<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 Company
225 Franklin Street, Boston, MA 02110
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
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT, SECRETARY/TREASURER
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY/TREASURER 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 report is issued for the 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).
VLF50696
--------------------------------
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1995
--------------------------------
VALUE LINE
ASSET
ALLOCATION
FUND, INC.
[LOGO]
VALUE LINE
MUTUAL FUNDS
<PAGE>
[LOGO] TO OUR VALUE LINE ASSET ALLOCATION FUND SHAREHOLDERS
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The six-month period ended September 30, 1995, was an outstanding one for the
shareholders of the Value Line Asset Allocation Fund, Inc. (the "Fund"). Total
return for the Fund in the period was 19.34%. This compared with total returns
for the unmanaged Standard & Poor's 500 Index, including reinvested dividends,
of 18.25% and of 8.53% for the unmanaged Lehman Government/Corporate Bond
Index.
Your Fund's return was achieved despite holding a significant portion of the
portfolio in cash and cash equivalents, ranging from 15% to 35% of total assets.
Value Line's proprietary computer models dictate asset allocation on the basis
of a number of economic and financial variables. Stockholdings reached a high
of about 75% of assets in April, May, and June. The rapid advance in share
prices, combined with a leveling off in interest rates, caused us to bring down
the stock portion in July/August to about 60%, where the allocation has since
remained. This represents essentially a neutral outlook on the stock market.
The portfolio's bondholdings this year have remained in the 5% to 10% range, as
the Value Line model has taken a neutral to negative stance on bonds.
The Fund holds a well diversified portfolio of about 180 stocks of U.S.
companies of all sizes and across many different industries. The renowned Value
Line Timeliness-Trademark- Ranking System, celebrating its 30th anniversary, is
a key tool in the Fund's stock selection. Turnover (the replacement of one
stock with another) is relatively high, as we seek to hold only stocks with
strong earnings momentum and favorable price momentum. We quickly delete
holdings that no longer meet our criteria.
We look for continued moderate growth in the U.S. economy in 1996. Details of
our forecast are on the next page.
Since its inception on August 24, 1993, your Fund has posted a total return of
41.04%, versus 34.68% for the S&P 500 and 10.51% for the Lehman Govern-
ment/Corporate Bond Index. We are especially pleased that the portfolio's
returns surpassed market indexes even while risk was reduced through significant
holdings of cash. Following this year's sharp climb in stock prices, the
emphasis on risk reduction through asset allocation is more important than ever.
Our approach allows investors to remain involved in the stock market while
leaving decisions-about specific holdings as well as allocation of the assets-to
Value Line's professional investment managers.
We 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
October 16, 1995
- --------------------------------------------------------------------------------
THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX REPRESENTATIVE OF THE
LARGER CAPITALIZATION STOCKS TRADED IN THE UNITED STATES.
THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX IS AN UNMANAGED INDEX REPRESENTATIVE
OF THE INVESTMENT-GRADE DOMESTIC CORPORATE AND GOVERNMENT BOND MARKETS.
2
<PAGE>
- --------------------------------------------------------------------------------
ECONOMIC OBSERVATIONS
Most signs now point to a slowdown in the rate of economic growth over the next
several months. Several key industrial indicators (e.g., the level of factory
usage) are now trending lower, and this is causing manufacturers to become more
cautious in their outlook. At the same time, consumers, burdened with a heavy
debt load, are becoming more selective in their purchasing plans. Not
surprisingly, retailers are not stocking their shelves the way they did earlier
in the business expansion. Taken together, these developments suggest that the
economy, which grew by better than 4% in the third quarter, will expand by
little more than half that rate in the final three months of 1995 and the
opening quarter of 1996.
Moreover, we think the economy will retain this calm, orderly growth character
throughout 1996. Perhaps the most distinguishing characteristic of the
five-year-old business expansion has been the notable lack of excess on the
growth side. Thus, while the automobile industry, the housing sector, and the
key industrial markets have all participated in the advance, none has veered out
of control. As a result, potentially inflationary labor and raw-materials
shortages have not developed. Hence, the Federal Reserve, which has had to
respond to higher prices in the past by clamping down hard on the monetary
brakes, has been able to be more gentle this time around.
On balance, we think little will change over the next several quarters.
