================================================================================
SEMI-ANNUAL REPORT
------------------
June 30, 2000
------------------
Value Line
Income and
Growth
Fund, Inc.
[LOGO]
--------------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Income and Growth Fund, Inc.
To Our Value Line
--------------------------------------------------------------------------------
To Our Shareholders:
Value Line Income and Growth Fund for the first half of 2000. Your Fund earned a
total return of 3.20% in the six-month period, which compared with a total
return of -.42% for the Standard & Poor's 500, an unmanaged stock index, and a
total return of 4.18% for the unmanaged Lehman Government/Corporate Bond Index.
Stockholdings comprised a bit over 70% of assets for most of the period, while
bondholdings and cash equivalents made up the remaining 25%-30% of assets. It
was a volatile time for both the stock and the bond markets, as investors
attempted to gauge the effect of the Federal Reserve's increase in short-term
interest rates. The first half was most memorable for the March-April collapse
of the NASDAQ market and technology stocks, which then staged a partial recovery
in May and June.
Your Fund weathered the storm through its balancing of bonds versus stocks, and
by sticking with companies demonstrating strong earnings momentum and strong
relative stock price momentum. The portfolio's largest holding, the newly merged
Pfizer and Warner-Lambert combination, gained 48% in the six months; its
second-largest holding, EMC Corp., gained 41%. Some more recent investments have
already paid off, too, even though we had to pay near record-high prices for the
stocks. In April, we paid a near-record high of $48 a share for ADC
Telecommunications, an equipment manufacturer that reported strong first-quarter
earnings; it closed June 30th at $84. Similarly, we paid near record-high prices
in January for SDL Inc., Altera, Waters Corp., and Siebel Systems; by June 30th,
they had variously gained 62%-116%. All of the companies mentioned here are
large-capitalization stocks (most are valued at well over $10 billion) with
cutting-edge technologies making them leaders in their fields. These are
qualities that helped the stocks come through the mid-period sell-off in good
shape.
We will continue to stick with high-quality companies and quickly sell holdings
that fail to measure up, while the Fund's bondholdings should provide steady
income and a cushion to the stock portfolio volatility. Thank you for investing
with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 4, 2000
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2
<PAGE>
Value Line Income and Growth Fund, Inc.
Income and Growth Fund Shareholders
--------------------------------------------------------------------------------
Economic Observations
The American economy appears to be on a somewhat slower growth track as we move
through the early stages of the second half of calendar 2000. Evidence of this
deceleration in business activity can be found in recent surveys on
manufacturing, housing, auto sales, and employment. Overall, we now estimate
that GDP growth will average 3.0%-3.5% during the third and fourth quarters.
Thereafter, we would expect the pace of economic activity to hold at these
comparatively restrained levels through at least the first half of 2001, as the
succession of interest-rate hikes voted for by the Federal Reserve Board over
the past year, or so, continues to have the hoped-for effect of stabilizing the
economy at comfortable growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices increase
further and the aforementioned moderation in second-half GDP growth fails to
evolve as we expect it will. The Federal Reserve, taking note of this potential
for higher prices, meanwhile, is likely to keep a vigilant eye on the monetary
situation, standing ready to raise interest rates further should it deem
inflation to be a problem. Absent an unexpected price flareup, we believe the
recent credit tightening cycle will shortly run its course.
*Performance Data:
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/2000 ....................... 18.45% $11,845
5 years ended 6/30/2000 ...................... 20.65% $25,567
10 years ended 6/30/2000 ...................... 14.82% $39,840
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and capital
gains distributions accepted in shares. The investment return and principal
value of an investment will fluctuate so that an investment, when redeemed,
may be worth more or less than its original cost.
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3
<PAGE>
Value Line Income and Growth Fund, Inc.
