================================================================================
SEMI-ANNUAL REPORT
------------------
June 30, 1999
------------------
The Value Line
Fund, Inc.
[LOGO]
------------------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
The Value Line Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To our shareholders:
The first six months of 1999 provided a good environment for growth equity
investing, and the performance of the Value Line Fund reflects that positive
backdrop. Early in the year we saw a continuation of a powerful rally that
started the previous October. And though a difficult period for growth stocks
arose during the springtime (described more fully below), during the last few
weeks of June the Fund's performance again picked up materially. The actual
returns for the six- and twelve-month periods that ended on June 30, 1999,
compared to the unmanaged benchmark S&P 500 Composite Index, are as follows:
Value Line
Fund S&P 500
---------- -------
First half ................................... 12.89% 12.38%
Trailing twelve months ....................... 21.46 22.75
Between late April and mid-June, a number of events combined to divert the
market's attention from the growth-oriented stocks upon which we focus in the
Value Line Fund. Crude oil prices, which had been depressed for over a year,
began to rise as expanding demand and production constraints fell into place.
The rise in demand reflects the economic strength of several overseas markets,
which had endured a series of financial crises beginning in 1997 and had played
a major role in U.S. equity corrections in 1997 and 1998. These developments,
along with fears of tight domestic labor markets and the possibility of other
industrial commodity prices rising, sparked concerns that inflation might again
be heating up. The bond market sank, with long-term interest rates jumping from
the mid-5% range to over 6%.
With all this going on, the stock market changed its focus. Small-capitalization
stocks, which had underperformed larger stocks for years, rose to investment
prominence during the second quarter. Stocks of cyclical or commodity-based
companies began to outperform growth stocks. And with the increasing health of
emerging-market economies, investors funneled funds into those markets at the
expense of U.S. issues. The bottom line is that domestic large-cap growth
vehicles, including the Value Line Fund, swooned for the better part of two
months.
During May and June we heard over and over about a "cyclical rotation," which
assumed that the stocks that had been leaders for years were about to be
replaced by the cyclical and commodity sector that had recently come into favor.
Though it's too soon to rule out that hypothesis completely, we believe that the
recent market action represents a broadening of the market beyond an exclusively
growth orientation rather than a rotation of the market away from a growth
focus. After all, our economic forecast (see our Economic Observations nearby)
calls for low inflation, decelerating economic growth, and the resulting
likelihood of stable to lower interest rates over the next few quarters. In this
climate, we believe growth investing, as defined by the Value Line Timelines
Ranking System, will provide superior investment returns.
As the final months of the millennium unfold, our outlook for equity investing
is as bright as ever. As always, we appreciate your confidence in Value Line.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 6, 1999
- --------------------------------------------------------------------------------
2
<PAGE>
The Value Line Fund, Inc.
Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The economy is now starting to turn in more of a mixed performance. Evidence of
this uneven pattern began to emerge in the second quarter, when GDP growth
slowed to a 2.3% rate. More recently, we've seen a moderation in the rate of
manufacturing activity and some selective weakening in retail sales. On the
other hand, housing is still quite strong and the level of employment continues
to increase at a healthy pace. Overall, this less even growth trend does not
imply that the long-running expansion is about to falter. But it does suggest
that growth is likely to hold nearer to the recent 2%-3% level over the next
several quarters than to the earlier, and more frenetic, 4%-5% pace.
Inflationary pressures, meanwhile, are starting to build. Here, as well, we
aren't forecasting a dramatic change in trend. Nevertheless, the sharp runup in
oil prices in recent months, the recent escalation in wage costs, and the runup
in mortgage rates all indicate that the cost of living is increasing. A gradual
uptrend in pricing now seems likely over the next several quarters. The Federal
Reserve, taking note of these rising cost pressures is likely to maintain a
somewhat more restrictive monetary stance in the months ahead.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/99 ....................... 21.46% $12,146
5 years ended 6/30/99 ...................... 23.09% $28,260
10 years ended 6/30/99 ...................... 17.07% $48,367
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and capital gains
distributions accepted in shares. The investment return and principal value
of an investment will fluctuate so that an investment, when redeemed, may be
worth more or less than its original cost.
- --------------------------------------------------------------------------------
3
<PAGE>
The Value Line Fund, Inc.
