---------------
ANNUAL REPORT
---------------
March 31, 1999
---------------
Value Line
Asset
Allocation
Fund, Inc.
[LOGO]
---------------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Asset Allocation Fund, Inc.
To Our Value Line Asset
- --------------------------------------------------------------------------------
To Our Shareholders:
We're pleased to report another excellent year for the Value Line Asset
Allocation Fund. For the 12-month period ended March 31, 1999, shareholders
earned a total return of 12.16% which compared with a total return for the
unmanaged Lehman Government/Corporate Bond Index of 6.55% and a total return for
the unmanaged Standard & Poor's 500 Index of 18.46%. Since inception in August
1993, your Fund ranks #3 for performance among the 71 funds in the "flexible"
category, according to Lipper Analytical Services.
This fiscal year, your Fund once again finished in the top one-third of its peer
group. Such consistency of superior results, not often found in the investment
world, is exactly what we were targeting when we conceived this portfolio. We
use a very disciplined investment process that emphasizes stocks with strong
earnings momentum and strong stock price momentum. Laggards on these measures
are quickly sold. In addition, we keep a keen eye on risk. We don't place big
bets on any single security and typically hold more than 200 different names.
The Fund also stays well diversified by sector and industry. In particular, we
ensure that investment in the volatile technology sector does not become too
large a portion of the portfolio. The diversification extends further to the
size of the companies in which the Fund invests, which has been about evenly
divided among small-, mid-, and large-cap equities. The best-known index of
small-cap stocks, the Russell 2000 Index, lost 16.26% in the 12 months ended
March 31st, but our investment discipline helped us avoid most of the problems
in this market segment.
Our asset allocation to stocks ranged from 68% to 90% of total assets during the
fiscal year. The high end of this range was reached in early October when we
took advantage of a sharp drop in the stock market to make some timely
purchases. The low end of the range is where the Fund finished the fiscal year.
To determine the asset mix among stocks, bonds, and cash, the Fund uses
proprietary models that incorporate a number of financial and economic
variables. At this writing, our allocation target is 60% in stocks, 30% in
bonds, and 10% in cash. The continued rise in equity prices, combined with an
increase in interest rates, have made our model turn gradually less positive
toward the stock market since October. Bonds, on the other hand, now offer more
attractive returns relative to other asset classes. Our latest bond purchases
have been mainly in intermediate-term (two- to ten-year maturity) Treasuries and
U.S. agencies.
Our goal will continue to be to maximize returns for shareholders, subject to
keeping risk at a moderate level. You will be pleased to know that Value Line
and its employees are the Fund's largest shareholders, demonstrating our own
confidence in the Fund and its management. Thank you for investing with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
May 18, 1999
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2
<PAGE>
Value Line Asset Allocation Fund, Inc.
Allocation Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
For now, at least, our economy continues to move ahead at a brisk pace. Evidence
of this ongoing strength can be found in the first quarter's 4.5% increase in
gross domestic product, as well as in reports showing further modest gains in
manufacturing, retailing, and employment. In fact, the only area of major
concern currently is our widening international trade deficit, as faltering
business overseas continues to limit demand for American exports. Even with this
bleak trade situation, though, it appears unlikely that economic growth will
fall short of 3% in the second quarter or 2%-3% in the second half.
Inflation reports take on increasing significance in this setting. That's
because the persistence of solid levels of economic growth, along with the
continuing increases in oil and gas prices, has the potential to introduce
pricing pressures for the first time in years. For now, such fears have not been
realized to any sustainable degree. Indeed, many corporations continue to have
limited pricing power. Even so, with the economy still moving ahead solidly,
with energy prices retaining most of their recent increases, with labor markets
still tightening, and with the tab for the war in Kosovo mounting, it is
realistic to expect at least a moderately higher rate of inflation in the coming
months.
