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ANNUAL REPORT
-----------------
December 31, 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:
We are pleased to report that the Value Line Fund completed an excellent six-
and twelve-month performance record December 31, 1999. For the full year, the
Fund beat the benchmark Standard & Poor's 500 Index by more than five full
percentage points; during the second half, we outperformed by about four and
one-half percentage points. (Returns for both the Fund and the index include
reinvested dividends.) The actual performance record is as follows:
Value
Line Fund S&P 500
--------- -------
Second half ............................ 12.26% 7.71%
Full year .............................. 26.74 21.04
In our last semiannual report to shareholders, covering the first six months of
1999, we discussed the "cyclical rotation" that took place in the spring,
whereby smaller-capitalization stocks and those of cyclical or commodity-based
companies commanded investors' focus at the expense of larger-cap growth stocks.
While this hurt the Fund's performance from roughly late March to the middle of
June, marketplace conditions began to turn around during the summer. By the time
crisp autumn air settled in, growth equities had resumed their historic market
dominance, leading to a powerful rally into the end of 1999.
One factor that momentarily distracted investors last fall was the series of
interest-rate hikes, including both market-induced increases in long-term rates
and a suite of three short-term rate hikes orchestrated by the Federal Open
Market Committee. It's worth noting, however, that the Fed had lowered rates by
three-quarters of a percentage point back during the global economic collapse in
the fall 1998, so that its tighter 1999 monetary policy only returned the
Federal Funds and Discount Rate environment to the levels in place during the
summer of 1998.
It is difficult to gauge the Federal Reserve's monetary posture in the opening
months of 2000. On the one hand, the fourth quarter of 1999 saw Gross Domestic
Product expand at a good clip, following a solid third-quarter showing.
Accelerating GDP growth may well prompt the Fed to put on the monetary brakes
throughout the spring, in order to keep the economy from overheating. On the
other hand, part of the economic expansion during last year's second half was
prompted by inventory stocking in advance of the Y2K event, and now that Y2K has
come and gone those inventories must be worked down, causing
weaker-than-trendline economic growth. (For further details, see our Economic
Observations below.)
In any case, we remain convinced that a diversified portfolio of high-quality
growth stocks, especially those identified by the Value Line Timeliness Ranking
System, will continue to deliver superior long-term returns to investors,
despite short-term volatility. We appreciate your continued confidence in Value
Line, and wish you the best for the new year.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
January 20, 2000
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2
<PAGE>
The Value Line Fund, Inc.
Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The American economy continues to perform well as we proceed through the first
quarter of 2000. Evidence of this healthy level of business activity can be
found in the strong pace of manufacturing, the acceleration in job growth, and
the generally solid performances by the auto, housing, and retail sectors.
Overall, we estimate that GDP growth will average 3.0%-3.5% for the year as a
whole, making 2000 the tenth year in a row of sustained economic growth in this
country.
Inflationary pressures, meanwhile, continue to be held largely at bay, in spite
of a tightening labor market and a further recent rise in energy prices, with
strong increases in productivity and ongoing technological innovations being at
least partially responsible for this comparative pricing stability.
Nevertheless, a gradual uptrend in cost pressures does seem likely over the next
several quarters. The Federal Reserve, taking note of this somewhat higher
expense structure, is likely to chart a modestly more restrictive monetary
course in the months ahead, with additional, albeit rather modest, interest rate
increases being quite possible.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 12/31/99 ...................... 26.74% $12,674
5 years ended 12/31/99 .................... 24.57% $29,996
10 years ended 12/31/99 .................... 16.82% $47,336
* 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.
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3
<PAGE>
The Value Line Fund, Inc.
