================================================================================
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 2000
------------------
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:
Equity investors have seen several market conditions over the first half of
2000. The year started out with a continuation of the strong environment going
back to the third quarter of 1999. In this environment, the NASDAQ Composite hit
a string of record highs, and technology and other growth stocks performed well.
By early March, however, the reality of rapid economic growth and the resultant
string of interest-rate hikes engineered by the Federal Reserve reversed earlier
market psychology. Prices collapsed, and technology and other types of growth
stocks bore the brunt of the damage.
Since about the beginning of June, however, it seems that the tighter monetary
policy that has been in place since June of 1999 has begun to filter into the
economy, and we have seen several indications that the breakneck GDP expansion
that carried through this year's March quarter has begun to ease up. Statistics
in the areas of manufacturing, wage rates, housing, retail sales, and employment
growth all suggest that a soft landing may be under way.
Thus, stocks ended the quarter somewhat off balance, neither as strong as in the
early weeks of the year nor as weak as the midsection. When the dust settled,
however, the Value Line Fund ended up the first half of the year about even with
the unmanaged S&P 500 and for the trailing twelve months our Fund outperformed
its benchmark by more than four percentage points. The actual numbers are as
follows:
Value Line
Fund S&P 500
-------- -------
First half .......................... -0.57% -0.42%
Trailing twelve months .............. 11.62% 7.25%
Looking ahead, we believe that the tendency toward somewhat slower (but still
healthy) economic growth that we've seen recently will prevail for the
foreseeable future. (For more detail, see our Economic Observations nearby)
Along with a benign inflation backdrop, these conditions should provide a
constructive atmosphere for equity investing over the balance of the year.
Success with common stocks will likely require a certain amount of selectivity,
since not all stocks will prosper under circumstances of slower overall growth.
Therefore, those stocks that score highly in the time-tested Value Line
Timeliness Ranking System will continue to provide the foundation for our growth
investment style.
We thank you for your continued confidence in Value Line, and we wish you the
best for the rest of 2000 and beyond.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 4, 2000
--------------------------------------------------------------------------------
2
<PAGE>
The Value Line Fund, Inc.
Fund Shareholders
--------------------------------------------------------------------------------
Economic Observations
The American economy appears to be on a somewhat slower growth track as we move
through the early stages of the second half of calendar 2000. Evidence of this
deceleration in business activity can be found in recent surveys on
manufacturing, housing, auto sales, and employment. Overall, we now estimate
that GDP growth will average 3.0%-3.5% during the third and fourth quarters.
Thereafter, we would expect the pace of economic activity to hold at these
comparatively restrained levels through at least the first half of 2001, as the
succession of interest-rate hikes voted for by the Federal Reserve Board over
the past year, or so, continues to have the hoped-for effect of stabilizing the
economy at comfortable growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices increase
further and the aforementioned moderation in second-half GDP growth fails to
evolve as we expect it will. The Federal Reserve, taking note of this potential
for higher prices, meanwhile, is likely to keep a vigilant eye on the monetary
situation, standing ready to raise interest rates further should it deem
inflation to be a problem. Absent an unexpected price flareup, we believe the
recent credit tightening cycle will shortly run its course.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/2000 ............... 11.62% $11,162
5 years ended 6/30/2000 .............. 20.67% $25,581
10 years ended 6/30/2000 .............. 16.02% $44,174
* 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.
