-------------------------------------
ANNUAL REPORT
-------------------------------------
December 31, 1999
-------------------------------------
Value Line
Income and
Growth
Fund, Inc.
[GRAPHIC]
----------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Income and Growth Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to report another successful year for the Value Line Income and
Growth Fund.
The Fund's total return in 1999 was 25.33%, which compared to a total return of
21.04% for the unmanaged Standard & Poor's 500 Stock Index and a total return of
- -1.89% for the unmanaged Lehman Brothers Government/Corporate Bond Index.
To produce income, the Fund held 20% to 35% of its assets in bonds and cash
during the course of the year. The Fund's bondholdings made only a nominal
contribution to total returns in 1999. Bond prices fell during the year,
offsetting interest payments. We concentrated primarily on U.S. Treasuries and
U.S. agencies, with a smaller amount of corporate bonds.
Your Fund was able to best the S&P 500 benchmark by investing in some
particularly strong individual stocks. Our strategy of balancing stockholdings
with bonds and cash produced favorable returns while holding down levels of risk
and volatility for shareholders.
The best performing sector in the Fund and in the stock market itself was the
technology sector. Each of the Fund's top seven stock gains came from various
subsectors of technology. These stocks were Qualcomm, Sun Microsystems, Nokia,
EMC Corp., Cisco, America Online, and Tellabs. Even the Fund's eighth best
performer, the advertising firm Omnicom, benefited from the growth of the
internet, through both dot.com brand spending on conventional advertising and
Omnicom's subsidiaries that handle ads on the internet itself. Other important
contributors to performance included Microsoft, financial services firms
Citigroup and American Express, and retailers Home Depot and Wal-Mart Stores,
each of whose prices rose over 60% during 1999.
In making stock selections, we concentrate on companies and stocks that are
already doing well in terms of both earnings momentum and stock price momentum.
When stocks no longer meet these criteria, they are usually eliminated from the
portfolio.
Thank you for your continued confidence.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
January 20, 2000
- --------------------------------------------------------------------------------
2
<PAGE>
Value Line Income and Growth Fund, Inc.
Income and Growth Fund Shareholders
================================================================================
Economic Observations
The American economy continues to perform well as we proceed through the first
quarter of 2000. Evidence of this healthy level of business activity can be
found in the strong pace of manufacturing, the acceleration in job growth, and
the generally solid performances by the auto, housing, and retail sectors.
Overall, we estimate that GDP growth will average 3.0%-3.5% for the year as a
whole, making 2000 the tenth year in a row of sustained economic growth in this
country.
Inflationary pressures, meanwhile, continue to be held largely at bay, in spite
of a tightening labor market and a further recent rise in energy prices, with
strong increases in productivity and ongoing technological innovations being at
least partially responsible for this comparative pricing stability.
Nevertheless, a gradual uptrend in cost pressures does seem likely over the next
several quarters. The Federal Reserve, taking note of this somewhat higher
expense structure, is likely to chart a modestly more restrictive monetary
course in the months ahead, with additional, albeit rather modest, interest rate
increases being quite possible.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
--------- -------------
1 year ended 12/31/99.......... 25.33% $12,533
5 years ended 12/31/99......... 22.99% $28,142
10 years ended 12/31/99......... 14.54% $38,862
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and capital
gains distributions accepted in shares. The investment return and principal
value of an investment will fluctuate so that an investment, when redeemed,
may be worth more or less than its original cost.
- --------------------------------------------------------------------------------
3
<PAGE>
Value Line Income and Growth Fund, Inc.
