<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 2000
FILE NO. 2-10827
FILE NO. 811-568
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 85 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 85 /X/
-------------
THE VALUE LINE FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
220 East 42nd Street
New York, New York 10017-5891
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's Telephone number, including Area Code: (212) 907-1500
David T. Henigson
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5891
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copy to:
Peter D. Lowenstein
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
It is proposed that this filing will become effective (check
appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/X/ on May 1, 2000 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
THE VALUE LINE FUND, INC.
--------------------------------
PROSPECTUS
MAY 1, 2000
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[LOGO]
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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FUND SUMMARY
What are the Fund's goals? PAGE 2
What are the Fund's main investment strategies?
PAGE 2
What are the main risks of investing in the Fund?
PAGE 2
How has the Fund performed? PAGE 3
What are the Fund's fees and expenses? PAGE 4
HOW WE MANAGE THE FUND
Our principal investment strategies PAGE 5
The principal risks of investing in the Fund PAGE 7
WHO MANAGES THE FUND
Investment Adviser PAGE 8
Management fees PAGE 8
Portfolio management PAGE 8
ABOUT YOUR ACCOUNT
How to buy shares PAGE 9
How to sell shares PAGE 11
Special services PAGE 12
Dividends, distributions and taxes PAGE 13
FINANCIAL HIGHLIGHTS
Financial Highlights PAGE 15
<PAGE>
FUND SUMMARY
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WHAT ARE THE FUND'S GOALS?
The Fund primarily seeks long-term growth of capital. Current
income is a secondary objective. Although the Fund will
strive to achieve these goals, there is no assurance that it
will succeed.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
To achieve the Fund's goals, we invest substantially all of
the Fund's net assets in common stocks or securities
convertible into common stock. In selecting securities for
purchase or sale, we rely on the Value Line Timeliness-TM-
Ranking System or the Value Line Performance-TM- Ranking
System. These Ranking Systems compare the Adviser's estimate
of the probable market performance of each stock during the
next twelve months relative to all of the stocks under
review. The Fund will usually invest in common stocks ranked
1 or 2 by either Ranking System but it may also invest in
common stocks ranked 3. Each Ranking System ranks stocks on a
scale of 1 (highest) to 5 (lowest). Although the Fund can
invest in companies of any size, it generally invests in U.S.
securities issued by larger, more established companies.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Investing in any mutual fund involves risk, including the
risk that you may receive little or no return on your
investment, and the risk that you may lose part or all of the
money you invest. Therefore, before you invest in this Fund
you should carefully evaluate the risks.
The chief risk that you assume when investing in the Fund is
market risk, the possibility that the securities in a certain
market will decline in value because of factors such as
economic conditions. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole.
The price of Fund shares will increase and decrease according
to changes in the value of the Fund's investments. The Fund
will be affected by changes in stock prices which tend to
fluctuate more than bond prices.
An investment in the Fund is not a complete investment
program and you should consider it just one part of your
total investment program. For a more complete discussion of
risk, please turn to page 7.
2
<PAGE>
HOW HAS THE FUND PERFORMED?
This bar chart and table can help you evaluate the potential
risks of investing in the Fund. We show how returns for the
Fund's shares have varied over the past ten calendar years,
as well as the average annual returns of these shares for
one, five, and ten years all compared to the performance of
the S&P 500-Registered Trademark-, a broad based market
index. You should remember that unlike the Fund, this index
is unmanaged and does not include the costs of buying,
selling, and holding the securities. The Fund's past
performance is not necessarily an indication of how it will
perform in the future.
TOTAL RETURNS AS OF 12/31 EACH YEAR (%)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1990 -0.77
<S> <C>
1991 48.86
1992 4.69
1993 6.82
1994 -4.47
1995 32.12
1996 22.52
1997 21.59
1998 20.25
1999 26.74
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: Q4 1998 +23.89%
WORST QUARTER: Q3 1990 (14.65%)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
------------------------------------------------------------------------
VALUE LINE FUND 26.74% 24.57% 16.82%
------------------------------------------------------------------------
S&P 500-REGISTERED TRADEMARK- INDEX 21.04% 28.55% 18.22%
------------------------------------------------------------------------
</TABLE>
3
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you pay in
connection with an investment in the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------
MAXIMUM SALES CHARGES (LOAD) IMPOSED ON PURCHASES NONE
AS A PERCENTAGE OF OFFERING PRICE
--------------------------------------------------------
MAXIMUM DEFERRED SALES CHARGES (LOAD) AS A NONE
PERCENTAGE OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PRICE, WHICHEVER IS LOWER
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MAXIMUM SALES CHARGES (LOAD) IMPOSED ON REINVESTED
DIVIDENDS NONE
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REDEMPTION FEE NONE
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EXCHANGE FEE NONE
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</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM THE FUND'S ASSETS)
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------
MANAGEMENT FEES 0.66%
---------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES NONE
---------------------------------------------------------
OTHER EXPENSES 0.10%
---------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.76%
---------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of
investing in the Fund to the cost of investing in other
mutual funds. We show the cumulative amount of Fund expenses
on a hypothetical investment of $10,000 with an annual 5%
return over the time shown assuming that the Fund's operating
expenses remain the same. The expenses indicated for each
period would be the same whether you sold your shares at the
end of each period or continued to hold them. This is an
example only, and your actual costs may be greater or less
than those shown here. Based on these assumptions, your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
------------------------------------------------------------------
VALUE LINE FUND $78 $243 $422 $942
------------------------------------------------------------------
</TABLE>
4
<PAGE>
HOW WE MANAGE THE FUND
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OUR PRINCIPAL INVESTMENT STRATEGIES
Because of the nature of the Fund, you should consider an
investment in it to be a long-term investment that will best
meet its objectives when held for a number of years. The
following is a description of how the Adviser pursues the
Fund's objectives.
We analyze economic and market conditions, seeking to
identify the market sector or securities that we think make
the best investments.
In selecting securities for purchase or sale, the Adviser
relies on the Value Line Timeliness-TM- Ranking System or the
Value Line Performance-TM- Ranking System.
The Value Line Timeliness Ranking System has evolved after
many years of research and has been used in substantially its
present form since 1965. It is based upon historical prices
and reported earnings, recent earnings and price momentum and
the degree to which the last reported earnings deviated from
estimated earnings, among other factors.
The Timeliness Rankings are published weekly in the Standard
Edition of The Value Line Investment Survey for approximately
1,700 of the most actively traded stocks in U.S. markets,
including stocks with large, mid and small market
capitalizations. There are only a few stocks of foreign
issuers that are included and stocks that have traded for
less than two years are not ranked. On a scale
of 1 (highest) to 5 (lowest), the rankings compare an
estimate of the probable market performance of each stock
during the coming six to twelve months relative to all 1,700
stocks under review. The Rankings are updated weekly to
reflect the most recent information.
The Value Line Performance Ranking System for common stocks
was introduced in 1995. It is a variation of the Value Line
Small-Capitalization Ranking System, which has been employed
in managing private accounts since 1981, and in managing the
Value Line Emerging Opportunities Fund, Inc. since 1993. The
Performance Ranking System evaluates the approximately 1,800
stocks in the Expanded Edition of The Value Line Investment
Survey which consists of stocks with mostly smaller market
capitalizations (under $1 billion) and only a few stocks of
foreign issuers. This stock ranking system relies on factors
similar to those found in the Value Line Timeliness Ranking
System except that it does not utilize earnings
5
<PAGE>
estimates. The Performance Ranks use a scale of 1 (highest)
to 5 (lowest) to compare the Adviser's estimate of the
probable market performance of each Expanded Edition stock
during the coming six to twelve months relative to all 1,800
stocks under review in the Expanded Edition.
Neither the Value Line Timeliness Ranking System nor the
Value Line Performance Ranking System eliminates market risk,
but the Adviser believes that they provide objective
standards for determining expected relative performance over
the next six to twelve months. The Fund will usually invest
in common stocks ranked 1 or 2 but it may also invest in
common stocks ranked 3. Although the Fund can invest in
companies of any size, it generally invests in U.S.
securities issued by larger, more established companies.
Reliance upon the rankings, whenever feasible, is a
fundamental policy of the Fund which may not be changed
without shareholder approval. The utilization of these
Rankings is no assurance that the Fund will perform more
favorably than the market in general over any particular
period.
TEMPORARY DEFENSIVE POSITION
From time to time in response to adverse market, economic,
political or other conditions, we may invest a portion of the
Fund's net assets in cash or cash equivalents, debt
securities, bonds, or preferred stocks for temporary
defensive purposes. This could help the Fund avoid losses,
but it may result in lost opportunities. If this becomes
necessary, the Fund may not achieve its investment
objectives.
PORTFOLIO TURNOVER
The Fund may engage in active and frequent trading of
portfolio securities in order to take advantage of better
investment opportunities to achieve its investment
objectives. This strategy would result in higher brokerage
commissions and other expenses and may negatively affect the
Fund's performance. Portfolio turnover may also result in
capital gain distributions that could increase your income
tax liability.
6
<PAGE>
THE PRINCIPAL RISKS OF INVESTING IN THE FUND
/ / Because the Fund may invest substantially all of its assets
in common stocks, the value of the stocks in its portfolio
might decrease in response to the activities of an
individual company or in response to general market or
economic conditions. If this occurs, the Fund's share price
may decrease.
/ / Certain securities may be difficult or impossible to sell
at the time and price that the Fund would like. The Fund
may have to lower the price, sell other securities instead
or forego an investment opportunity. This could have a
negative effect on the Fund's performance.