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE VALUE LINE FUND
AND THE S&P 500 STOCK INDEX*
(From 1/1/90 to 12/31/99)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
The Value Line Fund S&P 500 Index
------------------- -------------
1/1/90 $10,000 $10,000
3/90 $9,761 $9,699
6/90 $10,655 $10,308
9/90 $9,094 $8,893
12/31/90 $9,924 $9,689
3/91 $11,797 $11,094
6/91 $11,555 $11,068
9/91 $12,650 $11,658
12/31/91 $14,772 $12,635
3/92 $13,893 $12,316
6/92 $13,016 $12,550
9/92 $14,013 $12,946
12/31/92 $15,465 $13,596
3/93 $15,776 $14,189
6/93 $16,331 $14,257
9/93 $17,023 $14,624
12/31/93 $16,520 $14,963
3/94 $15,808 $14,397
6/94 $14,921 $14,457
9/94 $15,891 $15,163
12/31/94 $15,781 $15,160
3/95 $17,188 $16,634
6/95 $18,400 $18,220
9/95 $20,242 $19,667
12/31/95 $20,849 $20,850
3/96 $22,647 $21,969
6/96 $23,877 $22,954
9/96 $24,860 $23,663
12/31/96 $25,546 $25,634
3/97 $24,836 $26,323
6/97 $28,562 $30,915
9/97 $31,817 $33,229
12/31/97 $31,061 $34,183
3/98 $33,839 $38,948
6/98 $34,717 $40,234
9/98 $30,150 $36,239
12/31/98 $37,352 $43,951
3/99 $40,997 $46,140
6/99 $42,167 $49,392
9/99 $40,304 $46,310
12/31/99 $47,336 $53,198
(From 1/1/90 to 12/31/99)
* The Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged index that is
representative of the larger-capitalization stocks traded in the United States.
The return for the index does not reflect expenses which are deducted from the
Fund's returns.
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4
<PAGE>
The Value Line Fund, Inc.
Portfolio Highlights at December 31, 1999 (unaudited)
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Ten Largest Holdings
<TABLE>
<CAPTION>
Value Percentage of
Issue Shares (in thousands) Net Assets
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
EMC Corp. .............................. 175,000 $19,119 3.9%
Cisco Systems, Inc. .................... 165,000 17,675 3.6
QUALCOMM Inc. .......................... 100,000 17,612 3.6
Omnicom Group, Inc. .................... 175,000 17,500 3.5
America Online, Inc. ................... 200,000 15,088 3.0
Dell Computer Corp. .................... 255,000 13,005 2.6
Dayton Hudson Corp. .................... 160,000 11,750 2.4
Amgen Inc. ............................. 190,000 11,412 2.3
Tellabs, Inc. .......................... 175,000 11,233 2.3
American International Group, Inc. ..... 100,000 10,813 2.2
<CAPTION>
Five Largest Industry Categories
Value Percentage of
Industry (in thousands) Net Assets
- --------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ......................... $56,711 11.5%
Telecommunications Equipment ................... 46,994 9.5
Retail-Special Lines ........................... 45,748 9.2
Drug ........................................... 37,325 7.5
Retail Store ................................... 29,765 6.0
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- --------------------------------------------------------------------------------------
<S> <C>
Tiffany & Co. ............................................. $4,573
Time Warner, Inc. ......................................... 4,305
Nike, Inc. Class "B" ...................................... 4,036
Adobe Systems, Inc. ....................................... 4,000
CVS Corp. ................................................. 3,994
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
- --------------------------------------------------------------------------------------
<S> <C>
EMC Corp. .................................................... $ 9,789
Vodafone AirTouch PLC (ADR) .................................. 9,134
Cisco Systems, Inc. .......................................... 5,585
Ingersoll-Rand Co. ........................................... 4,588
Centex Corp. ................................................. 3,947
</TABLE>
* For the six month period ended 12/31/99
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4
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments
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Value
Shares (in thousands)
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COMMON STOCKS (95.9%)
ADVERTISING (3.5%)
175,000 Omnicom Group, Inc.................................. $ 17,500
BANK (2.2%)
27,000 Chase Manhattan Corp................................ 2,097
60,000 State Street Corp................................... 4,384
75,000 Zions Bancorporation................................ 4,439
--------
10,920
BANK-MIDWEST (2.0%)
90,000 Fifth Third Bancorp................................. 6,604
145,000 Firstar Corp........................................ 3,063
--------
9,667
COMPUTER AND
PERIPHERALS (11.5%)
165,000 Cisco Systems, Inc.*................................ 17,675
255,000 Dell Computer Corp.*................................ 13,005
175,000 EMC Corp.*.......................................... 19,119
64,000 International Business
Machines Corp..................................... 6,912
--------
56,711
COMPUTER SOFTWARE &
SERVICES (4.2%)
60,000 Adobe Systems, Inc.................................. 4,035
120,000 Computer Associates
International, Inc................................ 8,393
70,000 Microsoft Corp.*.................................... 8,172
--------
20,600
DIVERSIFIED
COMPANIES (2.2%)
120,000 Honeywell International Inc......................... 6,923
100,000 Tyco International, Ltd............................. 3,887
--------
10,810
DRUG (7.5%)
190,000 Amgen Inc.*......................................... 11,412
90,000 Biogen, Inc.*....................................... 7,605
105,000 Lilly (Eli) & Co.................................... 6,982