================================================================================
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
VALUE LINE INCOME AND GROWTH FUND, THE S&P 500 STOCK INDEX AND THE
LEHMAN GOVERNMENT/CORPORATE BOND INDEX*
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Value Line S & P 500 Lehman Brothers Gov't/
Income & Growth Fund Index Corp. Bond Index
-------------------- --------- ----------------------
1/90 100,000 10,000 10,000
3/90 $ 9,656 $ 9,699 $ 9,885
6/90 $ 10,067 $ 10,308 $ 10,242
9/90 $ 9,445 $ 8,893 $ 10,304
12/90 $ 10,200 $ 9,689 $ 10,828
3/91 $ 11,304 $ 11,094 $ 11,120
6/91 $ 11,205 $ 11,068 $ 11,288
9/91 $ 12,009 $ 11,658 $ 11,937
12/91 $ 13,107 $ 12,635 $ 12,574
3/92 $ 12,414 $ 12,316 $ 12,386
6/92 $ 12,592 $ 12,550 $ 12,887
9/92 $ 12,974 $ 12,946 $ 13,517
12/92 $ 13,336 $ 13,596 $ 13,528
3/93 $ 13,831 $ 14,189 $ 14,157
6/93 $ 14,293 $ 14,257 $ 14,582
9/93 $ 14,442 $ 14,624 $ 15,064
12/93 $ 14,438 $ 14,963 $ 15,020
3/94 $ 13,645 $ 14,397 $ 14,550
6/94 $ 13,567 $ 14,457 $ 14,369
9/94 $ 14,031 $ 15,163 $ 14,440
12/94 $ 13,809 $ 15,160 $ 14,493
3/95 $ 14,698 $ 16,634 $ 15,215
6/95 $ 15,686 $ 18,220 $ 16,201
9/95 $ 16,567 $ 19,667 $ 16,513
12/95 $ 17,432 $ 20,850 $ 17,282
3/96 $ 18,307 $ 21,969 $ 16,878
6/96 $ 18,786 $ 22,954 $ 16,957
9/96 $ 19,473 $ 23,663 $ 17,256
12/96 $ 20,462 $ 25,634 $ 17,784
3/97 $ 19,930 $ 26,323 $ 17,630
6/97 $ 22,554 $ 30,915 $ 18,272
9/97 $ 24,813 $ 33,229 $ 18,912
12/97 $ 24,256 $ 34,183 $ 19,519
3/98 $ 26,111 $ 38,948 $ 19,815
6/98 $ 26,905 $ 40,234 $ 20,333
9/98 $ 25,188 $ 36,239 $ 21,340
12/98 $ 31,007 $ 43,951 $ 21,368
3/99 $ 33,498 $ 46,140 $ 21,113
6/99 $ 33,860 $ 49,392 $ 20,881
9/99 $ 33,435 $ 46,310 $ 20,994
12/99 $ 38,862 $ 53,198 $ 20,909
(From 1/1/90 to 12/31/99)
* The Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged index that
is representative of the larger-capitalization stocks traded in the United
States.
The Lehman Brothers Government/Corporate Bond Index is an unmanaged index that
is representative of investment-grade domestic corporate and government bonds.
The returns for the indices do not reflect expenses which are deducted from the
Fund's returns.
- --------------------------------------------------------------------------------
4
<PAGE>
Value Line Income and Growth Fund, Inc.
Portfolio Highlights at December 31, 1999 (unaudited)
================================================================================
Ten Largest Holdings
Value Percentage of
Issue Shares (in thousands) Net Assets
- --------------------------------------------------------------------------------
Cisco Systems, Inc. ................... 72,750 $ 7,793 3.4%
EMC Corp. ............................. 70,000 7,647 3.3
Microsoft Corp. ....................... 65,000 7,589 3.3
America Online, Inc. .................. 100,000 7,544 3.3
Sun Microsystems, Inc. ................ 93,000 7,202 3.1
Wal-Mart Stores, Inc. ................. 102,500 7,085 3.1
Omnicom Group, Inc. ................... 70,500 7,050 3.1
QUALCOMM Inc. ......................... 37,000 6,517 2.8
Time Warner, Inc. ..................... 73,000 5,288 2.3
General Electric Co. .................. 31,500 4,875 2.1
Five Largest Industry Categories
Value Percentage of
Industry (in thousands) Net Assets
- --------------------------------------------------------------------------------
Computer & Peripherals ................ $29,574 12.8%
Drug .................................. 11,921 5.2
Telecommunications Equipment .......... 10,817 4.7
Financial Services-Diversified ........ 10,488 4.5
Computer Software & Services .......... 8,535 3.7
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
- --------------------------------------------------------------------------------
Federal National Mortgage Association Notes, 6.625%, 9/15/09 . $ 1,997
Telefonos de Mexico S.A. (ADR) ............................... 1,482
RBF Finance Co. Senior Secured Notes, 11.375%, 3/15/09 ....... 1,070
Federal National Mortgage Association Notes, 6.500%, 8/15/04 . 991
Global Crossing Holdings Ltd. Senior Notes,
Series 144A, 9.50% 11/15/09 ................................ 984
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
- --------------------------------------------------------------------------------
AT & T Corp. ................................................. $ 3,227
Intel Corp. .................................................. 2,782
Lucent Technologies Inc. ..................................... 2,264
EMC Corp. .................................................... 2,152
Clorox Company (The) ......................................... 2,012
* For the six month period ended 12/31/99.