Portfolio Highlights at June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Ten Largest Holdings
<TABLE>
<CAPTION>
Value Percentage
Issue Shares (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EMC Corp. .................................................... 300,000 $16,500 3.6%
Omnicom Group, Inc. .......................................... 200,000 16,000 3.4
Cisco Systems, Inc. .......................................... 230,000 14,835 3.2
Tellabs, Inc. ................................................ 200,000 13,512 2.9
Schwab (Charles) Corp. ....................................... 112,500 12,361 2.7
Staples, Inc. ................................................ 383,250 11,857 2.6
America Online, Inc. ......................................... 100,000 11,050 2.4
Dayton Hudson Corp. .......................................... 160,000 10,400 2.2
Dell Computer Corp. .......................................... 280,000 10,360 2.2
Tandy Corp. .................................................. 200,000 9,775 2.1
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ....................................... $49,967 10.8%
Retail-Special Lines ......................................... 31,880 6.9
Telecommunications Equipment ................................. 31,089 6.7
Drug ......................................................... 30,672 6.6
Retail Store ................................................. 26,267 5.7
<CAPTION>
Five Largest Security Purchases*
Cost
Issue (in thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
AT & T Corp. ................................................. $ 4,807
Mandalay Resort Group ........................................ 4,594
General Motors Corp. ......................................... 4,240
Best Buy Co., Inc. ........................................... 3,794
Loral Space & Communications Ltd. ............................ 3,772
<CAPTION>
Five Largest Security Sales*
Proceeds
Issue (in thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Mellon Bank Corp. ............................................ $ 7,147
Warner-Lambert Co. ........................................... 6,544
Cardinal Health, Inc. ........................................ 6,121
Pfizer, Inc. ................................................. 5,778
BMC Software, Inc. ........................................... 5,720
</TABLE>
* For the six month period ended 06/30/99
- --------------------------------------------------------------------------------
4
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS (91.7%)
ADVERTISING (3.4%)
200,000 Omnicom Group, Inc............................. $ 16,000
AEROSPACE/DEFENSE (0.8%)
55,000 Gulfstream Aerospace Corp.*.................... 3,716
AIR TRANSPORT (0.5%)
40,000 Delta Air Lines, Inc........................... 2,305
ALTERNATE ENERGY (1.3%)
100,000 AES Corp.*..................................... 5,813
AUTO & TRUCK (0.7%)
50,000 General Motors Corp............................ 3,300
BANK (2.6%)
27,000 Chase Manhattan Corp........................... 2,339
60,000 State Street Corp.............................. 5,123
75,000 Zions Bancorporation........................... 4,762
--------
12,224
BANK--MIDWEST (1.3%)
90,000 Fifth Third Bancorp............................ 5,991
COMPUTER AND
PERIPHERALS (10.8%)
230,000 Cisco Systems, Inc.*........................... 14,835
280,000 Dell Computer Corp.*........................... 10,360
300,000 EMC Corp.*..................................... 16,500
64,000 International Business
Machines Corp.............................. 8,272
--------
49,967
COMPUTER SOFTWARE &
SERVICES (3.4%)
120,000 Computer Associates
International, Inc......................... 6,600
90,000 Fiserv, Inc.*.................................. 2,818
70,000 Microsoft Corp.*............................... 6,313
--------
15,731
DIVERSIFIED COMPANIES (2.6%)
55,000 AlliedSignal Inc............................... 3,465
50,000 Tyco International, Ltd........................ 4,737
55,000 United Technologies Corp....................... 3,943
--------
12,145
DRUG (6.6%)
50,000 Amgen Inc.*.................................... 3,044
50,000 Biogen, Inc.*.................................. 3,216
45,000 Genzyme Corp.--General
Division*.................................. 2,183
105,000 Lilly (Eli) & Co............................... 7,521
46,000 Merck & Co., Inc............................... 3,404
50,000 Pfizer, Inc.................................... 5,487
80,000 Schering-Plough Corp........................... 4,240
45,000 Watson Pharmaceuticals, Inc.*.................. 1,577
--------
30,672
ELECTRICAL EQUIPMENT (1.2%)
50,000 General Electric Co............................ 5,650
ENTERTAINMENT (1.5%)
100,000 Clear Channel
Communications, Inc.*...................... 6,894
FINANCIAL SERVICES (3.2%)
40,000 American Express Co............................ 5,205
150,000 Citigroup Inc.................................. 7,125
50,000 FINOVA Group, Inc. (The)....................... 2,631
--------