46,000 Merck & Co., Inc.................................... 3,085
150,000 Pfizer, Inc......................................... 4,866
80,000 Schering-Plough Corp................................ 3,375
--------
37,325
DRUGSTORE (0.8%)
100,000 CVS Corp............................................ 3,994
ELECTRIC UTILITY-
CENTRAL (1.5%)
100,000 AES Corp.*.......................................... 7,475
ELECTRICAL
EQUIPMENT (1.6%)
50,000 General Electric Co................................. 7,738
ENTERTAINMENT (2.8%)
100,000 Clear Channel
Communications, Inc.*............................. 8,925
70,000 Time Warner, Inc.................................... 5,071
--------
13,996
FINANCIAL SERVICES-
DIVERSIFIED (5.2%)
40,000 American Express Co................................. 6,650
100,000 American International
Group, Inc........................................ 10,813
150,000 Citigroup Inc....................................... 8,334
--------
25,797
GROCERY (0.8%)
115,000 Safeway Inc.*....................................... 4,090
HOTEL/GAMING (0.7%)
165,000 Mandalay Resort Group*.............................. 3,321
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6
<PAGE>
The Value Line Fund, Inc.
December 31, 1999
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Value
Shares (in thousands)
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HOUSEHOLD
PRODUCTS (0.9%)
40,000 Procter & Gamble Co...................................... $ 4,382
INTERNET (3.0%)
200,000 America Online, Inc.*.................................... 15,088
MEDICAL SUPPLIES (3.6%)
140,000 Guidant Corp.*........................................... 6,580
40,000 Johnson & Johnson........................................ 3,725
100,000 Medtronic, Inc........................................... 3,644
70,000 VISX, Inc.*.............................................. 3,622
--------
17,571
OFFICE EQUIPMENT &
SUPPLIES (1.4%)
340,000 Staples, Inc.*........................................... 7,055
RECREATION (4.1%)
72,000 Carnival Corp............................................ 3,443
85,000 Electronic Arts Inc.*.................................... 7,140
100,000 Harley-Davidson, Inc..................................... 6,406
72,000 Royal Caribbean Cruises, Ltd............................. 3,550
--------
20,539
RETAIL BUILDING
SUPPLY (2.0%)
90,000 Home Depot, Inc. (The)................................... 6,171
60,000 Lowe's Companies, Inc.................................... 3,585
--------
9,756
RETAIL-SPECIAL LINES (9.2%)
100,000 Abercrombie & Fitch Co.
Class "A"*............................................. 2,669
125,000 Bed Bath & Beyond Inc.*.................................. 4,344
80,000 Best Buy Co., Inc.*...................................... 4,015
55,000 Circuit City Stores-
Circuit City Group..................................... 2,478
146,250 Gap, Inc. (The).......................................... 6,728
80,000 Intimate Brands Inc.
Class "A".............................................. 3,450
200,000 Tandy Corp............................................... 9,837
70,000 Tiffany & Co............................................. 6,247
130,000 Williams-Sonoma, Inc.*................................... 5,980
--------
45,748
RETAIL STORE (6.0%)
62,000 Costco Wholesale Corp.*.................................. 5,658
160,000 Dayton Hudson Corp....................................... 11,750
85,000 Kohl's Corp.*............................................ 6,136
90,000 Wal-Mart Stores, Inc..................................... 6,221
--------
29,765
SECURITIES
BROKERAGE (1.7%)
225,000 Schwab (Charles) Corp.................................... 8,634
SEMICONDUCTOR (2.7%)
90,000 Intel Corp............................................... 7,408
36,000 PMC-Sierra, Inc.*........................................ 5,771
--------
13,179
SEMICONDUCTOR CAPITAL
EQUIPMENT (1.5%)
65,000 Altera Corp.*............................................ 3,222
35,000 Applied Materials, Inc.*................................. 4,434
--------
7,656
SHOE (0.8%)
80,000 Nike, Inc. Class "B"..................................... 3,965
TELECOMMUNICATIONS
EQUIPMENT (9.5%)
80,000 ADC Telecommunications,
Inc.*.................................................. 5,805
200,000 Loral Space &
Communications Ltd.*................................... 4,863
100,000 Lucent Technologies Inc.................................. 7,481
100,000 QUALCOMM Inc.*........................................... 17,612
175,000 Tellabs, Inc.*........................................... 11,233
--------
46,994
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7
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments December 31, 1999
- --------------------------------------------------------------------------------
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
TELECOMMUNICATION
SERVICES (1.6%)
150,000 MCI WorldCom, Inc.*...................................... $ 7,959
THRIFT (1.4%)
58,500 Federal Home Loan
Mortgage Corp.......................................... 2,753
67,000 Federal National
Mortgage Association................................... 4,183
--------
6,936
--------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT SECURITIES (95.9%)
(Cost $235,065,000) ..................................... 475,171
--------
Value
Principal (in thousands
Amounts except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (3.9%)
(including accrued interest)
$19,500 Collateralized by $19,405,000
U.S. Treasury Notes 6 1/2%,
due 8/31/01, with a value of
$19,903,000 (with Banc
One Capital Markets, Inc.