- --------------------------------------------------------------------------------
5
<PAGE>
Value Line Income and Growth Fund, Inc.
Schedule of Investments
================================================================================
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS (69.4%)
ADVERTISING (3.1%)
70,500 Omnicom Group, Inc. ........................... $ 7,050
BANK (1.2%)
13,300 Mellon Financial Corp. ....................... 453
20,000 Wells Fargo & Company ......................... 809
24,000 Zions Bancorporation........................... 1,420
--------
2,682
BANK--MIDWEST (1.3%)
24,250 Fifth Third Bancorp............................ 1,779
61,500 Firstar Corp................................... 1,299
--------
3,078
CABLE TV (0.5%)
15,500 Cablevision Systems Corp.
Class "A"* ................................ 1,170
COMPUTER &
PERIPHERALS (12.8%)
72,750 Cisco Systems, Inc.* .......................... 7,793
92,500 Dell Computer Corp.*........................... 4,718
70,000 EMC Corp.*..................................... 7,647
20,500 International Business
Machines Corp. ........................... 2,214
93,000 Sun Microsystems, Inc.* ....................... 7,202
--------
29,574
COMPUTER SOFTWARE
& SERVICES (3.7%)
10,000 Computer Sciences Corp.*....................... 946
65,000 Microsoft Corp.* .............................. 7,589
--------
8,535
DIVERSIFIED
COMPANIES (2.5%)
11,500 Honeywell International Inc.................... 663
95,000 Tyco International, Ltd. ...................... 3,693
20,000 United Technologies Corp. .................... 1,300
--------
5,656
DRUG (5.2%)
22,000 Merck & Co., Inc. ............................. 1,475
121,000 Pfizer, Inc. .................................. 3,925
73,000 Schering-Plough Corp. ........................ 3,080
42,000 Warner-Lambert Co. ............................ 3,441
--------
11,921
DRUGSTORE (0.3%)
20,500 Walgreen Co. .................................. 600
ELECTRICAL
EQUIPMENT (2.1%)
31,500 General Electric Co. .......................... 4,875
ELECTRONICS (0.3%)
6,500 Sanmina Corp.* ................................ 649
ENTERTAINMENT (3.2%)
73,000 Time Warner, Inc. ............................. 5,288
36,500 Viacom Inc. Class "A"* ........................ 2,206
--------
7,494
FINANCIAL SERVICES--
DIVERSIFIED (4.5%)
7,000 American Express Co. .......................... 1,164
37,156 American International
Group, Inc. ............................... 4,018
16,000 Capital One Financial Corp. .................. 771
81,625 Citigroup Inc. ................................ 4,535
--------
10,488
FOREIGN
TELECOMMUNICATIONS
(2.7%)
17,000 Ericsson (L.M.) Telephone Co.
AB (ADR) .................................. 1,117
18,500 Nokia Corp. (ADR) ............................ 3,515
15,000 Telefonos de Mexico S.A.
(ADR) ..................................... 1,687
--------
6,319
- --------------------------------------------------------------------------------
6
<PAGE>
Value Line Income and Growth Fund, Inc.