14,961
FOREIGN
TELECOMMUNICATIONS (1.9%)
45,000 Vodafone AirTouch PLC (ADR).................... 8,865
GROCERY (1.2%)
115,000 Safeway Inc.*.................................. 5,693
HOMEBUILDING (1.1%)
140,000 Centex Corp.................................... 5,259
- --------------------------------------------------------------------------------
5
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
HOTEL/GAMING (0.8%)
180,000 Mandalay Resort Group*......................... $ 3,802
HOUSEHOLD PRODUCTS (2.0%)
33,000 Clorox Company (The)........................... 3,525
65,000 Dial Corp. (The)............................... 2,417
40,000 Procter & Gamble Co............................ 3,570
--------
9,512
INSURANCE--
DIVERSIFIED (2.0%)
80,000 American International
Group, Inc................................. 9,365
INTERNET (2.4%)
100,000 American Online, Inc.*......................... 11,050
MACHINERY (1.4%)
100,000 Ingersoll-Rand Co.............................. 6,463
MEDICAL SUPPLIES (4.3%)
80,000 Cardinal Health, Inc........................... 5,130
8,055 Genzyme Corp.-Surgical
Products Division*......................... 35
140,000 Guidant Corp.*................................. 7,201
40,000 Johnson & Johnson.............................. 3,920
50,000 Medtronic, Inc................................. 3,894
--------
20,180
OFFICE EQUIPMENT &
SUPPLIES (2.6%)
383,250 Staples, Inc.*................................. 11,857
OILFIELD SERVICES/
EQUIPMENT (0.6%)
100,000 Transocean Offshore, Inc....................... 2,625
RECREATION (2.2%)
85,000 Electronic Arts Inc.*.......................... 4,611
100,000 Harley-Davidson, Inc........................... 5,438
--------
10,049
RETAIL BUILDING
SUPPLY (1.6%)
60,000 Home Depot, Inc. (The)......................... 3,866
60,000 Lowe's Companies, Inc.......................... 3,401
--------
7,267
RETAIL--SPECIAL
LINES (6.9%)
125,000 Bed Bath & Beyond Inc.*........................ 4,812
80,000 Best Buy Co., Inc.*............................ 5,400
146,250 Gap, Inc....................................... 7,367
200,000 Tandy Corp..................................... 9,775
130,000 Williams-Sonoma, Inc.*......................... 4,526
--------
31,880
RETAIL STORE (5.7%)
62,000 Costco Companies, Inc.*........................ 4,964
160,000 Dayton Hudson Corp............................. 10,400
85,000 Kohl's Corp.*.................................. 6,561
90,000 Wal-Mart Stores, Inc........................... 4,342
--------
26,267
SECURITIES
BROKERAGE (2.7%)
112,500 Schwab (Charles) Corp.......................... 12,361
SEMICONDUCTOR (1.1%)
90,000 Intel Corp..................................... 5,355
TELECOMMUNICATIONS
EQUIPMENT (6.7%)
80,000 ADC
Telecommunications, Inc.*.................. 3,645
200,000 Loral Space &
Communications Ltd.*....................... 3,600
100,000 Lucent Technologies Inc........................ 6,744
25,000 QUALCOMM Inc.*................................. 3,588
200,000 Tellabs, Inc.*................................. 13,512
--------
31,089
- --------------------------------------------------------------------------------
6
<PAGE>
The Value Line Fund, Inc.
June 30, 1999
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
TELECOMMUNICATION
SERVICES (2.9%)
90,000 AT & T Corp.................................... $ 5,023
100,000 MCI WorldCom, Inc.*............................ 8,606
--------
13,629
THRIFT (1.2%)
58,500 Federal Home Loan
Mortgage Corp.............................. 3,393
32,000 Federal National
Mortgage Association....................... 2,188
--------
5,581
TRUCKING/TRANSPORTATION
LEASING (0.5%)
60,000 CNF Transportation Inc......................... 2,302
--------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (91.7%)
(Cost $227,420,000) ........................... 425,820
--------
Value
Principal (in thousands
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (6.8%)
(including accrued interest)
$ 30,600 Collateralized by $22,940,000
U.S. Treasury Bonds 9 7/8%,
due 11/15/15, with a value of
$31,302,000, (with Morgan
Stanley & Co., Incorporated
4.85%, dated 6/30/99,
due 7/1/99, delivery
value $30,604,000) ........................ $ 30,604
800 Collateralized by $805,000
U.S. Treasury Notes 6 1/2%,
due 5/31/01, with a value of
$806,000 (with State Street
Bank & Trust Company 4.00%,
dated 6/30/99, due 7/1/99,
delivery value $800,000) .................. 800
--------
TOTAL REPURCHASE
AGREEMENTS
(Cost $31,404,000)......................... 31,404
CASH AND RECEIVABLES LESS
LIABILITIES (1.5%) ............................................ 6,912
--------
NET ASSETS (100%) ................................... $464,136
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($464,135,711 / 18,152,596 shares of
capital stock outstanding) .................................... $ 25.57
========
* Non-income producing
See Notes to Financial Statements
- --------------------------------------------------------------------------------
7
<PAGE>
The Value Line Fund, Inc.