2.65%, dated 12/31/99,
due 1/3/00, delivery value
of $19,504,000)................................... $ 19,501
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES (0.2%) ...................................... 793
--------
NET ASSETS (100%) ................................................. $495,465
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($495,465,407 / 18,874,930 shares of
capital stock outstanding) ........................................ $ 26.25
========
* Non-income producing.
See Notes to Financial Statements
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8
<PAGE>
The Value Line Fund, Inc.
Statement of Assets
and Liabilities at December 31, 1999
- --------------------------------------------------------------------------------
(In thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost--$235,065) ................................................ $475,171
Repurchase agreement
(Cost--$19,501) ................................................. 19,501
Cash .............................................................. 77
Receivable for capital shares sold ................................ 999
Dividends receivable .............................................. 158
Prepaid insurance expense ......................................... 8
--------
Total Assets ................................................ 495,914
--------
Liabilities:
Payable for capital shares repurchased ............................ 113
Accrued expenses:
Advisory fee .................................................... 270
Other ........................................................... 66
.................................................................. --------
Total Liabilities ........................................... 449
--------
Net Assets ........................................................ $495,465
--------
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
18,874,930 shares) .............................................. $ 18,875
Additional paid-in capital ........................................ 227,402
Undistributed net realized gain on
investments ..................................................... 9,082
Net unrealized appreciation of
investments ..................................................... 240,106
--------
Net Assets ........................................................ $495,465
========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($495,465,407/18,874,930
shares outstanding) ............................................. $ 26.25
========
Statement of Operations
for the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
(In thousands)
--------------
Investment Income:
Dividends ......................................................... $ 1,914
Interest .......................................................... 1,063
--------
Total Income .................................................. 2,977
--------
Expenses:
Advisory fee ...................................................... 2,954
Transfer agent fees ............................................... 172
Custodian fees .................................................... 50
Printing........................................................... 48
Auditing and legal fees ........................................... 38
Postage ........................................................... 35
Telephone.......................................................... 30
Registration and filing fees ...................................... 24
Directors' fees and expenses ...................................... 14
Insurance, dues and other ......................................... 12
--------
Total Expenses Before
Custody Credits ............................................. 3,377
Less: Custody Credits ......................................... (3)
--------
Net Expenses .................................................. 3,374
--------
Net Investment Loss ............................................... (397)
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ............................................. 42,895
Change in Net Unrealized
Appreciation ................................................ 66,475
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments .................................................. 109,370
--------
Net Increase in Net Assets
from Operations ................................................. $108,973
========
See Notes to Financial Statements.
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9
<PAGE>
The Value Line Fund, Inc.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
for the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
--------------------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment (loss) income .................................... $ (397) $ 612
Net realized gain on investments ................................ 42,895 13,338
Change in net unrealized appreciation ........................... 66,475 58,617
--------------------------------
Net increase in net assets from operations ...................... 108,973 72,567
--------------------------------
Distributions to Shareholders:
Net investment income ........................................... -- (646)
Net realized gain from investment transactions .................. (41,730) (8,809)
--------------------------------
Total distributions ............................................. (41,730) (9,455)
--------------------------------
Capital Share Transactions:
Proceeds from sale of shares .................................... 505,761 107,298
Proceeds from reinvestment of distributions to shareholders ..... 39,058 8,871
Cost of shares repurchased ...................................... (535,036) (143,273)
--------------------------------
Net increase (decrease) from capital share transactions ......... 9,783 (27,104)
--------------------------------
Total Increase in Net Assets ...................................... 77,026 36,008
Net Assets:
Beginning of year ............................................... 418,439 382,431
--------------------------------
End of year ..................................................... $ 495,465 $ 418,439
================================
</TABLE>
See Notes to Financial Statements.
