any stocks, shares, bonds, debentures, notes, mortgages or
other obligations, and any certificates,
<PAGE>
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets) created or issued
by an issuer (which term "issuer" shall for the purposes of these Articles
of Incorporation, without limitation of the generality thereof be deemed to
include any persons, firms, associations, corporations, syndicates,
combinations, organizations, governments, or subdivisions thereof); and to
exercise, as owner or holder of any securities, all rights, powers and
privileges in respect thereof; and to do any and all acts and things for the
preservation, protection, improvement and enhancement in value of any or all
such securities.
(2) To issue and sell shares of its own capital stock in such
amounts and on such terms and conditions, for such purposes and for such
amount or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of Maryland and by these
Articles of Incorporation, as its Board of Directors may determine; when
shares of the capital stock of the Corporation are issued for a consideration
consisting of or including securities, the actual value of such securities
shall for the purposes of Section 20 of the Maryland General Corporation Law,
be deemed to be an amount not exceeding the fair market value
- 2 -
<PAGE>
thereof fixed on a date and in a manner determined by the Board of Directors
of the Corporation, and a description of such consideration shall, for such
purposes, be deemed to be "securities".
(3) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders or the Corporation) shares of its capital stock, in any manner
and to the extent now or hereafter permitted by the laws of said State and by
these Articles of Incorporation.
(4) To conduct its business in all its branches at one or more
offices in Maryland and elsewhere in any part of the world, without
restriction or limit as to extent.
(5) To carry out all or any of the foregoing objects and purposes
as principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of Maryland, as a member of, or as the owner
or holder of any stock of, or shares of interest in, any firm, association,
corporation, trust or syndicate; and in connection therewith to make or enter
into such deeds or contracts with any persons, firms, associations,
corporations, syndicates, governments or subdivisions thereof, and to do such
acts and things and to exercise such powers, as a natural person could
lawfully make, enter into, do or exercise.
- 3 -
<PAGE>
(6) To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desireable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise expressly
provided, be in no way limited or restricted by reference to, or inference
from, the terms of any other clause of this or any other Article of these
Articles of Incorporation, and shall each be regarded as independent, and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of
the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude another,
thought it be of like nature, not expressed; provided, however, that the
Corporation shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would preclude it from being
classified as an ordinary business corporation under the laws of said State;
nor shall it carry on any business, or exercise any powers, in any other
state, territory, district or country except to the extent that the same may
lawfully be carried on or exercised under the laws thereof.
- 4 -
<PAGE>
FOURTH: The post office address of the place at which the principal
office of the Corporation in the State of Maryland will be located is 10
Light Street, Baltimore, Maryland 21202.
The Corporation's resident agent is The Prentice-Hall Corporation
System, Maryland, whose post office address is 10 Light Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of the State of Maryland.
FIFTH: (1) The total amount of authorized capital stock of the
Corporation and the number and par value of its shares is $50,000,000
consisting of 50,000,000 shares of the par value of $1.00 each, all of one
class.
(2) At all meetings of stockholders each stockholder of the
Corporation shall be entitled to one vote for each share of stock standing in
his name on the books of the Corporation. Any fractional share if any such
fractional shares are outstanding, shall carry proportionately all the rights
of a whole share, including the right to vote and the right to receive
dividends. The presence in person or by proxy of the holders of a majority of
the shares of capital stock of the Corporation outstanding and entitled to
vote thereat shall constitute a quorum at any meeting of the shareholders. If
at any meeting of the shareholders there shall be less than a quorum present,
the shareholders present at such meeting may, without further notice, adjourn
the same from time to time until a quorum shall attend, but no business shall
be transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
- 5 -
<PAGE>
(3) The Corporation shall be an open-end investment company and:
(a) Each holder of the capital stock of the Corporation, upon
written request (including signature guarantees, if required by the Board of
Directors) to the Corporation accompanied, when stock certificates
representing such shares are outstanding, by surrender of the appropriate
stock certificate or certificates in proper form from transfer, or any such
other form as the Board of Directors may provide, shall be entitled to
require the Corporation to redeem all or any part of the capital stock
standing in the name of such holder on the books of the Corporation, at the
net asset value of such shares. The method of computing such net asset value,
the time as of which such net asset value shall be computed and the time
within which the Corporation shall make payment therefor shall be determined
as hereinafter provided in Article SEVENTH of these Articles of
Incorporation. Notwithstanding the foregoing, the Board of Directors of the
Corporation may, subject to rules of the Securities and Exchange Commission
or any successor thereto, suspend the right of the holders of the capital
stock of the Corporation to require the Corporation to redeem such capital
stock:
- 6 -
<PAGE>
(i) for any period (A) during which the New York Stock
Exchange is closed other than the customary weekend and holiday closings, or
(B) during which trading on the New York Stock Exchange is restricted;
(ii) for any period during which an emergency, as defined by
rules of the Securities and Exchange Commission or any successor thereto,
exists as a result of which (A) disposal by the Corporation of securities
owned by it is not reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the value of its net
assets; or
(iii) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the protection of
security holders of the Corporation.
(b) All shares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and redeemable, in the
sense used in the General Laws of the State of Maryland authorizing the
formation of corporations, at the redemption price for any such shares,
determined in the manner set out in these Articles of Incorporation. In the
absence of any specification
- 7 -
<PAGE>
as to the purposes for which shares of the capital stock of the Corporation
are redeemed or purchased by it, all shares so redeemed or purchased shall be
deemed to be acquired for retirement in the sense contemplated by the laws of
the State of Maryland and the number of the authorized shares of the capital
stock of the Corporation shall not be reduced by the number of any shares
redeemed or purchased by it.
(4) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a majority or
other designated proportion of the shares, or to be otherwise taken or
authorized by a vote of the stockholders, such action shall be effective and
valid if taken or authorized by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote
thereon pursuant to the provisions of these Articles of Incorporation.
(5) No holder of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock
of the Corporation which it may issue or sell (whether out of the number of
shares authorized by these Articles of Incorporation, or out of any shares of
the capital stock of the Corporation acquired by it after the issue thereof,
or otherwise) other than such right, if any, as the Board of Directors, in
its discretion, may determine.
- 8 -
<PAGE>
(6) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation.
SIXTH: The number of Directors of the Corporation shall be eight and the
names of those who shall act as such until the first annual meeting or until
their successors are duly chosen and qualified are as follows:
Arnold Bernhard James H. Halsey
George W. Anderson Ruxton M. Ridgly
Walter C. Boschen Owen Daly II
Shelby Cullom Davis Edmund F. Mansure
However, the By-Laws of the Corporation may fix the number of Directors
at a number greater or less than that named in these Articles of
Incorporation and may authorize the Board of Directors, by the vote of a
majority of the entire Board of Directors, to increase or decrease the number
of Directors fixed by these Articles of Incorporation, or by the By-Laws
within a limit specified in the By-Laws, provided that in no case shall the
number of Directors be less than three, and to fill the vacancies created by
any such increase in the number of Directors. Unless otherwise provided by
the By-Laws of the Corporation, the Directors of the Corporation need not be
stockholders therein.
SEVENTH: The following provisions are hereby adopted for the purpose of
defining and regulating the powers of the Corporation and of the Directors
and stockholders.
(1) The By-Laws of the Corporation may divide the Directors of the
Corporation into classes and prescribe the tenure of office of the several
classes, but no class shall be elected for a period shorter than that from
the time of the election following the
- 9 -
<PAGE>
division into classes until the next annual meeting and thereafter for a
period shorter than the interval between annual meetings or for a longer
period than five years, and the term of office of at least one class shall
expire each year.
(2) The holders of shares of any class of the Corporation shall
have only such rights to inspect the records, documents, accounts and books
of the Corporation as are provided by Maryland law, subject to reasonable
regulations of the Board of Directors, not contrary to Maryland law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations such rights shall be exercised.
(3) Any officer elected or appointed by the Board of Directors or
by any committee of said Board or by the stockholders or otherwise, may be
removed at any time with or without cause, in such lawful manner as may be
provided in the By-Laws of the Corporation.
(4) If the By-Laws so provide, the Board of Directors of the
Corporation shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep the
books of the Corporation outside of said State at such places as may from
time to time be designated by them.
(5) In addition to the powers and authority herein-before or by
statute expressly conferred upon them, the Board of Directors may exercise
all such powers and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the express provisions of the
laws of Maryland, of these Articles of Incorporation and of the By-Laws of
the Corporation.
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<PAGE>
(6) Shares of stock in other corporations shall be voted by the
President or a Vice-President, or such officer or officers of the Corporation
or such other person or persons as the Board of Directors shall designate for
the purpose, or by a proxy or proxies thereunto duly authorized by the Board
of Directors, except as otherwise ordered by vote of the holders of a
majority of the shares of the capital stock of the Corporation outstanding
and entitled to vote in respect thereto.
(7)(a) The Corporation shall not purchase or sell any securities
(other than capital stock of the Corporation) from or to any of the following
acting as principals, and shall not make any loan to, (1) any officer or
director of the Corporation, (ii) any partnership of which any officer or
director of the Corporation is a member, or (iii) any corporation, person or
organization acting as an investment adviser of the Corporation, (iv) any
officer, director, partner or trustee of any corporation, person, or
organization so acting; provided, however, that nothing herein contained
shall prevent any transaction which is the subject of an order of exemption
under the Investment Company Act of 1940 (which statute, as from time to time
amended is hereinafter referred to as the "1940 Act").
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<PAGE>
(b) Subject only to the provisions of subdivision (a) of this
paragraph (7) and the provisions of the 1940 Act, any director, officer or
employee individually, or any partnership of which any director, officer or
employee may be a member, or any corporation or association of which any
director, officer or employee may be an officer, director, trustee, employee
or stockholder, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation, and in the
absence of fraud no contract or other transaction shall be thereby affected
or invalidated; provided that in case a director, or a partnership,
corporation or association of which a director is a member, officer,
director, trustee, employee or stockholder is so interested, such fact shall
be disclosed or shall have been known to the Board of Directors or a majority
thereof; and any director of the Corporation who is so interested, or who is
also a director, officer, trustee, employee or stockholder of such other
corporation or association or a member of such partnership which is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize
any such contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force
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<PAGE>
and effect as if he were not such director, officer, trustee, employee or
stockholder of such other corporation or association or not so interested or
a member of a partnership so interested.
(c) Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against reasonable
costs and expenses incurred by him in connection with any action, suit or
proceeding to which he is made a party by reason of his being or having been
a director or officer of the Corporation, except in relation to any action,
suit or proceeding in which he has been adjudged liable because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. In the absence of an adjudication
which expressly absolves the director or officer of liability to the
Corporation or its stockholders for willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office, or in the event of a settlement, each director and officer (and his
heirs, executors and administrators) shall be indemnified by the Corporation
against payments made, including reasonable costs and expenses, provided
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<PAGE>
that such indemnity shall be conditioned upon the prior determination by a
resolution of two-thirds of those members of the Board of Directors of the
Corporation who are not involved in the action, suit or proceeding that the
director or officer has no liability by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, and provided further that if a majority of the members
of the Board of Directors of the Corporation are involved in the action, suit
or proceeding, such determination shall have been made by a written opinion
of independent counsel. The indemnity provided herein shall, in the event of
the settlement of any such action, suit or proceeding, not exceed the costs
and expenses (including attorneys' fees) which would reasonably have been
incurred if such action, suit or proceeding had been litigated to a final
conclusion. Such determination by resolution of the Board of Directors or by
independent counsel and the payment of amounts by the Corporation on the
basis thereof shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceeding on the grounds that the
officer or director was liable because of willful misfeasance, bad faith,
gross
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<PAGE>
negligence or reckless disregard of the duties involved in the conduct of his
office. The foregoing rights and indemnifications shall be exclusive of any
other right to which the officers and directors may be entitled according to
law.
