<PAGE>
This document is a copy of the Annual Report for the year ended
March 31, 1995, filed on June 20, 1995.
-----------------------
ANNUAL REPORT
March 31, 1995
-----------------------
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 Value Line
State Street Bank and Trust Company Asset
225 Franklin Street, Boston, MA 02110 Allocation
Fund, Inc.
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company c/o NFDS
P.O. Box 419729, Kansas City, MO 64141-6729
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas, New York, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF DIRECTORS
Jean Bernhard Buttner Francis C. Oakley
Marion N. Ruth Frances T. Newton
OFFICERS
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Stephen Grant John Moore
VICE PRESIDENT VICE PRESIDENT
David T. Henigson [Logo]
VICE PRESIDENT / SECRETARY / TREASURER
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY / TREASURER SECRETARY / TREASURER
This report is issued for the information of shareholders. VALUE LINE
It is not authorized for distribution to prospective MUTUAL FUNDS
investors unless preceded or accompanied by a currently
effective prospectus of the Fund (obtainable from the
Distributor).
<PAGE>
[LOGO] TO OUR VALUE LINE
-------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to report that, since inception, the Value Line Asset Allocation
Fund,Inc. (the "Fund") is one of the top-performing funds of its kind in the
country. From commencement of operations on August 24, 1993 through the end of
the latest fiscal year on March 31, 1995, your Fund had a total return of
18.18%. In the same period, the Lipper Analytical Services Flexible Fund Index
gained 6.18%. (Flexible funds hold more than one category of assets, most
commonly stocks, bonds, and money market instruments.) Also in the same period,
the unmanaged Standard & Poor's 500 (S&P500) stock index, including reinvestment
of dividends, gained 13.58%, and the Lehman Government/Corporate Bond Index
gained 1.82%. For the fiscal year ended March 31st, your Fund advanced 13.47%.
By comparison, in the same period, the Lipper Analytical Services Flexible Fund
Index gained 6.89%; the S&P 500, 15.57%; and the Lehman Government/Corporate
Bond Index rose 4.59%.
Value Line's proprietary investment models, which incorporate a number of
economic and financial variables, determine the Fund's suggested optimal asset
mix at any given moment. On average over time, your Fund is likely to hold about
55% of its assets in U.S. stocks, 35% in high-quality bonds, and 10% in cash.
The stock model, which forecasts market returns for the coming six months,
remains moderately bullish at the moment, pointing to a current invested
position of about 75% in equities. The recent decline in long-term interest
rates has been a plus for the model. Your Fund's bond holdings are currently
less than 10% of assets, reflecting the bond model's expectation of moderately
rising long-term interest rates (that is, falling bond prices) in the months
ahead. Should such a scenario unfold, we would probably move a portion of assets
out of stocks and into bonds. Since inception, your Fund has held a range of
60%--90% of its assets in U.S. stocks, 0%--12% in Treasury Bonds, and 5%--30% in
cash (money market instruments).
The well-known Value Line Timeliness Ranking System celebrates its 30th
anniversary this year. Your Fund uses this highly successful system in its stock
selection, producing a diversified portfolio of about 150 stocks (currently)
that rank highly on company earnings momentum, stock price momentum, and
valuation. Current income from stock dividends is not a priority.
We continue to aim for a high total return for our shareholders, consistent with
a reasonable level of risk.
Thank you for your confidence in the Value Line Asset Allocation Fund, Inc. We
look forward to serving your investment needs in the future.
Sincerely,
/s/ JEAN BERNHARD BUTTNER
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
MAY 19, 1995
ECONOMIC OBSERVATIONS
The odds that a "soft economic landing" will materialize over the next several
months are fairly high. Under this scenario, the economy temporarily moves onto
a slower growth track, but doesn't stop growing altogether; corporate profits
continue to rise, but at a lesser rate; inflation begins to pick up, but does
not veer out of control; and short-term interest rates stabilize and then
decline. To date, such key indicators as the employment level, auto sales,
retail spending, and personal income show an expansion that's slowing, but not
coming apart. At the same time, the latest producer and consumer price data
signal that there has been little overall buildup in pricing pressures, although
rising oil and paper prices suggest that inflation reports later in the year may
make somewhat less hospitable reading.