Portfolio Highlights at June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Ten Largest Holdings
<TABLE>
<CAPTION>
Value Percentage
Issue Shares (in thousands) of Net Assets
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EMC Corp. .................................................... 220,000 $16,926 3.6%
Omnicom Group, Inc. .......................................... 175,000 15,586 3.3
ADC Telecommunications, Inc. ................................. 160,000 13,420 2.8
Amgen Inc. ................................................... 190,000 13,347 2.8
PMC-Sierra, Inc. ............................................. 72,000 12,793 2.7
Cisco Systems, Inc. .......................................... 200,000 12,712 2.7
Dell Computer Corp. .......................................... 255,000 12,575 2.6
Intel Corp. .................................................. 90,000 12,032 2.5
Tellabs, Inc. ................................................ 175,000 11,977 2.5
American International Group, Inc. ........................... 100,000 11,750 2.5
<CAPTION>
Five Largest Industry Categories
Value Percentage
Industry (in thousands) of Net Assets
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ....................................... $ 49,225 10.4%
Telecommunications Equipment ................................. 37,322 7.9
Drug ......................................................... 33,917 7.1
Retail-Special Lines ......................................... 33,346 7.0
Computer Software & Services ................................. 29,089 6.1
<CAPTION>
Five Largest Security Purchases*
Cost
Issue (in thousands)
-----------------------------------------------------------------------------------------------------------
<S> <C>
HCA-The Healthcare Corporation ............................... $ 3,983
Alcoa, Inc. .................................................. 3,824
Oracle Corp. ................................................. 3,723
Corning Inc. ................................................. 3,706
Honeywell International, Inc. ................................ 2,954
<CAPTION>
Five Largest Security Sales*
Proceeds
Issue (in thousands)
-----------------------------------------------------------------------------------------------------------
<S> <C>
Cisco Systems, Inc. .......................................... $ 10,284
EMC Corp. .................................................... 9,069
Lilly (Eli) & Co. ............................................ 6,200
Staples, Inc. ................................................ 5,096
Fannie Mae ................................................... 3,639
</TABLE>
* For the six month period ended 06/30/00
--------------------------------------------------------------------------------
4
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited) June 30, 2000
--------------------------------------------------------------------------------
Value
Shares (in thousands)
--------------------------------------------------------------------------------
ADVERTISING (3.3%)
175,000 Omnicom Group, Inc............................. $ 15,586
BANK (2.5%)
40,500 Chase Manhattan Corp........................... 1,865
60,000 State Street Corp.............................. 6,364
75,000 Zions Bancorporation........................... 3,442
--------
11,671
BANK-MIDWEST (1.8%)
90,000 Fifth Third Bancorp............................ 5,693
145,000 Firstar Corp................................... 3,054
--------
8,747
COMPUTER AND
PERIPHERALS (10.4%)
200,000 Cisco Systems, Inc.*........................... 12,712
255,000 Dell Computer Corp.*........................... 12,575
220,000 EMC Corp.*..................................... 16,926
64,000 International Business
Machines Corp.............................. 7,012
--------
49,225
COMPUTER SOFTWARE
& SERVICES (6.1%)
60,000 Adobe Systems, Inc............................. 7,800
120,000 Computer Associates
International, Inc......................... 6,142
75,000 Fiserv, Inc.*.................................. 3,244
70,000 Microsoft Corp.*............................... 5,600
45,000 Oracle Corp.*.................................. 3,783
60,000 Paychex, Inc................................... 2,520
--------
29,089
DIVERSIFIED
COMPANIES (2.4%)
200,000 Honeywell International, Inc................... 6,738
100,000 Tyco International Ltd......................... 4,737
--------
11,475
DRUG (7.1%)
190,000 Amgen Inc.*.................................... 13,347
90,000 Biogen, Inc.*.................................. 5,805
46,000 Merck & Co., Inc............................... 3,525
150,000 Pfizer, Inc.................................... 7,200
80,000 Schering-Plough Corp........................... 4,040
--------
33,917
DRUGSTORE (0.8%)
100,000 CVS Corp....................................... 4,000
ELECTRIC UTILITY-
CENTRAL (1.9%)
200,000 AES Corp. (The)*............................... 9,125
ELECTRICAL
EQUIPMENT (2.8%)
20,000 Corning Inc.................................... 5,398
150,000 General Electric Co............................ 7,950
--------
13,348
ENTERTAINMENT (3.4%)
100,000 Clear Channel
Communications, Inc.*.................... 7,500
70,000 Time Warner, Inc............................... 5,320
50,000 Viacom, Inc. Class "A"*........................ 3,419
--------
16,239
FINANCIAL SERVICES-
DIVERSIFIED (5.7%)
120,000 American Express Co............................ 6,255
100,000 American International
Group, Inc............................... 11,750
150,000 Citigroup, Inc................................. 9,038
--------
27,043
GROCERY (1.1%)
115,000 Safeway Inc.*.................................. 5,189
INTERNET (2.2%)
200,000 America Online, Inc.*.......................... 10,550
--------------------------------------------------------------------------------
5
<PAGE>
The Value Line Fund, Inc.