(d) Specifically, but without limitation of the foregoing, the
Corporation may enter into a management or investment advisory contract and
other contracts with, and may otherwise do business with any manager or
investment adviser for the Corporation and/or principal underwriter of the
shares of capital stock of the Corporation or any subsidiary or affiliate of
any such manager or investment adviser and/or principal underwriter any may
permit any such firm or corporation to enter into any contracts or other
arrangements with any other firm or corporation relating to the Corporation
notwithstanding that the Board of Directors of the Corporation may be
composed in part of partners, directors, officers or employees of any such
firm or corporation, and officers of the Corporation may have been or may be
or become partners, directors, officers or employees of any such firm or
corporation, and in the absence of fraud the Corporation and any such firm or
corporation may deal freely with each other, and no such contract nor any
other contract or transaction between the Corporation and any such firm or
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<PAGE>
corporation shall be invalidated or in any wise affected thereby, nor shall
any director or officer of the Corporation be liable to the Corporation or to
any stockholder or creditor thereof or to any other person for any loss
incurred by it or him solely because of the existence of any such contract or
transaction; provided that nothing herein shall protect any director or
officer of the Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(8) The computation of net asset value, as in these Articles of
Incorporation referred to, shall be computed as provided in the 1940 Act or
any rule, regulation or order thereunder, and, except as so provided shall be
computed in accordance with the following rules;
(a) The net asset value of each share of capital stock of the
Corporation tendered to the Corporation for redemption shall be determined as
of the close of business on the New York Stock Exchange next succeeding the
tender of such capital stock, or in accordance with any provision of the 1940
Act or any rule or regulation thereunder, or at such other time as may be
determined by the Board of Directors in accordance with any such provision,
rule or regulation.
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<PAGE>
(b) The net asset value of each share of capital stock of the
Corporation for the purpose of the issue of such capital stock shall be
determined as of the close of business on the New York Stock Exchange next
succeeding the receipt of an order to purchase such stock, or in accordance
with any provision of the 1940 Act, any rule or regulation thereunder, or at
such other time as may be determined by the Board of Directors in accordance
with any such provision, rule or regulation.
(c) The net asset value of each share of capital stock of the
Corporation, as of the close of business on the New York Stock Exchange on
any day, shall be the quotient obtained by dividing the value, as at such
close, of the net assets of the Corporation (i.e., the value of the assets of
the Corporation less its liabilities exclusive of the par value of its
capital stock and surplus) by the total number of shares of capital stock
outstanding at such close. The assets and liabilities of the Corporation
shall be determined in accordance with generally accepted accounting
principles; provided, however, that in determining the liabilities of the
Corporation there shall be included such reserves for taxes or contingent
liabilities as may be authorized or approved by the Board of Directors, and
provided further that in determining the value of the assets of the
Corporation for the purpose of obtaining the net
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<PAGE>
asset value, each security listed on the New York Stock Exchange shall be
valued on the basis of the closing sale thereof on the New York Stock
Exchange on the business day as of which such value is being determined; if
there be no sale on such day, then the security shall be valued on the basis
of the mean between closing bid and asked prices on such day; if no bid and
asked prices are quoted for such day, then the security shall be valued by
such method as the Board of Directors shall deem in good faith to reflect its
fair market value; securities not listed on the New York Stock Exchange shall
be valued in like manner on the basis of quotations on any other stock
exchange which the Board of Directors may from time to time approve for that
purpose; readily marketable securities traded in the over-the-counter market
shall be valued at the mean between their bid and asked prices, or, if the
Board of Directors shall so determine, at their bid prices; and all other
assets of the Corporation and all securities as to which the Corporation
might be considered an "underwriter" (as that term is used in the Securities
Act of 1933), whether or not such securities are listed or traded in the
over-the-counter market, shall be valued by such method as they shall deem in
good faith to reflect their fair market value. In connection with the accrual
of any fee or refund
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<PAGE>
payable to or by an investment adviser of the Corporation, the amount of
which accrual is not definitely determinable as of any time at which the net
asset value of each share of the capital stock of the Corporation is being
determined due to the contingent nature of such fee or refund, the Board of
Directors is authorized to establish from time to time formulae for such
accrual, on the basis of the contingencies in question to the date of such
determination, or on such other basis as the Board of Directors may establish.
(A) Capital stock to be issued shall be deemed to be outstanding
as of the time of the determination of the net asset value per share
applicable to such issuance and the net price thereof shall be deemed to be
an asset of the Corporation; and
(B) Capital stock to be redeemed by the Corporation shall be
deemed to be outstanding until the time of the determination of the net asset
value applicable to such redemption and thereupon and until paid the
redemption price thereof shall be deemed to be a liability of the Corporation.
(C) Capital stock voluntarily purchased or contracted to be
purchased by the Corporation pursuant to the provisions of paragraph 8(e)
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<PAGE>
of this Article SEVENTH shall be deemed to be outstanding until which ever is
the later of (i) the time of the making of such purchase or contract to
purchase, and (ii) the time as of which the purchase price is determined, and
thereupon and until paid, the purchase price thereof shall be deemed to be a
liability of the Corporation.
(d) The net asset value of each share of the capital stock of
the Corporation, as of any time other than the close of business on the New
York Stock Exchange on any day, may be determined by applying to the net
asset value as of the close of business on that Exchange on the preceding
business day, computed as provided in paragraph 8(c) of this Article SEVENTH,
such adjustments as are authorized by or pursuant to the direction of the
Board of Directors and designed reasonably to reflect any material changes in
the market value of securities and other assets held and any other material
changes in the assets or liabilities of the Corporation and in the number of
its outstanding shares which shall have taken place since the close of
business on such preceding business day.
(e) In addition to the foregoing, the Board of Directors is
empowered, in its absolute discretion, to establish other bases or times, or
both, for determining the net asset value of each share of capital stock of
the Corporation in accordance with
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<PAGE>
any provision of the 1940 Act or any rule or regulation thereunder and to
authorize the voluntary purchase by the Corporation, either directly or
through an agent, of shares of capital stock of the Corporation upon such
terms and conditions and for such consideration as the Board of Directors
shall deem advisable in accordance with any such provision, rule or
regulation.
(f) Payment of the net asset value of capital stock of the
Corporation properly surrendered to it for redemption shall be made by the
Corporation within seven days after tender of such stock to the Corporation
for such purpose plus any period of time during which the right of the
holders of the capital stock of the Corporation to require the Corporation to
redeem such capital stock has been suspended. Any such payment may be made in
portfolio securities of the Corporation and/or in cash, as the Board of
Directors shall deem advisable, and no shareholder shall have a right, other
than as determined by the Board of Directors, to have his shares redeemed in
kind. However, the Corporation shall be obligated to redeem shares of its
capital stock solely in cash limited in amount with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000, or
(ii) 1% of the net asset value of the Corporation at the beginning of such
period. For the purpose of determining the amount of any payment to be made
in portfolio
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<PAGE>
securities, such securities shall be valued as provided in paragraph 8(c) of
this Article SEVENTH.
EIGHTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment
which changes the terms of any of the outstanding stock classification,
reclassification or otherwise), upon the vote of the holders of a majority of
the shares of capital stock of the Corporation at the time outstanding and
entitled to vote, and other provisions which might under the statutes of the
State of Maryland at the time in force be lawfully contained in articles of
incorporation, may be added or inserted upon such a vote and all rights at
any time conferred upon the stockholders of the Corporation by these Articles
of Incorporation are granted subject to the provisions of this Article EIGHTH.
The term "these Articles of Incorporation" as used herein and in the
By-Laws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended and restated.
IN WITNESS WHEREOF, we have signed these Articles of Incorporation on
this 11th day of November, 1971.
/s/ Mitchel J. Valicenti
-------------------------
/s/ Hoch Reid
-------------------------
/s/ Donald F. French
-------------------------
WITNESS:
/s/ Malcolm Monroe
- ---------------------
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
This is to certify that on this 11th day of November, 1971, before me,
the subscriber, a Notary Public of the State of New York, personally appeared
Mitchel J. Valicenti, Hoch Reid, and Donald F. French and severally
acknowledged the foregoing articles of incorporation to be their act.
Witness my hand and Notarial Seal the day and year last above written.
/s/ Victoria Panos
-----------------------
Notary Public
VICTORIA PANOS
Notary Public, State of New York
No. 41-8269410 Qual. in Queens Co.
Cert. Filed in New York County
Commission Expires March 30, 1972
(SEAL)
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<PAGE>
[SEAL]
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 WEST PRESTON STREET
BALTIMORE 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF INCORPORATION
OF
THE VALUE LINE FUND, INC.
as approved and received for record by the State Department of Assessments
and Taxation of Maryland, November 22, 1971 at 2:00 o'clock P.M.
AS WITNESS my hand and official seal of the said Department at
Balitmore this 29th day of November, 1971.
/s/ Richard H. Keller
------------------------
RICHARD H. KELLER
SUPERVISOR-CHARTER DIVISION
<PAGE>
Exhibit (a)
THE VALUE LINE FUND, INC.
ARTICLES OF AMENDMENT
THE VALUE LINE FUND, INC., a Maryland corporation having its principal
office in Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The charter of the Corporation is hereby amended by inserting,
after sub-paragraph (b) of paragraph (3) of Article FIFTH thereof, the
following sub-paragraph:
The Corporation, pursuant to a resolution of the Board of Directors
and without the vote or consent of stockholders of the Corporation, shall
have the right to redeem at net asset value all shares of capital stock in
any stockholder account in which there are fewer than 100 shares or such
fewer shares as shall be specified in such resolution. Such resolution shall
set forth that redemption of shares in such accounts has been determined to
be in the economic best interest of the Corporation or necessary to reduce
disproportionately burdensome expenses in servicing stockholder accounts.
Such resolution shall provide that prior notice of at least six months shall
be given to a stockholder before such redemption of shares, and that the
stockholder will have six months (or such longer period as is specified in
the resolution) from the date of the notice to avoid such redemption by
increasing his account to at least 100 shares, or such fewer
<PAGE>
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shares as is specified in the resolution. Stockholders shall be bound by
and/or compelled to accept such redemption provided that the terms and
conditions set forth in these Articles of Incorporation has been fulfilled.
SECOND: The board of directors of the Corporation, at a meeting duly
convened and held on November 20, 1975, adopted a resolution in which was set
forth the foregoing amendment to the charter, declaring that the said
amendment of the charter was advisable and directing that it be submitted for
action thereon at the Annual Meeting of the stockholders of the Corporation
to be held on March 23, 1976.
THIRD: Notice setting forth the said amendment of charter and stating
that a purpose of the meeting of the stockholders will be to take action
thereon, was given as required by law, to all stockholders of the Corporation
entitled to vote thereon. The amendment of the charter of the Corporation as
hereinabove set forth was approved by the stockholders of the Corporation at
said meeting by the affirmative vote of a majority of the outstanding shares
entitled to vote thereon. The affirmative vote of a majority of outstanding
shares is sufficient for approval pursuant to Article FIFTH (4) of the
Corporation's charter.
IN WITNESS WHEREOF, THE VALUE LINE FUND, INC. has caused these presents
to be signed in its name and on its behalf by its Vice President and its
corporate seal to be hereunto affixed and attested by its Secretary on
May 28, 1976.
Attest: THE VALUE LINE FUND, INC.
/s/ Dorothy A. Berry /s/ Harold Benjamin
- ------------------------------- ------------------------------------
Dorothy A. Berry, Secretary Harold Benjamin, Vice President
<PAGE>
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STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on May 28, 1976, before me the subscriber, a
notary public of the State of New York in and for the County of New York,
personally appeared Harold Benjamin, Vice President of The Value Line Fund,
Inc., a Maryland corporation, and in the name and on behalf of said
corporation acknowledged the foregoing Articles of Amendment to be the
corporate act of said corporation and further made oath in due form of law
that the matters and facts set forth in said Articles of Amendment with
respect to the approval thereof are true to the best of his knowledge,
information and belief.
WITNESS my hand and notarial seal, the day and year last above written.
/s/ Kenneth M. Newcomb
-----------------------------
Notary Public
KENNETH M. NEWCOMB
NOTARY PUBLIC, State of New York
No. 30-2875520
Qualified in Nassau County
Cert. Filed in New York County
Commission Expires March 20, 1977
<PAGE>
THE VALUE LINE FUND, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF MEETING. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or
at such other place within or without the State of Maryland as may from time
to time be designated by the Board of Directors and stated in the notice of
meeting.