December 31, 1999
================================================================================
Value
Shares (in thousands)
- --------------------------------------------------------------------------------
HOUSEHOLD
PRODUCTS (1.5%)
9,000 Kimberly-Clark Corp. ......................... $ 587
25,500 Procter & Gamble Co. .......................... 2,794
--------
3,381
INTERNET (3.3%)
100,000 America Online, Inc.* ......................... 7,544
MACHINERY (0.4%)
19,000 Dover Corp. .................................. 862
MEDICAL SUPPLIES (1.9%)
31,000 Guidant Corp.* ................................ 1,457
6,000 Johnson & Johnson.............................. 559
66,000 Medtronic, Inc. ............................... 2,405
--------
4,421
NATURAL GAS--
DIVERSIFIED (0.2%)
13,000 Williams Companies,
Inc. (The) ................................ 397
OFFICE EQUIPMENT
& SUPPLIES (0.4%)
43,500 Staples, Inc.* ................................ 903
PRECISION
INSTRUMENT (0.4%)
22,000 PerkinElmer, Inc............................... 917
RECREATION (0.5%)
14,000 Electronic Arts Inc.*.......................... 1,176
RETAIL--
SPECIAL LINES (1.6%)
26,000 Bed Bath & Beyond Inc.* ....................... 904
49,375 Gap, Inc. (The)................................ 2,271
22,500 TJX Companies, Inc. (The) ..................... 460
--------
3,635
RETAIL BUILDING
SUPPLY (1.3%)
45,000 Home Depot, Inc. (The) ........................ 3,085
RETAIL STORE (3.3%)
7,000 Costco Wholesale Corp.*........................ 639
102,500 Wal-Mart Stores, Inc. ......................... 7,085
--------
7,724
SECURITIES
BROKERAGE (0.2%)
12,000 Schwab (Charles) Corp. ....................... 461
SEMICONDUCTOR (2.0%)
55,000 Intel Corp. .................................. 4,527
TELECOMMUNICATIONS
EQUIPMENT (4.7%)
20,500 Lucent Technologies Inc. ...................... 1,534
37,000 QUALCOMM Inc. ................................. 6,517
10,500 Scientific-Atlanta, Inc. ...................... 584
34,000 Tellabs, Inc.* ................................ 2,182
--------
10,817
TELECOMMUNICATION
SERVICES (2.6%)
9,500 Bell Atlantic Corp............................. 585
23,000 Broadwing Inc. ................................ 848
74,853 MCI WorldCom, Inc.*............................ 3,972
10,000 SBC Communications Inc. ....................... 487
--------
5,892
THRIFT (1.7%)
38,000 Federal Home Loan
Mortgage Corp. ........................... 1,788
33,000 Federal National
Mortgage Association ...................... 2,061
--------
3,849
--------
TOTAL COMMON STOCKS
(Cost $85,294,000) ............................ 159,682
--------
- --------------------------------------------------------------------------------
7
<PAGE>
Value Line Income and Growth Fund, Inc.
Schedule of Investments
================================================================================
Principal
Amount Value
(in thousands) (in thousands)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (3.2%)
$ 2,000 U.S. Treasury Notes, 5.875%,
6/30/00.................................... $ 2,002
5,000 U.S. Treasury Notes, 4.750%,
11/15/08................................... 4,411
1,000 U.S. Treasury Bonds, 6.000%,
2/15/26 ................................... 915
--------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $7,877,000) ........................ 7,328
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (9.5%)
5,000 Federal Home Loan Bank Bonds,
5.125%, 2/26/02 ........................... 4,857
2,000 Federal Home Loan
Mortgage Corp. Debentures,
5.750%, 7/15/03 ........................... 1,937
5,000 Federal Home Loan
Mortgage Corp. Debentures,
5.000%, 1/15/04 ........................... 4,684
1,000 Federal National Mortgage
Association Notes,
6.50%, 8/15/04 ............................ 988
3,000 Federal National Mortgage
Association Notes,
5.750%, 6/15/05 ........................... 2,853
2,000 Federal National Mortgage
Association Notes,
6%, 5/15/08 ............................... 1,872
2,000 Federal National Mortgage
Association Notes,
6.625%, 9/15/09 ........................... 1,945
3,000 Tennessee Valley Authority
Global Power Bonds,
1995 Series "E", 6.750%,
11/1/25 ................................... 2,822
--------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $23,247,000) ....................... 21,958
--------
CORPORATE BONDS AND NOTES (4.6%)
ADVERTISING (0.5%)
1,000 Outdoor Systems, Inc. 8.875%
Senior Sub. Notes, 6/15/07 ................ 1,035
AUTO PARTS--
REPLACEMENT (0.4%)
1,000 Federal-Mogul Corp.
7.875%, Notes, 7/1/10 ..................... 914
CABLE TV (0.4%)
1,000 Adelphia Communications Corp.
9.875%, Senior Notes
Series "B", 3/1/07 ........................ 1,024
ENTERTAINMENT (0.4%)
1,000 Chancellor Media Corp. 8.125%,
Senior Sub. Notes
Series "B", 12/15/07 ...................... 1,000
ENVIRONMENTAL (0.4%)
1,000 Allied Waste North
America Inc. Senior Notes
Series "B", 7.875%, 1/1/09 ................ 885
HOTEL/GAMING (0.4%)
1,000 Park Place Entertainment Corp.