/ / The Fund's use of the Value Line Ranking Systems involves
the risk that over certain periods of time the price of
securities not covered by the Ranking Systems, or lower
ranked securities, may appreciate to a greater extent than
those securities in the Fund's portfolio.
/ / Please see the Statement of Additional Information for a
further discussion of risks. Information on the Fund's
recent holdings can be found in the Fund's current annual
or semi-annual report.
7
<PAGE>
WHO MANAGES THE FUND
- --------------------------------------------------------------------------------
The business and affairs of the Fund are managed by the
Fund's officers under the direction of the Fund's Board of
Directors.
INVESTMENT ADVISER
Value Line, Inc., 220 East 42nd Street, New York, NY 10017,
serves as the Fund's investment adviser and manages the
Fund's business affairs. Value Line also acts as investment
adviser to the other Value Line mutual funds and furnishes
investment counseling services to private and institutional
clients resulting in combined assets under management of over
$5 billion.
The Adviser was organized in 1982 and is the successor to
substantially all of the operations of Arnold Bernhard & Co.,
Inc. which with its predecessor has been in business since
1931. Value Line Securities, Inc., the Fund's distributor, is
a subsidiary of the Adviser. Another subsidiary of the
Adviser publishes The Value Line Investment Survey and other
publications.
MANAGEMENT FEES
For managing the Fund and its investments, the Adviser is
paid a yearly fee of 0.70% on the first $100 million of the
Fund's average daily net assets and 0.65% on such additional
assets.
PORTFOLIO MANAGEMENT
A committee of employees of the Investment Adviser is jointly
and primarily responsible for the day-to-day management of
the Fund's portfolio.
8
<PAGE>
ABOUT YOUR ACCOUNT
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
/ / BY TELEPHONE
Once you have opened an account, you can buy additional
shares by calling 800-243-2729 between 9:00 a.m. and
4:00 p.m. New York time. You must pay for these shares within
three business days of placing your order.
/ / BY WIRE
If you are making an initial purchase by wire, you must call
us at 800-243-2729 so we can assign you an account number.
Request your bank to wire the amount you want to invest to
State Street Bank and Trust Company, ABA #011000028,
attention DDA # 99049868. Include your name, account number,
tax identification number and the name of the Fund in which
you want to invest.
/ / THROUGH A BROKER-DEALER
You can open an account and buy shares through a
broker-dealer, who may charge a fee for this service.
/ / BY MAIL
Complete the Account Application and mail it with your check
payable to NFDS, Agent, to Value Line Funds, c/o National
Financial Data Services, Inc., P.O. Box 219729, Kansas City,
MO 64121-9729. If you are making an initial purchase by mail,
you must include a completed Account Application or an
appropriate retirement plan application if you are opening a
retirement account, with your check. Third party checks will
not be accepted for either the initial or any subsequent
purchase. All purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
/ / MINIMUM/ADDITIONAL INVESTMENTS
Once you have completed an application, you can open an
account with an initial investment of $1,000, and make
additional investments at any time for as little as $100. The
price you pay for shares will depend on when we receive your
purchase order.
/ / TIME OF PURCHASE
Your price for Fund shares is the Fund's net asset value per
share (NAV), which is generally calculated as of the close of
regular trading on the New York Stock Exchange (currently
4:00 p.m., Eastern time) every day the Exchange is open for
business. The Exchange is currently closed on New Year's Day,
Martin
9
<PAGE>
Luther King, Jr. Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and on the preceding Friday or subsequent
Monday if any of those days falls on a Saturday or Sunday,
respectively. Your order will be priced at the next NAV
calculated after your order is accepted by the Fund. We
reserve the right to reject any purchase order and to waive
the initial and subsequent investment minimums at any time.
Fund shares may be purchased through various third-party
intermediaries including banks, brokers, financial advisers
and financial supermarkets. When authorized by the Fund,
orders will be priced at the NAV next computed after receipt
by the intermediary.
/ / NET ASSET VALUE
We calculate NAV by adding the market value of all the
securities and assets in the Fund's portfolio, deducting all
liabilities, and dividing the resulting number by the number
of shares outstanding. The result is the net asset value per
share. We price securities for which market prices or
quotations are available at their market value. We price
securities for which market valuations are not available at
their fair market value as determined under the direction of
the Board of Directors. Any investments which have a maturity
of less than 60 days we price at amortized cost. The
amortized cost method of valuation involves valuing a
security at its cost and accruing any discount or premium
over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the
security.
10
<PAGE>
HOW TO SELL SHARES
/ / BY MAIL
You can redeem your shares (sell them back to the Fund) by
mail by writing to: Value Line Funds, c/o National Financial
Data Services, Inc., P.O. Box 219729, Kansas City, MO
64121-9729. The request must be signed by all owners of the
account, and you must include a signature guarantee for each
owner. Signature guarantees are also required when redemption
proceeds are going to anyone other than the account holder(s)
of record. If you hold your shares in certificates, you must
submit the certificates properly endorsed with signature
guaranteed with your request to sell the shares. A signature
guarantee can be obtained from most banks or securities
dealers, but not from a notary public. A signature guarantee
helps protect against fraud.
/ / THROUGH A BROKER-DEALER
You may sell your shares through a broker-dealer, who may
charge a fee for this service.
The Fund has authorized certain brokers to accept purchase
and redemption orders on behalf of the Fund. The Fund has
also authorized these brokers to designate others to accept
purchase and redemption orders on behalf of the Fund.
We treat any order to buy or sell shares that you place with
one of these brokers, or anyone they have designated, as if
you had placed it directly with the Fund. The shares that you
buy or sell through brokers or anyone they have designated
are priced at the next net asset value that is computed after
they receive your order.
Among the brokers that have been authorized are Charles
Schwab & Co., Inc., National Investor Services Corp.,
Pershing and Fidelity Brokerage Services Corp. You should
consult with your broker to determine if it has been
authorized.
/ / BY EXCHANGE
You can exchange all or part of your investment in the Fund
for shares in other Value Line funds. You may have to pay
taxes on your exchange. When you exchange shares, you are
purchasing shares in another fund so you should be sure to
get a copy of that fund's prospectus and read it carefully
before buying shares through an exchange. To execute an
exchange, call 800-243-2729.
11
<PAGE>
When you send us a properly completed request to sell or
exchange shares, you will receive the net asset value that is
next determined after we receive your request. For each
account involved you should provide the account name, number,
name of fund and exchange or redemption amount. Call
1-800-243-2729 for additional documentation that may be
required. You may have to pay taxes on the gain from your
sale of shares. We will pay you promptly, normally the next
business day, but no later than seven days after we receive
your request to sell your shares. If you purchased your
shares by check, we will wait until your check has cleared,
which can take up to 15 days from the day of purchase, before
we send the proceeds to you.
ACCOUNT MINIMUM
If as a result of redemptions your account balance falls
below $500, the Fund may ask you to increase your balance
within 30 days. If your account is not at the minimum by the
required time, the Fund may redeem your account, after first
notifying you in writing.
REDEMPTION IN KIND
The Fund reserves the right to make a redemption in
kind--payment in portfolio securities rather than cash--if
the amount being redeemed is large enough to affect Fund
operations.
SPECIAL SERVICES
To help make investing with us as easy as possible, and to
help you build your investments, we offer the following
special services. You can get further information about these
programs by calling Shareholder Services at 800-223-0818.
/ / Valu-Matic-Registered Trademark- allows you to make
regular monthly investments of $25 or more automatically
from your checking account.
/ / Through our Systematic Cash Withdrawal Plan you can
arrange a regular monthly or quarterly payment from your
account payable to you or someone you designate. If your
account is $5,000 or more, you can have monthly or
quarterly withdrawals of $25 or more.
12
<PAGE>
/ / You may buy shares in the Fund for your individual or
group retirement plan, including your Regular or Roth IRA.
You may establish your IRA account even if you already are
a member of an employer-sponsored retirement plan. Not all
contributions to an IRA account are tax deductible;
consult your tax advisor about the tax consequences of
your contribution.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to pay dividends from its net investment
income, if any, and to distribute any capital gains that it
has realized annually. We automatically reinvest all
dividends and any capital gains, unless you instruct us
otherwise in your application to purchase shares. At
December 31, 1999, the Fund had net unrealized appreciation
of $240,106,000 representing approximately 48% of the Fund's
net assets. In the event the Fund disposes of securities in
its portfolio and recognizes sizeable gains the Fund will
distribute such gains to stockholders who may be taxed on
such amounts. Investors should consider the tax consequences
of buying shares of the Fund prior to the record date of a
distribution because such distribution will generally be
taxable even though the net asset value of shares of the Fund
is reduced by the distribution.
You will generally be taxed on distributions you receive,
regardless of whether you reinvest them or receive them in
cash. Dividends from short-term capital gains and net
investment income will be taxable as ordinary income.
Dividends designated by the Fund as long-term capital gains
distributions will be taxable at your long-term capital gains
tax rate, no matter how long you have owned your Fund shares.
In addition, you may be subject to state and local taxes on
distributions.
We will send you a statement by January 31 each year
detailing the amount and nature of all dividends and capital
gains that you received during the prior year.
If you hold your Fund shares in a tax-deferred retirement
account, such as an IRA, you generally will not have to pay
tax on distributions until they are distributed from the
account. These accounts are subject to complex tax rules, and
you should consult your tax adviser about investment through
a tax-deferred account.
You will generally have a capital gain or loss if you dispose
of your Fund shares by redemption, exchange or sale. Your
gain or loss will be long-term or short-term, generally
depending upon how long you owned your shares.