Section 2. ANNUAL MEETINGS. The annual meeting of the stockholders of
the Corporation shall be held at such hour as may be determined by the Board
of Directors and as shall be designated in the notice of meeting on such date
within 31 days after the 14th day of March in each year as may be fixed by
the Board of Directors for the purpose of electing directors for the ensuing
year and for the transaction of such other business as may properly be
brought before the meeting.
Section 3. SPECIAL OR EXTRAORDINARY MEETINGS. Special or extraordinary
meetings of the stockholders for any purpose or purposes may be called by the
Chairman of the Board of Directors, if any, or by the President or by a
majority of the board of Directors who are not interested persons, as that
term is defined in the Investment Company Act of 1940 (the "1940 Act") of the
Corporation or of the Corporation's investment adviser,
<PAGE>
and shall be called by the Secretary upon receipt of the request in writing
signed by stockholders holding not less than one quarter in amount of the
entire capital stock issued and outstanding and entitled to vote thereat.
Such request shall state the purpose or purposes of the proposed meeting.
Section 4. NOTICE OF MEETINGS OF STOCKHOLDERS. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of
the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each stockholder entitled to vote thereat by
leaving the same with him or at his residence or usual place of business or
by mailing it, postage prepaid, and addressed to him at his address as it
appears upon the books of the Corporation.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 5. CLOSING OF TRANSFER BOOKS: RECORD DATES. The Board of
Directors may fix the time, not exceeding twenty days preceding the date of
any meeting of stockholders, and dividend payment date or any date for the
allotment of rights, during which the books of the Corporation shall be
closed against transfers of stock. If such books are closed for the
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<PAGE>
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of providing for the closing of
the books against transfers of stock as aforesaid, the Board of Directors may
fix, in advance, a date, not exceeding sixty days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding sixty
days preceding any dividend payment date or any date for the allotment of
rights, as a record date for the determination of the stockholders entitled
to notice of and to vote at such meeting, or entitled to receive such
dividends or rights, as the case may be; and only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting or to
receive such dividends or rights, as the case may be.
Section 6. QUORUM, ADJOURNMENT OF MEETINGS. The presence in person or
by proxy of the holders of record of a majority of the shares of the capital
stock of the Corporation issued and outstanding and entitled to vote thereat,
shall constitute a quorum at all meetings of the stockholders. If at any
meeting of the stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, without further notice, adjourn the
same from time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
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<PAGE>
Section 7. VOTING AND INSPECTORS. At all meetings of stockholders every
stockholder of record entitled to vote thereat shall be entitled to one vote
for each share of stock standing in his name on the books of the Corporation
(and such stockholders of record holding fractional shares, if any, shall
have proportionate voting rights as provided in the Articles of
Incorporation) on the date for the determination of stockholders entitled to
vote at such meeting either in person or by proxy appointed by instrument in
writing subscribed by such stockholder or his duly authorized attorney. No
proxy which is dated more than three months before the meeting at which it
is offered shall be accepted, unless such proxy shall, on its face, name a
longer period for which it is to remain in force.
All elections shall be had and all questions decided by a majority of
the votes cast at a duly constituted meeting, except as otherwise provided in
the Articles of Incorporation or in these By-Laws or by specific statutory
provision superseding the restrictions and limitations contained in the
Articles of Incorporation or in these By-Laws.
At any election of Directors, the Board of Directors prior thereto may,
or, if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten per cent (10%) of the stock entitled to vote at
such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the
best of their ability, and shall after the election make a certificate of the
result of the vote taken.
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<PAGE>
No candidate for the office of Director shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten per cent (10%) of the stock entitled to vote on such election
or matter.
Section 8. CONDUCT OF STOCKHOLDERS' MEETINGS. The meetings of the
stockholders shall be presided over by the Chairman of the Board of
Directors, if any, or if he shall not be present by the President or if he
shall not be present, by a Vice-President, or if neither Chairman of the
Board of Directors, the President nor any Vice-President is present, by a
chairman to be elected at the meeting. The Secretary of the Corporation, if
present, shall act as Secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an Assistant
Secretary is present, then the meeting shall elect its secretary.
Section 9. CONCERNING VALIDITY OF PROXIES, BALLOTS, ETC. At every meeting
of the stockholders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the secretary of the meeting,
who shall decide all questions touching the qualification of voters, the
validity of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in Section 7, in
which event such inspectors of election shall decide all such questions.
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<PAGE>
ARTICLE II
BOARD OF DIRECTORS
Section 1. NUMBER AND TENURE OF OFFICE. The business and property of the
Corporation shall be conducted and managed by a Board of Directors consisting
of eight Directors, which number may be increased or decreased as provided in
Section 2 of this Article. Each director shall hold office until the annual
meeting of stockholders of the Corporation next succeeding his election or
until his successor is duly elected and qualifies. Directors need not be
stockholders.
Section 2. INCREASE OR DECREASE IN NUMBER OF DIRECTORS. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of Directors to a number not exceeding fifteen, and may elect
Directors to fill the vacancies created by any such increase in the number of
Directors until the next annual meeting or until their successors are duly
elected and qualify; the Board of Directors, by the vote of a majority of the
entire Board, may likewise decrease the number of Directors to a number not
less than three. Vacancies occurring other than by reason of any such
increase shall be filled as provided by the Maryland General Corporation Law.
Section 3. PLACE OF MEETING. The Directors may hold their meetings, have
one or more offices, and keep the books of the Corporation outside the State
of Maryland, at any office or offices of the Corporation or at any other
place as they may
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<PAGE>
from time to time by resolution determine, or, in the case of meetings, as
they may from time to time by resolution determine or as shall be specified
or fixed in the respective notices or waivers of notice thereof.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and on such notice, if any, as the Directors may
from time to time determine.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board of
Directors, if any, the President or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each
Director not less than one day before such meeting. No notice need be given
to any Director who attends in person or to any Director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Such notice or waiver of notice need not
state the purpose of purposes of such meeting.
Section 6. QUORUM. One third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been
obtained. The act of the majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Directors, except as may be
otherwise specifically provided by statute, by the Articles of Incorporation
or by these By-Laws.
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<PAGE>
Section 7. EXECUTIVE COMMITTEE. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors
an Executive Committee to consist of such number of Directors as the Board
may from time to time determine. The Board of Directors by such affirmative
vote shall have power at any time to change the members of such Committee and
may fill vacancies in the Committee by election from the Directors. When the
Board of Directors is not in session, the Executive Committee shall have and
may exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation (including the
power to authorize the seal of the Corporation to be affixed to all papers
which may require it) except as provided by law and except the power to
increase or decrease the size of, or fill vacancies on the Board. The
Executive Committee may fix its own rules of procedure, and may meet, when
and as provided by such rules or by resolution of the Board of Directors,
but in every case the presence of a majority shall be necessary to constitute
a quorum. In the absence of any member of the Executive Committee the members
thereof present at any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place of such absent
member.
Section 8. OTHER COMMITTEES. The Board of Directors, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members (not
less than two) and shall have and
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<PAGE>
may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may
determine its action, and fix the time and place of its meetings, unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
power at any time to change the members and powers of any such committee, to
fill vacancies, and to discharge any such committee.
Section 9. INFORMAL ACTION BY DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such committee, as
the case may be.
Section 10. COMPENSATION OF DIRECTORS. No Director shall receive any
stated salary or fees from the Corporation for his services as such Director
if such Director is, otherwise than by reason of being such Director,
affiliated (as such term is defined in the 1940 Act) with the Corporation or
with any investment adviser of the Corporation. Except as provided in the
preceding sentence, Directors shall be entitled to receive such compensation
from the Corporation for their services as may from time to time be voted by
the Board of Directors.
ARTICLE III
OFFICERS
Section 1. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be chosen by the Board of Directors as soon as may be
practicable after the annual meeting of the stockholders. These may include a
Chairman of the Board
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<PAGE>
of Directors, and shall include a President, one or more Vice Presidents (the
number thereof to be determined by the Board of Directors), a Secretary and a
Treasurer. The Chairman of the Board of Directors, if any, and the President
shall be selected from among the Directors. The Board of Directors or the
Executive Committee may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall
have such authority and perform such duties as the Board or the Executive
Committee may determine. The Board of Directors may fill any vacancy which
may occur in any office. Any two officers, except those of President and Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law or these By-Laws to be executed, acknowledged
or verified by two or more officers.
Section 2. TERM OF OFFICE. The term of office of all officers shall be
one year and until their respective successors are chosen and qualify,
subject, however, to any provision for removal contained in the Articles of
Incorporation. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Directors.
Section 3. POWERS AND DUTIES. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices,
as well as such powers and duties as may from time to time be conferred by
the Board of Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
Section 1. CERTIFICATES OF SHARES. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full shares of
stock of the Corporation owned
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<PAGE>
by them in such form as the Board of Directors may from time to time
prescribe.
Section 2. TRANSFER OF SHARES. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney or legal representative, upon surrender
and cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the Corporation or
its agents may reasonably require, in the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board of
Directors.
Section 3. STOCK LEDGERS. The stock ledgers of the Corporation, containing
the name and address of the stockholders and the number of shares held by
them respectively, shall be kept at the principal offices of the Corporation
or, if the Corporation employs a transfer agent, at the offices of the
transfer agent of the Corporation.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors
may determine the conditions upon which a new certificate of stock of the
Corporation of any class may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal representative
to give bond, with sufficient surety to the Corporation and the transfer
agent, if any, to indemnify it and such transfer agent against any and all
loss or claims which may arise by reason of the issue of a new certificate in
the place of the one so lost, stolen or destroyed.
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<PAGE>
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII
MISCELLANEOUS
Section 1. INDEMNIFICATION. Each director and officer (and his heirs,
executors and administrators) shall be indemnified by the Corporation to the
extent set forth in the Articles of Incorporation.
Section 2. ADVISORY CONTRACT. Any advisory or management contract to
which the Corporation shall be a party shall not be amended, without the
affirmative vote or the written consent of the holders of a majority (as
defined in the Investment Company Act of 1940) of all the shares of the
capital stock of the Corporation at the time outstanding and entitled to vote.
Section 3. CUSTODIANSHIP. All cash and securities owned by the
Corporation shall be held by a bank or trust company of good standing, having
a capital, surplus and undivided profits aggregating not less than two
million ($2,000,000), provided such a bank or trust company can be found
ready and willing to act. Upon the resignation or inability to serve of any
such bank or trust company the Corporation shall (i) use its best
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<PAGE>
efforts to obtain a qualified successor, (ii) require the cash and securities
of the Corporation held by such bank or trust company to be delivered directly
to the successor, and (iii) in the event that no qualified successor can be
found, submit to the holders of the shares of the capital stock of the
Corporation at the time outstanding and entitled to vote, before permitting
delivery of such cash and securities to anyone other than a qualified
successor, the question whether the Corporation shall be dissolved and
liquidated or shall function without a qualified bank or trust company to hold
such cash and securities. Upon such resignation or inability to serve, such
bank or trust company may deliver any assets of the Corporation held by it to
a qualified bank or trust company selected by it, such assets to be held
subject to the terms of the agreement which governed such retiring bank or
trust company, pending action by the Corporation as set forth in this
Section 3. Nothing herein contained, however, shall prevent the termination of
any agreement between the Corporation and any such bank or trust company by
the Corporation at the discretion of the Board of Directors, and any such
agreement shall be terminated upon the affirmative vote of the holders of a
majority of all the shares of the capital stock of the Corporation at the time
outstanding and entitled to vote.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Except as set forth below, the By-Laws of the Corporation may be
altered, amended, added to or repealed by the stockholders or by majority
vote of the entire Board of Directors; but any such alteration, amendment,
addition or repeal of the By-Laws by action of the Board of Directors may be
altered or repealed by the stockholders. Sections 2 and 3 of Article VII may
be altered, amended or repealed only by the stockholders.
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<PAGE>
Exhibit (d)
INVESTMENT ADVISORY AGREEMENT
Agreement made as of the 26th day of September, 1991, between THE VALUE
LINE FUND, INC., a Maryland corporation (hereinafter called "the Fund"), and
VALUE LINE, INC., a New York corporation (hereinafter called "the Company");
W I T N E S S E T H:
WHEREAS, the Fund desires to have the Company act as its investment adviser
and provide it with investment research, advice, supervision and management;
and
WHEREAS, the Company is willing to undertake the same upon the terms and
conditions set forth.