Meanwhile, there is historical precedent for a "soft landing" as well as for a
lengthy business expansion. The 1960s and the 1980s both witnessed upcycles that
lasted for seven or eight years--or about double the length of the present
upturn--with nothing more
2
<PAGE>
ASSET ALLOCATION FUND SHAREHOLDERS
-------------------------------------------------------------------------------
ECONOMIC OBSERVATIONS (CONTINUED)
serious than a brief interlude or two along the way. The 1970s, in contrast,
brought surging inflation and a pair of recessions.
There are risks in the current situation, however. For example, there is still
the possibility that the aforementioned runup in certain commodity prices is a
harbinger of things to come on the inflation front. There's also the risk that
May's weaker-than-expected employment data is a signal that the Federal Reserve
has already pushed interest rates too high and that a recession is probably on
the way, perhaps later this year or in 1996.
The stock market, meanwhile, is still accentuating the positive, with most
investors preferring to view the mixed economic and inflation statistics, along
with the very encouraging recent decline in long-term interest rates, as being
consistent with an orderly slowing in growth--rather than as the opening salvos
in a looming recession. We think the market's sentiments are on target and, as
such, believe that positive returns will still be achieved with equities in the
months ahead, although given the strong runup in stocks over the last several
months, we also suspect that the easy money has already been made this year.
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
VALUE LINE ASSET ALLOCATION FUND, THE S&P 500 INDEX AND THE
LEHMAN GOVERNMENT/CORPORATE BOND INDEX
[GRAPH]
Period covered by the graph is from 8/24/93 to 3/31/95
-------------------------------------------------------------------------------
THE S&P 500 INDEX IS AN INDEX THAT GENERALLY REPRESENTS THE U.S. STOCK MARKET.
THE INDEX USED FOR PRESENTATION INCLUDES REINVESTED DIVIDENDS. THE LEHMAN
GOVERNMENT/CORPORATE BOND INDEX IS AN INDEX WHICH GENERALLY REPRESENTS THE U.S.
BOND MARKET WITH ISSUES HAVING AN AVERAGE MATURITY OF 9.8 YRS. THE INDEX USED
FOR PRESENTATION INCLUDES INTEREST REINVESTED.
-------------------------------------------------------------------------------
* PERFORMANCE DATA:
AVERAGE ANNUAL
TOTAL RETURN
--------------
1 year ended 3/31/95.......... 13.47%
From 8/24/93 (commencement
of operations) to 3/31/95.. 11.00%
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN 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>
<TABLE>
<CAPTION>
VALUE LINE ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS MARCH 31, 1995
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (76.4%)
ADVERTISING (1.7%)
8,900 *Heritage Media Corp. Class "A". . . $ 229,175
3,700 Omnicom Group, Inc. . . . . . . . . 202,575
------------
431,750
AEROSPACE/DEFENSE (1.4%)
3,300 McDonnell Douglas Corp. . . . . . . 183,975
3,600 Northrop Grumman Corp. . . . . . . 175,950
------------
359,925
AIR TRANSPORT (0.4%)
4,000 Air Express International Corp. . . 102,000
APPAREL (0.3%)
3,200 *Tommy Hilfiger Corp. . . . . . . . 70,400
AUTO PARTS-ORIGINAL
EQUIPMENT (0.7%)
5,500 Modine Manufacturing Co. . . . . . 184,250
AUTO PARTS-REPLACEMENT (0.6%)
3,000 Echlin, Inc. . . . . . . . . . . . 115,500
2,200 Wynn's International, Inc. . . . . 47,575
------------
163,075
BEVERAGE-ALCOHOLIC (0.6%)
4,000 *Canandaigua Wine Co., Inc.