Specifically, we would look for growth and inflation to hold within a comforting
2%-3% band. We also see interest rates remaining near current levels, with a
further slight decline being perhaps more likely than an increase. Finally, we
expect corporate profits to edge higher, on balance, over the next 12 to 15
months. Altogether, this scenario should not presage troubling times for
equity-market participants in the months ahead, nor should it lull investors
into thinking future gains will come easily.
- --------------------------------------------------------------------------------
* PERFORMANCE DATA:
GROWTH OF AN
AVERAGE ASSUMED
ANNUAL INVESTMENT
TOTAL RETURN OF $10,000
-------------- ---------------
1 year ended 9/30/95 29.42% $ 12,942
From 8/24/93
(commencement of
operations) to 9/30/95 17.79% $ 14,104
* 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>
VALUE LINE ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30,1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (62.5%)
ADVERTISING (1.4%)
3,900 *Heritage Media Corp. Class "A" $ 117,487
5,700 Omnicom Group, Inc. . . . . . . . . . . . 371,213
20,000 WPP Group PLC (ADR) . . . . . . . . . . . 96,250
-----------
584,950
AEROSPACE/DEFENSE (2.2%)
5,000 Logicon, Inc. . . . . . . . . . . . . . . 135,000
3,300 McDonnell Douglas Corp. . . . . . . . . . 273,075
2,600 Northrop Grumman Corp.. . . . . . . . . . 158,275
6,000 *Rohr, Inc.. . . . . . . . . . . . . . . . 97,500
4,000 *Whitehall Corp. . . . . . . . . . . . . . 149,000
8,000 *Wyman-Gordon Co.. . . . . . . . . . . . . 110,500
-----------
923,350
APPAREL (0.8%)
3,000 *Donnkenny, Inc. . . . . . . . . . . . . . 84,375
3,200 *Tommy Hilfiger Corp.. . . . . . . . . . . 104,000
7,000 Warnaco Group, Inc. Class "A" . . . . . . 168,000
-----------
356,375
AUTO PARTS-ORIGINAL
EQUIPMENT (0.2%)
8,000 *Intermet Corp.. . . . . . . . . . . . . . 90,000
BANK (0.2%)
8,000 *D & N Financial Corp. . . . . . . . . . . 92,000
BEVERAGE-ALCOHOLIC (0.8%)
14,000 *Mondavi (Robert) Corp. (The)
Class "A". . . . . . . . . . . . . . . . 357,000
BROADCASTING/CABLE TV (1.1%)
2,300 *Clear Channel Communications, Inc.. . . . 174,225
3,500 TCA Cable TV, Inc.. . . . . . . . . . . . 100,625
3,936 *Viacom, Inc. Class "B". . . . . . . . . . 195,816
-----------
470,666
BUILDING MATERIALS (0.5%)
7,000 *Manville Corp.. . . . . . . . . . . . . . 91,875
6,000 *NCI Building Systems, Inc.. . . . . . . . 141,000
-----------
232,875
CHEMICAL-DIVERSIFIED (0.5%)
2,300 Norsk Hydro A. S. (ADR) . . . . . . . . . 99,188
2,000 Potash Corp. of Saskatchewan, Inc.. . . . 124,500
-----------
223,688
CHEMICAL-SPECIALTY (1.4%)
5,200 Cambrex Corp. . . . . . . . . . . . . . . 209,300
3,000 Engelhard Corp. . . . . . . . . . . . . . 76,125
3,400 Praxair, Inc. . . . . . . . . . . . . . . 90,950
5,000 Sigma-Aldrich Corp. . . . . . . . . . . . 242,500
-----------
618,875
COMPUTER &
PERIPHERALS (1.8%)
5,000 *Auspex Systems, Inc.. . . . . . . . . . . 78,125
10,000 *Computervision Corp.. . . . . . . . . . . 121,250
2,700 International Business