Statement of Assets
and Liabilities at June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost-$227,420) .......................................... $ 425,820
Repurchase agreements
(Cost-$31,404) ........................................... 31,404
Cash ....................................................... 32
Receivable for securities sold ............................. 7,151
Receivable for capital shares sold ......................... 1,339
Dividends & interest receivable ............................ 191
Prepaid insurance expense .................................. 10
---------
Total Assets ......................................... 465,947
---------
Liabilities:
Payable for capital shares repurchased ..................... 1,522
Accrued expenses:
Advisory fee ............................................. 236
Other .................................................... 53
---------
Total Liabilities .................................... 1,811
---------
Net Assets ................................................. $ 464,136
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 18,152,596 shares) ........................... $ 18,153
Additional paid-in capital ................................. 211,134
Accumulated net investment loss ............................ (14)
Undistributed net realized gain on
investments .............................................. 36,463
Net unrealized appreciation of
investments .............................................. 198,400
---------
Net Assets ................................................. $ 464,136
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($464,135,711 / 18,152,596
shares outstanding) ...................................... $ 25.57
=========
Statement of Operations
for the six months ended June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
--------------
Investment Income:
Dividends ................................................. $ 1,012
Interest .................................................. 614
--------
Total Income .......................................... 1,626
--------
Expenses:
Advisory fee .............................................. 1,432
Transfer agent fees ....................................... 84
Printing and stationery ................................... 26
Custodian fees ............................................ 24
Postage ................................................... 17
Auditing and legal fees ................................... 17
Telephone and wire charges ................................ 16
Registration and filing fees .............................. 13
Directors' fees and expenses .............................. 8
Insurance, dues and other ................................. 4
--------
Total Expenses before
Custody Credits ..................................... 1,641
Less: Custody Credits ................................. (1)
--------
Net Expenses .......................................... 1,640
--------
Net Investment Loss ....................................... (14)
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ..................................... 28,546
Change in Net Unrealized
Appreciation ........................................ 24,769
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments .......................................... 53,315
--------
Net Increase in Net Assets
from Operations ......................................... $ 53,301
========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
<PAGE>
The Value Line Fund, Inc.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
for the six months ended June 30, 1999 (unaudited) and for the year ended December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 1999 Year Ended
(unaudited) December 31,1998
----------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment (loss) income ........................................... $ (14) $ 612
Net realized gain on investments ....................................... 28,546 13,338
Change in net unrealized appreciation .................................. 24,769 58,617
--------------------------------
Net increase in net assets from operations ............................. 53,301 72,567
--------------------------------
Distributions to Shareholders:
Net investment income .................................................. -- (646)
Net realized gain from investment transactions ......................... -- (8,809)
--------------------------------
Total distributions .................................................... -- (9,455)
--------------------------------
Capital Share Transactions:
Proceeds from sale of shares ........................................... 217,110 107,298
Proceeds from reinvestment of distributions to shareholders ............ -- 8,871
Cost of shares repurchased ............................................. (224,714) (143,273)
--------------------------------
Decrease from capital share transactions ............................... (7,604) (27,104)
--------------------------------
Total Increase ........................................................... 45,697 36,008
Net Assets:
Beginning of period .................................................... 418,439 382,431
--------------------------------
End of period .......................................................... $ 464,136 $ 418,439
================================
Accumulated net investment (loss) income, at end of period ............... $ (14) $ --
================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
9
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company whose primary investment
objective is long-term growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales prices on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid prices.
Securities for which market quotations are not readily available or that are not
readily marketable and all other assets of the Fund are valued at fair value as
the Board of Directors may determine in good faith. Short-term instruments with
maturities of 60 days or less at the date of purchase are valued at amortized
cost, which approximates market value. Short-term instruments with maturities
greater than 60 days at the date of purchase are valued at the midpoint between
the latest available and representative asked and bid prices, and commencing 60
days prior to maturity such securiites are valued at amortized cost.
(B) Repurchase Agreements. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
- --------------------------------------------------------------------------------
10
<PAGE>
The Value Line Fund, Inc.