Class "A" . . . . . . . . . . . . 168,000
BEVERAGE-SOFT DRINK (1.0%)
1,100 Coca-Cola Co. (The) . . . . . . . . 62,150
10,100 Coca-Cola Enterprises Inc. . . . . 210,837
------------
272,987
BROADCASTING/CABLE TV (1.4%)
1,800 Belo (A. H.) Corp. Series "A" . . . 104,400
1,200 Capital Cities/ABC, Inc. . . . . . 105,900
3,636 *Viacom, Inc. Class "B". . . . . . . 162,711
------------
373,011
BUILDING MATERIALS (1.1%)
4,400 Butler Manufacturing Co. . . . . . 159,500
4,000 International Aluminum Corp. . . . 133,000
------------
292,500
CHEMICAL-DIVERSIFIED (1.7%)
2,200 IMC Global Inc. . . . . . . . . . . 107,525
5,600 Pall Corp. . . . . . . . . . . . . 117,600
19,700 Terra Industries, Inc. . . . . . . 214,238
------------
439,363
CHEMICAL-SPECIALTY (3.6%)
3,400 Avery Dennison Corp. . . . . . . . 135,575
4,300 Hercules, Inc. . . . . . . . . . . 200,488
4,300 International Flavors & Fragrances Inc. 221,987
700 LeaRonal, Inc. . . . . . . . . . . 13,475
2,900 Park Electrochemical Corp. . . . . 111,650
5,000 Praxair, Inc. . . . . . . . . . . . 116,250
4,400 Schulman (A.), Inc. . . . . . . . . 134,200
------------
933,625
COMPUTER & PERIPHERALS (2.3%)
2,900 Apple Computer, Inc. . . . . . . . 102,225
2,000 *Cabletron Systems, Inc. . . . . . . 89,750
900 Hewlett-Packard Co. . . . . . . . . 108,338
2,700 International Business Machines Corp. 221,062
5,000 *Mentor Graphics Corp. . . . . . . . 78,125
------------
599,500
COMPUTER SOFTWARE
& SERVICES (2.8%)
3,500 Autodesk, Inc. . . . . . . . . . . 147,437
7,800 *Ceridian Corp. . . . . . . . . . . 260,325
1,400 Computer Associates International, Inc. 83,125
3,000 *Informix Corp. . . . . . . . . . . 103,125
8,250 National Data Corp. . . . . . . . . 143,344
------------
737,356
DIVERSIFIED COMPANIES (3.0%)
3,200 Blount, Inc. Class "A". . . . . . . 142,400
3,300 Danaher Corp. . . . . . . . . . . . 94,462
4,600 *Itel Corp. . . . . . . . . . . . . 176,525
3,800 Kysor Industrial Corp. . . . . . . 77,425
8,000 Mark IV Industries, Inc. . . . . . 164,000
6,700 Valmont Industries, Inc. . . . . . 137,350
------------
792,162
DRUG (1.7%)
4,000 Glaxo PLC (ADR) . . . . . . . . . . 91,500
6,100 Mylan Laboratories Inc. . . . . . . 193,675
2,000 Pfizer, Inc. . . . . . . . . . . . 171,500
------------
456,675
DRUGSTORE (1.2%)
2,200 Arbor Drugs, Inc. . . . . . . . . . 52,250
10,000 Big B, Inc. . . . . . . . . . . . . 136,250
5,300 Rite Aid Corp. . . . . . . . . . . 129,850
------------
318,350
ELECTRICAL EQUIPMENT (0.6%)
2,800 Baldor Electric Co. . . . . . . . . 77,700
1,300 Grainger (W.W.), Inc. . . . . . . . 81,900
------------
159,600
ELECTRONICS (4.2%)
4,400 CTS Corp. . . . . . . . . . . . . . 138,600
5,500 *California Microwave, Inc. . . . . 137,500
11,100 *Dynatech Corp. . . . . . . . . . . 174,825
2,200 Molex Inc. . . . . . . . . . . . . 78,650
2,400 *Rogers Corp. . . . . . . . . . . . 129,000
3,400 Scientific-Atlanta, Inc. . . . . . 79,475
6,100 *Symbol Technologies, Inc. . . . . . 187,575
3,135 *Vishay Intertechnology, Inc. . . . 175,952
------------
1,101,577
4
<PAGE>
<CAPTION>
Shares Value