Machines Corp. . . . . . . . . . . . . . 254,812
5,000 *Mentor Graphics Corp. . . . . . . . . . . 104,375
6,000 *Microcom, Inc.. . . . . . . . . . . . . . 113,250
3,000 *SCI Systems, Inc. . . . . . . . . . . . . 103,500
-----------
775,312
COMPUTER SOFTWARE
& SERVICES (5.1%)
2,500 *Active Voice Corp.. . . . . . . . . . . . 70,937
6,000 *American Business Information, Inc. . . . 121,500
13,000 *Borland International, Inc. . . . . . . . 190,125
2,500 *Cadence Design Systems, Inc.. . . . . . . 98,125
4,600 *Ceridian Corp.. . . . . . . . . . . . . . 204,125
2,100 Computer Associates International, Inc. . 88,725
3,500 *Computer Horizons Corp. . . . . . . . . . 70,000
3,000 *Comshare, Inc.. . . . . . . . . . . . . . 87,750
5,000 *Comverse Technology, Inc. . . . . . . . . 108,750
6,000 *Consilium, Inc. . . . . . . . . . . . . . 81,750
8,000 *Hogan Systems, Inc. . . . . . . . . . . . 80,000
8,000 MDL Information Systems, Inc. . . . . . . 149,000
14,250 National Data Corp. . . . . . . . . . . . 382,969
7,000 *NetManage, Inc. . . . . . . . . . . . . . 166,250
3,000 *Network General Corp. . . . . . . . . . . 123,750
4,000 *Sterling Software Inc.. . . . . . . . . . 182,000
-----------
2,205,756
4
<PAGE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED COMPANIES (1.9%)
4,600 Anixter International, Inc. . . . . . . . $ 190,325
3,200 Blount, Inc. Class "A". . . . . . . . . . 152,400
3,000 Crane Co. . . . . . . . . . . . . . . . . 103,500
3,800 Danaher Corp. . . . . . . . . . . . . . . 124,450
3,800 Kysor Industrial Corp.. . . . . . . . . . 82,650
6,700 Valmont Industries, Inc.. . . . . . . . . 162,475
-----------
815,800
DRUG (1.4%)
15,000 *AutoImmune, Inc.. . . . . . . . . . . . . 234,375
10,000 *Gilead Sciences, Inc. . . . . . . . . . . 220,000
2,600 Pfizer, Inc.. . . . . . . . . . . . . . . 138,775
-----------
593,150
DRUGSTORE (0.3%)
3,000 Medicine Shoppe International, Inc. . . . 132,750
ELECTRICAL EQUIPMENT (0.6%)
3,000 *Charter Power Systems, Inc. . . . . . . . 84,000
5,200 Measurex Corp.. . . . . . . . . . . . . . 178,100
-----------
262,100
ELECTRONICS (2.3%)
6,000 *Cable Design Technologies Corp. . . . . . 180,000
5,000 *Electromagnetic Sciences, Inc.. . . . . . 57,500
2,750 Molex, Inc. . . . . . . . . . . . . . . . 99,687
4,800 *Rogers Corp.. . . . . . . . . . . . . . . 115,200
5,100 *Symbol Technologies, Inc. . . . . . . . . 168,938
4,000 Telxon Corp.. . . . . . . . . . . . . . . 95,500
6,270 *Vishay Intertechnology, Inc.. . . . . . . 263,340
-----------
980,165
ENVIRONMENTAL (1.8%)
3,300 Browning-Ferris Industries, Inc.. . . . . 100,238
5,000 *Republic Waste Industries, Inc. . . . . . 115,625
12,000 *Sanifill, Inc.. . . . . . . . . . . . . . 393,000
4,000 *United Waste Systems, Inc.. . . . . . . . 167,000
-----------
775,863
FINANCIAL SERVICES (2.1%)
5,650 *CUC International, Inc. . . . . . . . . . 197,044
4,000 *Comdata Holdings Corp.. . . . . . . . . . 97,500
2,000 *Credit Acceptance Corp. . . . . . . . . . 54,000
10,000 *Data Broadcasting Corp. . . . . . . . . . 76,875