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10
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements December 31, 1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Value Line Fund, Inc. (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 securities are valued at amortized cost.
(B) Repurchase Agreements. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
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11
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Year Ended Year Ended
December 31, December 31,
1999 1998
----------------------------
Shares sold ............................... 20,467 5,360
Shares issued to shareholders
in reinvestment
distributions ........................... 1,549 411
---------------------
22,016 5,771
Shares repurchased ........................ 21,616 7,124
---------------------
Net increase (decrease) .................. 400 (1,353)
=====================
Dividends per share ....................... $-- $ .03
=====================
Distributions per share from
net realized gains ...................... $2.358 $ .491
=====================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year Ended
December 31,
1999
------------
(in thousands)
PURCHASES:
Investment Securities ..................... $153,630
========
SALES:
Investment Securities ..................... $189,732
========
At December 31, 1999, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $254,566,000. The aggregate
appreciation and depreciation of investments at December 31, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $242,042,000 and $1,936,000, respectively, resulting in a net appreciation
of $240,106,000.
Permanent book-tax differences relating to shareholder distributions are
reclassified within the composition of net asset accounts. In the current year
the Fund reclassified $397,000 from accumulated net investment loss to
additional paid-in capital. Net investment loss, net realized gain, and net
assets were not affected by this reclassification.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $2,954,000 was paid or payable to Value Line, Inc., the
Fund's investment adviser, (the "Adviser") for the year ended December 31, 1999.
This was computed at the annual rate of .70% of the first $100 million of the
average daily net assets of the Fund during the year 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.
- --------------------------------------------------------------------------------
12
<PAGE>
The Value Line Fund, Inc.
December 31, 1999
- --------------------------------------------------------------------------------
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers and a director of the Fund. During the year
ended December 31, 1999, the Fund paid brokerage commissions totaling $184,866
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 at December 31, 1999 owned 926,003 shares of the Fund's capital
stock, representing 4.9% of the outstanding shares. In addition, certain
officers and directors of the Fund owned 177,947 shares of the Fund,
representing 0.94% of the outstanding shares.
5. Subsequent Events
Effective January 1, 2000 the Fund's dividend policy changed from quarterly
payments to annual.
- --------------------------------------------------------------------------------
13
<PAGE>
The Value Line Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 22.65 $ 19.29 $ 19.29 $ 17.63 $ 14.36
-------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .......... (.02) .03 .14 .11 .12
Net gains or losses on securities
(both realized and unrealized) ...... 5.98 3.85 3.79 3.88 4.47
-------------------------------------------------------------------------------
Total from investment operations ........ 5.96 3.88 3.93 3.99 4.59
-------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income .... -- (.03) (.14) (.11) (.12)
Distributions from net realized gains ... (2.36) (.49) (3.79) (2.22) (1.20)
-------------------------------------------------------------------------------
Total distributions ..................... (2.36) (.52) (3.93) (2.33) (1.32)
-------------------------------------------------------------------------------
Net asset value, end of year .............. $ 26.25 $ 22.65 $ 19.29 $ 19.29 $ 17.63
===============================================================================
Total return .............................. 26.74% 20.25% 21.59% 22.52% 32.12%
===============================================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .... $ 495,465 $ 418,439 $ 382,431 $ 348,871 $ 317,569
Ratio of expenses to average net assets ... .76%(2) .77%(1) .78%(1) .80%(1) .83%
Ratio of net investment income (loss) to
average net assets ...................... (.09%) .16% .63% .55% .73%
Portfolio turnover rate ................... 36% 98% 68% 54% 78%
</TABLE>
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets net of custody credits would not
have changed.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
<PAGE>
The Value Line Fund, Inc.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of The Value Line Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Value Line Fund, Inc. (the
"Fund") at December 31, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 11, 2000
- --------------------------------------------------------------------------------
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 Emerging Opportunities 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 219729
Kansas City, MO 64121-9729
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
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
This report is issued for information of shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Fund (obtainable from the Distributor).
#511493