-------------------------------------------------------------------------------
<C> <S> <C>
ENVIRONMENTAL (0.4%)
3,300 Browning-Ferris Industries, Inc. . $ 112,200
FINANCIAL SERVICES (1.9%)
5,100 *CUC International, Inc. . . . . . . 198,263
2,400 Green Tree Financial Corp. . . . . 98,400
4,400 Paychex, Inc. . . . . . . . . . . . 202,400
------------
499,063
FOOD PROCESSING (1.5%)
13,100 Archer-Daniels-Midland Co. . . . . 243,988
8,100 Hudson Foods, Inc. Class "A". . . . 154,912
------------
398,900
FURNITURE/HOME
FURNISHINGS (0.4%)
2,200 Leggett & Platt, Inc. . . . . . . . 92,400
GROCERY (1.8%)
3,300 Albertsons, Inc. . . . . . . . . . 106,425
7,800 Casey's General Stores, Inc. . . . 123,825
6,700 *Safeway, Inc. . . . . . . . . . . . 232,825
------------
463,075
HEALTHCARE INFORMATION
SYSTEMS (0.6%)
3,300 HBO & Co. . . . . . . . . . . . . . 143,550
HOME APPLIANCE (1.0%)
9,300 Black & Decker Corp. . . . . . . . 268,538
HOTEL/GAMING (1.8%)
3,000 *Circus Circus Enterprises, Inc. . . 96,750
5,300 La Quinta Inns, Inc. . . . . . . . 143,762
7,800 *Mirage Resorts, Inc. . . . . . . . 218,400
------------
458,912
HOUSEHOLD PRODUCTS (2.1%)
1,500 Colgate-Palmolive Co. . . . . . . . 99,000
3,300 Lancaster Colony Corp. . . . . . . 117,150
5,600 Oneida Ltd. . . . . . . . . . . . . 81,200
10,500 Sunbeam-Oster Co., Inc. . . . . . . 240,188
------------
537,538
INDUSTRIAL SERVICES (3.3%)
5,600 *C D I Corp. . . . . . . . . . . . . 136,500
7,200 Equifax Inc. . . . . . . . . . . . 243,000
2,000 Kelly Services, Inc. Class "A". . . 72,000
8,300 Manpower, Inc. . . . . . . . . . . 266,638
5,000 *Volt Information Sciences, Inc. . . 142,500
------------
860,638
INSURANCE-DIVERSIFIED (1.4%)
6,800 American Bankers Insurance
Group, Inc. . . . . . . . . . . . 194,650
1,600 American International Group, Inc. 166,800
------------
361,450
MACHINE TOOL (0.7%)
4,400 Acme-Cleveland Corp. . . . . . . . $ 70,400
5,500 Gleason Corp. . . . . . . . . . . . 99,687
------------
170,087
MACHINERY (1.8%)
3,100 Applied Power Inc. Class "A". . . . 77,113
6,000 Cascade Corp. . . . . . . . . . . . 79,500
6,700 Commercial Intertech Corp. . . . . 147,400
5,300 IDEX Corp. . . . . . . . . . . . . 158,337
------------
462,350
MACHINERY-CONSTRUCTION
& MINING (1.6%)
2,900 *Clark Equipment Co. . . . . . . . . 239,250
4,500 JLG Industries, Inc. . . . . . . . 178,313
------------
417,563
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (1.8%)
2,200 *Champion Enterprises Inc. . . . . . 85,800
6,700 Clayton Homes, Inc. . . . . . . . . 114,737
9,800 Oakwood Homes Corp. . . . . . . . . 258,475
------------
459,012
MEDICAL SERVICES (0.8%)
9,100 Surgical Care Affiliates Inc. . . . 211,575
MEDICAL SUPPLIES (7.8%)
3,100 Allergan, Inc. . . . . . . . . . . 91,450
4,400 Becton, Dickinson & Co. . . . . . . 238,700
4,300 Bergen Brunswig Corp. Class "A" . . 115,025
10,900 *Bio-Rad Laboratories, Inc. Class "A" 312,013
3,000 *Boston Scientific Corp. . . . . . . 73,875
3,800 Cardinal Health Inc. . . . . . . . 180,975
2,900 *Cordis Corp. . . . . . . . . . . . 210,975
7,600 Invacare Corp. . . . . . . . . . . 267,900
3,100 Johnson & Johnson . . . . . . . . . 184,450