2,000 Household International, Inc. . . . . . . 124,000
1,000 Loews Corp. . . . . . . . . . . . . . . . 145,500
4,000 Travelers Group, Inc. . . . . . . . . . . 212,500
-----------
907,419
FOOD PROCESSING (0.6%)
3,200 IBP, Inc. . . . . . . . . . . . . . . . . 170,800
4,000 Interstate Bakeries Corp. . . . . . . . . 84,500
-----------
255,300
FOOD WHOLESALERS (0.3%)
3,000 *General Nutrition Companies, Inc. . . . . 136,500
FOREIGN ELECTRONICS/
ENTERTAINMENT (0.5%)
4,000 Philips Electronics N.V. (N.Y. Shares). . 195,000
FOREIGN TELECOMMUNICATIONS
(0.2%)
1,500 Telecom Corp. of
New Zealand Ltd. (ADR). . . . . . . . . . 92,625
GROCERY (0.5%)
4,700 *Safeway, Inc.. . . . . . . . . . . . . . 196,225
HEALTHCARE INFORMATION
SYSTEMS (1.1%)
3,300 *Cerner Corp.. . . . . . . . . . . . . . . 113,025
3,300 HBO & Co. . . . . . . . . . . . . . . . . 206,250
3,000 *Medic Computer Systems, Inc.. . . . . . . 152,250
-----------
471,525
HOTEL/GAMING (2.1%)
9,000 *Bally Entertainment Corp. . . . . . . . . 97,875
4,000 *Circus Circus Enterprises, Inc. . . . . . 112,000
8,000 *HFS Inc.. . . . . . . . . . . . . . . . . 419,000
2,500 La Quinta Inns, Inc.. . . . . . . . . . . 70,000
5,800 *Mirage Resorts, Inc.. . . . . . . . . . . 190,675
-----------
889,550
HOUSEHOLD PRODUCTS (0.2%)
5,600 Oneida Ltd. . . . . . . . . . . . . . . . 91,000
5
<PAGE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (1.1%)
2,500 Equifax, Inc. . . . . . . . . . . . . . . $ 104,687
6,000 *Primark Corp. . . . . . . . . . . . . . . 149,250
5,000 *Volt Information Sciences, Inc. . . . . . 215,000
-----------
468,937
INSURANCE-DIVERSIFIED (1.4%)
7,800 American Bankers Insurance Group,
Inc. . . . . . . . . . . . . . . . . . . 290,550
1,000 *CNA Financial Corp. . . . . . . . . . . . 106,000
1,000 *Markel Corp.. . . . . . . . . . . . . . . 73,500
7,000 US Facilities Corp. . . . . . . . . . . . 140,875
-----------
610,925
INVESTMENT COMPANY-
DOMESTIC (0.3%)
4,500 *Mercer International, Inc. (SBI). . . . . 112,500
MACHINE TOOL (0.7%)
4,400 Acme-Cleveland Corp.. . . . . . . . . . . 117,700
5,500 Gleason Corp. . . . . . . . . . . . . . . 180,125
-----------
297,825
MACHINERY (1.6%)
3,000 Albany International Corp. Class "A". . . 70,125
3,100 Applied Power Inc. Class "A". . . . . . . 99,200
5,200 Dover Corp. . . . . . . . . . . . . . . . 198,900
4,000 Duriron Company, Inc. . . . . . . . . . . 117,000
1,200 Graco, Inc. . . . . . . . . . . . . . . . 40,950
4,300 IDEX Corp.. . . . . . . . . . . . . . . . 153,725
-----------
679,900
MACHINERY-CONSTRUCTION
& MINING (0.5%)
6,000 *INDRESCO, Inc.. . . . . . . . . . . . . . 107,250
2,000 JLG Industries, Inc.. . . . . . . . . . . 90,000
-----------
197,250
MANUFACTURED HOUSING/
RECREATIONAL VEHICLES (0.9%)
6,400 *Champion Enterprises, Inc.. . . . . . . . 127,200
11,700 Clayton Homes, Inc. . . . . . . . . . . . 277,875
-----------
405,075
MARITIME (0.7%)
11,000 *Avondale Industries Inc.. . . . . . . . . 171,875
4,500 Stolt-Nielsen S.A.. . . . . . . . . . . . 144,000
-----------
315,875
MEDICAL SERVICES (0.3%)