7.875%, Senior Sub.
Notes, 12/15/05 ........................... 957
MEDICAL SERVICES (0.4%)
1,000 Tenet Healthcare Corp.
Senior Notes,
8%, 1/15/05 ............................... 962
OILFIELD SERVICES/
EQUIPMENT (0.5%)
1,000 RBF Finance Co. Senior
Secured Notes
11.375%, 3/15/09 .......................... 1,080
- --------------------------------------------------------------------------------
8
<PAGE>
Value Line Income and Growth Fund, Inc.
December 31, 1999
================================================================================
Principal
Amount Value
(in thousands) (in thousands)
- --------------------------------------------------------------------------------
PETROLEUM--
PRODUCING (0.4%)
1,000 Ocean Energy Inc. Senior
Notes, Series "B",
7.625%, 7/1/05 ............................ $ 944
TELECOMMUNICATION
SERVICES (0.4%)
1,000 Global Crossing Holdings Ltd.
Senior Notes, Series 144A,
9.50%, 11/15/09** ......................... 992
TEXTILE (0.4%)
1,000 WestPoint Stevens Inc.
Senior Notes, 7.875%,
6/15/08 ................................... 898
--------
TOTAL CORPORATE
BONDS & NOTES
(Cost $10,956,000) ........................ 10,691
--------
TOTAL INVESTMENT
SECURITIES (86.7%)
(Cost $127,375,000) ....................... 199,659
--------
Value
Principal (in thousands
Amount except per
(in thousands) share amount)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (11.2%)
(includes accrued interest)
$ 8,700 Collateralized by $7,195,000
U.S. Treasury Notes
10.75%, due 8/15/05,
with a value of $8,874,582
(with State Street Bank
& Trust Company, 3.75%,
dated 12/31/99, due 1/3/00,
delivery value $8,702,719)................. $ 8,701
8,600 Collateralized by $8,777,000
U.S. Treasury Notes 5.50%,
due 1/31/03, with a value
of $8,777,477 (with Banc
One Capital Markets Inc.
2.65%, dated 12/31/99,
due 1/3/00, delivery
value $8,601,899) ......................... 8,601
8,500 Collateralized by $6,270,000
U.S. Treasury Bonds
13.875%, due 5/15/11,
with a value of $8,680,244
(with Morgan Stanley
& Co., Inc. 2.47%, dated
12/31/99, due 1/3/00,
delivery value $8,501,750) ................ 8,500
--------
TOTAL REPURCHASE
AGREEMENTS
(Cost $25,802,122) ........................ 25,802
CASH AND OTHER ASSETS IN
EXCESS LIABILITIES (2.1%) ..................................... 4,840
--------
NET ASSETS (100.0%) ........................................... $230,301
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($230,301,096 / 22,803,793
shares of capital stock outstanding) .......................... $ 10.10
=======
* Non-income producing.
** Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(ADR) American Depositary Receipts.
See Notes to Financial Statements
- --------------------------------------------------------------------------------
9
<PAGE>
Value Line Income and Growth Fund, Inc.
Statement of Assets
and Liabilities at December 31, 1999
================================================================================
(In thousands
except per share
amount)
---------------
Assets:
Investment securities, at value
(Cost--$127,375) .......................................... $199,659
Repurchase agreements
(Cost--$25,802) ........................................... 25,802
Cash ........................................................ 83
Receivable for securities sold .............................. 3,199
Receivable for capital shares sold .......................... 1,022
Dividends and interest receivable ........................... 740
Prepaid insurance expense ................................... 3
--------
Total Assets .......................................... 230,508
--------
Liabilities:
Payable for capital shares repurchased ...................... 25
Accrued expenses:
Advisory fee .............................................. 128
Other ..................................................... 54
--------
Total Liabilities ..................................... 207
--------
Net Assets .................................................. $230,301
========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000,
outstanding 22,803,793 shares) ............................ $ 22,804
Additional paid-in capital .................................. 130,948
Undistributed net investment income ......................... 283
Undistributed net realized gain
on investments ............................................ 3,982
Net unrealized appreciation
of investments ............................................ 72,284
--------
Net Assets .................................................. $230,301
========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($230,301,096 / 22,803,793
shares outstanding) ....................................... $ 10.10
========
Statement of Operations
for the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
(In thousands)
------------
Investment Income:
Interest ................................................... $ 3,262
Dividends (Net of foreign withholding
tax of $1) ............................................... 902
--------
Total Income ......................................... 4,164
--------
Expenses:
Advisory fee ............................................... 1,393
Transfer agent fees ........................................ 106
Printing ................................................... 43
Custodian fees ............................................. 42
Auditing and legal fees .................................... 38
Postage .................................................... 37
Telephone .................................................. 18
Registration and filing fees ............................... 17
Directors' fees and expenses ............................... 14
Insurance, dues and other .................................. 11
--------
Total Expenses Before
Custody Credits .................................... 1,719
Less: Custody Credits ................................ (5)
--------
Net Expenses ......................................... 1,714
--------
Net Investment Income ...................................... 2,450
--------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain ...................................... 29,406
Change in Net Unrealized
Appreciation ......................................... 15,655
--------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ........................................... 45,061
--------
Net Increase in Net Assets
from Operations .......................................... $ 47,511
========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10
<PAGE>
Value Line Income and Growth Fund, Inc.