Schedule of Investments (unaudited)
--------------------------------------------------------------------------------
Value
Shares (in thousands)
--------------------------------------------------------------------------------
MEDICAL
SERVICES (1.2%)
180,000 HCA-The Healthcare
Corporation.............................. $ 5,468
MEDICAL
SUPPLIES (3.4%)
140,000 Guidant Corp.*................................. 6,930
40,000 Johnson & Johnson.............................. 4,075
100,000 Medtronic, Inc................................. 4,981
--------
15,986
METALS & MINING-
GENERAL (0.7%)
110,000 Alcoa, Inc..................................... 3,190
PAPER & FOREST
PRODUCTS (0.3%)
50,000 International Paper Co......................... 1,491
PETROLEUM-
PRODUCING (0.8%)
60,000 Apache Corp.................................... 3,529
PRECISION
INSTRUMENT (0.5%)
40,500 KLA-Tencor Corp.*.............................. 2,372
RECREATION (2.9%)
85,000 Electronic Arts Inc.*.......................... 6,200
200,000 Harley-Davidson, Inc........................... 7,700
--------
13,900
RETAIL BUILDING
SUPPLY (1.5%)
90,000 Home Depot, Inc. (The)......................... 4,494
60,000 Lowe's Companies, Inc.......................... 2,464
--------
6,958
RETAIL-SPECIAL
LINES (7.0%)
125,000 Bed Bath & Beyond Inc.*........................ 4,531
80,000 Best Buy Co., Inc.*............................ 5,060
55,000 Circuit City Stores, Inc.-
Circuit City Group....................... 1,825
146,250 Gap, Inc. (The)................................ 4,570
160,000 Intimate Brands, Inc. Class "A"................ 3,160
200,000 RadioShack Corp................................ 9,475
70,000 Tiffany & Co................................... 4,725
--------
33,346
RETAIL STORE (5.9%)
124,000 Costco Wholesale Corp.*........................ 4,092
170,000 Kohl's Corp.*.................................. 9,456
160,000 Target Corp.................................... 9,280
90,000 Wal-Mart Stores, Inc........................... 5,186
--------
28,014
SECURITIES
BROKERAGE (2.4%)
337,500 Schwab (Charles) Corp.......................... 11,348
SEMICONDUCTOR (5.6%)
90,000 Intel Corp..................................... 12,032
60,000 Motorola, Inc.................................. 1,744
72,000 PMC-Sierra, Inc.*.............................. 12,793
--------
26,569
SEMICONDUCTOR CAPITAL
EQUIPMENT (2.7%)
65,000 Altera Corp.*.................................. 6,626
70,000 Applied Materials, Inc.*....................... 6,344
--------
12,970
STEEL-GENERAL (0.3%)
45,000 Nucor Corp..................................... 1,493
--------------------------------------------------------------------------------
6
<PAGE>
The Value Line Fund, Inc.