Portfolio Highlights at June 30, 2000 (unaudited)
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<TABLE>
<CAPTION>
Ten Largest Holdings
Value Percentage of
Issue Shares (in thousands) Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pfizer, Inc. ............................................. 236,500 $11,352 4.9%
EMC Corp. ................................................ 140,000 10,771 4.7
Cisco Systems, Inc. ...................................... 145,500 9,248 4.0
Sun Microsystems, Inc. ................................... 93,000 8,457 3.7
Intel Corp. .............................................. 55,000 7,353 3.2
Omnicom Group, Inc. ...................................... 70,500 6,279 2.7
Wal-Mart Stores, Inc. .................................... 102,500 5,907 2.6
Time Warner, Inc. ........................................ 73,000 5,548 2.4
Microsoft Corp. .......................................... 65,000 5,200 2.2
General Electric Co. ..................................... 94,500 5,009 2.2
<CAPTION>
Five Largest Industry Categories
Value Percentage of
Industry (in thousands) Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer & Peripherals ................................... $ 34,109 14.7%
Drug ..................................................... 18,332 7.9
Semiconductor ............................................ 12,742 5.5
Financial Services-Diversified ........................... 10,270 4.4
Entertainment ............................................ 9,981 4.3
<CAPTION>
Five Largest Net Security Purchases*
Cost
Issue (in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Apple Computer, Inc. ..................................... $ 1,188
Boeing Co. ............................................... 1,034
Tenet Healthcare Corp. ................................... 1,026
Siebel Systems, Inc. ..................................... 1,019
Waters Corp. ............................................. 995
<CAPTION>
Five Largest Net Security Sales*
Proceeds
Issue (in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
QUALCOMM Incorporated .................................... $ 2,932
International Business Machines Corp. .................... 2,294
Guidant Corp. ............................................ 1,811
America Online, Inc. ..................................... 1,740
Procer & Gamble Co. ...................................... 1,546
</TABLE>
* For the six month period ended 06/30/00
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4
<PAGE>
Value Line Income and Growth Fund, Inc.
Schedule of Investments (unaudited) June 30, 2000
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Value
Shares (in thousands)
--------------------------------------------------------------------------------
COMMON STOCKS (74.1%)
ADVERTISING (2.7%)
70,500 Omnicom Group, Inc............................. $ 6,279
AEROSPACE-
DEFENSE (0.4%)
22,000 Boeing Co...................................... 920
BANK (0.2%)
13,300 Mellon Financial Corp.......................... 485
BANK-MIDWEST (1.4%)
24,250 Fifth Third Bancorp............................ 1,534
61,500 Firstar Corp................................... 1,295
8,000 Northern Trust Corp............................ 521
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3,350
CABLE TV (0.5%)
15,500 Cablevision Systems Corp.
Class "A"*................................. 1,052
CHEMICAL-
SPECIALTY (0.2%)
8,000 Avery Dennison Corp............................ 537
COMPUTER &
PERIPHERALS (14.7%)
20,000 Apple Computer, Inc.*.......................... 1,048
10,000 Cabletron Systems, Inc.*....................... 253
145,500 Cisco Systems, Inc.*........................... 9,248
62,500 Dell Computer Corp.*........................... 3,082
140,000 EMC Corp.*..................................... 10,771
4,000 Hewlett-Packard Co............................. 500
4,000 Network Appliance, Inc.*....................... 322
7,000 SanDisk Corp.*................................. 428
93,000 Sun Microsystems, Inc.*........................ 8,457
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34,109
COMPUTER SOFTWARE &
SERVICES (3.5%)
10,000 BroadVision, Inc.*............................. 508
11,000 Fiserv, Inc.*.................................. 476
65,000 Microsoft Corp.*............................... 5,200
11,000 Siebel Systems, Inc.*.......................... 1,799
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7,983
DIVERSIFIED
COMPANIES (2.6%)
11,500 Honeywell International, Inc................... 387
95,000 Tyco International Ltd......................... 4,501
20,000 United Technologies Corp....................... 1,178
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6,066
DRUG (7.9%)
10,000 Immunex Corp.*................................. 494
22,000 Merck & Co., Inc............................... 1,686
5,000 Millennium
Pharmaceuticals, Inc.*..................... 559
236,500 Pfizer, Inc.................................... 11,352
73,000 Schering-Plough Corp........................... 3,687
10,000 Teva Pharmaceutical
Industries, Ltd.(ADR)...................... 554
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18,332
DRUGSTORE (0.3%)
20,500 Walgreen Co.................................... 660
ELECTRICAL
EQUIPMENT (2.6%)
10,000 AVX Corp....................................... 229
3,000 Corning Inc.................................... 810
94,500 General Electric Co............................ 5,009
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6,048
ELECTRONICS (1.0%)
4,000 JDS Uniphase Corp.*............................ 479
13,000 Sanmina Corp.*................................. 1,112
12,000 Symbol Technologies, Inc....................... 648
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2,239
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5
<PAGE>
Value Line Income and Growth Fund, Inc.