At this juncture, though, we do not see a compelling reason for the Federal
Reserve to push interest rates materially higher. We note, however, that as the
economic situation starts to improve globally, the temptation for the Fed--which
has already signaled that it is now more likely to raise interest rates than to
lower them in the weeks ahead--to push up interest rates would increase.
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3
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Value Line Asset Allocation Fund, Inc.
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COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE VALUE LINE ASSET ALLOCATION FUND, INC., LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX AND THE S&P 500 INDEX
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Value Line Asset Lehman Brothers
Allocation Fund, Inc. S&P 500 Index Govt/Corp Bond
--------------------- ------------- --------------
8/24/93 10,000 10,000 10,000
9/30/93 10,480 10,051 10,080
12/31/93 10,596 10,284 10,051
3/31/94 10,415 9,897 9,737
6/30/94 10,275 9,939 9,615
9/30/94 10,898 10,425 9,663
12/31/94 10,961 10,423 9,669
3/31/95 11,818 11,435 10,182
6/30/95 12,757 12,523 10,843
9/30/95 14,104 13,515 11,050
12/31/95 14,919 14,326 11,565
3/31/96 15,970 15,094 11,294
6/30/96 17,383 15,770 11,347
9/30/96 18,231 16,254 11,547
12/31/96 18,888 17,607 11,901
3/31/97 18,764 18,082 11,798
6/30/97 20,635 21,239 12,231
9/30/97 22,836 22,831 12,638
12/31/97 22,852 23,487 13,010
3/31/98 25,774 26,763 13,212
6/30/98 26,470 27,647 13,558
9/30/98 23,074 24,896 14,229
12/31/98 28,748 30,198 14,248
3/31/99 28,908 31,703 14,077
From 8/24/93 to 3/31/99
The Standard & Poor's 500 Index is an unmanaged index that is representative of
the larger capitalization stocks traded in the United States. The presentation
includes reinvested dividends. The Lehman Brothers Government/Corporate Bond
Index is an unmanaged index that generally represents the U.S. Bond market, with
issues having an average maturity of 9.8 years. The graphic representation
includes interest reinvested.
Performance Data:*
Average
Annual Total
Return
---------
1 year ended 3/31/99......................................... 12.16%
5 years ended 3/31/99........................................ 22.65%
From 8/24/93 (commencement
of operations) to 3/31/99.................................. 20.87%
* 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.
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4
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS (70.5%)
ADVERTISING (0.8%)
9,000 Big Flower Holdings, Inc.*............................. $ 280,125
8,000 Harte-Hanks Inc........................................ 219,500
11,400 Omnicom Group, Inc..................................... 911,287
-----------
1,410,912
AEROSPACE/
DEFENSE (0.8%)
8,000 General Dynamics Corp.................................. 514,000
15,500 Gulfstream Aerospace
Corp.*............................................. 672,313
11,000 Primex Technologies, Inc............................... 228,250
-----------
1,414,563
AIR TRANSPORT (0.9%)
21,000 Comair Holdings, Inc................................... 496,125
18,000 SkyWest, Inc........................................... 519,750
21,000 Southwest Airlines Co.................................. 635,250
-----------
1,651,125
APPAREL (1.4%)
31,000 Chico's FAS, Inc.*..................................... 666,500
17,000 Quiksilver, Inc.*...................................... 718,250
17,000 Tarrant Apparel Group*................................. 714,000
7,000 Tommy Hilfiger Corp.*.................................. 482,125
-----------
2,580,875
AUTO & TRUCK (0.4%)
7,000 General Motors Corp.................................... 608,125
AUTO PARTS--ORIGINAL
EQUIPMENT (0.5%)
11,000 Arvin Industries, Inc.................................. 370,562
21,000 Gentex Corp.*.......................................... 452,813
-----------
823,375
AUTO PARTS--
REPLACEMENT (0.5%)
12,000 Midas, Inc............................................. 400,500
13,000 O'Reilly Automotive, Inc.*............................. 581,750
-----------
982,250
BANK (0.5%)
8,000 Chase Manhattan Corp. (The)............................ 650,500
5,000 Zions Bancorporation................................... 332,500
-----------
983,000
BANK--MIDWEST (0.8%)
14,000 Fifth Third Bancorp.................................... 923,125
16,000 First Tennessee National
Corp............................................... 586,000
-----------
1,509,125
BEVERAGE--
ALCOHOLIC (0.6%)
12,000 Canandaigua Brands, Inc.