June 30, 2000
--------------------------------------------------------------------------------
Value
Shares (in thousands)
--------------------------------------------------------------------------------
TELECOMMUNICATIONS
EQUIPMENT (7.9%)
160,000 ADC Telecommunications, Inc.*.................. $ 13,420
100,000 Lucent Technologies Inc........................ 5,925
100,000 QUALCOMM Inc.*................................. 6,000
175,000 Tellabs, Inc.*................................. 11,977
--------
37,322
TELECOMMUNICATION
SERVICES (2.0%)
25,000 Telephone & Data Systems, Inc.................. 2,506
150,000 WorldCom, Inc.*................................ 6,881
--------
9,387
--------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (96.6%)
(Cost $227,932,000)............................ 458,547
--------
Value
Principal (in thousands
Amount except per
(in thousands) share amount)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (1.8%)
(including accrued interest)
$ 8,600 Collateralized by $9,295,000
U.S. Treasury Notes 4.25%,
due 11/15/03, with a value of
$8,772,000 (with State Street
Bank & Trust Company, 6.20%,
dated 6/30/00, due 7/3/00,
delivery value $8,604,443) ................ $ 8,601
CASH AND RECEIVABLES LESS
LIABILITIES (1.6%) ............................................ 7,768
--------
NET ASSETS (100%) ........................................... $474,916
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($474,916,096 / 18,197,571 shares of
capital stock outstanding) .................................... $ 26.10
========
* Non-income producing
See Notes to Financial Statements
--------------------------------------------------------------------------------
7
<PAGE>
The Value Line Fund, Inc.
Statement of Assets
and Liabilities at June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
(In thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost-$227,932) ..................................... $ 458,547
Repurchase agreement
(Cost-$8,601) ....................................... 8,601
Cash .................................................. 70
Receivable for capital shares sold .................... 8,012
Dividends receivable .................................. 132
Prepaid insurance expense ............................. 3
---------
Total Assets .................................... 475,365
---------
Liabilities:
Payable for capital shares repurchased ................ 117
Accrued expenses:
Advisory fee ........................................ 255
Other ............................................... 77
---------
Total Liabilities ............................... 449
---------
Net Assets ............................................ $ 474,916
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 18,197,571 shares) ...................... $ 18,198
Additional paid-in capital ............................ 210,821
Accumulated net investment loss ....................... (473)
Undistributed net realized gain on
investments ......................................... 15,755
Net unrealized appreciation of
investments ......................................... 230,615
---------
Net Assets ............................................ $ 474,916
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($474,916,096 / 18,197,571
shares outstanding) ................................. $ 26.10
=========
Statement of Operations
for the six months ended June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
(In thousands)
--------------
Investment Income:
Dividends ............................................. $ 849
Interest .............................................. 488
-------
Total Income ...................................... 1,337
-------
Expenses:
Advisory fee .......................................... 1,564
Transfer agent fees ................................... 87
Postage ............................................... 29
Printing .............................................. 28
Custodian fees ........................................ 27
Insurance, dues and other ............................. 23
Auditing and legal fees ............................... 19
Telephone ............................................. 16
Registration and filing fees .......................... 13
Directors' fees and expenses .......................... 7
-------
Total Expenses before
Custody Credits ................................. 1,813
Less: Custody Credits ............................. (3)
-------
Net Expenses ...................................... 1,810
-------
Net Investment Loss ................................... (473)
-------
Net Realized and Unrealized
Gain (Loss) on Investments:
Net Realized Gain ................................. 6,673
Change in Net Unrealized
Appreciation .................................... (9,491)
-------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ...................................... (2,818)
-------
Net Decrease in Net Assets
from Operations ..................................... $(3,291)
=======
See Notes to Financial Statements.
--------------------------------------------------------------------------------
8
<PAGE>
The Value Line Fund, Inc.
Statement of Changes in Net Assets
for the six months ended June 30, 2000 (unaudited)
and for the year ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------------------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment loss ....................................... $ (473) $ (397)
Net realized gain on investments .......................... 6,673 42,895
Change in net unrealized appreciation ..................... (9,491) 66,475
-----------------------------
Net (decrease) increase in net assets from operations ..... (3,291) 108,973
-----------------------------
Distributions to Shareholders:
Net realized gain from investment transactions ............ -- (41,730)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 271,910 505,761
Proceeds from reinvestment of distributions to shareholders -- 39,058
Cost of shares repurchased ................................ (289,168) (535,036)
-----------------------------
Net (decrease) increase from capital share transactions ... (17,258) 9,783
-----------------------------
Total (Decrease) Increase in Net Assets ..................... (20,549) 77,026
Net Assets:
Beginning of period ....................................... 495,465 418,439
-----------------------------
End of period ............................................. $ 474,916 $ 495,465
=============================
Accumulated net investment (loss) income, at end of period .. $ (473) $ --
=============================
</TABLE>
See Notes to Financial Statements.