As with all mutual funds, the Fund may be required to
withhold U.S. federal income tax at the rate of 31% of all
taxable distributions payable to you if you fail to provide
the Fund with your correct taxpayer identification number
13
<PAGE>
or to make required certifications, or if you have been
notified by the IRS that you are subject to backup
withholding. Backup withholding is not an additional tax;
rather, it is a way in which the IRS ensures it will collect
taxes otherwise due. Any amounts withheld may be credited
against your U.S. federal income tax liability.
The above discussion is meant only as a summary, and we urge
you to consult your tax adviser about your particular tax
situation and how it might be affected by current tax law.
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you
understand the Fund's financial performance for the past five
years. Certain information reflects financial results for a
single Fund share. The total returns in the table represent
the rate that an investor would have earned or lost on an
investment in the Fund assuming reinvestment of all dividends
and distributions. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the
Fund's financial statements, is included in the Fund's annual
report, which is available upon request by calling
800-223-0818.
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------
<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 income (loss) 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 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.
15
<PAGE>
FOR MORE INFORMATION
Additional information about the Fund's investments is
available in the Fund's annual and semi-annual reports to
shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year. You can find more detailed information
about the Fund in the current Statement of Additional
Information dated May 1, 2000, which we have filed
electronically with the Securities and Exchange Commission
(SEC) and which is legally a part of this prospectus. If you
want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any
questions about investing in this Fund, you can write to us
at 220 East 42nd Street, New York, NY 10017-5891 or call
toll-free 800-223-0818. You may also obtain the prospectus
from our Internet site at http://www.valueline.com.
Reports and other information about the Fund are available on
the EDGAR Database on the SEC Internet site
(http://www.sec.gov), or you can get copies of this
information, after payment of a duplicating fee, by
electronic request at the following E-mail address:
[email protected], or by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-0102. Information
about the Fund, including its Statement of Additional
Information, can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington,
D.C. You can get information on operation of the public
reference room by calling the SEC at 1-202-942-8090.
<TABLE>
<S> <C>
INVESTMENT ADVISER SERVICE AGENT
Value Line, Inc. State Street Bank and Trust Company
220 East 42nd Street c/o NFDS
New York, NY 10017-5891 P.O. Box 219729
Kansas City, MO 64121-9729
CUSTODIAN DISTRIBUTOR
State Street Bank and Trust Company Value Line Securities, Inc.
225 Franklin Street 220 East 42nd Street
Boston, MA 02110 New York, NY 10017-5891
</TABLE>
<TABLE>
<S> <C>
Value Line Securities, Inc.
220 East 42nd Street, New York, NY 10017-5891 File no. 811-568
</TABLE>
<PAGE>
THE VALUE LINE FUND, INC.
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
www.valueline.com
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STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of The Value Line Fund, Inc. dated May
1, 2000, a copy of which may be obtained without charge by writing or
telephoning the Fund. The financial statements, accompanying notes and report of
independent accountants appearing in the Fund's 1999 Annual Report to
Shareholders are incorporated by reference in this Statement. A copy of the
Annual Report is available from the Fund upon request and without charge by
calling 800-223-0818.
--------------
TABLE OF CONTENTS
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PAGE
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<S> <C>
Description of the Fund and Its Investments and Risks....... B-2
Management of the Fund...................................... B-8
Investment Advisory and Other Services...................... B-9
Brokerage Allocation and Other Practices.................... B-11
Capital Stock............................................... B-12
Purchase, Redemption and Pricing of Shares.................. B-12
Taxes....................................................... B-13
Performance Data............................................ B-15
Financial Statements........................................ B-15
</TABLE>
B-1
<PAGE>
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
HISTORY AND CLASSIFICATION. The Fund is an open-end, diversified management
investment company incorporated in Delaware in 1949 and reincorporated in
Maryland in 1972. The Fund's investment adviser is Value Line, Inc. (the
"Adviser").
NON-PRINCIPAL INVESTMENT STRATEGIES AND ASSOCIATED RISKS.
- RESTRICTED SECURITIES. On occasion, the Fund may purchase securities
which would have to be registered under the Securities Act of 1933 if they were
to be publicly distributed. However, it will not do so if the value of such
securities and other securities which are not readily marketable (including
repurchase agreements maturing in more than seven days) would exceed 10% of the
market value of its net assets. It is management's policy to permit the
occasional acquisition of such restricted securities only if (except in the case
of short-term non-convertible debt securities) there is an agreement by the
issuer to register such securities, ordinarily at the issuer's expense, when
requested to do so by the Fund. The acquisition in limited amounts of restricted
securities is believed to be helpful toward the attainment of the Fund's
investment objective without unduly restricting its liquidity or freedom in the
management of its portfolio. However, because restricted securities may only be
sold privately or in an offering registered under the Securities Act of 1933, or
pursuant to an exemption from such registration, substantial time may be
required to sell such securities, and there is greater than usual risk of price
decline prior to sale.
In addition, the Fund may purchase certain restricted securities
("Rule 144A securities") for which there is a secondary market of qualified
institutional buyers, as contemplated by Rule 144A under the Securities Act of
1933. Rule 144A provides an exemption from the registration requirements of the
Securities Act for the resale of certain restricted securities to qualified
institutional buyers.
The Adviser, under the supervision of the Board of Directors, will consider
whether securities purchased under Rule 144A are liquid or illiquid for purposes
of the Fund's limitation on investment in securities which are not readily
marketable or are illiquid. Among the factors to be considered are the frequency
of trades and quotes, the number of dealers and potential purchasers, dealer
undertakings to make a market and the nature of the security and the time needed
to dispose of it.
To the extent that the liquid Rule 144A securities that the Fund holds
become illiquid, due to lack of sufficient qualified institutional buyers or
market or other conditions, the percentage of the Fund's assets invested in
illiquid assets would increase. The Adviser, under the supervision of the Board
of Directors, will monitor the Fund's investments in Rule 144A securities and
will consider appropriate measures to enable the Fund to maintain sufficient
liquidity for operating purposes and to meet redemption requests.
- COVERED CALL OPTIONS. The Fund may write covered call options on stocks
held in its portfolio ("covered options") in an attempt to earn additional
income on its portfolio or to partially offset an expected decline in the price
of a security. When the Fund writes a covered call option, it gives the
purchaser of the option the right to buy the underlying security at the price
specified in the option (the "exercise price") at any time during the option
period. If the option expires unexercised, the Fund will realize income to the
extent of the amount received for the option (the "premium"). If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
covered option, the Fund
B-2
<PAGE>
foregoes, in exchange for the premium less the commission ("net premium"), the
opportunity to profit during the option period from an increase in the market
value of the underlying security above the exercise price. The Fund will not
write call options in an aggregate amount greater than 25% of its net assets.
The Fund will purchase call options only to close out a position. When an
option is written on securities in the Fund's portfolio and it appears that the
purchaser of that option is likely to exercise the option and purchase the
underlying security, it may be considered appropriate to avoid liquidating the
Fund's position, or the Fund may wish to extinguish a call option sold by it so
as to be free to sell the underlying security. In such instances the Fund may
purchase a call option on the same security with the same exercise price and
expiration date which had been previously written. Such a purchase would have
the effect of closing out the option which the Fund has written. The Fund
realizes a gain if the amount paid to purchase the call option is less than the
premium received for writing a similar option and a loss if the amount paid to
purchase a call option is greater than the premium received for writing a
similar option. Generally, the Fund realizes a short-term capital loss if the
amount paid to purchase the call option with respect to a stock is greater than
the premium received for writing the option. If the underlying security has
substantially risen in value, it may be difficult or expensive to purchase the
call option for the closing transaction.
- STOCK INDEX FUTURES CONTRACTS AND OPTIONS THEREON. The Fund may trade in
stock index futures contracts and in options on such contracts. Such contracts
will be entered into on exchanges designated by the Commodity Futures Trading
Commission ("CFTC").
The Fund's futures and options on futures transactions must constitute bona
fide hedging or other risk management purposes pursuant to regulations
promulgated by the CFTC. In addition, the Fund may not engage in such activities
generally if the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity options would exceed 5% of the fair market value of the
Fund's net assets, after taking into account unrealized profits and unrealized
losses on such contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in calculating the 5%. In instances involving entering
into long stock index futures or options contracts by the Fund, an amount equal
to the market value of the futures contract will be deposited in a segregated
account with the Fund's custodian of cash and liquid securities to collateralize
the position and thereby insure that the use of such futures contract is
unleveraged. No more than 25% of the Fund's net assets may be deposited in such
segregated account.
There can be no assurance of the Fund's successful use of stock index
futures as a hedging device. Hedging transactions involve certain risks. One
risk arises because of the imperfect correlation between movements in the price
of the stock index future and movements in the price of the securities which are
the subject of the hedge. The risk of imperfect correlation increases as the
composition of the Fund's securities portfolio diverges from the securities
included in the applicable stock index. In addition to the possibility that
there may be an imperfect correlation, or no correlation at all, between
movements in the stock index future and the portion of the portfolio being
hedged, the price of stock index futures may not correlate perfectly with the
movement in the stock index due to certain market distortions. Increased
participation by speculators in the futures market also may cause temporary
price distortions. Due to the possibility of price distortions in the futures
market and
B-3
<PAGE>
because of the imperfect correlation between movements in the stock index and
movements in the price of stock index futures, a correct forecast of general
market trends by the Adviser still may not result in a successful hedging
transaction.
For example, should the Fund anticipate a decrease in the value of its
portfolio securities, it could enter into futures contracts to sell stock
indexes thereby partially hedging its portfolio against the anticipated losses.