Schedule of Investments (unaudited)
--------------------------------------------------------------------------------
Value
Shares (in thousands)
--------------------------------------------------------------------------------
ENTERTAINMENT (3.9%)
73,000 Time Warner, Inc............................... $ 5,548
9,000 Univision Communications, Inc.
Class "A"*................................. 931
36,500 Viacom, Inc. Class "A"*........................ 2,496
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8,975
FINANCIAL SERVICES-
DIVERSIFIED (4.4%)
21,000 American Express Co............................ 1,095
30,156 American International
Group, Inc................................. 3,543
16,000 Capital One Financial Corp..................... 714
81,625 Citigroup, Inc................................. 4,918
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10,270
FOREIGN TELECOM-
MUNICATIONS (2.6%)
68,000 Ericsson (L.M.) Telephone Co.
(ADR) Class "B"............................ 1,360
60,000 Nokia Corp. (ADR).............................. 2,996
30,000 Telefonos de Mexico S.A.
de CV (ADR)................................ 1,714
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6,070
GROCERY (0.2%)
25,000 Kroger Co.*.................................... 552
HOUSEHOLD
PRODUCTS (0.2%)
9,000 Kimberly-Clark Corp............................ 516
INDUSTRIAL
SERVICES (0.3%)
26,000 Robert Half International, Inc.*............... 741
INTERNET (2.1%)
74,000 America Online, Inc.*.......................... 3,904
6,000 Exodus Communications, Inc.*................... 276
4,300 VeriSign, Inc.*................................ 759
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4,939
MACHINERY (0.5%)
28,000 Dover Corp..................................... 1,136
MEDICAL SERVICES (0.7%)
3,000 Affymetrix, Inc.*.............................. 495
38,000 Tenet Healthcare Corp.*........................ 1,026
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1,521
MEDICAL SUPPLIES (0.9%)
40,000 Medtronic, Inc................................. 1,993
NATURAL GAS-
DIVERSIFIED (0.3%)
3,000 Enron Corp..................................... 193
13,000 Williams Companies, Inc. (The)................. 542
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735
OFFICE EQUIPMENT &
SUPPLIES (0.3%)
5,000 Lexmark International, Inc.
Class "A"*................................. 336
23,500 Staples, Inc.*................................. 361
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697
PRECISION
INSTRUMENT (1.5%)
1,525 Agilent Technologies, Inc.*.................... 112
22,000 PerkinElmer, Inc............................... 1,455
15,000 Waters Corp.*.................................. 1,872
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3,439
RECREATION (0.4%)
14,000 Electronic Arts Inc.*.......................... 1,021
RETAIL-SPECIAL
LINES (1.2%)
26,000 Bed Bath & Beyond Inc.*........................ 942
4,000 CDW Computer Centers, Inc.*.................... 250
49,375 Gap, Inc. (The)................................ 1,543
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2,735
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6
<PAGE>
Value Line Income and Growth Fund, Inc.