3,400 *Renal Treatment Centers, Inc. . . . . . . 125,800
MEDICAL SUPPLIES (6.1%)
9,900 *Bio-Rad Laboratories, Inc. Class "A". . . 398,475
4,200 *Boston Scientific Corp. . . . . . . . . . 179,025
3,800 Cardinal Health, Inc. . . . . . . . . . . 210,425
6,000 *Conmed Corp.. . . . . . . . . . . . . . . 196,500
2,300 *Cordis Corp.. . . . . . . . . . . . . . . 194,925
3,400 Invacare Corp.. . . . . . . . . . . . . . 163,200
2,200 Johnson & Johnson . . . . . . . . . . . . 163,075
5,600 Medtronic Inc.. . . . . . . . . . . . . . 301,000
4,000 Meridian Diagnostics, Inc.. . . . . . . . 48,500
4,280 *Nellcor Puritan-Bennett, Inc. . . . . . . 212,930
6,000 *St. Jude Medical, Inc.. . . . . . . . . . 379,500
12,000 *Utah Medical Products, Inc. . . . . . . . 192,000
-----------
2,639,555
METAL FABRICATING (0.8%)
8,000 Allied Products Corp. . . . . . . . . . . 171,000
4,000 *SPS Technologies, Inc.. . . . . . . . . . 156,000
-----------
327,000
NATURAL GAS-DIVERSIFIED (0.3%)
3,000 Williams Companies, Inc.. . . . . . . . . 117,000
NEWSPAPER (0.6%)
10,000 New York Times Co. Class "A". . . . . . . 273,750
OILFIELD SERVICES/
EQUIPMENT (1.2%)
15,000 *Global Marine Inc.. . . . . . . . . . . . 106,875
3,800 Halliburton Co. . . . . . . . . . . . . . 158,650
9,000 *Pride Petroleum Services, Inc.. . . . . . 90,000
10,000 *Smith International, Inc. . . . . . . . . 173,750
-----------
529,275
6
<PAGE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------
<C> <S> <C>
PACKAGING & CONTAINER (0.2%)
1,500 *Sealed Air Corp.. . . . . . . . . . . . . $ 82,688
PAPER & FOREST
PRODUCTS (0.4%)
500 *Crown Vantage Inc.. . . . . . . . . . . . 11,125
5,000 James River Corp. of Virginia . . . . . . 160,000
-----------
171,125
PETROLEUM-INTEGRATED (0.5%)
10,000 USX-Marathon Group. . . . . . . . . . . . 197,500
PRECISION INSTRUMENT (3.2%)
3,300 *Coherent, Inc.. . . . . . . . . . . . . . 120,450
3,200 *Dionex Corp.. . . . . . . . . . . . . . . 167,200
3,500 *Esterline Technologies Corp.. . . . . . . 95,812
5,000 Innovex Inc.. . . . . . . . . . . . . . . 109,375
2,000 *Kronos, Inc.. . . . . . . . . . . . . . . 92,500
45,000 *LTX Corp. . . . . . . . . . . . . . . . . 568,125
3,200 Pacific Scientific Co.. . . . . . . . . . 77,200
3,000 *Robotic Vision Systems, Inc.. . . . . . . 69,750
1,500 Tektronix, Inc. . . . . . . . . . . . . . 88,500
-----------
1,388,912
PUBLISHING (0.6%)
4,000 Cadmus Communications Corp. . . . . . . . 100,000
4,000 *Devon Group, Inc. . . . . . . . . . . . . 173,000
-----------
273,000
RECREATION (1.2%)
3,500 *Custom Chrome, Inc. . . . . . . . . . . . 79,188
4,000 Disney (Walt) Co. . . . . . . . . . . . . 229,500
2,400 Harman International Industries, Inc. . . 117,600
4,000 *Quiksilver Inc. . . . . . . . . . . . . . 108,500
-----------
534,788
RESTAURANT (0.6%)
4,000 *Longhorn Steaks, Inc. . . . . . . . . . . 71,000
4,000 *Papa John's International, Inc. . . . . . 180,000
-----------
251,000
RETAIL-SPECIAL LINES (0.5%)
7,100 *Fabri-Centers of America, Inc.
Class "A". . . . . . . . . . . . . . . . 109,162
7,100 *Fabri-Centers of America, Inc.