3,700 Medtronic Inc. . . . . . . . . . . 256,687
3,300 *Sunrise Medical, Inc. . . . . . . . 117,975
------------
2,050,025
METAL FABRICATING (0.7%)
6,500 *Allied Products Corp. . . . . . . . 109,688
2,200 *SPS Technologies Inc. . . . . . . . 65,175
------------
174,863
NEWSPAPER (0.3%)
2,800 Media General, Inc. Class "A" . . . 90,300
OFFICE EQUIPMENT
& SUPPLIES (1.0%)
10,000 *Staples, Inc. . . . . . . . . . . . 263,750
OILFIELD SERVICES/
EQUIPMENT (0.5%)
3,800 Halliburton Co. . . . . . . . . . . 138,225
5
<PAGE>
<CAPTION>
VALUE LINE ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
MARCH 31, 1995
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Shares or
Principal Amount Value
-------------------------------------------------------------------------------
<C> <S> <C>
PACKAGING & CONTAINER (0.2%)
2,200 Bemis Co., Inc. . . . . . . . . . . $ 64,625
PAPER & FOREST
PRODUCTS (0.7%)
2,100 Scott Paper Co. . . . . . . . . . . 187,687
PETROLEUM-PRODUCING (0.4%)
5,600 Pogo Producing Co. . . . . . . . . 114,100
PRECISION INSTRUMENT (2.4%)
3,300 *Coherent, Inc. . . . . . . . . . . 88,275
3,200 *Dionex Corp. . . . . . . . . . . . 128,800
10,500 *Esterline Technologies Corp. . . . 173,250
3,200 Pacific Scientific Co. . . . . . . 65,600
4,400 Tektronix, Inc. . . . . . . . . . . 176,000
------------
631,925
RECREATION (0.6%)
3,100 Disney (Walt) Co. . . . . . . . . . 165,463
RESTAURANT (0.6%)
4,900 McDonald's Corp. . . . . . . . . . 167,212
RETAIL-SPECIAL LINES (2.2%)
3,300 *Bed, Bath & Beyond, Inc. . . . . . 81,675
7,100 *Fabri-Centers of America, Inc. . . 128,688
7,500 United States Shoe Corp. . . . . . 197,812
8,300 *Waban, Inc. . . . . . . . . . . . . 163,925
------------
572,100
RETAIL STORE (1.6%)
8,800 *Consolidated Stores Corp. . . . . . 177,100
9,275 Dollar General Corp. . . . . . . . 243,469
------------
420,569
SHOE (0.9%)
2,100 NIKE, Inc. Class "B". . . . . . . . 156,712
2,800 Wolverine World Wide, Inc. . . . . 85,750
------------
242,462
TELECOMMUNICATIONS
EQUIPMENT (0.8%)
4,400 *ADC Telecommunications, Inc. . . . 129,800
2,075 *Andrew Corp. . . . . . . . . . . . 84,556
------------
214,356
TELECOMMUNICATIONS
SERVICE (0.4%)
7,000 *U.S. Long Distance Corp. . . . . . 100,625
TIRE & RUBBER (0.5%)
4,200 Cooper Tire & Rubber Co. . . . . . 119,175
TOBACCO (0.8%)
6,800 UST, Inc. . . . . . . . . . . . . . $ 215,900
TOILETRIES/COSMETICS (0.4%)
1,200 Gillette Co. . . . . . . . . . . . 97,950
TRUCKING/TRANSPORTATION
LEASING (0.4%)
3,500 Consolidated Freightways, Inc. . . . 93,188
------------
TOTAL COMMON STOCKS
(Cost $17,799,058). . . . . . . . . 19,997,457
------------
U.S. GOVERNMENT OBLIGATIONS (9.3%)
$2,000,000 United States Treasury Bonds
7.25%, 8/15/22 . . . . . . . . . . 1,940,622
500,000 United States Treasury Notes 6.75%,
5/31/99. . . . . . . . . . . . . . 494,218
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS (Cost $2,588,815) . . . 2,434,840
------------
TOTAL INVESTMENT SECURITIES
(85.7%)(Cost $20,387,873) . . . . . 22,432,297
REPURCHASE AGREEMENT (14.9%)
(INCLUDING ACCRUED INTEREST)
3,900,000 Collateralized by $3,275,000 U.S.