June 30, 20000
--------------------------------------------------------------------------------
Value
Shares (in thousands)
--------------------------------------------------------------------------------
RETAIL BUILDING
SUPPLY (1.0%)
45,000 Home Depot, Inc. (The)......................... $ 2,247
RETAIL STORE (2.6%)
102,500 Wal-Mart Stores, Inc........................... 5,907
SECURITIES
BROKERAGE (0.5%)
6,000 Morgan Stanley Dean
Witter & Co................................ 500
18,000 Schwab (Charles) Corp.......................... 605
--------
1,105
SEMICONDUCTOR (5.5%)
7,000 Advanced Micro Devices, Inc.*.................. 541
8,000 Amkor Technology, Inc.*........................ 283
12,000 Atmel Corp.*................................... 442
9,000 Conexant Systems, Inc.*........................ 438
10,000 Cypress Semiconductor Corp.*................... 422
55,000 Intel Corp..................................... 7,353
8,000 Maxim Integrated
Products, Inc.*............................ 544
10,000 National Semiconductor Corp.*.................. 567
6,000 SDL, Inc.*..................................... 1,711
6,000 Vitesse Semiconductor Corp.*................... 441
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12,742
SEMICONDUCTOR
CAPITAL EQUIPMENT (0.5%)
12,000 Altera Corp.*.................................. 1,223
TELECOMMUNICATIONS EQUIPMENT (2.5%)
10,000 ADC Telecom-
munications, Inc.*......................... 839
16,000 QUALCOMM Incorporated*......................... 960
21,000 Scientific-Atlanta, Inc........................ 1,564
34,000 Tellabs, Inc.*................................. 2,327
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5,690
TELECOMMUNICATION
SERVICES (2.4%)
29,000 BroadWing Inc.*................................ 752
11,000 Metromedia Fiber
Network, Inc. Class "A"*................... 437
8,000 Nextel Communications, Inc.
Class "A"*................................. 489
9,500 Verizon Communications......................... 483
74,853 WorldCom, Inc.*................................ 3,434
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5,595
THRIFT (1.4%)
33,000 Fannie Mae..................................... 1,722
38,000 Freddie Mac.................................... 1,539
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3,261
WIRELESS
NETWORKING (0.2%)
5,000 RF Micro Devices Inc.*......................... 438
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TOTAL COMMON STOCKS
(Cost $97,542,000) .......................... 171,608
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7
<PAGE>
Value Line Income and Growth Fund, Inc.
Schedule of Investments (unaudited)
--------------------------------------------------------------------------------
Principal
Amount
(in Value
thousands) (in thousands)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (2.4%)
$ 5,000 U.S. Treasury Notes,
4.750%, 11/15/08........................... $ 4,541
1,000 U.S. Treasury Bonds,
6.000%, 2/15/26............................ 977
--------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $5,891,000) ......................... 5,518
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (9.5%)
5,000 Federal Home Loan Bank
Bonds, 5.125%, 2/26/02..................... 4,863
2,000 Federal Home Loan Mortgage Corp.
Debentures, 5.750%, 7/15/03 ............... 1,932
5,000 Federal Home Loan Mortgage Corp.
Debentures, 5.000%, 1/15/04 ............... 4,685
1,000 Federal National Mortgage
Association Notes, 6.50%,
8/15/04 ................................... 980
3,000 Federal National Mortgage
Association Notes, 5.750%,
6/15/05 ................................... 2,843
2,000 Federal National Mortgage
Association Notes, 6%,
5/15/08 ................................... 1,861
2,000 Federal National Mortgage
Association Notes, 6.625%,
9/15/09 ................................... 1,929
3,000 Tennessee Valley Authority
Global Power Bonds, 1995
Series "E", 6.750%, 11/1/25 ............... 2,802
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TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $23,263,000) ........................ 21,895
-------
CORPORATE BONDS AND NOTES (3.6%)
ADVERTISING (0.4%)
1,000 Outdoor Systems, Inc. 8.875%
Senior Sub. Notes, 6/15/07................. 1,005
AUTO PARTS-
REPLACEMENT (0.3%)
$ 1,000 Federal-Mogul Corp. 7.875%,
Notes, 7/1/10.............................. 697
ENTERTAINMENT (0.4%)
1,000 Chancellor Media Corp.