Class "A"* ........................................ 604,500
9,000 Coors (Adolph) Co.
Class "B".......................................... 486,000
-----------
1,090,500
BUILDING
MATERIALS (1.0%)
14,000 Elcor Corp............................................. 492,625
25,000 Insituform Technologies, Inc.
Class "A"* ........................................ 437,500
15,000 Jacobs Engineering
Group Inc.*........................................ 591,562
11,000 NCI Building Systems, Inc.*............................ 258,500
-----------
1,780,187
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5
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
CABLE TV (1.7%)
15,000 Cablevision Systems Corp.
Class "A"*......................................... $ 1,111,875
20,000 Century Communications
Corp. Class "A"*................................... 928,750
13,000 EchoStar Communications
Corp. Class "A"* .................................. 1,061,125
-----------
3,101,750
CEMENT &
AGGREGATES (0.2%)
10,000 Centex Construction
Products, Inc...................................... 348,125
COAL/ALTERNATE
ENERGY (0.2%)
10,000 AES Corp.*............................................. 372,500
COMPUTER &
PERIPHERALS (1.2%)
18,000 Cybex Computer
Products Corp.*.................................... 322,875
7,000 EMC Corp.*............................................. 894,250
10,000 Pinnacle Systems, Inc.*................................ 455,000
20,000 Unisys Corp.*.......................................... 553,750
-----------
2,225,875
COMPUTER SOFTWARE
& SERVICES (7.5%)
50,254 Acclaim Entertainment,
Inc.*.............................................. 449,145
11,000 Affiliated Computer Services,
Inc. Class "A"* ................................... 503,250
17,000 American Management
Systems, Inc.*..................................... 580,125
11,000 Analytical Surveys, Inc.*.............................. 286,000
27,000 Ardent Software, Inc.*................................. 433,687
10,000 Best Software, Inc.*................................... 135,000
14,600 Citrix Systems, Inc.*.................................. 556,625
6,000 Comverse Technology, Inc.*............................. 510,000
12,000 Electronics For Imaging
Inc.*.............................................. 468,000
13,500 FactSet Research
Systems, Inc.*..................................... 583,875
9,000 Henry (Jack) & Associates,
Inc................................................ 330,750
10,000 International Network
Services*.......................................... 699,375
27,000 Mentor Graphics Corp.*................................. 364,500
24,000 Mercury Interactive Corp.*............................. 855,000
16,000 Microsoft Corp.*....................................... 1,434,000
17,500 New Dimension
Software, Ltd.*.................................... 907,813
12,000 New Era of Networks, Inc.*............................. 813,000
19,000 Paychex, Inc........................................... 901,313
23,000 Peregrine Systems, Inc.*............................... 773,375
20,000 Progress Software Corp.*............................... 682,500
19,000 Rational Software Corp.*............................... 509,437
17,000 Siebel Systems, Inc.*.................................. 807,500
2,000 SunGard Data Systems
Inc.*.............................................. 80,000
2,000 TSI International
Software Ltd.*..................................... 97,625
-----------
13,761,895
DIVERSIFIED
COMPANIES (0.4%)
2,000 Sequa Corp. Class "A"*................................. 100,500
10,000 Tyco International, Ltd................................ 717,500
-----------
818,000
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6
<PAGE>
Value Line Asset Allocation Fund, Inc.