NOW THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. DUTIES. The Company shall provide the Fund with such investment
research, data advice and supervision as the latter may from time to time
consider necessary for proper supervision of its funds. The Company shall act
as manager and investment advisor of the Fund and, as such, shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased or sold by the Fund, and what portion of the
assets of the Fund shall be held uninvested, subject always to the provisions
of the Fund's Articles of Incorporation and By-Laws, to the Fund's
fundamental investment policies as in effect from time to time, and to the
control and review by the Fund's Board of Directors. The Company shall take,
on behalf of the Fund, all actions which it deems necessary to carry into
effect the investment policies determined as provided above, and to that end
the Company may designate a person or persons who are to be authorized by the
Fund as the representative or representatives of the Fund, to give
instructions to the Custodian of the assets of the Fund as to deliveries of
securities and payments of cash for the account of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES; BROKERAGE. The Company shall
furnish as its own expense all administrative services, office space,
equipment and administrative, bookkeeping and clerical personnel necessary
for managing the affairs of the Fund. The Company shall also provide persons
satisfactory to the Fund's Board of Directors to act as officers and
employees of the Fund and shall pay the salaries and wages of all officers
and employees of the Fund who are also officers and employees of the Company
or of an affiliated person (as defined in the Investment Company Act of 1940)
other than the Fund. All other costs and expenses not expressly assumed by
the Company under this Agreement, or to be paid by the Distributor or
Distributors of the shares of the Fund, shall be paid by the Fund, including
(i) interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchases or sale of securities; (iii) insurance premiums
for fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its directors other than those affiliated with
the Company; (v) legal and audit expenses; (vi) custodian and shareholder
servicing agent fees and expenses; (vii) expenses incident to the redemption
of its shares; (viii) expenses incident to the issuance of its shares against
payment therefor by or on behalf of the subscribers thereto, including
printing of stock certificates; (ix) fees and expenses incident to the
registration under the Securities Act of 1933 or under any state securities
laws of shares of the Fund for public sale and fees imposed on the Fund under
the Investment Company Act of 1940); (x) expenses of printing and mailing
prospectuses, reports and
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notices and proxy material to shareholders of the Fund; (xi) all other
expenses incidental to holding meetings of the Fund's shareholders; (xii) a
pro rata share, based on relative net asset value of the Fund and other
investment companies for which the Company also act as manager and investment
adviser, of 50% of the fees or dues of the Investment Company Institute;
(xiii) fees and expenses in connection with registration of the Fund or
qualification of its shares under the securities laws of states and foreign
jurisdictions and (xiv) such non-recurring expenses as may arise, including
actions, suits or proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify its officers and directors
with respect thereto.
The Company shall place purchase and sale orders for portfolio
transactions of the Fund with brokers and/or dealers including, where
permitted law, the Fund's Distributor or affiliates thereof or of the
Company, which, in the judgment of the Company, are able to execute such
orders 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 shall ordinarily be executed with primary market makers
acting as principal except when it is determined that better prices and
executions may otherwise be obtained, provided, that the Company may cause
the Fund to pay a member of a securities exchange, broker or dealer an amount
of commission for effecting a purchase or sale order for a portfolio
transaction in excess of the amount of commission another member of an
exchange, broker or dealer would have charged for effecting that transaction
if the Company determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker, dealer, viewed in terms of that particular
transaction or the Company's overall responsibilities. As used herein,
"brokerage and research services" shall have the same meaning as in Section
28(e)(3) of the Securities Exchange Act of 1934, as such Section may be
amended from time to time, and any rules or regulations promulgated by the
Securities and Exchange Commission. It is understood that, consistent with
the Company's fiduciary duty to the Fund, it is the intent of the Agreement
to allow the Company the widest discretion permitted by law in determining
the manner and means by which portfolio securities' transactions can be
affected in the best interests of the Fund.
3. COMPENSATION. (a) For its services and for the facilities to be
furnished as provided herein, the Fund shall pay to the Company an advisory
fee payable monthly, computed at the annual rate of .70 of 1% of the first
$100 million of the Fund's average net assets during the year plus .65 of 1%
of such average net assets in excess thereof, pro rated for any portion of a
year during which the Agreement is in effect. For this purpose, the value of
the Fund shares as described in the Fund's net assets shall be determined in
the same manner as for the purchase and redemption of Fund's current
Prospectus.
(b) If the Fund's Distributor receives fees in connection with the
tender of portfolio securities of the Fund, the gross amount of the advisory
fee computed in accordance with the preceding paragraph 3(a) shall be reduced
by the amount of tender fees received; if the amount of such tender fees
exceeds the amount of advisory fees computed in accordance with paragraph
3(a), the excess shall be paid by the Company to the Fund.
(c) In the event that the total expenses of the Fund, excluding
interest, taxes, brokerage commissions and extraordinary expenses, exceeds in
any fiscal year the lowest applicable percentage limitation prescribed by any
state in which shares of the Fund are sold, the compensation of the Company,
computed in accordance with the preceding two paragraphs 3(a) and 3(b), shall
be reduced by the amount of such excess.
4. DURATION AND TERMINATION OF AGREEMENT. This agreement shall become
effective on the date set forth above and will continue in effect from year
to year thereafter only so long as such continuance
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is specifically approved at least annually with the Investment Company Act of
1940. This Agreement may be terminated on sixty days written notice by either
party. This Agreement shall terminate automatically in the event of its
assignment as defined in the Investment Company Act of 1940.
5. NAME OF FUND. The Company consents to the use by the Fund of the
name "The Value Line Fund, Inc." so long, and only so long, as this Agreement
(or any agreement with any organization which has succeeded to the business
of the Company) or any extension, renewal or amendment thereof, remains in
effect. The Fund agrees that if and when no such agreement is in effect, (a)
it will cease to use said name or any name indicating or suggesting that the
Fund is advised by or otherwise connected with the Company and (b) it will
not thereafter refer to the former association between the Company and the
Fund.
6. COMPANY MAY ACT FOR OTHERS. Nothing herein contained shall limit
the freedom of the Company or any affiliated person of the Company to render
investment supervisory or corporate administrative services to other
investment companies, to act as investment adviser or investment counselor to
other persons, firms or corporations, and to engage in other business
activities.
7. AMENDMENT OF AGREEMENT. This Agreement may not be amended except
pursuant to a direction given by the vote of the holders of a majority (as
defined in the Investment Company Act of 1940) of the outstanding shares of
the Fund.
8. LIABILITY. The Company shall not be liable for any error of
judgement, or mistake of law, or any loss suffered by the Fund, in connection
with the matters to which this Agreement relates, except for loss resulting
from willful misfeasance, bad faith or gross negligence of the Company in the
performance of its duties or from reckless disregard by the Company of its
obligations and duties hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duty authorized officers as of the date and year first
above written.
THE VALUE LINE FUND, INC.
By /s/ Jean B. Buttner
----------------------------------
THE VALUE LINE, INC.
By /s/ Rodd M. Baxter
----------------------------------
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Exhibit (e)
THE VALUE LINE FUND, INC.
UNDERWRITING CONTRACT
This Agreement made this 20th day of January 1974, between The Value
Line Fund, Inc. a Maryland Corporation (hereinafter called "the Fund") and
VALUE LINE SECURITIES, INC., a New York corporation (hereinafter called "the
Underwriter").
WITNESSETH
WHEREAS the Fund and the Underwriter duly entered into an Underwriting
Agreement made the 11th day of September, 1962 (hereinafter called "the
former Underwriting Contract").
AND WHEREAS the Underwriting Contract was amended successively by
Agreements between the Fund and the Underwriter made, respectively, on the
18th day of March, 1965, the 23rd day of March, 1967, the 1st day of March,
1968, and the 20th day of January, 1970.
AND WHEREAS the Underwriter has signified its willingness to continue to
act as principal underwriter and general distributor of the shares of the
Fund.
AND WHEREAS, it is contemplated that the Underwriter will also be the
principal underwriter and general distributor of the shares of The Value Line
Income Fund, Inc. and The Value Line Special Situations Fund, Inc.
AND WHEREAS it appears convenient and expedient that the amendments made
to the former Underwriting Contract be consolidated with the provisions of
the former Underwriting Contract.
AND WHEREAS it appears expedient that a further amendment be made to the
former Underwriting Contract to reflect the provisions of Rule N-22C-1 made
under the Investment Company Act of 1940.
<PAGE>
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AND WHEREAS the Fund and the Underwriter desire, accordingly, to enter
into a new Underwriting Contract, having the same terms and provisions as
those of the former Underwriting Contract as presently amended and including
such further amendment, for the sale of shares of the Fund, through the
Underwriter acting as agent for the Fund, to dealers and investors, all
subject to, and in compliance with, the provisions of the Securities Act of
1933 and of the Investment Company Act of 1940, and of all other applicable
laws and regulations.
NEW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Sec. 1. INTERPRETATION AND CONSTRUCTION
A. In this Underwriting Contract, unless the context otherwise requires,
(a) the expression "dealer" means a dealer in securities who is a
member of the National Association of Securities Dealers, Inc.,
or a dealer who is a "non-member broker or dealer in a foreign
country who is not eligible for membership in a registered
securities association" as that phrase is used in Paragraph (c)
Section 25 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., or as that or any similar
phrase is used in any amendment of, or substitute for, that Rule:
Provided that all future sales agreements contemplated by this
Underwriting Contract with such non-eligible foreign dealers shall
contain provisions forbidding the sale of shares of the Fund by
such dealers to residents, citizens or nationals of the United
States or to purchasers who such dealers have reason to believe
may resell such shares to such persons;
<PAGE>
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(b) the expression "shares" means shares of the common stock of the
Fund;
(c) the expression "shareholder" means a registered holder of shares;
(d) the expression "prospectus" means the prospectus of the Fund;
(e) the expression "net asset value", in relation to a share, means
the net asset value of that share determined in accordance with
the provisions of the currently effective prospectus;
(f) the expression "public offering price", in relation to the sale
of shares, means the net asset value of the shares together with
a selling commission, determined in accordance with the provisions
of the currently effective prospectus;
(g) the expression "selling commission" means, in relation to the sale
of shares, that part of the public offering price treated as
selling commission, determined in accordance with the provisions
of the currently effective prospectus;
(h) the expression "dealer's discount", in relation to the sale of
shares, means the proportion of the selling commission allowed
to a dealer when such sale is made by him;
(i) the expression "sales agreement" means an agreement relating to
the sale of shares in the form authorized by Section 7 of this
Underwriting Contract, and in effect between the Underwriter
and a dealer.
<PAGE>
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B. Any reference in this Underwriting Contract to a term or thing in the
singular shall, where the context requires, also constitute a reference to
such terms or things in the plural.
Sec. 2. APPLICATION OF UNDERWRITING CONTRACT
This Underwriting Contract relates to the issue and sale of shares which
are from time to time fully authorized and registered and available for sale
by the Fund, including repurchased and treasury shares, if and to the extent
that such shares may legally be sold, but if, and only if, the Board of
Directors of the Fund sees fit to sell them.
Sec. 3. CONTINUATION OF APPOINTMENT OF UNDERWRITER
The Fund hereby continues the appointment of Value Line Securities,
Inc. as the principal underwriter (as defined in the Investment Company Act
of 1940) and general distributor of the shares of the Fund as from the date
of this Underwriting Contract.
Sec. 4. CONTINUATION OF GRANT OF AUTHORITY TO UNDERWRITER TO SELL SHARES
A. The Fund hereby continues the grant to the Underwriter of authority
to sell shares as agent of the Fund; and in consideration of the continuation
of the grant of such authority the Underwriter agrees, subject to the terms
of any further instructions given to it from time to time by the Fund, to
continue to use its best efforts to sell shares to BONA FIDE investors and to
solicit orders for shares from responsible dealers, all upon the terms, and
subject to the conditions, set forth in this Underwriting Contract, and in
such manner as to maintain a broad distribution of shares.
B. The Fund hereby continues the grant to the Underwriter of authority,
during the term of this Underwriting Contract, to sell for the Fund shares
to be issued or sold by the Fund on orders for such shares placed with the
Underwriter by investors, or by dealers with whom the Underwriter has sales
agreements.