8.125%, Senior Sub. Notes
Series "B",
12/15/07 .................................. 1,006
ENVIRONMENTAL (0.4%)
1,000 Allied Waste North America Inc.
Senior Notes Series "B",
7.875%, 1/1/09............................. 853
HOTEL/GAMING (0.4%)
1,000 Park Place Entertainment Corp.
7.875%, Senior Sub. Notes,
12/15/05 .................................. 940
MEDICAL SERVICES (0.4%)
1,000 Tenet HealthCare Corp. Senior
Notes, 8%, 1/15/05 ........................ 960
OILFIELD SERVICES/
EQUIPMENT (0.5%)
1,000 RBF Finance Co. Senior
Secured Notes, 11.375%,
3/15/09.................................... 1,085
TELECOMMUNICATION
SERVICES (0.4%)
1,000 Global Crossing Holding Ltd.
Senior Notes, 9.50%,
11/15/09................................... 965
TEXTILE (0.4%)
1,000 WestPoint Stevens Inc. Senior
Notes, 7.875%, 6/15/05 .................... 835
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TOTAL CORPORATE
BONDS & NOTES
(Cost $8,877,000) ......................... 8,346
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TOTAL INVESTMENT
SECURITIES (89.6%)
(Cost $135,573,000) ....................... 207,367
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8
<PAGE>
Value Line Income and Growth Fund, Inc.
June 30, 2000
--------------------------------------------------------------------------------
Principal Value
Amount (in thousands
(in except per
thousands) share amount)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (10.4%)
(including accrued interest)
$ 12,200 Collateralized by $8,842,000
U.S. Treasury Bonds 14%,
due 11/15/11, with a value of
$12,440,000 (with Warburg,
Dillon, Read LLC, 6.20%,
dated 6/30/00, due 7/3/00,
delivery value $12,206,303)................ $ 12,202
12,000 Collateralized by $12,970,000 --------
U.S. Treasury Notes 4.25%,
due 11/15/03, with a value
of $12,240,000 (with State
Street Bank & Trust Company,
6.20%, dated 6/30/00,
due 7/3/00, delivery value
$12,006,200)............................... 12,002
--------
TOTAL REPURCHASE
AGREEMENTS
(Cost $24,204,000) .......................... 24,204
EXCESS OF LIABILITIES OVER
CASH AND OTHER ASSETS (0.0%) .................................. ( 92)
--------
NET ASSETS (100.0%) ........................................... $231,479
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($231,478,783 / 22,347,583
shares outstanding) ........................................... $ 10.36
========
* Non-income producing.
(ADR) American Depoisitory Receipts.
See Notes to Financial Statements
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9
<PAGE>
Value Line Income and Growth Fund, Inc.