Losses in the portfolio, if realized, should be partially offset by gains on the
futures contracts. Conversely, if the Fund anticipated purchasing additional
portfolio securities in a rising market, it could enter into futures contracts
to purchase stock indexes thereby locking in a price. The implementation of
these strategies by the Fund should be less expensive and more efficient than
buying and selling the individual securities at inopportune times.
A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the contract is entered into. There can
be no assurance of the Fund's successful use of stock index futures as a hedging
device.
The contractual obligation is satisfied by either a cash settlement or by
entering into an opposite and offsetting transaction on the same exchange prior
to the delivery date. Entering into a futures contract to deliver the index
underlying the contract is referred to as entering into a short futures
contract. Entering into a futures contract to take delivery of the index is
referred to as entering into a long futures contract. An offsetting transaction
for a short futures contract is effected by the Fund entering into a long
futures contract for the same date, time and place. If the price of the short
contract exceeds the price in the offsetting long, the Fund is immediately paid
the difference and thus realizes a gain. If the price of the long transaction
exceeds the short price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a long futures contract is effected by the Fund
entering into a short futures contract. If the offsetting short price exceeds
the long price, the Fund realizes as a gain, and if the offsetting short price
is less than the long price, the Fund realizes a loss.
No consideration will be paid or received by the Fund upon entering into a
futures contract. Initially, the Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 1% to 10% of
the contract amount. This amount is subject to change by the board of trade on
which the contract is traded and members of such board of trade may charge a
higher amount. This amount is known as "initial margin" and is in the nature of
a performance bond or good faith deposit on the contract which is returned to
the Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as "variation
margin," to and from the broker will be made daily as the price of the index
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable, a process known as
"marking-to-market."
The Fund may also purchase put and call options on stock index futures
contracts on commodity exchanges or write covered options on such contracts. A
call option gives the purchaser the right to buy, and the writer the obligation
to sell, while a put option gives the purchaser the right to sell and the writer
the obligation to buy. Unlike a stock index futures contract, which requires the
parties to buy and sell the stock index on a set date, an option on a stock
index futures contract entitles its holder to decide on or before a future date
whether to enter into such a futures contract. If the holder decides not to
enter into the contract, the premium paid for the option is lost. Since the
value of the
B-4
<PAGE>
option is fixed at the point of sale, the purchase of an option does not require
daily payments of cash in the nature of "variation" or "maintenance" margin
payments to reflect the change in the value of the underlying contract. The
value of the option purchased by the Fund does change and is reflected in the
net asset value of the Fund. The writer of an option, however, must make margin
payments on the underlying futures contract. Exchanges provide trading
mechanisms so that an option once purchased can later be sold and an option once
written can later be liquidated by an offsetting purchase.
Successful use of stock index futures by the Fund also is subject to the
Adviser's ability to predict correctly movements in the direction of the market.
If the Adviser's judgment about the several directions of the market is wrong,
the Fund's overall performance may be worse than if no such contracts had been
entered into. For example, if the Fund has hedged against the possibility of a
decline in the market adversely affecting stocks held in its portfolio and stock
prices increase instead, the Fund will lose part or all of the benefit of the
increased value of its stock which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so. When stock
index futures are purchased to hedge against a possible increase in the price of
stocks before the Fund is able to invest its cash (or cash equivalents) in
stocks in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest in stocks at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction in
the price of securities purchased.
Use of options on stock index futures entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase these options unless its
investment adviser is satisfied with the development, depth and liquidity of the
market and the investment adviser believes the options can be closed out.
Options and futures contracts entered into by the Fund will be subject to
special tax rules. These rules may accelerate income to the Fund, defer Fund
losses, cause adjustments in the holding periods of Fund securities, convert
capital gain into ordinary income and convert short-term capital losses into
long-term capital losses. As a result, these rules could affect the amount,
timing and character of Fund distributions. However, the Fund anticipates that
these investment activities will not prevent the Fund from qualifying as a
regulated investment company.
- REPURCHASE AGREEMENTS. The Fund may invest temporary cash balances in
repurchase agreements. A repurchase agreement involves a sale of securities to
the Fund, with the concurrent agreement of the seller (a member bank of the
Federal Reserve System or a securities dealer which the Adviser believes to be
financially sound) to repurchase the securities at the same price plus an amount
equal to an agreed-upon interest rate, within a specified time, usually less
than one week, but, on occasion, at a later time. The Fund will make payment for
such securities only upon physical delivery or evidence of book-entry transfer
to the account of the custodian or a bank acting as agent for the Fund.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. The value of the
underlying securities will be at least equal at all times to the total amount of
the repurchase obligation, including the interest factor.
B-5
<PAGE>
In the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses, including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.
FUND POLICIES.
(i) The Fund may not issue senior securities except evidences of
indebtedness permitted under clause (ii) below.
(ii) The Fund may not borrow money in excess of 10% of the value of its
assets and then only as a temporary measure to meet unusually heavy
redemption requests or for other extraordinary or emergency purposes.
Securities will not be purchased while borrowings are outstanding. No assets
of the Fund may be pledged, mortgaged or otherwise encumbered, transferred
or assigned to secure a debt except in connection with the Fund's entering
into stock index futures.
(iii) The Fund may not engage in the underwriting of securities except
to the extent that the Fund may be deemed an underwriter as to restricted
securities under the Securities Act of 1933 in selling portfolio securities.
(iv) The Fund may not invest 25% or more of its assets in securities of
issuers in any one industry.
(v) The Fund may not purchase securities of other investment companies
or invest in real estate, mortgages or illiquid securities of real estate
investment trusts although the Fund may purchase securities of issuers which
engage in real estate operations.
(vi) The Fund may not lend money except in connection with the purchase
of debt obligations or by investment in repurchase agreements, provided that
repurchase agreements maturing in more than seven days when taken together
with other illiquid investments do not exceed 10% of the Fund's assets.
(vii) The Fund may not engage in arbitrage transactions, short sales,
purchases on margin or participate on a joint or joint and several basis in
any trading account in securities except that these prohibitions will not
apply to futures contracts or options on futures contracts entered into by
the Fund for permissable purposes or to margin payments made in connection
with such contracts.
(viii) The Fund may not purchase or sell any put or call options or any
combination thereof, except that the Fund may write and sell covered call
option contracts on securities owned by the Fund. The Fund may also purchase
call options for the purpose of terminating its outstanding obligations with
respect to securities upon which covered call option contracts have been
written (i.e., "closing purchase transactions"). The Fund may also purchase
and sell put and call options on stock index futures contracts.
(ix) The Fund may not invest more than 5% of its total assets in the
securities of any one issuer or purchase more than 10% of the outstanding
voting securities, or any other class of securities, of any one issuer. For
purposes of this restriction, all outstanding debt securities of an issuer
are considered as one class, and all preferred stock of an issuer is
considered as one
B-6
<PAGE>
class. This restriction does not apply to obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
(x) The Fund may not invest more than 5% of its total assets in
securities of issuers having a record, together with its predecessors, of
less than three years of continuous operation. This restriction does not
apply to any obligation issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
(xi) The Fund may not purchase securities for the purpose of exercising
control over another company.
(xii) The Fund may not invest more than 2% of the value of its total
assets in warrants (valued at the lower of cost or market), except that
warrants attached to other securities are not subject to these limitations.
(xiii) The Fund may not invest in commodities or commodity contracts
except that the Fund may invest in stock index futures contracts and options
on stock index futures contracts.
(xiv) The Fund may not purchase the securities of any issuer if, to the
knowledge of the Fund, those officers and directors of the Fund and of the
Adviser, who each owns more than 0.5% of the outstanding securities of such
issuer, together own more than 5% of such securities.
(xv) The primary investment objective of the Fund is long-term growth of
capital. Current income is a secondary objective.
In addition, management of the Fund has adopted a policy that it will not
recommend that the Fund purchase interest in oil, gas or other mineral type
development programs or leases, although the Fund may invest in the securities
of companies which operate, invest in or sponsor such programs.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction. For purposes of industry
classifications, the Fund follows the industry classifications in The Value Line
Investment Survey.
The policies set forth above may not be changed without the affirmative vote
of the majority of the outstanding voting securities of the Fund which means the
lesser of (1) the holders of more than 50% of the outstanding shares of capital
stock of the Fund or (2) 67% of the shares present if more than 50% of the
shares are present at a meeting in person or by proxy.
B-7
<PAGE>
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed by the Fund's officers
under the direction of the Board of Directors. Set forth below is certain
information regarding the Directors and Officers of the Fund.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- --------------------- ------------------ -----------------------------------------
<S> <C> <C>
*Jean Bernhard Buttner Chairman of the Chairman, President and Chief Executive
Age 65 Board of Directors Officer of the Adviser and Value Line
and President Publishing, Inc. Chairman and President
of the Value Line Funds and Value Line
Securities, Inc. (the "Distributor");
Chairman and President of each of the 15
Value Line Funds.
John W. Chandler Director Consultant, Academic Search Con-
2801 New Mexico Ave., N.W. sultation Service, Inc. Trustee Emeri-
Washington, DC 20007 tus and Chairman (1993-1994) of the Board
Age 76 of Trustees of Duke University; President
Emeritus, Williams College.
David H. Porter Director Visiting Professor of Classics, Wil-
5 Birch Run Drive liams College, since July 1, 1999;
Saratoga Springs, NY 12866 President Emeritus, Skidmore College
Age 64 since 1999 and; President, 1987-1998;
Director of Adirondack Trust Company.
Paul Craig Roberts Director Chairman, Institute for Political Econ-
169 Pompano St. omy; Director, A. Schulman Inc. (plas-
Panama City Beach, FL 32413 tics).