Class "B". . . . . . . . . . . . . . . . 86,975
-----------
196,137
RETAIL BUILDING SUPPLY (0.1%)
2,000 *Central Sprinkler Corp. . . . . . . . . . 61,500
SHOE (1.5%)
10,000 *Just For Feet, Inc. . . . . . . . . . . . 307,500
1,500 NIKE, Inc. Class "B". . . . . . . . . . . 166,688
6,200 Wolverine World Wide, Inc.. . . . . . . . 169,725
-----------
643,913
STEEL-GENERAL (0.1%)
2,000 Castle (A.M.) & Co. . . . . . . . . . . . 44,500
TELECOMMUNICATIONS
EQUIPMENT (1.8%)
4,000 *Aspect Telecommunications Corp. . . . . . 108,000
13,000 *Colonial Data Technologies Corp.. . . . . 240,500
2,000 *Glenayre Technologies, Inc. . . . . . . . 144,000
4,000 *InterVoice, Inc.. . . . . . . . . . . . . 91,500
2,000 *U.S. Robotics Corp. . . . . . . . . . . . 170,500
-----------
754,500
TELECOMMUNICATIONS
SERVICE (2.0%)
5,000 Cincinnati Bell Inc.. . . . . . . . . . . 135,000
15,000 *EIS International, Inc. . . . . . . . . . 268,125
14,000 *WorldCom, Inc.. . . . . . . . . . . . . . 449,750
-----------
852,875
THRIFT (0.7%)
4,000 Charter One Financial, Inc. . . . . . . . 118,000
3,000 Leader Financial Corp.. . . . . . . . . . 103,875
3,000 *St. Francis Capital Corp. . . . . . . . . 68,250
-----------
290,125
7
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Amount Value
- --------------------------------------------------------------------
<C> <S> <C>
TOBACCO (0.5%)
5,000 *Culbro Corp.. . . . . . . . . . . . . $ 201,250
TRUCKING/TRANSPORTATION
LEASING (0.2%)
2,000 XTRA Corp.. . . . . . . . . . . . . . . . 88,750
-----------
TOTAL COMMON STOCKS
(Cost $22,785,435) . . . . . . . . . . . . 26,859,049
-----------
U.S. GOVERNMENT OBLIGATIONS (6.2%)
$2,000,000 United States Treasury
Bonds 7.25%, 8/15/22 . . . . . . . . 2,150,000
500,000 United States Treasury
Notes 6.75%, 5/31/99 . . . . . . . . 512,500
-----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Cost $2,588,878). . . . . . . . . . . 2,662,500
-----------
TOTAL INVESTMENT
SECURITIES (68.7%)
(Cost $25,374,313) . . . . . . . . . . 29,521,549
-----------
REPURCHASE AGREEMENTS (29.8%)
(INCLUDING ACCRUED INTEREST)
$6,800,000 Collateralized by $7,035,000 U.S.
Treasury Bills due 12/28/95, with
a value of $6,943,344. (With First
Chicago Capital Markets, Inc., 6.30%
dated 9/29/95, due 10/2/95, delivery
value $6,803,570.) . . . . . . . . . 6,802,380
<CAPTION>
Principal Amount Value
- --------------------------------------------------------------------
<C> <S> <C>
$6,000,000 Collateralized by $5,670,000 U.S.
Treasury Notes 7 3/4%, due
2/15/01, with a value of
$6,136,003. (With Morgan
Stanley & Co., Inc., 6 1/4%,
dated 9/29/95, due 10/2/95,
delivery value $6,003,125.) . . . . .$ 6,002,083
-----------
TOTAL REPURCHASE
AGREEMENTS
(Cost $12,804,463) . . . . . . . . . . 12,804,463
-----------
EXCESS OF CASH AND OTHER
ASSETS OVER LIABILITIES (1.5%) . . . . . . . . . . 652,369
-----------
NET ASSETS (100%). . . . . . . . . . . . . . . . .$ 42,978,381
-----------
-----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE, PER OUTSTANDING
SHARE ($42,978,381 4 3,109,160
SHARES OUTSTANDING). . . . . . . . . . . . . . . .$ 13.82
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATMENTS
8
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
STATEMENT OF ASSETS
AND LIABILITIES
AT SEPTEMBER 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment securities, at value
(Cost-$25,374,313) . . . . . . . . . . . . . . $ 29,521,549
Short-term investments
(Cost-$12,804,463) . . . . . . . . . . . . . . 12,804,463
Cash . . . . . . . . . . . . . . . . . . . . . . 836
Receivable for securities sold . . . . . . . . . 1,236,589
Deferred organization costs (note 2) . . . . . . 37,986
Dividends and interest receivable . . . . . . . 38,700
Receivable for capital shares sold . . . . . . . 28,730
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . 43,668,853
-------------
LIABILITIES:
Payable for securities purchased . . . . . . . . 555,250
Payable for capital shares redeemed. . . . . . . 68,777
Accrued expenses:
Advisory fee payable. . . . . . . . . . . . . . 22,646