<TABLE>
Statement of Changes in Net Assets
for the Years Ended December 31, 1999 and 1998
====================================================================================
<CAPTION>
1999 1998
-----------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment income ................................. $ 2,450 $ 2,033
Net realized gain on investments ...................... 29,406 17,759
Change in net unrealized appreciation ................. 15,655 22,129
-----------------------
Net increase in net assets from operations ............ 47,511 41,921
-----------------------
Distributions to Shareholders:
Net investment income ................................. (2,196) (2,011)
Net realized gain from investment transactions ........ (33,196) (9,945)
-----------------------
Total distributions ................................... (35,392) (11,956)
-----------------------
Capital Share Transactions:
Net proceeds from sale of shares ...................... 43,537 10,481
Net proceeds from reinvestment of dividends and
distributions to shareholders ....................... 29,353 9,742
Cost of shares repurchased ............................ (43,125) (22,231)
-----------------------
Net increase (decrease) from capital share transactions 29,765 (2,008)
-----------------------
Total Increase in Net Assets ............................ 41,884 27,957
Net Assets:
Beginning of year ..................................... 188,417 160,460
-----------------------
End of year ........................................... $ 230,301 $ 188,417
=======================
Undistributed Net Investment Income, at end of year ..... $ 283 $ 29
=======================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
<PAGE>
Value Line Income and Growth Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Income and Growth Fund, Inc., formerly, The Value Line Income Fund,
Inc. (the "Fund") is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company whose primary
investment objective is income, as high and dependable as is consistent with
reasonable risk. Capital growth to increase total return is a secondary
objective.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales prices on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid prices.
Securities for which market quotations are not readily available or which are
not readily marketable and all other assets of the Fund are valued at fair value
as the Board of Directors may determine in good faith. Short-term instruments
with maturities of 60 days or less at the date of purchase are valued at
amortized cost, which approximates market value.
The Board of Directors has determined that the value of bonds and other
fixed-income securities be calculated on the valuation date by reference to
valuations obtained from an independent pricing service which determines
valuations for normal institutional-size trading units of debt securities,
without exclusive reliance upon quoted prices. This service takes into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data in determining valuations.
(B) Repurchase Agreements. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
- --------------------------------------------------------------------------------
12
<PAGE>
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
2. Capital Share Transactions, Dividends and
Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Year Ended Year Ended
December 31, December 31,
1999 1998
--------------------------
Shares sold .................................. 4,259 1,198
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 2,989 1,073
--------------------
7,248 2,271
Shares repurchased ........................... (4,209) 2,609
--------------------
Net increase (decrease) ...................... 3,039 (338)
====================
Dividends per share from net
investment income .......................... $ .11 $.1050
====================
Distributions per share from
net realized gains ......................... $ 1.67 $.5281
====================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year Ended
December 31,
1999
--------------
(in thousands)
PURCHASES:
U.S. Treasury & Government
Agency Obligations ..................................... $ 17,658
Other Investment Securities .............................. 102,570
--------
$120,228
========
SALES & REDEMPTIONS:
U.S. Treasury & Government
Agency Obligations ..................................... $ 5,042
Other Investment Securities .............................. 142,069
--------
$147,111
========
At December 31, 1999 the aggregate cost of investment securities and repurchase
agreements for federal income tax purposes was $153,336,000. The aggregate
appreciation and depreciation of investments at December 31, 1999, based on a
comparison of investment values and their costs for federal income tax purposes,
was $75,164,000 and $3,039,000, respectively, resulting in a net appreciation of
$72,125,000.