Age 61
Nancy-Beth Sheerr Director Former Chairman, Radcliffe College Board
1409 Beaumont Drive of Trustees.
Gladwyne, PA 19035
Age 50
Alan N. Hoffman, CFA Vice President Portfolio Manager with the Adviser.
Age 46
Philip J. Orlando, CFA Vice President Chief Investment Officer with the
Age 41 Adviser's Asset Management Division since
1995.
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- --------------------- ------------------ -----------------------------------------
<S> <C> <C>
David T. Henigson Vice President, Director, Vice President and Compliance
Age 42 Secretary and Officer of the Adviser. Director and Vice
Treasurer President of the Distributor. Vice
President, Secretary and Treasurer of
each of the 15 Value Line Funds.
</TABLE>
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* "Interested" director as defined in the Investment Company Act of 1940 (the
"1940 Act").
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY.
Directors of the Fund are also directors/trustees of 11 other Value Line
Funds.
The following table sets forth information regarding compensation of
Directors by the Fund and by the Fund and the eleven other Value Line Funds of
which each of the Directors is a director or trustee for the fiscal year ended
December 31, 1999. Directors who are officers or employees of the Adviser do not
receive any compensation from the Fund or any of the Value Line Funds.
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND
AGGREGATE BENEFITS BENEFITS AND FUND
COMPENSATION ACCRUED AS PART UPON COMPLEX
NAME OF PERSONS FROM FUND OF FUND EXPENSES RETIREMENT (12 FUNDS)
- --------------- ------------ ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Jean B. Buttner $ -0- N/A N/A $ -0-
John W. Chandler 2,968 N/A N/A 35,620
David H. Porter 2,968 N/A N/A 35,620
Paul Craig
Roberts 2,968 N/A N/A 35,620
Nancy-Beth Sheerr 2,968 N/A N/A 35,620
</TABLE>
As of March 31, 2000, no person owned of record or, to the knowledge of the
Fund, owned beneficially, 5% or more of the outstanding stock of the Fund. The
Adviser and its affiliates owned 493,659 shares of record or approximately 2.7%.
In addition, First Union National Bank as Trustee of the Value Line, Inc. Profit
Sharing and Savings Plan owned 417,791 shares (2.3%). Officers and directors of
the Fund as a group owned less than 1% of the outstanding shares.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund's investment adviser is Value Line, Inc. (the "Adviser").
Arnold Bernhard & Co., Inc., 220 East 42nd Street, New York, NY 10017, a holding
company, owns approximately 84% of the outstanding shares of the Adviser's
common stock. Jean Bernhard Buttner, Chairman, President and Chief Executive
Officer of the Adviser and Chairman and President of the Fund, owns all of the
voting stock of Arnold Bernhard & Co., Inc.
B-9
<PAGE>
The investment advisory agreement between the Fund and the Adviser, dated
September 26, 1991, provides for an advisory fee at an annual rate of 0.70% on
the first $100 million of the Fund's average daily net assets during the year
and 0.65% of such net assets in excess thereof. During 1997, 1998 and 1999, the
Fund paid or accrued to the Adviser advisory fees of $2,463,000 $2,529,000 and
$2,954,000 respectively.
The investment advisory agreement provides that the Adviser shall render
investment advisory and other services to the Fund including, at its expense,
all administrative services, office space and the services of all officers and
employees of the Fund. The Fund pays all other expenses not assumed by the
Adviser including taxes, interest, brokerage commissions, insurance premiums,
fees and expenses of the custodian and shareholder servicing agents, legal and
accounting fees, fees and expenses in connection with qualification under
federal and state securities laws and costs of shareholder reports and proxy
materials. The Fund has agreed that it will use the words "Value Line" in its
name only so long as Value Line, Inc. serves as investment adviser to the Fund.
The agreement will terminate upon its assignment.
The Adviser acts as investment adviser to 14 other investment companies
constituting The Value Line Family of Funds and furnishes investment counseling
services to private and institutional accounts resulting in combined assets
under management in excess of $5 billion.
Certain of the Adviser's clients may have investment objectives similar to
the Fund and certain investments may be appropriate for the Fund and for other
clients advised by the Adviser. From time to time, a particular security may be
bought or sold for only one client or in different amounts and at different
times for more than one but less than all such clients. In addition, a
particular security may be bought for one or more clients when one or more other
clients are selling such security, or purchases or sales of the same security
may be made for two or more clients at the same time. In such event, such
transactions, to the extent practicable, will be averaged as to price and
allocated as to amount in proportion to the amount of each order. In some cases,
this procedure could have a detrimental effect on the price or amount of the
securities purchased or sold by the Fund. In other cases, however, it is
believed that the ability of the Fund to participate, to the extent permitted by
law, in volume transactions will produce better results for the Fund.
The Adviser and/or its affiliates, officers, directors and employees may
from time to time own securities which are also held in the portfolio of the
Fund. The Fund, the Adviser and the Distributor have adopted a Code of Ethics
under Rule 17j-1 of the Investment Company Act which permits personnel subject
to the Code to invest in securities, including securities that may be purchased
or held by the Fund. The Code requires that such personnel submit reports of
security transactions for their respective accounts and restricts trading in
various types of securities in order to avoid possible conflicts of interest.
The Fund has entered into a distribution agreement with Value Line
Securities, Inc. (the "Distributor") whose address is 220 East 42nd Street, New
York, NY 10017, pursuant to which the Distributor acts as principal underwriter
and distributor of the Fund for the sale and distribution of its shares. The
Distributor is a wholly-owned subsidiary of the Adviser. For its services under
the agreement, the Distributor is not entitled to receive any compensation. The
Distributor also serves as distributor to the other Value Line funds.
Jean Bernhard Buttner is Chairman and President of the Distributor.
The Adviser has retained State Street Bank and Trust Company ("State
Street") to provide certain bookkeeping and accounting services for the Fund.
The Adviser pays State Street $32,400
B-10
<PAGE>
per annum for each Value Line fund for which State Street provides these
services. State Street, whose address is 225 Franklin Street, Boston, MA 02110,
also acts as the Fund's custodian, transfer agent and dividend-paying agent. As
custodian, State Street is responsible for safeguarding the Fund's cash and
securities, handling the receipt and delivery of securities and collecting
interest and dividends on the Fund's investments. As transfer agent and
dividend-paying agent, State Street effects transfers of Fund shares by the
registered owners and transmits payments for dividends and distributions
declared by the Fund. National Financial Data Services, Inc., a State Street
affiliate, whose address is 330 W. 9th Street, Kansas City, MO 64105, provides
certain transfer agency functions to the Fund as an agent for State Street.
PricewaterhouseCoopers LLP, whose address is 1177 Avenue of the Americas, New
York, NY 10036, acts as the Fund's independent accountants and also performs
certain tax preparation services.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Orders for the purchase and sale of portfolio securities are placed with
brokers and dealers who, in the judgment of the Adviser, are able to execute
them as expeditiously as possible and at the best obtainable price. Debt
securities are traded principally in the over-the-counter market on a net basis
through dealers acting for their own account and not as brokers. Purchases and
sales of securities which are not listed or traded on a securities exchange will
ordinarily be executed with primary market makers acting as principal, except
when it is determined that better prices and executions may otherwise be
obtained. The Adviser is also authorized to place purchase or sale orders with
brokers or dealers who may charge a commission in excess of that charged by
other brokers or dealers if the amount of the commission charged is reasonable
in relation to the value of the brokerage and research services provided. Such
allocation will be in such amounts and in such proportions as the Adviser may
determine. Orders may also be placed with brokers or dealers who sell shares of
the Fund or other funds for which the Adviser acts as investment adviser, but
this fact, or the volume of such sales, is not a consideration in their
selection. During 1997, 1998 and 1999, the Fund paid brokerage commissions of
$342,166, $574,609 and $294,421 respectively, of which $212,386 (62%), $350,987
(61%), and $184,086 (63%) respectively, was paid to Value Line Securities, Inc.,
the Fund's distributor and a subsidiary of the Adviser. Value Line Securities,
Inc. clears transactions for the Fund through unaffiliated broker-dealers.
The Board of Directors has adopted procedures incorporating the standards of
Rule 17e-1 under the 1940 Act which requires that the commissions paid to Value
Line Securities or any other "affiliated person" be "reasonable and fair"
compared to the commissions paid to other brokers in connection with comparable
transactions. The procedures require that the Adviser furnish reports to the
Directors with respect to the payment of commissions to affiliated brokers and
maintain records with respect thereto. During 1999, $236,160 (80%) of the Fund's
brokerage commissions were paid to brokers or dealers solely for their services
in obtaining the best prices and executions; the balance, or $58,261 (20%), went
to brokers or dealers who provided information or services to the Adviser and,
therefore, indirectly to the Fund and the other entities that it advises. The
information and services furnished to the Adviser include the furnishing of
research reports and statistical compilations and computations and the providing
of current quotations for securities. The services and information were
furnished to the Adviser at no cost to it; no such services or information were
furnished directly to the Fund, but certain of these services might have
relieved the Fund of expenses which it would otherwise have had to pay. Such
information and services are considered by the Adviser, and brokerage
commissions are allocated in accordance with its assessment of such
B-11
<PAGE>
information and services, but only in a manner consistent with the placing of
purchase and sale orders with brokers and/or dealers, which, in the judgment of
the Adviser, are able to execute such orders as expeditiously as possible and at
the best obtainable price. The Fund is advised that the receipt of such
information and services has not reduced in any determinable amount the overall
expenses of the Adviser.