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C. The continued authority to sell shares granted to the Underwriter by
the foregoing provisions of this Section shall, subject as hereinafter
provided, be exclusive:
Provided that such exclusive authority shall not apply or have effect in
relation to -
(a) shares issued by the Fund to shareholders as a stock dividend;
(b) shares offered by the Fund to shareholders for reinvestment of
cash distributed by the Fund to shareholders (together with cash
received to pay for full shares) in any case where, by virtue of
the provisions of the currently effective prospectus, no selling
commission is required to be paid by the shareholder in the
circumstances;
(c) shares issued by the Fund to shareholders in connection with a
reorganization or recapitalization of the Fund, or the merger or
consolidation of any other investment company with the Fund, or
the acquisition by the Fund, by purchase or otherwise, of all or
substantially all of the outstanding stock of any cash investment
company.
(d) shares issued by the Fund at the asset value per share to any
registered unit investment trust or foreign unit investment trust
which is the issuer of periodic payment plan certificates (as that
expression is defined in the Investment Company Act of 1940) the
net proceeds of which are invested in shares of the Fund, and to
any foreign investment company substantially all the assets of
which, or substantially all the assets attributable to a class of
shares, of which, consist of shares of the Fund.
<PAGE>
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D. The Underwriter hereby agrees that no selling commission shall be paid -
(a) in respect to any purchase of shares by the Fund's directors or
officers, or by the Underwriter, or by the Fund's Manager and
Investment Adviser, or by the directors, officers and BONA
FIDE full-time employees or sales representatives of the
Underwriter or of the Fund's Manager and Investment Adviser who
have acted as such for not less that ninety days,k or by any
pension or profit sharing plan established for any of such
persons, in any case where the purchaser of such shares gives a
written assurance that the purchase is made for investment
purposes and that the shares will not be resold except through
redemption or repurchase by or on behalf of the Fund; or
(b) in respect of any purchase of shares in exercise of the
dividend reinvestment privilege as set forth in the currently
effective prospectus; or
(c) in respect of any purchase of shares in exercise of the
transfer of investment privilege from The Value Line Income
Fund, Inc. as set forth in the currently effective prospectus.
Sec. 5. SALES OF SHARES; PRICE AND TIME
The Fund agrees that it will cause the public offering price of shares to
be computed one each day during which the New York Exchange ("the NYSE" is
open for trading as of the close of the NYSE.
<PAGE>
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All sales of shares made hereunder, in respect of an order received by
the Underwriter prior to the close of the NYSE on a day when the NYSE is open
for trading, shall be at the public offering price computed as of the time of
such close.
The public offering price for orders received by dealers prior to the
close of the NYSE on a day when the NYSE is open for trading shall be the
public offering price computed as of the time of such close, provided the
order is accepted by the Underwriter and received by the Underwriter prior to
5:00 P.M. (New York City time) on that day.
Orders received by dealers on any day after the close of the NYSE, or on
any day on which the NYSE is not open for trading, shall be filled, if
accepted by the Underwriter at the public offering price computed as of the
next close of the NYSE.
Sec. 6. COMPENSATION FOR SALES OF SHARES
A. As compensation for any sale of shares hereunder the Underwriter
shall be entitled to retain the applicable selling commission, less the
amount of the applicable dealer's discount (if any) which shall be paid to the
dealer in any case where he makes the sale.
B. The Fund shall in all cases receive not less than the difference
between the public offering price in effect at the time of the sale and the
selling commission.
Sec. 7. SALES AGREEMENTS
The form of all sales agreements between the Underwriter and dealers
shall at all times be in such form as may from time to time be approved by
the Board of Directors of the Fund.
<PAGE>
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Sec. 8. COVENANTS BY UNDERWRITER
A. The Underwriter agrees that in selling shares it will in all respects
duly conform with all federal and state laws relating to the sale of such
securities.
B. The Underwriter agrees that it will endeavor to ensure that dealers
sell shares of the Fund only to bona fide investors and that the method and
materials used in selling such shares are sound and conservative.
C. The Underwriter agrees that it will indemnify and save harmless the
Fund from any damage or expense on account of any wrongful act done by it or
by its representatives.
D. All written communications or reports to shareholders or investors
and all sales literature and all advertisements or radio or television
broadcasts used in connection with the sale of shares or relating to the Fund
or the management of the Fund shall be approved in writing in advance or any
use thereof by the Board of Directors of the Fund or a duly authorized
representative of such Board.
Sec. 9. PAYMENT OF CHARGES BY FUND
The Fund agrees that it will pay, or cause to be paid, -
(a) all fees and expenses connected with, or incidental to, the
registration, under the Securities Act of 1933, of further
shares from time to time;
(b) all expenses connected with or incidental to the preparation
and filing under the Securities Act of 1933 of any new
prospectus relating to shares, or to such further shares which
have been so registered as aforesaid, and of all amendments and
revisions of such prospectus or of any such new prospectus, and
also all expenses connected with, or incidental to, printing
and delivering to the Underwriter, for use as aforesaid, of
copies of any such new prospectus or any such amendment or
revision;
<PAGE>
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(c) all expenses connected with, or incidental to, the issue and
delivery of shares, including all cost of share certificates and
the issue (or initial) transfer taxes thereon; and
(d) all fees payable to States, or to state authorities in States, in
which the Underwriter desires to distribute shares, and all other
expenses, connected with, or incidental to, compliance with the
requirements of such States for the qualification, and
maintenance of qualification from time to time, of shares under
the applicable Blue Sky Laws.
Sec. 10. PAYMENT OF CHARGES BY UNDERWRITER
A. The Underwriter agrees that it will pay, or cause to be paid, -
(a) all expenses, including wire charges, incidental to quoting
prices of shares in newspapers and to shareholders, dealers and
others;
(b) all expenses incident to the distribution of prospectuses or of
any amendment or revision of a prospectus, and of any new
prospectus or any amendment or revision thereof; and
(c) all expenses connected with or incidental to the printing and
distribution of such statistical information and other material,
supplemental to any prospectus and not included in the Fund's
regular reports to its shareholders, as may be furnished to it
from time to time by the Fund.
B. The Underwriter agrees generally to endeavor, at its own expense,
to bring about and maintain a broad distribution of shares.
Sec. 11. DEALING WITH THE FUND
The Underwriter agrees that it will not deal with the Fund as principal
in connection with purchases or sales of securities or other property for the
account of the Fund, and that it will not take any long or short positions in
shares.
<PAGE>
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Sec. 12. GUARANTEE BY UNDERWRITER OF NET PURCHASE PRICE TO FUND
With respect to any shares which are from time to time hereafter issued
pursuant to instructions of the Fund upon receipt of the net purchase price
therefor by check prior to clearance of such check through the Fund's
account, the Underwriter, in each such instance, guarantees to the Fund the
payment in full of such check and agrees to indemnify the Fund against, and
save it harmless from, any and all loss, cost, expense or damage which it may
directly or indirectly suffer, or be subject to, as a result of any such check
not being promptly honored in full upon presentment thereof for payment.
Sec. 13. AMENDMENT OF CONTRACT, BY-LAWS, ETC.
A. If at any time during the term of this Underwriting contract the
Fund considers it necessary or advisable in its best interests that any
amendment of this underwriting Contract be made in order to comply with any
recommendations or requirements of the Securities and Exchange Commission or
other government authority, or to obtain any advantage under federal or state
tax laws, and notifies the Underwriter of the form of amendment which it
considers necessary or advisable and the reasons therefor, and if the
underwriter declines to assent to such amendment, then the Fund may terminate
this underwriting Contract forthwith.
B. If at any time during the term of this Underwriting Contract, upon
request by the Underwriter, the Fund fails after a reasonable time to make
any changes in its Certificate of Incorporation or By-Laws or in its methods
of doing business which are necessary in order to comply with any
requirements of federal law or regulation of the Securities and Exchange
Commission or of a national securities association of which the Underwriter
is or may be a member, relating to the sales of shares, then the Underwriter
may terminate this underwriting Contract forthwith.
<PAGE>
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Sec. 14. APPROVAL AND CONTINUANCE OF UNDERWRITING CONTRACT
A. This Underwriting Contract shall continue for a period of two years
from the date first above written, but shall continue thereafter only so long
as such continuance is specifically approved at least annually by a majority
of the Directors of the Fund who are not affiliated with the Underwriter or
by the holders of a majority of the outstanding shares.
B. This Underwriting Contract may, on sixty (60) days' written notice to
the other party, be terminated at any time without payment of penalty -
(a) by the Fund acting pursuant to a direction given by a majority
of the Board of Directors of the Fund or by a vote of the
holders of a majority of the outstanding shares; or
(b) by the Underwriter.
C. This Underwriting Contract shall automatically terminate in the event
of its assignment by the Underwriter, the term "assignment" for this purpose,
having the meaning defined in section 2 (a) (4) of the Investment Company Act
of 1940.
Sec. 15. COVENANT BY UNDERWRITER WITH REGARD TO ASSOCIATION WITH FUND
The Underwriter agrees that if it ceases to be the principal
underwriter, as defined in the Investment Company Act of 1940, of the Fund,
then -
(a) if the Fund continues thereafter to use the name The Value Line
Fund, Inc., or any other name including the words "Value Line",
the Underwriter will, upon receipt of a written request
<PAGE>
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from the Fund, thenceforth cease to use the name
"Value Line Securities, Inc." or any other name
including the words "Value Line": and
(b) the Underwriter will not thenceforth in any manner
refer to or otherwise publicize its former association
with the Fund.
Section 16. TERMINATION OF FORMER UNDERWRITING CONTRACT; COMMENCEMENT OF
CONTRACT
The Fund and the Underwriter mutually agree that, without prejudice to
any liabilities or benefits incurred or accrued thereunder, the former
Underwriting Contract shall be deemed to terminate, and this Underwriting
Contract shall be deemed simultaneously to have effect, as of the date first
above written.
IN WITNESS WHEREOF the Fund has caused this instrument to be executed in
its name and behalf and under its corporate seal by one of its Vice
Presidents thereunto duly authorized and the Underwriter has caused this
instrument to be executed in its name and behalf and under its corporate seal
by its Vice President thereunto duly authorized, all as of the date and year
first above written.
THE VALUE LINE FUND, INC
By /s/ Harold Benjamin
------------------------------------
Harold Benjamin, Vice President
VALUE LINE SECURITIES, INC.
By /s/ Dorothy A. Berry
------------------------------------
Dorothy A. Berry, Vice President
<PAGE>
Exhibit (g)
CUSTODIAN AGREEMENT
Dated as of:
Between
THE VALUE LINE FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Bank Appointed Custodian........................................... 1
2. Definitions........................................................ 1
(a) Authorized Person............................................. 1
(b) Security...................................................... 2
(c) Portfolio Security............................................ 2
(d) Officers' Certificate......................................... 2
(e) Book-Entry System and Depository.............................. 2
3. A. Proper Instructions........................................... 3
B. Bank's Communications with Fund............................... 4
4. Separate Accounts.................................................. 5
5. Certification as to Authorized Persons............................. 5
6. Custody of Cash and Securities..................................... 6
A. Cash.......................................................... 6
(a) Purchase of Securities................................... 6
(b) Redemptions.............................................. 7
(c) Distributions and Expenses of Fund....................... 7
(d) Payment in Respect of Securities......................... 7
(e) Repayment of Cash........................................ 7
(f) Other Authorized Payments................................ 8
(g) Termination.............................................. 8
B. Securities.................................................... 8
(a) Book-Entry System........................................ 10
(b) Use of Direct Paper System for Commercial Paper.......... 12
C. Options and Futures Transactions.............................. 14
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter......................................... 14
(b) Puts, Calls and Futures Traded on Commodities Exchanges.. 15
(c) Segregated Account....................................... 16
D. Segregated Account for "when issued", "forward commitment"
and Reverse Repurchase Agreement Transactions................. 17
7. Transfer of Securities............................................. 18
8. Redemptions........................................................ 20
9. Merger, Dissolution, etc. of Fund.................................. 20
10. Actions of Bank Without Prior Authorization........................ 21
11. Maintenance of Records and Confidentiality......................... 23
<PAGE>
12. Concerning the Bank................................................ 23
A. Performance of Duties.......................................... 23
B. Responsibility of Custodian.................................... 24
C. No Duty of Bank................................................ 24
D. Fees and Expenses of Bank...................................... 25
E. Advances by Bank............................................... 26
13. Termination........................................................ 26
14. Notices............................................................ 28
15. Amendments......................................................... 29
16. Parties............................................................ 29
17. Governing Law...................................................... 29
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 21st day of June, 1990 between THE VALUE LINE
FUND, INC., a corporation established under the laws of Maryland (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY ("Bank").