Treasury Bonds 10 3/4%, due 2/15/03,
with a value of $4,007,589. (With
Morgan Stanley &Co., Inc., 6%, dated
3/31/95, due 4/3/95, delivery value
$3,901,950) . . . . . . . . . . . . 3,900,650
EXCESS OF LIABILITIES OVER CASH AND
OTHER ASSETS (-0.6%) . . . . . . . . . . . . . . . (160,655)
------------
NET ASSETS (100%). . . . . . . . . . . . . . . . . $26,172,292
------------
------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE, PER OUTSTANDING
SHARE ($26,172,292 + 2,259,409 SHARES
OUTSTANDING) . . . . . . . . . . . . . . . . . . . $ 11.58
------------
------------
<FN>
* NON-INCOME PRODUCING
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
VALUE LINE ASSET ALLOCATION FUND, INC.
STATEMENT OF ASSETS
AND LIABILITIES
AT MARCH 31, 1995
--------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment securities, at value
(Cost-$20,382,667). . . . . . . . .. . . . . $22,432,297
Repurchase Agreement
(Cost-$3,900,650). . . . . . . . . . . . . . 3,900,650
Cash . . . . . . . . . . . . . . . . . . . . . . 27,567
Receivable for securities sold . . . . . . . . . 993,861
Deferred organization costs (note 2) . . . . . . 44,397
Dividends and interest receivable. . . . . . . . 41,824
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . 27,440,596
------------
LIABILITIES:
Payable for securities purchased . . . . . . . . 1,195,935
Payable for capital shares redeemed. . . . . . . 5,000
Accrued expenses:
Advisory fee payable . . . . . . . . . . . . 13,465
Plan fees payable. . . . . . . . . . . . . . 5,179
Other. . . . . . . . . . . . . . . . . . . . 48,725
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . 1,268,304
------------
NET ASSETS:
Capital stock, at $.001 par value (authorized
300,000,000, outstanding 2,259,409
shares). . . . . . . . . . . . . . . . . . . 2,260
Additional paid-in capital . . . . . . . . . . . 23,695,797
Undistributed investment income-net. . . . . . . 92,646
Accumulated net realized gain
on investments . . . . . . . . . . . . . . . 331,959
Unrealized net appreciation of
investments. . . . . . . . . . . . . . . . . 2,049,630
-------------
NET ASSETS . . . . . . . . . . . . . . . . . $26,172,292
-------------
-------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE, PER
OUTSTANDING SHARE ($26,172,292 +
2,259,409 SHARES OUTSTANDING) . . . . . . . $ 11.58
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
MARCH 31, 1995
--------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest income. . . . . . . . . . . . . . . . . $ 407,412
Dividend income (net of foreign withholding
tax of $182) . . . . . . . . . . . . . . . . . 138,319
------------
TOTAL INCOME . . . . . . . . . . . . . . . . . 545,731
------------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . 134,762
Service and distribution plan fee . . . . . . . 51,832
Directors' fees and expenses . . . . . . . . . . 34,603
Accounting and bookkeeping expense . . . . . . . 32,400
Custodian fees . . . . . . . . . . . . . . . . . 31,970
Auditing and legal fees. . . . . . . . . . . . . 27,878
Registration and filing fees . . . . . . . . . . 25,889
Amortization of deferred organization
costs (note 2) . . . . . . . . . . . . . . . . 13,208
Printing . . . . . . . . . . . . . . . . . . . . 8,290
Insurance, dues and other. . . . . . . . . . . . 3,433
Transfer agent fees. . . . . . . . . . . . . . . 2,558
Telephone expense. . . . . . . . . . . . . . . . 1,157
Postage expense. . . . . . . . . . . . . . . . . 445
------------
TOTAL EXPENSES . . . . . . . . . . . . . . . . 368,425
------------
INVESTMENT INCOME-NET. . . . . . . . . . . . . . . 177,306
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS-NET:
Realized Gain-Net. . . . . . . . . . . . . . . 654,998
Change in Unrealized Appreciation . . . . . . 1,970,422
------------
NET REALIZED GAIN AND CHANGE IN NET UNREALIZED
APPRECIATION OF INVESTMENTS. . . . . . . . . . . 2,625,420
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS. . . . . . . . . . . . . . . . . $ 2,802,726