Plan fees payable . . . . . . . . . . . . . . . 8,710
Other . . . . . . . . . . . . . . . . . . . . . 35,089
-------------
TOTAL LIABILITIES . . . . . . . . . . . . . . 690,472
-------------
NET ASSETS:
Capital stock, at $.001 par value (authorized
300,000,000, outstanding 3,109,160
shares) . . . . . . . . . . . . . . . . . . . . 3,109
Additional paid-in capital . . . . . . . . . . . 34,476,573
Undistributed investment income-net. . . . . . . 255,311
Accumulated net realized gain
on investments. . . . . . . . . . . . . . . . . 4,096,152
Unrealized net appreciation of
investments . . . . . . . . . . . . . . . . . . 4,147,236
-------------
NET ASSETS. . . . . . . . . . . . . . . . . . $ 42,978,381
-------------
-------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE ($42,978,381 DIVIDED BY
3,109,160 SHARES OUTSTANDING). . . . . . . . $ 13.82
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income. . . . . . . . . . . . . . . . . $ 338,545
Dividend income (net of foreign
withholding tax of $463). . . . . . . . . . . . 80,936
-------------
TOTAL INCOME . . . . . . . . . . . . . . . . 419,481
-------------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . 110,096
Service and distribution plan fee . . . . . . . 42,345
Custodian fees . . . . . . . . . . . . . . . . . 21,053
Auditing and legal fees. . . . . . . . . . . . . 20,448
Accounting & bookkeeping expense . . . . . . . . 16,200
Registration and filing fees . . . . . . . . . . 15,501
Directors' fees and expenses . . . . . . . . . . 15,379
Printing . . . . . . . . . . . . . . . . . . . . 8,633
Amortization of deferred organization
costs (note 2). . . . . . . . . . . . . . . . . 6,529
Insurance, dues, and other . . . . . . . . . . . 632
-------------
TOTAL EXPENSES . . . . . . . . . . . . . . . 256,816
-------------
INVESTMENT INCOME--NET . . . . . . . . . . . . 162,665
-------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS--NET:
Realized Gain-Net . . . . . . . . . . . . . 3,764,193
Change in Unrealized Appreciation . . . . . 2,097,606
-------------
NET REALIZED GAIN AND NET UNREALIZED
APPRECIATION OF INVESTMENTS. . . . . . . . . . 5,861,799
-------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS. . . . . . . . . . . . . . . . $ 6,024,464
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED),
AND FOR THE YEAR ENDED MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 1995 YEAR ENDED
(UNAUDITED) MARCH 31, 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net. . . . . . . . . . . . . . . . $ 162,665 $ 177,306
Realized gain on investments-net . . . . . . . . . . 3,764,193 654,998
Net unrealized appreciation . . . . . . . . . . . . 2,097,606 1,970,422
-------------- --------------
Net increase in net assets from operations 6,024,464 2,802,726
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net. . . . . . . . . . . . . . . . -- (116,050)
Realized gains-net . . . . . . . . . . . . . . . . . -- (206,890)
-------------- --------------
Total distributions. . . . . . . . . . . . . . . . . -- (322,940)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares . . . . . . . . . . 11,155,095 4,879,999
Net proceeds from reinvestment of distributions
to shareholders . . . . . . . . . . . . . . . . . . -- 321,433
Cost of shares repurchased . . . . . . . . . . . . . (373,470) (497,439)
-------------- --------------
Increase from capital share transactions . . . . . . 10,781,625 4,703,993
-------------- --------------
TOTAL INCREASE . . . . . . . . . . . . . . . . . . . . 16,806,089 7,183,779
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . 26,172,292 18,988,513
-------------- --------------
End of period. . . . . . . . . . . . . . . . . . . . $ 42,978,381 $26,172,292
-------------- --------------
-------------- --------------
Undistributed investment income-net at end of period . $ 255,311 $ 92,646
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. 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.
(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 60 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.