The Fund, an open-end management investment company, desires to place
and maintain its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1)
of the Investment Company Act of 1940 to act as custodian of the portfolio
securities and cash of the Fund, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
(a) AUTHORIZED PERSON. Authorized person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of the Board of Directors.
<PAGE>
(b) SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933 as
amended, including, without limitation, any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable
share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof), or any
put, call, straddle, option, or privilege entered into on a national
securities exchange relating to a foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any
certificate of interest or participation in temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the
foregoing and futures, forward contracts and options thereon.
(c) PORTFOLIO SECURITY. Portfolio security will mean any security
owned by the Fund.
(d) OFFICERS' CERTIFICATE. Officers' Certificate will mean unless
otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the
Fund.
(e) BOOK-ENTRY SYSTEM AND DEPOSITORY. Book-Entry System shall mean
the Federal Reserve-Treasury Department Book Entry System for United
States Government, instrumentality and agency securities operated by the
Federal Reserve Banks, it successor or successors and its nominee or
nominees. Depository shall mean the Depository
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<PAGE>
Trust Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934,
it successor or successors and its nominee or nominees. The term "Depository"
shall further mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Fund's Directors.
3A. PROPER INSTRUCTIONS For purposes of this Agreement, "Proper
Instructions" shall mean (i) instructions regarding the purchase or sale of
securities for the portfolio of the Fund, and payments and deliveries in
connection therewith, given by an Authorized Person as designated in an
Officers' Certificate, such instructions to be given in such form and manner
as the Bank and the Fund shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialled by such one or more persons from time to time designated
in an Officer's Certificate as having been authorized by the Directors of the
Fund. Oral instructions given by a person whom the Bank reasonably believes
to be authorized to give such instructions with respect to the transaction
involved will be considered Proper Instructions only if the Bank receives
written instructions (which may be sent by telecopier) confirming such oral
instructions, provided however that if the Bank is notified by an Authorized
Person of the Fund that the Fund is unable to promptly confirm such oral
instruction in writing, then the Bank may act upon receipt of a second oral
instruction confirming such prior oral instruction. The Bank shall compare
the original oral instruction with any confirmatory written or oral
instruction, as the case may be, and shall report any discrepancy to the Fund
immediately, and the Bank shall be responsible for any expense incurred in
taking any action, including any reprocessing, necessary to correct any
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<PAGE>
such discrepancy or error in Proper Instructions given by the Fund, to the
extent such expense is caused by the unreasonable delay of the Bank in
reporting such discrepancy to the Fund. Except as provided in the preceeding
sentence, the Fund shall be responsible, at the Fund's expense, for taking
any action, including any reprocessing, necessary to correct any such
discrepancy or error in Proper Instructions given by the Fund, and to the
extent such action requires the Bank to act, the Fund shall give the Bank
specific Proper Instructions as to the action required. The Bank shall act
upon and comply with any subsequent Proper Instructions which modified a
prior Proper Instruction. Upon receipt of an Officers' Certificate as to the
authorization by the Directors of the Fund accompanied by a detailed
description of procedures approved by the Fund, Proper Instructions may
include communication effected directly between electro-mechanical or
electronic devices provide that the Directors and the Bank are satisfied that
such procedures afford adequate safeguards for the Fund's assets.
3B. BANK'S COMMUNICATIONS WITH FUND. For purposes of this Agreement,
all communications from the Bank to the Fund shall be in writing (which may
be sent by means of a telecopier) and any such writing reasonably believed by
the Fund to be from a person authorized to make such communication on behalf
of the Bank may be relied upon the Fund. An oral communication from a person
who the Fund reasonably believes to be authorized to make such communication
on behalf of the Bank with respect to the transaction may be relied upon by
the Fund only if the Fund receives a written communication (which may be sent
by telecopier) confirming such oral communication, provided however, that if
the Fund is notified by such authorized person that the Bank is unable to
promptly confirm such oral communication in writing, then the Fund may act in
reliance upon receipt of a second oral communication confirming such prior
oral communication. The Fund shall compare the original oral communication
with any confirmatory written or oral
-4-
<PAGE>
communication, as the case may be, and shall report any discrepancy to the
Bank immediately, and the Fund shall be responsible for any expense incurred
in taking any action, including any reprocessing, necessary to correct any
such discrepancy or error in communications given by the Bank, to the extent
such expense is caused by the unreasonable delay of the Fund in reporting
such discrepancy to the Bank. Except as provided in the preceding sentence,
the Bank shall be responsible, at the Bank's expense, for any action taken,
including any reprocessing, necessary to correct any such discrepancy or
error in communications given by the Bank, and to the extent such action
requires the Bank to act, the Fund shall give the Bank specific Proper
Instructions as to the action required. The Fund may act in reliance upon any
subsequent communication from the Bank which modifies a prior communication.
4. SEPARATE ACCOUNTS. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of the Fund into a Separate
Account for each such series or portfolio containing the assets of such
series or portfolio (and all investment earnings thereon), all as directed
from time to time by Proper Instructions.
5. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the Authorized Persons, it being understood that
upon the occurrence of any change in the information set forth in the most
recent certification on file (including without limitation any person named
in the most recent certification who is no longer an Authorized Person as
designated therein), the Secretary or Assistant Secretary of the Fund will
sign a new or amended certification setting forth the change and the new,
additional or omitted names or signatures. The Bank will be entitled to rely
and act upon any Officer's Certificate given to
-5-
<PAGE>
it by the Fund which has been signed by Officers named in the most recent
certification.
6. CUSTODY OF CASH AND SECURITIES. As custodian for the Fund, the Bank
will keep safely all of the portfolio securities delivered to the Bank, and
will deposit to the account of the Fund all of the cash of the Fund delivered
to the Bank, as set forth below.
A. CASH. The Bank will open and maintain a separate account or accounts
in the name of the Fund or in the name of the Bank, as custodian of the Fund,
subject only to draft or order by the Bank acting pursuant to the terms of
this Agreement. The Bank will hold in such account or accounts as custodian,
subject to the provisions hereof (including sections 6(C) and 6(D), all cash
received by it, for the account of the Fund. Upon receipt by the Bank of
Proper Instructions (which may be continuing instructions) or in the case of
payments for redemptions and repurchases of outstanding shares of beneficial
interest of the Fund, notification from the Fund's transfer agent as provided
in Section 8, requesting such payment, designating the payee or the account
or accounts to which the Bank will release funds or deposit, and stating that
it is for a purpose permitted under the terms of this Section 6(A),
specifying the applicable subsection, or describing such purpose with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
(a)-(g) below.
(a) PURCHASE OF SECURITIES: upon the purchase of securities for
the Fund, against contemporaneous receipt of such securities by the Bank
registered in the name of the Fund or in the name of, or properly
endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank through use of (1) the
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<PAGE>
Book-entry System pursuant to Section 6(B)(a)(3) below, (2) a Depository
pursuant to 6(B)(b) below, or (3) Book Entry Paper pursuant to Section
6(B)(c) below, each such payment to be made at the purchase price shown
on a broker's confirmation (or transaction report in the case of Book
Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received
by the Bank before payment is made;
(b) REDEMPTIONS: in such amount as may be necessary for the
repurchase or redemption of shares of beneficial interest of the Fund
offered for repurchase or redemption in accordance with Section 8 of
this Agreement;
(c) DISTRIBUTIONS AND EXPENSES OF FUND: for the payment on the
account of the Fund of dividends or other distributions to shareholders
as may from time to time be declared by the Directors of the Fund,
interest, taxes, management or supervisory fees, distribution fees, fees
of the Bank for its services hereunder and reimbursement of the expenses
and liabilities of the Bank as provided hereunder, fees of any transfer
agent, fees for legal, accounting and auditing services, or other
operating expenses of the Fund;
(d) PAYMENT IN RESPECT OF SECURITIES: for payments in connection
with the conversion, exchange or surrender of portfolio securities or
securities subscribed to by the Fund held by or to be delivered to the
Bank;
(e) REPAYMENT OF CASH: to repay the cash delivered to the Fund
for the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Trust representing portfolio securities,
but only upon redelivery to the Bank of such borrowed certificates;
-7-
<PAGE>
(f) OTHER AUTHORIZED PAYMENTS: for other authorized transactions
of the Fund, or other obligations of the Fund incurred for proper Fund
purposes; provided that before making any such payment the Bank will
also receive a certified copy of a resolution of the Directors signed by
an Authorized Person of the Fund (other than the Person certifying such
resolution) and certified by its Clerk or Assistant Clerk, naming the
person or persons to whom such payment is to be made, and either
describing the transaction for which payment is to be made and declaring
it to be an authorized transaction of the Fund, or specifying the amount
of the obligation for which payment is to be made, setting forth the
purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose; and
(g) TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 9 and Section 13 of this
Agreement.
The Bank is hereby authorized to endorse for collection and collect on
behalf of and in the name of the Fund all checks, drafts, or other negotiable
or transferrable instruments or other orders for the payment of money
received by it for the account of the Fund.
B. SECURITIES. Except as provided in subsections (a), (b) and (c)
of this Section 6(B), and in Sections 6(C) and 6(D), the Bank as custodian,
will receive and hold pursuant to the provisions hereof, in a separate
account or accounts and physically segregated at all times from those of
other persons, any and all portfolio securities which may now or hereafter be
delivered to it by or for the account of the Fund. All such portfolio
securities will be held or disposed of by the Bank for, and subject at all
times to, the instructions of the Fund pursuant to the terms of this
Agreement. Subject to the
-8-
<PAGE>
specific provision in Subparagraphs (a), (b), and (c) relating to securities
that are not physically held by the Bank, the Bank will register all
portfolio securities (unless otherwise directed by Proper Instructions or an
Officers' Certificate), in the name of a registered nominee of the Bank as
defined in the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, which nominee shall be exclusively assigned to
the Fund, and will execute and deliver all such certificates in connection
therewith as may be required by such laws or Regulations or under the laws of
any State. The Bank will ensure that the specific portfolio securities of the
Fund held by it hereunder will be at all times identifiable.
The Bank will use the same care with respect to the safekeeping of
portfolio securities and cash of the Fund held by it as it uses in respect of
its own similar property but it need not maintain any special insurance for
the benefit of the Fund.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or
to register in the name of its registered nominee, any securities which it
may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Neither the Bank nor any nominee of the Bank will vote any of the
portfolio securities held hereunder by or for the account of the Fund, except
in accordance with Proper Instructions of an Officers' Certificate.
The Bank will execute and deliver, or cause to be executed and
delivered, to the Fund all notices, proxies and proxy soliciting materials
with respect to such securities, such proxies to be executed by the
registered holder of such securities (if registered otherwise than in the
name of the Fund), but without indicating the manner in which such proxies
are to be voted.
-9-
<PAGE>
(a) BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Directors of the Fund specifically
approving deposits of the Fund assets in the Book-Entry System, indicating
that, and (ii) for each year following such approval, the Directors of the
Fund has reviewed and approved the arrangement and has not delivered an
Officer's Certificate to the Bank indicating that it has withdrawn its
approval:
1. The Bank may keep Securities of the Fund in the Book-Entry
System provided that such securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held
as a fiduciary, custodian, or otherwise for customers.
2. The records of the Bank (any any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank
(or any such agent) will identify by book entry securities belonging
to the Fund which are included with other securities deposited in
the Account and shall at all times during the regular business hours
of the Bank (or such agent) be open for inspection by duly authorized
officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry
or otherwise, identify as belonging to the Fund a quantity of
securities in fungible bulk of securities (i) registered in the name
of the Bank or its nominee, or (ii) shown on the Bank's account on
the books of the Federal Reserve Bank.