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1995 AND FOR THE PERIOD AUGUST 24, 1993* TO
MARCH 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 24, 1993*
MARCH 31, 1995 TO MARCH 31, 1994
-------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment income-net . . . . . . . . . . . . . $ 177,306 $ 82,978
Realized gain (loss) on investments-net . . . . 654,998 (116,149)
Net unrealized appreciation . . . . . . . . . . 1,970,422 79,208
------------- -------------
Net increase in net assets from operations. . . 2,802,726 46,037
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net . . . . . . . . . . . . . (116,050) (51,588)
Realized gains-net. . . . . . . . . . . . . . . (206,890) -
------------- -------------
(322,940) (51,588)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares. . . . . . . . 4,879,999 22,980,223
Net proceeds from reinvestment of distributions to
shareholders . . . . . . . . . . . . . . . . . . . 321,433 51,380
Cost of shares repurchased. . . . . . . . . . . (497,439) (4,137,539)
------------- -------------
Increase from capital share transactions. . . . 4,703,993 18,894,064
------------- -------------
TOTAL INCREASE . . . . . . . . . . . . . . . . . . 7,183,779 18,888,513
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 18,988,513 100,000
------------- -------------
End of period . . . . . . . . . . . . . . . . $ 26,172,292 $ 18,988,513
------------- -------------
------------- -------------
UNDISTRIBUTED INVESTMENT INCOME-NET, AT END OF
PERIOD. . . . . . . . . . . . . . . . . . . . . . $ 92,646 $ 31,390
------------- -------------
------------- -------------
<FN>
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. 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 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 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.
(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 of 1986, as amended, applicable to
regulated investment companies, 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. 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.
2. ORGANIZATION COSTS
Costs of $66,040 incurred in connection with the Fund's organization and initial
registration have been deferred and are being amortized over sixty months
beginning at the commencement of operations of the Fund. In the event any of
the initial shares of the Fund are redeemed by the holder thereof during the
five-year amortization period, the redemption proceeds will be reduced by a pro
rata portion of any unamortized deferred organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
3. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended August 24, 1993*
March 31, 1995 to March 31, 1994
----------------------------------
<S> <C> <C>
Shares sold. . . . . . . . . . . 443,662 2,196,317
Shares issued in reinvest-
ment of dividends and
distributions. . . . . . . . . 30,238 5,003
----------- -----------
473,900 2,201,320
Shares repurchased . . . . . . . 45,595 380,216
----------- -----------
Net increase . . . . . . . . . . 428,305 1,821,104
----------- -----------
----------- -----------
<FN>
* COMMENCEMENT OF OPERATIONS.
</TABLE>
9
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, were as
follows:
<TABLE>
<CAPTION>
Year Ended
March 31, 1995
----------------
<S> <C>
PURCHASES:
U.S. Government Obligations. . . . . . $ 982,969
Investment Securities. . . . . . . . . 35,087,827
--------------
$ 36,070,796
--------------
--------------
SALES:
Investment Securities. . . . . . . . . $ 34,344,846
--------------
--------------
</TABLE>
At March 31, 1995, the aggregate cost of investment securities and repurchase
agreement for Federal income tax purposes was $24,296,434. The aggregate
appreciation and depreciation of investments at March 31, 1995, based on a
comparison of investment values and their costs for federal income tax purposes
was $2,305,971 and $269,458, respectively, resulting in a net appreciation of
$2,036,513. For the year ended March 31, 1995, the Fund utilized a prior year
capital loss carryforward of $47,194.