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Six Months
Ended Year Ended
June 30, 1999 December 31,
(unaudited) 1998
-----------------------------
Shares sold .................................. 9,036 5,360
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... -- 411
----------------------
9,036 5,771
Shares repurchased ........................... 9,357 7,124
----------------------
Net decrease ................................. (321) (1,353)
======================
Dividends per share from net
investment income .......................... $ -- $ .03
======================
Distributions per share from
net realized gains ......................... $ -- $ .491
======================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 1999
(unaudited)
----------------
(in thousands)
Purchases:
Investment Securities .................................... $66,111
=======
Sales:
Investment Securities .................................... $95,520
=======
At June 30, 1999, the aggregate cost of investment securities and repurchase
agreements for federal income tax purposes was $258,824,000. The aggregate
appreciation and depreciation of investments at June 30, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $200,426,000 and $2,026,000, respectively, resulting in a net appreciation
of $198,400,000.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $1,432,000 was paid or payable to Value Line, Inc. (the
Adviser), the Fund's investment adviser, for the six months ended June 30, 1999.
This was computed at the rate of .70% of the first $100 million of the Fund's
average daily net assets plus .65% on the excess thereof, and paid monthly. The
Adviser provides research, investment programs, supervision of the investment
portfolio and pays costs of administrative services, office space, equipment and
compensation of administrative, bookkeeping and clerical personnel necessary for
managing the affairs of the Fund. The Adviser also provides persons,
satisfactory to the Fund's Board of Directors, to act as officers and employees
of the Fund and pays their salaries and wages. The Fund bears all other costs
and expenses.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers and a director of the Fund. During the six
months ended June 30, 1999, the Fund paid brokerage commissions totalling
$78,985 to the distributor, which clears its transactions through unaffiliated
brokers.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 869,761 shares of the Fund's capital stock, representing
4.8% of the outstanding shares at June 30, 1999. In addition, certain officers
and directors of the Fund owned 165,243 shares of the Fund, representing 0.9% of
the outstanding shares.
- --------------------------------------------------------------------------------
11
<PAGE>
The Value Line Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1999 -------------------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............... $ 22.65 $ 19.29 $ 19.29 $ 17.63 $ 14.36 $ 17.90
-----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income ............. -- .03 .14 .11 .12 .10
Net gains or losses on securities
(both realized and unrealized) .. 2.92 3.85 3.79 3.88 4.47 (.93)
-----------------------------------------------------------------------------------------
Total from investment operations .. 2.92 3.88 3.93 3.99 4.59 (.83)
-----------------------------------------------------------------------------------------
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)
-----------------------------------------------------------------------------------------
Total distributions ............. -- (.52) (3.93) (2.33) (1.32) (2.71)
-----------------------------------------------------------------------------------------
Net asset value, end of period ...... $ 25.57 $ 22.65 $ 19.29 $ 19.29 $ 17.63 $ 14.36
=========================================================================================
Total return ........................ 12.89%+ 20.25% 21.59% 22.52% 32.12% -4.47%
=========================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .................... $464,136 $418,439 $382,431 $348,871 $317,569 $272,763
Ratio of operating expenses to
average net assets ................ .76%*(1) .77%(1) .78%(1) .80%(1) .83% .82%
Ratio of net investment income (loss)
to average net assets ............. (.01)% .16% .63% .55% .73% .54%
Portfolio turnover rate ............. 16%+ 98% 68% 54% 78% 150%
</TABLE>
(1) Before offset of custody credits.
+ Not annualized
* Annualized
See Notes to Financial Statements
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12
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The Value Line Fund, Inc.
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OTHER INFORMATION (unaudited)
Year 2000. Like other mutual funds, the Fund could be adversely affected if the
computer systems used by the Adviser and other 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.
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13
<PAGE>
The Value Line Fund, Inc.
14
<PAGE>
The Value Line Fund, Inc.
15
<PAGE>
The Value Line Fund, Inc.
The Value Line Family of Funds
1950--The Value Line Fund seeks long-term growth of capital. Current income is a
secondary objective.
1952--Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983--Value Line Centurion Fund* seeks long-term growth of capital.
1984--The Value Line Tax Exempt Fund seeks to provide investors with the maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: The Money Market Portfolio
and the National Bond Portfolio.
1985--Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--Value Line Aggressive Income Trust seeks to maximize current income.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal.
1987--Value Line Strategic Asset Management Trust* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line Small-Cap Growth Fund invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
<PAGE>
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Leo R. Futia
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Alan N. Hoffman
Vice President
Philip J. Orlando
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and, accordingly, they
do not express an opinion thereon.
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Fund (obtainable from the
Distributor).
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