March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
DRUG (4.3%)
25,000 Amgen Inc.*............................................ $ 1,871,875
3,500 Andrx Corp.*........................................... 318,937
13,500 Biogen, Inc.*.......................................... 1,543,219
9,000 Forest Laboratories, Inc.*............................. 507,375
12,000 Genzyme Corp.--
General Division *................................. 605,250
3,000 Gilead Sciences, Inc.*................................. 136,500
5,000 Medco Research, Inc.*.................................. 130,000
18,000 MedImmune, Inc.*....................................... 1,065,375
6,200 Pfizer Inc............................................. 860,250
10,000 QLT PhotoTherapeutics
Inc.*.............................................. 407,500
23,000 Roberts Pharmaceutical
Corp.*............................................. 477,250
-----------
7,923,531
EDUCATIONAL
SERVICES (0.4%)
24,000 Education Management
Corp.*............................................. 738,000
ELECTRIC UTILITY--
EAST (0.5%)
8,000 Energy East Corporation................................ 420,500
13,000 Florida Progress Corp.................................. 490,750
-----------
911,250
ELECTRICAL
EQUIPMENT (1.9%)
22,000 General Electric Co.................................... 2,433,750
17,000 Power Integrations, Inc.*.............................. 539,750
16,000 Semtech Corp.*......................................... 510,000
-----------
3,483,500
ELECTRONICS (1.7%)
8,000 CTS Corp............................................... 395,500
9,000 Gemstar International
Group Ltd.*........................................ 677,250
7,000 Gilat Satellite Networks
Ltd.*.............................................. 420,000
5,000 Plantronics Inc.*...................................... 312,813
8,800 Symbol Technologies, Inc............................... 396,000
7,500 Uniphase Corp.*........................................ 863,437
-----------
3,065,000
ENTERTAINMENT (2.0%)
12,544 Chancellor Media Corp.*................................ 591,136
6,200 Clear Channel
Communications, Inc.*.............................. 415,788
2,000 Cox Radio, Inc. Class "A"*............................. 102,500
6,000 Jacor Communications,
Inc.*.............................................. 456,000
24,400 Time Warner Inc........................................ 1,733,925
12,000 USA Networks Inc.*..................................... 429,750
-----------
3,729,099
FURNITURE/HOME
FURNISHINGS (1.0%)
14,000 Department 56, Inc.*................................... 426,125
10,000 Ethan Allen Interiors, Inc............................. 415,625
15,000 Mohawk Industries, Inc.*............................... 450,000
29,500 Shaw Industries, Inc.*................................. 545,750
-----------
1,837,500
GROCERY (1.7%)
16,400 Albertson's, Inc....................................... 890,725
14,000 Kroger Co.*............................................ 838,250
11,000 Meyer (Fred), Inc.*.................................... 647,625
12,600 Safeway Inc.*.......................................... 646,537
-----------
3,023,137
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7
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
HOME APPLIANCE (0.3%)
10,000 Maytag Corp............................................ 603,750
HOMEBUILDING (0.2%)
6,500 NVR, Inc.*............................................. 273,813
HOUSEHOLD
PRODUCTS (0.8%)
7,500 Clorox Company (The)................................... 878,906
25,000 Salton, Inc.*.......................................... 610,938
-----------
1,489,844
INDUSTRIAL
SERVICES (1.6%)
8,000 Galileo International, Inc............................. 387,000
15,500 Metzler Group, Inc.*................................... 486,313
15,000 Profit Recovery Group
International, Inc. (The)* ........................ 592,500
8,000 QRS Corp.*............................................. 500,500
18,000 RCM Technologies, Inc.*................................ 198,000
10,000 SABRE Group Holdings, Inc.