PORTFOLIO TURNOVER. The Fund's annual portfolio turnover rate may exceed
100%. A rate of portfolio turnover of 100% would occur if all of the Fund's
portfolio were replaced in a period of one year. To the extent that the Fund
engages in short-term trading in attempting to achieve its objective, it may
increase portfolio turnover and incur higher brokerage commissions and other
expenses than might otherwise be the case. The Fund's portfolio turnover rate
for recent fiscal years is shown under "Financial Highlights" in the Fund's
Prospectus.
CAPITAL STOCK
Each share of the Fund's common stock, $1 par value, has one vote with
fractional shares voting proportionately. Shares have no preemptive rights, are
freely transferable, are entitled to dividends as declared by the Directors and,
if the Fund were liquidated, would receive the net assets of the Fund.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASES: Shares of the Fund are purchased at net asset value next calculated
after receipt of a purchase order. Minimum orders are $1,000 for an initial
purchase and $100 for each subsequent purchase. The Fund reserves the right to
reduce or waive the minimum purchase requirements in certain cases such as
pursuant to payroll deduction plans, etc., where subsequent and continuing
purchases are contemplated.
AUTOMATIC PURCHASES: The Fund offers a free service to its shareholders,
Valu-Matic, through which monthly investments of $25 or more may be made
automatically into the shareholder's Fund account. The required form to enroll
in this program is available upon request from the Distributor.
RETIREMENT PLANS: Shares of the Fund may be purchased as the investment medium
for various tax-sheltered retirement plans. Upon request, the Distributor will
provide information regarding eligibility and permissible contributions. Because
a retirement plan is designed to provide benefits in future years, it is
important that the investment objectives of the Fund be consistent with the
participant's retirement objectives. Premature withdrawals from a retirement
plan may result in adverse tax consequences. For more complete information,
contact Shareholder Services at 1-800-223-0818.
REDEMPTION: The right of redemption may be suspended, or the date of payment
postponed beyond the normal seven-day period, by the Fund under the following
conditions authorized by the 1940 Act: (1) For any period (a) during which the
New York Stock Exchange is closed, other than customary weekend and holiday
closing, or (b) during which trading on the New York Stock Exchange is
restricted; (2) For any period during which an emergency exists as a result of
which (a) disposal by the Fund of securities owned by it is not reasonably
practical, or (b) it is not reasonably practical for the Fund to determine the
fair value of its net assets; (3) For such other
B-12
<PAGE>
periods as the Securities and Exchange Commission may by order permit for the
protection of the Fund's shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities or other property of the Fund. However, the Fund has
obligated itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Fund's net assets
if that is less) in any 90-day period. Securities delivered in payment of
redemptions are valued at the same value assigned to them in computing the net
asset value per share. Shareholders receiving such securities may incur
brokerage costs on their sales.
The net asset value of the Fund's shares for purposes of both purchases and
redemptions is determined once daily as of the close of regular trading on the
New York Stock Exchange (generally 4:00 p.m., New York time) on each day that
the New York Stock Exchange is open for trading except on days on which no
orders to purchase, sell or redeem Fund shares have been received. The New York
Stock Exchange is currently closed on New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on the preceding Friday or subsequent
Monday if one of those days falls on a Saturday or Sunday, respectively. The net
asset value per share is determined by dividing the total value of the
investments and other assets of the Fund, less any liabilities, by the total
outstanding shares. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales price on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid prices.
Securities for which market quotations are not readily available or which are
not readily marketable and all other assets of the Fund are valued at fair value
as the Board of Directors or persons acting at their direction may determine in
good faith. Short-term instruments with maturities of 60 days or less at the
date of purchase are valued at amortized cost, which approximates market.
TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund so
qualified during the Fund's last fiscal year. By so qualifying, the Fund is not
subject to Federal income tax on its net investment income or net realized
capital gains which are distributed to shareholders (whether or not reinvested
in additional Fund shares).
The Code requires each regulated investment company to pay a nondeductible
4% excise tax to the extent the company does not distribute, during each
calendar year, 98% of its ordinary income, determined on a calendar year basis,
and 98% of its capital gains, determined, in general,
B-13
<PAGE>
on an October 31 year end, plus certain undistributed amounts from previous
years. The Fund anticipates that it will make sufficient timely distributions to
avoid imposition of the excise tax.
Realized losses incurred after October 31, if so elected by the Fund, are
deemed to arise on the first day of the following fiscal year. In the year ended
December 31, 1999, the Fund did not incur such losses.
Distributions of net investment income and of the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income. Distributions of the excess of net long-term capital gain over
net short-term capital loss (net capital gains) are taxable to the shareholders
as long-term capital gain, regardless of the length of time the shares of the
Fund have been held by such shareholders and regardless of whether the
distribution is received in cash or in additional shares of the Fund. Because a
portion of the Fund's income will consist of dividends paid by U.S.
corporations, a portion of the dividends paid by the Fund will be eligible for
the corporate dividends-received deduction. Upon request, the Fund will inform
shareholders of the amounts of qualifying dividends.
A distribution by the Fund will reduce the Fund's net asset value per share.
Such a distribution is taxable to the shareholder as ordinary income or capital
gain as described above even though, from an investment standpoint, it may
constitute a return of capital. In particular, investors should be careful to
consider the tax implications of buying shares just prior to a distribution. The
price of shares purchased at that time (at the net asset value per share) may
include the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will then receive a return of capital upon the distribution
which will nevertheless be taxable to them. All distributions, whether received
in shares or cash, must be reported by each shareholder on his Federal income
tax return. Furthermore, under the Code, dividends declared by the Fund in
October, November or December of any calendar year, and payable to shareholders
of record in such a month, shall be deemed to have been received by the
shareholder on December 31 of such calendar year if such dividend is actually
paid in January of the following calendar year.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the Fund. The tax consequences of a sale or redemption
depend upon several factors, including the shareholder's tax basis in the shares
sold or redeemed and the length of time the shares have been held. Basis in the
shares may be the actual cost of those shares (net asset value of Fund shares on
purchase or reinvestment date). Any loss realized by shareholders upon
redemption of shares within six months of the date of their purchase will
generally be treated as a long-term capital loss to the extent of any
distributions of net long-term capital gains with respect to such shares during
the six month period. Moreover, a loss on sale or redemption of Fund shares will
be disallowed if shares of the Fund are purchased within 30 days before or after
the shares are sold or redeemed.
For shareholders who fail to furnish to the Fund their social security or
taxpayer identification numbers and certain related information or who fail to
certify that they are not subject to back-up withholding, dividends,
distributions of capital gains and redemption proceeds paid by the Fund will be
subject to a 31% Federal income tax withholding requirement. If the withholding
provisions are applicable, any such dividends or capital-gains distributions to
these shareholders, whether taken in cash or reinvested in additional shares,
and any redemption proceeds will be reduced by the amounts required to be
withheld.
B-14
<PAGE>
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents, domestic
corporations and partnerships, and certain trusts and estates) and is not
intended to be a complete discussion of all Federal tax consequences.
Shareholders who are not citizens or residents of the United States and certain
foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short-term capital
gains. Shareholders are advised to consult with their tax advisers concerning
the application of Federal, state and local taxes to an investment in the Fund.
PERFORMANCE DATA
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
or other performance data on the Fund will be accompanied by information on the
Fund's average annual compounded rate of return for the periods of one year,
five years and ten years, all ended on the last day of a recent calendar
quarter. The Fund may also advertise aggregate total return information for
different periods of time.
The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:
P(1+T) to the power of n = ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial purchase order of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase
at the end of the period.
</TABLE>
The Fund's average annual total returns for the one, five and ten year
periods ending December 31, 1999 were 26.74%, 24.57% and 16.82%, respectively.
The Fund's total return may be compared to relevant indices and data from
Lipper Analytical Services, Inc., Morningstar or Standard & Poor's Indices.
From time to time, evaluations of the Fund's performance by independent
sources may also be used in advertisements and in information furnished to
present or prospective investors in the Fund.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield, total return or
distribution rate for any period should not be considered as a representation of
what an investment may earn or what an investor's total return, yield or
distribution rate may be in any future period.
FINANCIAL STATEMENTS
The Fund's financial statements for the year ended December 31, 1999,
including the financial highlights for each of the five fiscal years in the
period ended December 31, 1999, appearing in the 1999 Annual Report to
Shareholders and the report thereon of PricewaterhouseCoopers LLP, independent
accountants, appearing therein, are incorporated by reference in this Statement
of Additional Information.
B-15
<PAGE>
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Incorporation, as amended.*
(b) By-laws.*
(c) Instruments Defining Rights of Security Holders. Reference is made to
Article Fifth of the Articles of Incorporation filed as Exhibit (a) to
Post-Effective Amendment No. 84.
(d) Investment Advisory Agreement.*
(e) Underwriting Contract.*
(f) Not applicable.
(g) Custodian Agreement.*
(h) Not applicable.
(i) Legal Opinion.*
(j) Consent of independent accountants.
(k) Not applicable.
(l) Not applicable.
(m) Not applicable.
(p) Code of Ethics.
* Filed as an exhibit to Post-Effective Amendment No. 84 and incorporated
herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 25. INDEMNIFICATION.
Incorporated by reference to Article Seventh (7)(c) of the Articles of
Incorporation filed as Exhibit (a) to Post-Effective Amendment No. 84.
ITEM 26. BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER.
Value Line, Inc., Registrant's investment adviser, acts as investment
adviser for a number of individuals, trusts, corporations and institutions, in
addition to the registered investment companies in the Value Line Family of
Funds listed in Item 27.