Statement of Assets
and Liabilities at June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
(In thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost--$135,573) ......................................... $ 207,367
Repurchase agreements
(Cost--$24,204) .......................................... 24,204
Cash ....................................................... 14
Receivable for capital shares sold ......................... 843
Dividends and interest receivable .......................... 653
Prepaid insurance expense .................................. 2
---------
Total Assets ......................................... 233,083
---------
Liabilities:
Payable for securities purchased ........................... 1,283
Payable for capital shares repurchased ..................... 115
Accrued expenses:
Advisory fee ............................................. 126
Other .................................................... 80
---------
Total Liabilities .................................... 1,604
---------
Net Assets ................................................. $ 231,479
=========
Net Assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
22,347,583 shares) ....................................... $ 22,348
Additional paid-in capital ................................. 127,105
Undistributed net investment income ........................ 232
Undistributed net realized gain
on investments ........................................... 10,000
Net unrealized appreciation of
investments .............................................. 71,794
---------
Net Assets ................................................. $ 231,479
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($231,478,783 / 22,347,583 shares
outstanding).............................................. $ 10.36
=========
Statement of Operations
for the six months ended June 30, 1999 (unaudited)
--------------------------------------------------------------------------------
(In thousands)
------------
Investment Income:
Interest ................................................... $ 1,993
Dividends (Net of foreign withholding
tax of $4) ............................................... 370
-------
Total Income ......................................... 2,363
-------
Expenses:
Advisory fee ............................................... 761
Transfer agent fees ........................................ 54
Insurance, dues and other .................................. 28
Custodian fees ............................................. 24
Printing ................................................... 19
Auditing and legal fees .................................... 19
Postage .................................................... 18
Registration and filing fees ............................... 13
Telephone .................................................. 11
Directors' fees and expenses ............................... 7
-------
Total Expenses Before
Custody Credits .................................... 954
Less: Custody Credits ................................ (5)
-------
Net Expenses ......................................... 949
-------
Net Investment Income ...................................... 1,414
-------
Net Realized and Unrealized
Gain (Loss) on Investments:
Net Realized Gain ...................................... 6,018
Change in Net Unrealized
Appreciation ......................................... (490)
-------
Net Realized Gain and Change in
Net Unrealized Appreciation on
Investments .............................................. 5,528
-------
Net Increase in Net Assets from
Operations ............................................... $ 6,942
=======
See Notes to Financial Statements.
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10
<PAGE>
Value Line Income and Growth Fund, Inc.
Statement of Changes in Net Assets
for the six months ended June 30, 2000 (unaudited)
and for the year ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 December 31,
(unaudited) 1999
-------------------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment income ............................................. $ 1,414 $ 2,450
Net realized gain on investments .................................. 6,018 29,406
Change in net unrealized appreciation ............................. (490) 15,655
-------------------------------
Net increase in net assets from operations ........................ 6,942 47,511
-------------------------------
Distributions to Shareholders:
Net investment income ............................................. (1,465) (2,196)
Net realized gain from investment transactions .................... -- (33,196)
-------------------------------
Total distributions ............................................... (1,465) (35,392)
-------------------------------
Capital Share Transactions:
Net proceeds from sale of shares .................................. 57,389 43,537
Net proceeds from reinvestment of distributions to shareholders ... 1,153 29,353
Cost of shares repurchased ........................................ (62,841) (43,125)
-------------------------------
Net (decrease) increase from capital share transactions ........... (4,299) 29,765
-------------------------------
Total Increase in Net Assets ........................................ 1,178 41,884
Net Assets:
Beginning of period ............................................... 230,301 188,417
-------------------------------
End of period ..................................................... $ 231,479 $ 230,301
===============================
Undistributed Net Investment Income, at end of period ............... $ 232 $ 283
===============================
</TABLE>
See Notes to Financial Statements.
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11
<PAGE>
Value Line Income and Growth Fund, Inc.
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Income and Growth 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.
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
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12
<PAGE>
Value Line Income and Growth Fund, Inc.
June 30, 2000
--------------------------------------------------------------------------------
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows (in thousands except per share
amounts):
Six Months
Ended Year
June 30, Ended
2000 December 31,
(unaudited) 1999
-------------------------
Shares sold .................................... 5,693 4,259
Shares issued to shareholders
in reinvestment of dividends
and distributions ............................ 108 2,989
----------------------
5,801 7,248
Shares repurchased ............................. (6,257) (4,209)
----------------------
Net (decrease) increase ........................ (456) 3,039
======================
Dividends per share from net
investment income ............................ $ .065 $ .11
======================
Distributions per share from
net realized gains ........................... $ -- $ 1.67
======================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
June 30, 2000
(unaudited)
----------------
(in thousands)
Purchases:
Investment Securities ................................ $30,634
=======
Sales & Redemptions:
U.S. Treasury & Government
Agency Obligations ................................. $ 2,000
Other Investment Securities .......................... 26,511
-------
$28,511
=======
At June 30, 2000, the aggregate cost of investment securities and repurchase
agreements for federal income tax purposes was $159,888,000. The aggregate
appreciation and depreciation of investments at June 30, 2000, based on a
comparison of investment values and their costs for federal income tax purposes,
was $77,359,000 and $5,676,000, respectively, resulting in a net appreciation of
$71,683,000.