4. Investment Advisory Contract, Management Fees
and Transactions With Affiliates
An advisory fee of $1,393,000 was paid or payable to Value Line, Inc., the
Fund's investment adviser ("Adviser"), for the year ended December 31, 1999.
This was computed at the annual rate of .70% of the first $100 million of the
Fund's average daily net assets of the Fund during the year plus .65% on the
excess thereof, and paid monthly. The Adviser provides research, investment
programs and supervision of the investment portfolio and pays costs of
administrative services, office space, equipment, and compensation of
administrative, bookkeeping, and clerical personnel necessary for managing the
affairs of the Fund. The Adviser also provides persons, satisfactory to the
Fund's Board of Directors, to act as officers and employees of the Fund and pays
their salaries and wages. The Fund bears all other costs and expenses.
Certain officers and directors of the Adviser and its wholly owned subsidiary,
Value Line Securities, Inc. (the Fund's distributor and a registered
broker/dealer), are also officers and a director of the Fund. During the year
ended December 31, 1999, the Fund paid brokerage commissions totaling $95,482 to
the distributor, which clears its transactions through unaffiliated brokers.
The Adviser and/or affiliated companies owned 502,150 shares of the Fund's
capital stock, representing 2.2% of the outstanding shares at December 31, 1999.
In addition, certain officers and directors of the Fund owned 176,518 shares of
the Fund, representing 0.8% of the outstanding shares.
- --------------------------------------------------------------------------------
13
<PAGE>
Value Line Income and Growth Fund, Inc.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .......... $ 9.53 $ 7.98 $ 7.37 $ 7.37 $ 6.21
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income ................... .12 .10 .15 .24 .25
Net gains or losses on securities
(both realized and unrealized) ........ 2.23 2.08 1.18 1.03 1.36
--------------------------------------------------------------------------------
Total from investment operations ........ 2.35 2.18 1.33 1.27 1.61
--------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income .... (.11) (.10) (.15) (.24) (.25)
Distributions from net realized gains ... (1.67) (.53) (.54) (1.03) (.20)
Distributions in excess of realized gains -- -- (.03 )-- --
--------------------------------------------------------------------------------
Total distributions ..................... (1.78) (.63) (.72) (1.27) (.45)
--------------------------------------------------------------------------------
Net asset value, end of year ................ $ 10.10 $ 9.53 $ 7.98 $ 7.37 $ 7.37
================================================================================
Total return ................................ 25.33% 27.83% 18.55% 17.38% 26.24%
================================================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ...... $230,301 $188,417 $160,460 $147,193 $144,306
Ratio of expenses to
average net assets ........................ .83%(2) .87%(1) .87%(1) .93%(1) .93%
Ratio of net investment income to
average net assets ........................ 1.19% 1.24% 1.82% 3.08% 3.48%
Portfolio turnover rate ..................... 64% 99% 54% 83% 76%
</TABLE>
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets net of custody credits would not
have changed.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
<PAGE>
Value Line Income and Growth Fund, Inc.
Report of Independent Accountants
================================================================================
To the Shareholders and Board of Directors
of Value Line Income and Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Value Line Income and Growth Fund,
Inc. (the "Fund") at December 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 11, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Federal Tax Status of Distributions (unaudited)
For corporate taxpayers 7.10% of the ordinary income distributions paid during
the calendar year 1999 qualify for the corporate dividends received deductions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
15
<PAGE>
Value Line Income and Growth Fund, Inc.
The Value Line Family of Funds
================================================================================
1950--The Value Line Fund seeks long-term growth of capital. Current income is a
secondary objective.
1952--Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983--Value Line Centurion Fund* seeks long-term growth of capital.
1984--The Value Line Tax Exempt Fund seeks to provide investors with the maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: The Money Market Portfolio
and The National Bond Portfolio.
1985--Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--Value Line Aggressive Income Trust seeks to maximize current income.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal.
1987--Value Line Strategic Asset Management Trust* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line Emerging Opportunities Fund invests primarily in common stocks
or securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
<PAGE>
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
Directors Jean Bernhard Buttner
John W. Chandler
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Stephen E. Grant
Vice President
Philip J. Orlando
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
This report is issued for information of shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Fund (obtainable from the Distributor).
#511490