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9
<PAGE>
The Value Line Fund, Inc.
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company whose primary investment
objective is long-term growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales prices on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid prices.
Securities for which market quotations are not readily available or that are not
readily marketable and all other assets of the Fund are valued at fair value as
the Board of Directors may determine in good faith. Short-term instruments with
maturities of 60 days or less at the date of purchase are valued at amortized
cost, which approximates market value. Short-term instruments with maturities
greater than 60 days at the date of purchase are valued at the midpoint between
the latest available and representative asked and bid prices, and commencing 60
days prior to maturity such 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, 2000
--------------------------------------------------------------------------------
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, 2000 December 31,
(unaudited) 1999
-------------------------------
Shares sold ........................... 10,624 20,467
Shares issued to shareholders
in reinvestment of dividends
and distributions ................... -- 1,549
------------------------
10,624 22,016
Shares repurchased .................... 11,301 21,616
------------------------
Net (decrease) increase ............... (677) 400
========================
Distributions per share from
net realized gains .................. $ -- $ 2.358
========================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 2000
(unaudited)
--------------
(in thousands)
Purchases:
Investment Securities ............... $41,167
=======
Sales:
Investment Securities ............... $54,923
=======
At June 30, 2000, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $236,533,000. The aggregate
appreciation and depreciation of investments at June 30, 2000, based on a
comparison of investment values and their costs for federal income tax purposes
was $237,655,000 and $7,040,000, respectively, resulting in a net appreciation
of $230,615,000.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $1,564,000 was paid or payable to Value Line, Inc., the
Fund's investment adviser (the "Adviser"), for the six months ended June 30,
2000. 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
month period ended June 30, 2000, the Fund paid brokerage commissions totalling
$48,000 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 959,983 shares of the Fund's capital stock, representing
5.3% of the outstanding shares at June 30, 2000. In addition, certain officers
and directors of the Fund owned 161,784 shares of the Fund, representing 0.89%
of the outstanding shares.
5. Subsequent Event
At a special meeting of shareholders held on June 15, 2000, the shareholders
approved the adoption of a Service and Distribution Plan (the "Plan") effective
July 1, 2000. The Plan, adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, provides for the payment of certain expenses incurred by
the distributor in advertising, marketing and distributing the Fund's shares and
for servicing the Fund's shareholders at an annual rate of 0.25% of the Fund's
average daily net assets.
--------------------------------------------------------------------------------
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, 2000 ------------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............... $ 26.25 $ 22.65 $ 19.29 $ 19.29 $ 17.63 $ 14.36
-----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) ...... (.03) (.02) .03 .14 .11 .12
Net gains or losses on securities
(both realized and unrealized) .. (.12) 5.98 3.85 3.79 3.88 4.47
-----------------------------------------------------------------------------------------
Total from investment operations .. (.15) 5.96 3.88 3.93 3.99 4.59
-----------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ............. -- -- (.03) (.14) (.11) (.12)
Distributions from capital 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 period ...... $ 26.10 $ 26.25 $ 22.65 $ 19.29 $ 19.29 $ 17.63
=========================================================================================
Total return ........................ -0.57%+ 26.74% 20.25% 21.59% 22.52% 32.12%
=========================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) .................... $474,916 $495,465 $418,439 $382,431 $348,871 $317,569
Ratio of expenses to
average net assets ................ .76%(2)* .76%(2) .77%(1) .78%(1) .80%(1) .83%
Ratio of net investment income (loss)
to average net assets ............. (.20)%* (.09)% .16% .63% .55% .73%
Portfolio turnover rate ............. 9%+ 36% 98% 68% 54% 78%
</TABLE>
(1) Before offset of custody credits.
(2) Ratios reflect expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets net of custody credits would not
have changed.
+ Not annualized
* Annualized.
See Notes to Financial Statements
--------------------------------------------------------------------------------
12
<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 Sound View Drive, Suite 100
Greenwich, CT 06830
Directors Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
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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