-10-
<PAGE>
3. The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the
return of securities loaned by the Fund upon (i) receipt of advice
from the Book-Entry System that such Securities have been transferred
to the Account, and (ii) the making of an entry on the records of the
Bank (or its agent) to reflect such payment and transfer for the
account of the Fund. The Bank (or its agent) shall transfer securities
sold or loaned for the account of the Fund upon
(a) receipt of advice from the Book-Entry System that payment
for Securities sold or payment of the initial cash collateral
against the delivery of securities loaned by the Fund has been
transferred to the Account, and
(b) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Book-Entry System of
transfers of Securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Bank and shall be
provided to the Fund at its request. The Bank shall send the Fund
a confirmation, as defined by Rule 17f-4 under the Investment
Company Act of 1940, of any transfers to or from the account of
the Fund.
4. The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for
safeguarding Securities deposited in the Book-Entry System. The
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<PAGE>
Bank will provide the Fund and cause any such agent to provide, at
such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities,
including Securities deposited in the Book-Entry System, relating to
the services provided by the Bank or such agent under the Agreement.
5. Anything to the contrary in the Agreement notwithstanding, the
Bank shall be liable to the Fund for any loss or damage to the Fund
resulting from use of the Book-Entry System by reason of any gross
negligence, wilful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless
disregard by the Bank or any such agent of its duty to enforce
effectively such rights as it may have against the Book-Entry System;
at the election of the Fund, it shall be entitled to be subrogated for
the Bank in any claim against the Book-Entry System or any other
person which the Bank or its agent may have as a consequence of any
such loss or damage if and to the extent that the Fund has not been
made whole for any loss or damage.
(b) USE OF DIRECT PAPER SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Fund's Directors
specifically approving participation in a system maintained by the Bank for
the holding of commercial paper in direct paper form ("Direct Paper") and
(ii) for each year following such approval the Directors of the Fund have
received and approved the arrangements, upon receipt of Proper Instructions
and upon receipt of confirmation from an Issuer (as defined below) that the
Fund has purchased such Issuer's Direct Paper,
-12-
<PAGE>
the Bank shall issue and hold in direct paper form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
direct paper agreement (the "Issuers"). In maintaining its Direct Paper
System, the Bank agrees that:
1. the Bank will maintain all Direct Paper held by the Fund in
an account of the Bank that includes only assets held by it for
customers;
2. the records of the Bank with respect to the Fund's purchase
of Direct Paper through the Bank will identify, by book entry,
Commercial Paper belonging to the Fund which is included in the Direct
Paper System and shall at all times during the regular business hours
of the Bank be open for inspection by duly authorized officers,
employees or agents of the Fund.
3. (a) The Bank shall pay for Direct Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from
the Issuer that such sale of Direct Paper has been effected, and (ii)
the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund.
(b) The Bank shall cancel such Direct Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Direct Paper has been transferred to the Fund, and
(ii) the making of an entry on the records of the Bank to reflect such
payment for the account of the Fund.
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<PAGE>
4. the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Direct Paper for the account of the
Fund on the next business day following the transaction;
5. the Bank will send to the Fund such reports on its system of
internal accounting control as the Fund may reasonably request from
time to time;
C. OPTIONS AND FUTURES TRANSACTIONS.
(a) PUTS AND CALLS TRADED ON SECURITIES EXCHANGES, NASDAQ OR
OVER-THE-COUNTER.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the
provisions of any agreement entered into upon receipt of Proper
Instructions between the Bank, any broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc., and, if necessary, the
Fund relating to the compliance with rules of the Options Clearing
Corporation and of any registered national securities exchange, or
of any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Fund has deposited or
is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under any duty or
obligation to present such option to the broker for exercise unless it
receives Proper Instructions from the Fund. The Bank shall have no
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<PAGE>
responsibility for legality of any put or call purchased or sold on
behalf of the Fund, the propriety of any such purchase or sale, or the
adequacy of any collateral delivered to a broker in connection with an
option or deposited to or withdrawn from a Segregated Account as
described in sub-paragraph c of this Section 6(C). The Bank
specifically, but not by way of limitation, shall not be under any
duty or obligation to: (i) periodically check or notify the Fund that
the amount of such collateral held by a broker or held in a Segregated
Account as described in sub-paragraph (c) of this Section 6(C) is
sufficient to protect such broker of the Fund against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has or is about to expire.
Such duties or obligations shall be the sole responsibility of the
Fund.
(b) PUTS, CALLS AND FUTURES TRADED ON COMMODITIES EXCHANGES.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance with
the provisions of any agreement among the Fund, the Bank and a Futures
Commission Merchants registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant
-15-
<PAGE>
account and the Segregated Account shall be limited as set forth in
sub-paragraph (a)(2) of this Section 6(C) as if such sub-paragraph
referred to Futures Commission Merchants rather than brokers, and
Futures and puts and calls thereon instead of options.
(c) SEGREGATED ACCOUNT.
The Bank shall upon receipt of Proper Instructions establish
and maintain a Segregated Account or Accounts for and on behalf of
the Fund, into which Account or Accounts may be transferred cash
and/or securities including securities maintained in an Account by
the Bank pursuant to Section 6(B) hereof, (i) in accordance with
the provisions of any agreement among the Fund, the Bank and a
broker-dealer registered under the Exchange Act and a member of
the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of
the Options Clearing Corporation and of any registered national
securities exchange or the Commodity Futures Trading Commission or
any registered Contract Market, or of any similar organization or
organizations regarding escrow or other arrangements in connection
with transactions by the Fund, and (ii) for the purpose of
segregating cash or securities in connection with options
purchased or written by the Fund, or commodity futures purchased
or written by the Fund, and (iii) for the purposes of compliance
by the Fund with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
Segregated Accounts by registered investment companies and (iv)
for other proper corporate purposes, BUT ONLY, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions,
a certified copy of a resolution of the Directors of the Fund
signed by an officer of the Fund and
-16-
<PAGE>
certified by the Clerk of an Assistant Clerk, setting forth the purpose
or purposes of such Segregated Account and declaring such purposes to be
proper corporate purposes.
D. SEGREGATED ACCOUNT FOR "WHEN-ISSUED", "FORWARD COMMITMENT" AND
REVERSE REPURCHASE AGREEMENT TRANSACTIONS. Notwithstanding the provisions of
Section 6(A), 6(B) and 6(C) hereof, the Bank will maintain a segregated
account (the "Segregated Account') in the name of the Fund (i) for the
deposit of liquid assets, such as cash, U.S. Government securities or other
high grade debt obligations, having a market value (marked to the market on a
daily basis) at all times equal to not less than the aggregate purchase price
due on the settlement dates of all the Fund's then outstanding forward
commitment or "when-issued" agreements relating to the purchase of portfolio
securities and all the Fund's then outstanding commitments under reverse
repurchase agreements entered into with broker-dealer firms, and (ii) for the
deposit of any portfolio securities which the Fund has agreed to sell on a
forward commitment basis, all in accordance with Securities and Exchange
Commission Release No. IC-10666. No assets shall be deposited in the
Segregated Account except pursuant to Proper Instructions. Assets may be
withdrawn from the segregated account pursuant to Proper Instructions only
(a) for sale or delivery to meet the Fund's obligations under outstanding
firm commitment or when-issued agreements for the purchase of portfolio
securities and under reverse repurchase agreements, (b) for exchange for
other liquid assets of equal or greater value deposited in the Segregated
Account, (c) to the extent that the Fund's outstanding forward commitment or
when-issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the Segregated
Account, or (d) for delivery upon settlement of a forward commitment
agreement for the sale of portfolio securities.
-17-
<PAGE>
7. TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver or
release portfolio securities held by it hereunder, insofar as such securities
are available for such purpose, provided that before making any transfer,
exchange delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it
is for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of portfolio securities for the account of the Fund,
against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the portfolio securities received by
the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made, provided
however, that portfolio securities may be delivered to the broker
selling the same for examination in accordance with "street delivery"
custom;
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise;
(c) upon conversion of portfolio securities pursuant to their terms
into other securities;
(d) upon exercise of subscription, purchase or sale or other similar
rights represented by such portfolio securities;
-18-
<PAGE>
(e) for the purpose of redeeming in kind shares of beneficial
interest of the Fund upon authorization from the Fund;
(f) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;'
(g) when such portfolio securities are called, redeemed or retired
or otherwise become payable;
(h) for the purpose of releasing certificates representing portfolio
securities of the Fund, against contemporaneous receipt by the Bank of
the fair market value of such security, as set forth in Proper
Instructions received by the Bank before such payment is made;
(i) for the purpose of tendering shares pursuant to a tender offer
therefor;
(j) for the purpose of delivering securities lent by the Fund to a
bank or broker-dealer, but only against receipt in accordance with
street delivery custom, except as otherwise provided in Subsections
6(B)(a) and (b) hereof, of adequate collateral as agreed upon from time
to time by the Fund and the Bank, and upon receipt of payment in
connection with any repurchase agreement relating to such securities
entered into by the Fund;
(k) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer,
the Bank will also receive a certified copy of resolution of the
Directors of the Fund, signed by an authorized officer of the Fund
(other than the officer certifying such resolution) and certified by its
Secretary or Assistant Secretary, specifying the portfolio securities to
be delivered, setting forth the transaction
-19-
<PAGE>
in or purpose for which such delivery is to be made, declaring such
transaction to be an authorized transaction of the Fund or such purpose
to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made; and
(1) upon termination of this Agreement as hereinafter set forth
pursuant to Section 9 and Section 13 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (d), (f), (g), (h), (i) and (j) securities or cash receivable in
exchange therefor shall be delivered to the Bank.
8. REDEMPTIONS. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding shares of beneficial interest, the Bank will rely on notification
by the Fund's transfer agent if receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles of Incorporation
of the Fund, from assets available for said purposes.
9. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions not in the ordinary course of business, namely, the merger of
the Fund into or the consolidation of the Fund with another investment
company, the sale by the Fund of all, or substantially all of its assets to
another investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the portfolio securities
held by it under this Agreement and disburse cash only upon the order of the
Fund set forth in an Officers' Certificate, accompanied by a certified copy
of a resolution of the Fund's Directors authorizing any of the foregoing
-20-
<PAGE>
transactions. Upon completion of such delivery and disbursement and the
payment of the fees, disbursements and expenses of the Bank due to the Bank
pursuant to Section 12E hereof, this Agreement will terminate.
10. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Fund or the transfer agent:
(a) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof, all
income, dividends, interest and other payments or distribution of cash
with respect to the portfolio securities held thereunder;
(b) Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation
and hold the cash received by it upon such payment for the account of
the Fund in the account or accounts referred to in Section 6 hereof;
(c) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof all
securities received as a distribution on portfolio securities as a
result of a stock dividend, share split-up, reorganization,
recapitalization, merger, consolidation, readjustment, distribution of
rights and similar securities issued with respect to any portfolio
securities held by it hereunder.
(d) Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or
by the laws
-21-
<PAGE>
of any state, now or hereafter in effect, inserting the Fund's name on
such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection wit portfolio securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal
Revenue Code and any Regulations of the Treasury Department issued
thereunder, or under the laws of any State;
(e) Present for payment all portfolio securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Fund in the account or accounts
referred to in Section 6 hereof; and
(f) Exchange interim receipts or temporary securities for
definitive securities.
The Bank will use all diligence to collect any funds which may to its
knowledge become collectible arising from such securities, including
dividends, interest and other income, and to transmit to the Fund notice
actually received by it of any call for redemption, offer of exchange, right
of subscription, reorganization or other proceedings affecting such
securities.
If portfolio securities upon which such income is payable are in default
or payment is refused after due demand or presentation, the Bank will notify
the Fund by telecopier of any default or refusal to pay no later than one
business day from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any portfolio security held by it which is more
than ten days overdue on the date of such report and which has not previously
been reported.
-22-
<PAGE>
11. MAINTENANCE OF RECORDS. The Bank will maintain records with respect
to transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement and in compliance with the applicable rules and
regulations under the Investment Company Act of 1940 as amended, and will
furnish the Fund daily with a statement of condition of the Fund. The Bank
will furnish to the Fund at the end of every month, and at the close of each
quarter of the Fund's fiscal year, a list of the portfolio securities and the
aggregate amount of cash held by it for the Fund. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the
Bank or its independent accountants concerning its accounting system,
procedures for safeguarding securities and internal accounting controls will
be open to inspection and audit at reasonable times by officers of or
auditors employed by the Fund and will be preserved by the Bank in the manner
and in accordance with the applicable rules and regulations under the
Investment Company Act of 1940.