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
---- ----------- ----------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Board, Chairman of the Board and Chief Executive
President and Chief Executive Officer of Arnold Bernhard & Co., Inc. and
Officer Chairman of the Value Line Funds and the
Distributor
Samuel Eisenstadt Senior Vice President and -------------------------------------------
Director
David T. Henigson Vice President, Treasurer and Vice President and a Director of Arnold
Director Bernhard & Co., Inc. and the Distributor
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C> <C>
Howard A. Brecher Vice President, Secretary and Vice President, Secretary, Treasurer and a
Director Director of Arnold Bernhard & Co., Inc.
Harold Bernard, Jr. Director Attorney-at-law; Retired Administrative Law
Judge
W. Scott Thomas Director Partner, Brobeck, Phleger & Harrison,
attorneys, One Market Plaza, San Francisco,
CA 94105
Linda S. Wilson Director President Emerita, Radcliffe College;
Senior Lecturer, Harvard Graduate School of
Education, Cambridge, MA 02138
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Value Line Securities, Inc., acts as principal underwriter for the
following Value Line funds, including the Registrant: The Value Line
Fund, Inc.; Value Line Income and Growth Fund, Inc.; The Value Line
Special Situations Fund, Inc.; Value Line Leveraged Growth Investors,
Inc.; The Value Line Cash Fund, Inc.; Value Line U.S. Government
Securities Fund, Inc.; Value Line Centurion Fund, Inc.; The Value Line
Tax Exempt Fund, Inc.; Value Line Convertible Fund, Inc.; Value Line
Aggressive Income Trust; Value Line New York Tax Exempt Trust; Value Line
Strategic Asset Management Trust; Value Line Emerging Opportunities Fund,
Inc.; Value Line Asset Allocation Fund, Inc.; Value Line U.S.
Multinational Company Fund, Inc.
(b)
<TABLE>
<CAPTION>
(2)
POSITION AND (3)
(1) OFFICES POSITION AND
NAME AND PRINCIPAL WITH VALUE LINE OFFICES WITH
BUSINESS ADDRESS SECURITIES, INC. REGISTRANT
---------------- ---------------- ----------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Chairman of the
Board Board and
President
David T. Henigson Vice President, Vice President,
Secretary, Secretary and
Treasurer and Treasurer
Director
Stephen LaRosa Asst. Vice Asst. Treasurer
President
</TABLE>
The business address of each of the officers and directors is 220 East
42nd Street, NY 10017-5891.
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Value Line, Inc.
220 East 42nd Street
New York, NY 10017
For records pursuant to:
Rule 31a-1(b)(4),(5),(6),(7),(10),(11)
Rule 31a-1(f)
C-2
<PAGE>
State Street Bank and Trust Company
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141
For records pursuant to Rule 31a-1(b)(2)(iv)
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
For all other records
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
None.
--------------
C-3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 85 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 11, 2000 relating to the financial
statements and financial highlights which appear in the December 31, 1999 Annual
Report to Shareholders of The Value Line Fund, Inc., which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the headings "Financial Highlights", "Investment Advisory and Other
Services" and "Financial Statements" in such Registration Statement.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
April 24, 2000
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York, on
the day of April, 2000.
THE VALUE LINE FUND, INC.
By: /s/ DAVID T. HENIGSON
...................................
DAVID T. HENIGSON, VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C> <C>
*JEAN B. BUTTNER Chairman and Director; April 24, 2000
(JEAN B. BUTTNER) President; Principal
Executive Officer
*JOHN W. CHANDLER Director April 24, 2000
(JOHN W. CHANDLER)
*DAVID H. PORTER Director April 24, 2000
(DAVID H. PORTER)
*PAUL CRAIG ROBERTS Director April 24, 2000
(PAUL CRAIG ROBERTS)
*NANCY-BETH SHEERR Director April 24, 2000
(NANCY-BETH SHEERR)
/s/ DAVID T. HENIGSON Treasurer; Principal Financial April 24, 2000
....................................... and Accounting Officer
(DAVID T. HENIGSON)
</TABLE>
*By /s/ DAVID T. HENIGSON
...................................
(DAVID T. HENIGSON,
ATTORNEY-IN-FACT)
C-5
<PAGE>
12/99
VALUE LINE, INC.
VALUE LINE DISTRIBUTION CENTER, INC.
VALUE LINE PUBLISHING, INC.
VALUE LINE SECURITIES, INC.
COMPUPOWER CORPORATION
VALUE LINE FUNDS
CODE OF ETHICS REGARDING
SECURITIES TRANSACTIONS
AND INSIDER TRADING POLICY
This organization is one of the most complex in the investment advisory
business. The diversity of its activities, including the publication of The
Value Line Investment Survey and other services, and the management of mutual
funds and asset management accounts, raises special problems regarding areas in
which conflicts of interest may arise between the overall organization and its
directors, officers and employees and shareholders on the one hand, and
subscribers to the services, shareholders of the funds, and asset management
clients, on the other.
Ethics and law place a heavy burden on an investment adviser and its
officers, directors and employees. They are, together, in a position of trust in
which the highest standards of integrity at all times must be maintained. It is
the duty of management to take all steps to ensure that the private financial or
other transactions of all employees are conducted so as not to conflict with the
interest of subscribers, shareholders and clients with whom the organization is
in a relationship of trust. The interests of such subscribers and investors are
specially protected by the Securities and Exchange Commission and other
governmental authorities and the consequences of the discovery of an improper
transaction by an employee are most serious for both the employee and the
employer.
It is the duty of management to protect both Value Line and its
officers, directors and employees by establishing procedures to be followed by
all personnel in their private transactions. Much thought has been given to
working out solutions that are practical and realistic. The rules and procedures
that have been established are similar to those that have been adopted by a
number of other firms in the securities business.
- -------------------
This Code of Ethics Regarding Securities Transactions and Insider Trading Policy
is applicable to all officers, directors and employees of Value Line, Inc. and
its subsidiaries ("Value Line") and of the Value Line Funds.
<PAGE>
1. CONFIDENTIALITY; INSIDER TRADING RULES APPLICABLE TO OFFICERS,
DIRECTORS AND EMPLOYEES
--------------------------------------------------------------
Management wishes to emphasize, in the strongest possible manner, the
paramount necessity for exercising the greatest discretion in divulging
confidential information. Depending on their functions in the organization,
officers, directors and employees have access to, or may become aware of,
confidential information to a greater or lesser degree. It is not possible to
give an exhaustive list of what material is confidential, and common sense must
be applied to the circumstances, but the following matters must ALWAYS be
treated as strictly confidential:
(a) the name of a Stock Highlight prior to the time when
subscribers to a Value Line Service have had a reasonable time
to act on a recommendation;
(b) the name of a Special Situation after selection for
publication in a Value Line Service and prior to the time when
subscribers to that Service have had a reasonable time to act
on the recommendation;
(c) any information regarding, or connected with, buying and
selling operations conducted, or proposed to be conducted, in
respect of the security portfolios of any of the Value Line
Funds or of any asset management client;
(d) any information privately tendered to any person in the Value
Line organization that, if or when publicly known, would be
likely to affect the price of a security.
All officers, directors and employees must not use, reveal or discuss
any confidential information with any person outside Value Line unless they are
specifically authorized to do so for a particular business reason; and officers,
directors and employees must not disclose confidential information to any other
member of the organization unless it is clearly necessary for such person to be
informed. Any information relating to Value Line, Inc., its subsidiaries or the
Value Line Funds prior to its release to the public must be considered to be
confidential information.
OFFICERS, DIRECTORS AND EMPLOYEES MUST NOT BUY, SELL, TIP, RECOMMEND OR
SUGGEST THAT ANYONE ELSE BUY, SELL OR RETAIN, THE SECURITIES OF ANY COMPANY
(INCLUDING VALUE LINE, INC.) WHILE IN POSSESSION OF INSIDE INFORMATION REGARDING
SUCH COMPANY. THIS PROHIBITION ON INSIDER TRADING APPLIES NOT ONLY TO PERSONAL
TRANSACTIONS, BUT ALSO BARS TRADING FOR CLIENT ACCOUNTS OR FOR FAMILY MEMBERS OR
FRIENDS WHEN IN POSSESSION OF INSIDE INFORMATION. IN SHORT, "INSIDE INFORMATION"
MEANS NON-PUBLIC INFORMATION (INFORMATION WHICH IS NOT AVAILABLE TO INVESTORS
GENERALLY) THAT A REASONABLE INVESTOR WOULD CONSIDER TO BE IMPORTANT IN DECIDING
WHETHER TO BUY, SELL, OR RETAIN A SECURITY.
THE UNAUTHORIZED DISCLOSURE OF CONFIDENTIAL INSIDE INFORMATION IS
ALWAYS WRONG AND MAY HAVE THE MOST SERIOUS CONSEQUENCES. ANY BREACH OF THIS RULE
WILL BE REGARDED
<PAGE>
AS A SERIOUS CONTRAVENTION OF COMPANY REGULATIONS.
2. TRADING AND OTHER RULES APPLICABLE TO OFFICERS AND EMPLOYEES
------------------------------------------------------------
(a) Employees, including officers, are:
(1) forbidden to act as investment advisers, to operate
any security account management service, or to give
any investment advice to any person for profit or
benefit, whether direct or indirect, without the
express prior written authorization of the Chief
Executive Officer or President of Value Line, Inc.
(2) forbidden to trade against the interest of
subscribers to any of the Value Line Services, asset
management clients, or any Value Line Funds, for
their own account or benefit, whether direct or
indirect, or for the account or benefit, whether
direct or indirect, of any other person.
(3) forbidden to recommend any securities transaction to
any Value Line Fund or asset management account
without having disclosed in writing his interest, if
any, in the securities or the issuer thereof to the
Company's Compliance Officer or Legal Counsel.