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $761,000 was paid or payable to Value Line, Inc., the Fund's
investment adviser (the "Adviser"), for the six months ended June 30, 2000. This
was computed at the rate of .70% of the first $100 million of the Fund's average
daily net assets plus .65% on the excess thereof, and paid monthly. The Adviser
provides research, investment programs 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 six
months ended June 30, 2000, the Fund paid brokerage commissions totalling
$13,000 to the distributor, which clears its transactions through unaffiliated
brokers.
The Adviser and/or affiliated companies owned 412,745 shares of the Fund's
capital stock, representing 1.8% of the outstanding shares at June 30, 2000.
--------------------------------------------------------------------------------
13
<PAGE>
Value Line Income and Growth Fund, Inc.
Notes to Financial Statements (unaudited) June 30, 2000
--------------------------------------------------------------------------------
5. Subsequent Event
At a special meeting of shareholders held on June 15, 2000, the shareholders
approved the adoption of a Service and Distribution Plan (the "Plan") effective
July 1, 2000. The Plan, adopted, pursuant to Rule 12b-1 under the Investment
Company Act of 1940, provides for the payment of certain expenses incurred by
the distributor in advertising, marketing and distributing and Fund's shares and
for servicing the Fund's shareholders at an annual rate of 0.25% of the Fund's
average daily net assets.
--------------------------------------------------------------------------------
14
<PAGE>
Value Line Income and Growth Fund, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
June 30, 2000 ------------------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------
Net asset value,
<S> <C> <C> <C> <C> <C> <C>
beginning of period ............ $ 10.10 $ 9.53 $ 7.98 $ 7.37 $ 7.37 $ 6.21
-------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .......... .07 .12 .10 .15 .24 .25
Net gains or losses on
securities (both realized
and unrealized) .............. .26 2.23 2.08 1.18 1.03 1.36
-------------------------------------------------------------------------------------------------
Total from investment
operations ................... .33 2.35 2.18 1.33 1.27 1.61
-------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ............ (.07) (.11) (.10) (.15) (.24) (.25)
Distributions from capital gains -- (1.67) (.53) (.54) (1.03) (.20)
Distributions in excess of
realized gains ............... -- -- -- (.03) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (.07) (1.78) (.63) (.72) (1.27) (.45)
-------------------------------------------------------------------------------------------------
Net asset value, end of period ... $ 10.36 $ 10.10 $ 9.53 $ 7.98 $ 7.37 $ 7.37
=================================================================================================
Total return ..................... 3.20%+ 25.33% 27.83% 18.55% 17.38% 26.24%
=================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................. $ 231,479 $ 230,301 $ 188,417 $ 160,460 $ 147,193 $ 144,306
Ratio of expenses to
average net assets ............. .84%(2)* .83%(2) .87%(1) .87%(1) .93%(1) .93%
Ratio of net investment income
to average net assets .......... 1.25%* 1.19% 1.24% 1.82% 3.08% 3.48%
Portfolio turnover rate .......... 14%+ 64% 99% 54% 83% 76%
</TABLE>
(1) Before offset of custody credits.
(2) Ratios reflect expenses grossed up for custody credit arrangement. The
ratios of expenses to average net assets net of custody credits would not
have changed.
+ Not annualized
* Annualized.
See Notes to Financial Statements
--------------------------------------------------------------------------------
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. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to principal. 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 achieve 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 Sound View Drive, Suite 100
Greenwich, CT 06830
Directors Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Stephen E. Grant
Vice President
Alan N. Hoffman
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and, accordingly, they
do not express an opinion thereon.
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Fund (obtainable from the
Distributor).
#513940