The Bank agrees to treat all records and other information relative to
the Fund and its shareholders as confidential, except it may disclose such
information after prior notification to and approval in writing by the Fund,
which approval shall not be unreasonably withheld. Nothing in this Section 11
shall prevent the Bank from divulging information to bank or securities
regulatory authorities or where the Bank may be exposed to civil or criminal
contempt proceedings for failure to comply.
12. CONCERNING THE BANK.
A. PERFORMANCE OF DUTIES.
(1) The Bank and the Fund shall each exercise reasonable care
in the performance of their respective duties and functions under
this Agreement.
-23-
<PAGE>
(2) In its dealings with the Fund, the Bank shall be entitled
to rely upon any Officers' Certificate, Proper Instructions,
resolution of the Directors, telegram, facsimile communication,
written notice, or certificate.
B. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to
this Contract and shall beheld harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. The Custodian shall be
held harmless and be protected by the Fund and shall be held to the
exercise of reasonable care in carrying out the Proper Instructions of
the Fund. It shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) or mutually acceptable to both
parties on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
C. NO DUTY OF BANK. The Bank will be under no duty or obligation to
inquire into and will not be liable for:
(a) the validity of the issue of any portfolio securities
purchased by or for the Fund, the legality of the purchases thereof
or the propriety of the price incurred therefor;
-24-
<PAGE>
(b) the legality of any sale of any portfolio securities by or for
the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an isue or sale of any shares of common stock
of the Fund or the sufficiency of the amount to be received therefor
provided that it reflects the net asset value as provided by the Fund;
(d) the legality of the repurchase of any shares of common stock of
the Fund or the propriety of the amount to be paid therefor provided
that it reflects the net asset value as provided by the Fund;
(e) the legality of the declaration of any dividend by the Fund or
the legality of the distribution of any portfolio securities as payment
in kind of such divident; or
(f) any property or moneys of the Fund unless and until received by
it, except as otherwise provided in Section 10 hereof, and any such
property or moneys delivered or paid by it pursuant to the terms
hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any portfolio securities at any time delivered to or held by it for
the account of the Fund are such as may properly be held by the Fund under
the provisions of its Agreement and Declaration of Fund or By-Laws, any
federal or state statutes or any rule or regulation of any governmental
agency.
D. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the Bank
from time to time for any transfer taxes payable upon transfer of
portfolio securities made hereunder, and for the Bank's normal disbursements,
-25-
<PAGE>
expenses and charges made or incurred by the Bank in the performance of
this Agreement (including any duties listed on any Schedules hereto, if
any). For the services rendered by the Bank hereunder, the Fund will pay to
the Bank such compensation or fees at such rate and at such times as shall
be agreed upon in writing by the parties from time to time. The Bank will
also be entitled to reimbursement by the Fund for normal industry costs for
securities transfers and services incurred in conjunction with termination
of this Agreement by the Fund.
E. ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of Proper Instructions as required by this
Agreement for such payments by the Fund. Should such a payment or payments,
with advanced funds, result in an overdraft (due to insufficiencies of
the Fund's account with the Bank, or for any other reason) any such related
indebtedness shall be deemed a loan made by the Bank to the Fund payable on
demand and bearing interest at the current rate charged by the Bank for
such loans unless the Fund shall provide the Bank with agreed-upon
compensating balances. The Fund authorizes the Bank, in its sole discretion,
at any time to charge any overdraft or indebtedness, together with interest
due thereon, against any balance of account standing to the credit of the
Fund on the Bank's books.
13. TERMINATION.
(a) This Agreement may be terminated at any time without penalty upon
ninety days written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such ninety days this
Agreement will terminate; provided, however, that the effective date of
such termination may be postponed to a date of delivery
-26-
<PAGE>
of such notice (i) by the Bank in order to prepare for the transfer by the
Bank of all of the assets of the Fund held hereunder, and (ii) by the Fund
in order to give the Fund an opportunity to make suitable arrangements for
a successor custodian. At any time after the termination of this Agreement,
the Fund will, at its request, have access to the records of the Bank
relating to the performance of its duties as custodian.
(b) In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer
of all cash and the delivery of all portfolio securities duly endorsed and
all records maintained under Section 11 to the successor custodian when
appointed by the Fund. The obligation of the Bank to deliver and transfer
over the assets of the Fund held by it directly to such successor
custodian will commence as soon as such successor is appointed and will
continue until completed as aforesaid. If the Fund does not select a
successor custodian within ninety days from the date of delivery of notice
termination the Bank may, subject to the provisions of subsection (c) of
this Section 13, deliver the portfolio securities and cash of the Fund held
by the Bank to a bank or trust company of its own selection which mets the
requirements of Section 17(f)(1) of the Investment Company Act of 1940 and
has a reported capital, surplus and undivided profits aggregating not less
than $2,000,000, to be held as the property of the Fund under terms similar
to those on which they were held by the Bank, whereupon such bank or trust
company so selected by the Bank will become the successor custodian of
such assets of the Fund with the same effect a though selected by the
Directors of the Fund.
-27-
<PAGE>
(c) Prior to the expiration of ninety days after notice of termination
has been given, the Fund may furnish the Bank with an order of the Fund
advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted
to the shareholders of the Fund the question of whether the Fund will be
liquidated or will function without a cutodian for the assets of the Fund
held by the Bank. In that event the Bank will deliver the portfolio
securities and cash of the Fund held by it, subject as aforesaid, in
accordance with one of such alternatives which may be approved by the
requisite vote of shareholders, upon receipt by the Bank of a copy of the
minutes of the meeting of shareholders at which action was taken, certified
by the Fund's Secretary.
14. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it
at its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
The Value Line Fund, Inc.
c/o Value Line Inc.
711 3rd Avenue
New York, New York 10017
Attn: Treasurer
(b) In the case of notices sent to the Bank to:
State Street Bank and Trust Company
Mutual Fund Services
1776 Heritage Drive
North Quincy, MA 02171
-28-
<PAGE>
or at such other place as such party may from time to time designate in
writing.
15. AMENDMENTS. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Directors.
16. PARTIES. This Agreement will be binding upon and shall insure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Directors; and provided
further that termination proceedings pursuant to Section 13 hereof will not
be deemed to be an assignment within the meaning of this provision.
17. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed
hereto as of the date first above written by their respective officers
thereunto duly authorized.
THE VALUE LINE FUND, INC.
By: /s/ JEAN B. BUTTNER
------------------------
ATTEST:
/s/ [ILLEGIBLE]
- -----------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ [ILLEGIBLE]
------------------------
ATTEST:
/s/ [ILLEGIBLE]
- -----------------------
-30-
<PAGE>
Exhibit (g)
AMENDMENT TO CUSTODIAN CONTRACT
AMENDMENT made by and between STATE STREET BANK AND TRUST COMPANY (the
"Custodian") each Fund listed on Appendix A (the "Fund")
WHEREAS, the Custodian and each Fund are parties to a Custodian
Contract, as amended (each a "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and each Fund desires to amend the relevant
Custodian Contract;
NOW THEREFORE, the Custodian and each Fund hereby amend and revise in
its entirety the defined term "Authorized person" in Section 2(a) of the
Custodian Contract as follows:
"Authorized person" of a Fund shall mean any of the persons duly
authorized to give Proper Instructions or otherwise act with respect
to such Fund on behalf of the Board of Trustees/Directors of such
Fund by appropriate resolution of such Board of Trustees/Directors,
it being understood that the signatures of two Authorized persons of
a Fund shall be required for the release of the assets of the Fund.
1
<PAGE>
Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force
and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of
the 1st day of October, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
----------------------------
Ronald E. Logue
Executive Vice President
Attest: /s/ Thomas M. Lenz
-------------------------
Thoms M. Lenz
Vice President
EACH FUND LISTED ON APPENDIX A
By: /s/ Jean B. Buttner
----------------------------
Name: JEAN B. BUTTNER
Title: CHAIRMAN/PRESIDENT
Attest: /s/ David T. Henigson
------------------------
Name: DAVID T. HENIGSON
Title: SECRETARY
2
<PAGE>
APPENDIX A
LIST OF FUNDS
Value Line Aggressive Income Trust
Value Line Asset Allocation Fund, Inc.,
Value Line Cash Fund, Inc., (The)
Value Line Centurion Fund, Inc.
Value Line Convertible Fund, Inc.
Value Line Fund, Inc. (The)
Value Line Income Fund, Inc., (The)
Value Line Leveraged Growth Investors, Inc.
Value Line New York Tax Exempt Trust
Value Line Small-Cap Growth Fund, Inc.
Value Line Special Situations Fund, Inc.
Value Line Strategic Asset Management Trust
Value Line Tax-Exempt Fund, Inc. (The)
Value Line U.S. Government Securities Fund, Inc.
Value Line U.S. Multi-National Company Fund, Inc.
3
<PAGE>
Exhibit (i)
PETER D. LOWENSTEIN
ATTORNEY AT LAW
TWO GREENWICH PLAZA, SUITE 100
GREENWICH, CONNECTICUT 06830
203 622-3932
FAX 203 622-0321
February 19, 1999
The Value Line Fund, Inc.
220 Each 42nd Street
New York, Ny 10017
Gentlemen:
I have acted as special counsel to The Value Line Fund, Inc., a Maryland
corporation (the "Fund"), in connection with certain matters, including the
issuance of shares of its common stock, $1.00 par value (the "Common Stock").
As special counsel for the Fund, I am familiar with its Charter and
By-laws. I have examined the prospectus included in Post-Effective Amendment
No. 84 to its Registration Statement on Form N-1A, File No. 2-10827 (the
"Registration Statement"), substantially in the form in which it is to become
effective (the "Prospectus"). I have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to
the effect that the Fund is duly incorporated and existing under the laws of
the State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
I have also examined and relied upon such corporate records of the Fund
and other document and certificates with respect to factual matters as I have
deemed necessary to render the opinion expressed herein. I have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to me as originals and the conformity
with originals of all documents submitted to me as copies.
Based on such examination, I am of the opinion and so advise you that:
1. The Fund is duly organized and validly existing as
a corporation in good standing under the laws of the
State of Maryland.
2. The shares of Common Stock of the Fund to be offered
for sale pursuant to the Prospectus are to the extent
of the number of shares authorized to be issued, duly
authorized and, when sold, issued and paid for as
contemplated by the Prospectus, will have been validly
and legally issued and will be fully paid and
nonassessable.
<PAGE>
I am a member of the bars of the States of Connecticut and New York and I
do not purport to be an expert in, and express no opinion with respect to,
the laws of any jurisdiction other than the federal laws of the United States
and the laws of the States of Connecticut and New York.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Peter D. Lowenstein
Peter D. Lowenstein
PDL:psp
<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. 84 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 12, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 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
heading "Financial Statements" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 22, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 243,970
<INVESTMENTS-AT-VALUE> 417,601
<RECEIVABLES> 1,422
<ASSETS-OTHER> 104
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 419,127
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 688
<TOTAL-LIABILITIES> 688
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 236,891
<SHARES-COMMON-STOCK> 18,474
<SHARES-COMMON-PRIOR> 19,827
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,917
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 173,631
<NET-ASSETS> 418,439
<DIVIDEND-INCOME> 1,948
<INTEREST-INCOME> 1,615
<OTHER-INCOME> 0
<EXPENSES-NET> 2,951
<NET-INVESTMENT-INCOME> 612
<REALIZED-GAINS-CURRENT> 13,338
<APPREC-INCREASE-CURRENT> 58,617
<NET-CHANGE-FROM-OPS> 72,567
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 646
<DISTRIBUTIONS-OF-GAINS> 8,809
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,360
<NUMBER-OF-SHARES-REDEEMED> 7,124
<SHARES-REINVESTED> 411
<NET-CHANGE-IN-ASSETS> 36,008
<ACCUMULATED-NII-PRIOR> 34
<ACCUMULATED-GAINS-PRIOR> 3,388
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,529
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,955
<AVERAGE-NET-ASSETS> 382,069
<PER-SHARE-NAV-BEGIN> 19.29
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 3.85
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> .49
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.65
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