(4) forbidden from serving on the Board of Directors of
any publicly traded company without the express prior
written authorization of the Chief Executive Officer
or President of Value Line, Inc.
(5) forbidden from purchasing or selling any security
until 7 calendar days AFTER all transactions for a
Value Line Fund or asset management account have been
completed for that security. A portfolio manager may
not purchase or sell a security for his or her own
account within 7 calendar days BEFORE or AFTER all
transactions for a Value Line Fund or asset
management account have been completed for that
security if he acts as a portfolio manager for that
Fund or account or is a member of the portfolio
management team for that Fund or account.
(6) forbidden from PURCHASING or SELLING any security
that has been selected or is about to be recommended
as a special recommendation or stock highlight by any
of the Value Line Services or if its rank is being
upgraded by one of the Services until at least 1
business day after publication of the Service.
(7) forbidden from SELLING any security if its rank is
being downgraded or if a Value Line Service is
recommending that it be sold until at least 1
business day after publication.
<PAGE>
("Publication" refers to the date of publication
appearing on a Service or the date of such
publication's release to the public, whichever is
appropriate.)
(8) prohibited from participating in initial public
offerings. Purchases of new issues are allowed only
in the secondary markets.
(9) prohibited from acquiring securities in a private
placement without the express prior written
authorization of the Chief Executive Officer or
President of Value Line, Inc.
(10) expected to seek to avoid day-trades and should be
prepared to hold securities for at least 60 calendar
days in order to avoid any conflict of interest.
(11) prohibited without the express prior written
authorization of the Chief Executive Officer or
President of Value Line, Inc., from accepting any
offer made by any person whereby the officer or that
person would be enabled to purchase or sell any
security at a price, or under other conditions, more
favorable than those obtainable at the time by the
general public.
(12) prohibited from receiving any gift other than of a
minor value from any person that does business with
Value Line, any of its subsidiaries or any of the
Value Line Funds.
IN ADDITION, AS SET FORTH IN SECTION 3, WITH RARE
EXCEPTIONS, ALL TRANSACTIONS MUST BE CLEARED IN
ADVANCE BY THE TRADING DEPARTMENT.
3. PRE-CLEARANCE OF TRADES APPLICABLE TO OFFICERS AND EMPLOYEES
------------------------------------------------------------
NO OFFICER OR EMPLOYEE MAY ENGAGE IN ANY TRANSACTION IN ANY SECURITY
WITHOUT ADVANCE NOTIFICATION TO AND CLEARANCE BY THE TRADING DEPARTMENT, EXCEPT
AS SET FORTH BELOW. IF CLEARANCE IS DENIED, THIS FACT SHOULD BE CONSIDERED AS
CONFIDENTIAL INFORMATION AND MUST NOT BE DISCLOSED. In addition, the acquisition
of securities in a private placement or the purchase or sale of any security at
a price more favorable than that which is ascertainable at the time by the
general public also requires the express written authorization of the Chief
Executive Officer or President of Value Line, Inc.
The fullest assistance will always be given to any employee who is in
doubt as to whether a particular transaction would CONTRAVENE EITHER THE GENERAL
PROHIBITIONS SET OUT IN SECTION 1 OR ANY OF THE SPECIFIC RULES SET FORTH IN
SECTION 2. Employees and officers are
<PAGE>
urged in any case where they have the slightest doubt as to the propriety of a
transaction, to refer it to the Company's Compliance Officer or Legal Counsel.
Provided the standards of Sections 1 and 2 are met, the following
transactions are exempted from the pre-clearance requirement:
(a) transactions effected in any account in which the employee has
no direct or indirect influence or control or beneficial
interest;
(b) transactions in securities that are direct obligations of the
United States;
(c) purchases of shares in automatic dividend reinvestment
programs;
(d) transactions in the shares of any registered open-end
investment company (mutual fund);
(e) transactions in banker's acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements.
4. REPORTING OBLIGATIONS APPLICABLE TO OFFICERS, DIRECTORS AND EMPLOYEES
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THE SECURITIES AND EXCHANGE COMMISSION REQUIRES VALUE LINE, INC. AND
OTHER INVESTMENT ADVISERS TO OBTAIN FROM OFFICERS, DIRECTORS AND EMPLOYEES, AND
TO MAINTAIN RECORDS OF, PARTICULARS OF THEIR SECURITIES TRANSACTIONS AND OF
OTHER TRANSACTIONS IN SECURITIES IN WHICH THEY MAY BE CONSIDERED TO HAVE A
BENEFICIAL INTEREST.
(a) OFFICERS AND EMPLOYEES
IN ORDER TO COMPLY WITH THE REPORTING REQUIREMENTS, OFFICERS AND
EMPLOYEES MUST (i) INSTRUCT THE BROKER DEALER OR BANK WITH OR THROUGH WHOM A
SECURITY TRANSACTION IS EFFECTED IN WHICH SUCH PERSON HAS, OR BY REASON OF SUCH
TRANSACTION, ACQUIRES ANY DIRECT OR INDIRECT BENEFICIAL OWNERSHIP OF A SECURITY
TO FURNISH DUPLICATE COPIES OF TRANSACTION CONFIRMATIONS AND STATEMENTS OF
ACCOUNT AT THE SAME TIME THAT SUCH STATEMENTS ARE SENT TO THE OFFICER OR
EMPLOYEE AND (ii) REPORT BY MAY 30 OF EACH CALENDAR YEAR TO THE COMPLIANCE
DEPARTMENT THAT SUCH PERSON HAS EITHER FORWARDED ALL BROKERAGE STATEMENTS WITH
RESPECT TO TRANSACTIONS OR HAD NO TRANSACTIONS DURING THE PREVIOUS HALF-YEAR.
(i) The foregoing requirements relate to all securities
transactions (purchases, sales, or other acquisitions
or dispositions) effected by or on behalf of the
officer, employee, his/her spouse, minor child, other
household members, accounts subject to the officer's
or employee's discretion and control and other
accounts in which the employee has a beneficial
interest.
<PAGE>
(ii) Every such transaction is to be reported, whether or
not it is effected directly or indirectly. Examples
of transactions in securities that indirectly benefit
a person mentioned in subparagraph (i) above include
transactions that entitle such person to any of the
rights or benefits of ownership even though he or she
is not the owner of record. In addition to the family
situations mentioned above, beneficial ownership may
also occur where such person acquires or disposes of
securities in the capacity of trustee, executor,
pledgee, agent or in any similar capacity, or where
any such person has a beneficial interest in the
securities under a trust, will, partnership or other
arrangement, or through a closely held corporation.
(b) DIRECTORS
(1) DIRECTORS OTHER THAN OUTSIDE FUND DIRECTORS. All Directors
other than outside Value Line Fund directors, must either comply with Section
4(a) as if it applied to such directors or file a report with the Compliance
Department within 10 days of the end of any calendar quarter covering every
transaction in which the director had, or by reason of the transaction,
acquired, any direct or indirect beneficial ownership of a security which
contains the following information: (a) the date of the transaction, title and
number of shares or interest rate, maturity and principal amount of each
security involved; (b) the nature of the transaction (i.e., a purchase, sale,
gift); (c) the price; (d) the name of the broker, dealer or bank through whom
the transaction was effected; and (e) the date the report is submitted to the
Compliance Department.
(2) OUTSIDE FUND DIRECTORS. The Securities and Exchange
Commission requires that any Director of the Value Line Funds (who is not an
interested person of a Fund or otherwise an officer, director or employee of
Value Line) must file a report with the Compliance Department within 10 days of
the end of any calendar quarter if such director knew, or "in the ordinary
course of fulfilling his or her official duties as a Fund director, should have
known," that during the 15 days BEFORE or AFTER the date of a transaction by the
director, the security is or was purchased or sold by a Value Line Fund, or was
being considered by a Value Line Fund or Value Line, Inc. for purchase or sale.
Ordinarily, reports would need to be filed only if an outside director actually
knows of a Fund transaction since, generally, outside directors would not be
expected to be in a position in which they "should have known" of a Fund
transaction.
<PAGE>
(c) ACCESS PERSONS*
(1) INITIAL REPORTING REQUIREMENTS. No later than 10 days
after a person becomes an Access Person, such person must file a report with the
Compliance Department which contains the following information: (a) the title
and number of shares or principal amount of each security in which such person
has any direct or indirect beneficial ownership; (b) the name of the broker,
dealer or bank with whom such person maintains an account in which the
securities are held; and (c) the date the report is submitted to the Compliance
Department.
(2) ANNUAL REPORTING REQUIREMENTS. No later than May 30 of
each calendar year, each Access Person must file a report with the Compliance
Department which contains the following information: (a) the title and number of
shares or principal amount of security in which such person has any direct or
indirect beneficial ownership; (b) the name of the broker, dealer or bank with
whom such person maintains an account in which the securities are held; and (c)
the date the report is submitted to the Compliance Department.
* * *
The provisions of this Policy Statement must be strictly observed.
Violations of this policy will be grounds for appropriate disciplinary action,
including, in the case of officers and employees, dismissal. Pre-clearance and
reporting of personal securities transactions do not relieve anyone from
responsibility for compliance with the proscriptions against insider trading and
tipping described in Section 1.
The Legal and Compliance Departments shall be responsible for the
interpretation and enforcement of this Policy Statement and Code of Ethics.
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* You are an Access Person if you are a director, officer or employee of
a Value Line Fund or of Value Line (or of any company in a control
relationship to Value Line) who, in connection with your regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of securities by the Fund, or whose
functions relate to the making of any recommendation to the Fund with
respect to the purchase or sale of securities. If you are in doubt as
to your status, you should check with the Legal Department.