5. ADVISORY FEES, SERVICE AND DISTRIBUTION PLAN FEES AND TRANSACTIONS
WITH AFFILIATES
An advisory fee of $134,762 was paid or payable to Value Line, Inc., the Fund's
investment adviser (the `Adviser'), for the year ended March 31, 1995. The fee
was computed at the rate of .65 of 1% of the daily net assets during the period
and paid monthly. The Adviser provides research, investment programs and
supervision of the investment portfolio and pays costs of certain administrative
services and office space.
The Adviser also provides persons, satisfactory to the Fund's Board of
Directors, to act as officers of the Fund and pays their salaries and wages. The
Fund bears all other costs and expenses in its organization and operation. If
the aggregate expenses of the Fund, other than taxes, interest, brokerage
commissions and extraordinary expenses, exceed the expense limitation imposed by
any state in which the Fund sells its shares, the advisory fee will be reduced
by the amount of such excess, or the amount of such excess will be refunded.
A fee of $3,780 for printing services was paid or payable to the Adviser for the
year ended March 31, 1995.
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, for the payment of certain
expenses incurred by Value Line Securities, Inc. (the "Distributor") a
wholly-owned subsidiary of the Adviser, in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets. In the year ended
March 31, 1995, fees amounting to $51,832 were paid or payable under the Plan.
Certain officers and directors of the Adviser and the Distributor, are also
officers and a director of the Fund. During the year ended March 31, 1995, the
Fund paid brokerage commissions totalling $56,691 to the Distributor, a
registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At March 31, 1995, the Adviser and/or affiliated companies owned 1,947,697
shares of the Fund's capital stock, representing 86.2% of the outstanding
shares. In addition, certain officers and directors of the Fund owned 181,113
shares of capital stock, representing 8.0% of the outstanding shares.
10
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
AUGUST 24, 1993
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
MARCH 31, 1995 MARCH 31, 1994
--------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . $ 10.37 $ 10.00
-------------- --------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . . . . .08 .06(1)
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . 1.30 .35
-------------- --------------
Total from investment operations . . . . . . . 1.38 .41
-------------- --------------
LESS DISTRIBUTIONS:
Dividends from net investment income. . . . . . (.06) (.04)
Distributions from capital gains. . . . . . . . (.11) -
-------------- --------------
Total distributions. . . . . . . . . . . . . . (.17) (.04)
-------------- --------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . $ 11.58 $ 10.37
-------------- --------------
-------------- --------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . 13.47% 4.15%+
-------------- --------------
-------------- --------------
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands). . . . . . $ 26,172 $ 18,989
Ratio of operating expenses to average net assets. 1.76% 0.47%*(1)(2)
Ratio of net investment income to average net assets. .85% 1.10%*(1)(2)
Portfolio turnover rate. . . . . . . . . . . . . . 211% 108%
<FN>
(1) Net of expense reimbursement and fees waived by the Adviser. Had these
expenses been fully paid by the Fund, net investment loss per share would
have been $(.02), ratio of operating expenses to average net assets would
have been 2.24%*, and ratio of net investment loss to average net assets
would have been (0.67%)*.
(2) Due to the reimbursement of expenses and waiver of fees by the Adviser and
the short period covered by this report, data is not indicative of future
periods.
+ Not annualized.
* Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
-------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF VALUE LINE ASSET
ALLOCATION 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 Asset Allocation Fund,
Inc. (the "Fund") at March 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
the year then ended and for the period August 24, 1993 (commencement of
operations) through March 31, 1994, in conformity with generally accepted
accounting principles. 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 generally accepted auditing standards
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 March 31, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
May 19, 1995
--------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
For corporate taxpayers 18% of the ordinary income distributions paid
during the year 1994 qualify for the corporate dividends received
deduction
--------------------------------------------------------------------------------
12