11
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
3. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
SIX MONTHS ENDED
SEPTEMBER 30,
1995 YEAR ENDED
(UNAUDITED) MARCH 31, 1995
---------- ------------
Shares sold. . . . . . . . . . . . . . . 878,682 443,662
Shares issued in reinvestment
of dividends and distributions. . . . . -- 30,238
---------- ----------
878,682 473,900
Shares repurchased . . . . . . . . . . . 28,931 45,595
---------- ----------
Net increase . . . . . . . . . . . . . . 849,751 428,305
---------- ----------
---------- ----------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, were as
follows:
SIX MONTHS
ENDED
SEPTEMBER 30, 1995
(UNAUDITED)
------------------
PURCHASES:
Investment Securities . . . . . . . . . $ 32,190,315
------------------
------------------
SALES:
Investment Securities . . . . . . . . . $ 30,962,925
------------------
------------------
At September 30, 1995, the aggregate cost of investment securities and
repurchase agreement for Federal income-tax purposes was $38,179,457. The
aggregate appreciation and depreciation of investments at September 30, 1995,
based on a comparison of investment values and their costs for federal
income-tax purposes, was $4,445,302 and $298,747, respectively, resulting in a
net appreciation of $4,146,555.
5. ADVISORY FEES, SERVICE AND DISTRIBUTION
PLAN FEES, AND TRANSACTIONS WITH AFFILIATES
An advisory fee of $110,096 was paid or payable to Value Line, Inc. the Fund's
investment adviser (the "Adviser"), for the six months ended September 30, 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 $2,880 for printing services was paid or payable to the Adviser for the
six months ended September 30, 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 six months
ended September 30, 1995, fees amounting to $42,345 were paid or payable under
this Plan.
Certain officers and directors of the Adviser and the Distributor are also
officers and a director of the Fund. During the six months ended September 30,
1995, the Fund paid brokerage commissions totalling $31,485 to the Distributor,
a registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At September 30, 1995, the Adviser and/or affiliated companies owned 2,687,213
shares of the Fund's capital stock, representing 86.4% of the outstanding
shares. In addition, certain officers and directors of the Fund owned 224,025
shares of capital stock, representing 7.2% of the outstanding shares.
12
<PAGE>
VALUE LINE ASSET ALLOCATION FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS AUGUST 24, 1993
ENDED (COMMENCEMENT
SEPTEMBER 30, 1995 YEAR ENDED OF OPERATIONS) TO
(UNAUDITED) MARCH 31, 1995 MARCH 31, 1994
---------------- -------------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . $11.58 $10.37 $10.00
---------------- -------------- --------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . .05 .08 .06(1)
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . . . . 2.19 1.30 .35
---------------- -------------- --------------
Total from investment operations . . . . . . . . . . 2.24 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 . . . . . . . . . . . . $13.82 $11.58 $10.37
---------------- -------------- --------------
---------------- -------------- --------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 19.34%+ 13.47% 4.15%+
---------------- -------------- --------------
---------------- -------------- --------------
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands). . . . . . . . $42,978 $26,172 $18,989
Ratio of operating expenses to average net assets. . . 1.50%* 1.76% 0.47%*(1)(2)
Ratio of net investment income to average net assets . .95%* .85% 1.10%*(1)(2)
Portfolio turnover rate. . . . . . . . . . . . . . . . 121%+ 211 108%
</TABLE>
(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 expenses to average net assets would be 2.24%*,
and ratio of net investment loss to average net assets would be (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 are not indicative of future
periods.
+ Not annualized.
* Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
14
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
15
<PAGE>
THE VALUE LINE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952 -- THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth
of capital by investing not less than 80% of its assets in "special situations."
No consideration is given to achieving current income.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS'S sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
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 assets will be invested in issues of the U.S. Government and its agencies
and instrumentalities.
1983 -- VALUE LINE CENTURION FUND* seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield 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 by
investing in high-yielding, lower-rated, fixed-income securities.
1987 -- VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York
taxpayers with 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* invests in stocks, bonds,
and cash equivalents according to computer trend models developed by Value Line.
The objective is to professionally manage the optimal allocation of these
investments at all times.
1992 -- VALUE LINE INTERMEDIATE BOND FUND seeks high current income consistent
with low volatility of principal by investing primarily in a diversified
portfolio of debt securities.
1993 -- VALUE LINE SMALL-CAP GROWTH 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 correct
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 THE 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. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
16