Class "A"*......................................... 453,750
15,000 URS Corp.*............................................. 270,937
-----------
2,889,000
INSURANCE--
DIVERSIFIED (0.7%)
6,840 American International
Group, Inc......................................... 825,075
7,000 Blanch (E.W.) Holdings Inc............................. 367,500
-----------
1,192,575
INSURANCE--LIFE (1.0%)
11,000 AFLAC, Inc............................................. 598,812
10,000 Jefferson-Pilot Corp................................... 677,500
12,750 Reinsurance Group of
America, Inc. ..................................... 542,672
-----------
1,818,984
INTERNET (1.2%)
6,000 America Online, Inc.*.................................. 876,000
3,500 Exodus Communications,
Inc.*.............................................. 470,750
19,000 Macromedia Inc.*....................................... 860,937
-----------
2,207,687
MACHINERY (0.7%)
22,000 Astec Industries, Inc.*................................ 679,250
13,500 Ingersoll-Rand Co...................................... 669,938
-----------
1,349,188
MANUFACTURED
HOUSING/
RECREATIONAL
VEHICLES (0.4%)
22,500 Monaco Coach Corp.*.................................... 518,906
12,000 National R.V. Holdings,
Inc.*.............................................. 265,500
-----------
784,406
MEDICAL SERVICES
(2.4%)
9,000 Advance Paradigm, Inc.*................................ 568,688
9,000 Express Scripts, Inc.
Class "A"*......................................... 773,437
5,000 Hanger Orthopedic
Group, Inc.*....................................... 67,500
18,000 Hooper Holmes, Inc..................................... 281,250
19,500 Osteotech, Inc.*....................................... 670,313
4,000 PacifiCare Health Systems,
Inc. Class "B"* ................................... 273,000
19,000 Res-Care, Inc.*........................................ 428,688
11,000 Sunrise Assisted Living
Inc.*.............................................. 501,187
27,000 Veterinary Centers of
America, Inc.*..................................... 381,375
6,000 WellPoint Health
Networks Inc.*..................................... 454,875
-----------
4,400,313
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8
<PAGE>
Value Line Asset Allocation Fund, Inc.
March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
MEDICAL SUPPLIES
(4.1%)
14,500 Allergan, Inc.......................................... $ 1,274,188
14,000 Alpharma Inc. Class "A"................................ 549,500
10,800 AmeriSource Health Corp.
Class "A"* ........................................ 369,225
19,000 Bergen Brunswig Corp.
Class "A".......................................... 380,000
21,000 Bindley Western Industries,
Inc................................................ 599,812
6,000 Biomatrix Inc.*........................................ 468,000
6,768 Medtronic, Inc......................................... 485,604
12,000 Patterson Dental Co.*.................................. 519,000
8,512 Priority Healthcare Corp.
Class "B"*......................................... 385,168
12,500 ResMed Inc.*........................................... 353,125
14,000 VISX, Inc.*............................................ 1,505,875
16,500 Xomed Surgical Products,
Inc.*.............................................. 647,625
-----------
7,537,122
OFFICE EQUIPMENT &
SUPPLIES (1.3%)
14,000 Office Depot, Inc.*.................................... 515,375
11,000 Pitney Bowes, Inc...................................... 701,250
34,500 Staples, Inc.*......................................... 1,134,187
-----------
2,350,812
PRECISION
INSTRUMENT (1.9%)
17,000 Hutchinson Technology Inc.*............................ 422,875
17,250 Kronos Inc.*........................................... 422,625
20,000 Optical Coating
Laboratory, Inc.................................... 960,000
10,000 Orbotech Ltd.*......................................... 491,250
11,200 Waters Corp.*.......................................... 1,176,700
-----------
3,473,450
PUBLISHING (1.0%)
8,000 Consolidated Graphics,
Inc.*.............................................. 462,000
8,000 McGraw-Hill Companies,
Inc. (The)......................................... 436,000
8,000 Valassis Communications,
Inc.*.............................................. 414,000
11,000 Wiley (John) & Sons, Inc.
Class "A" ......................................... 462,000
-----------
1,774,000
RAILROAD (0.2%)
27,000 Johnstown America
Industries, Inc.*.................................. 401,625
RECREATION (1.4%)
13,000 Action Performance
Companies, Inc.*................................... 391,625
12,000 Carnival Corp.......................................... 582,750
16,000 Harley-Davidson, Inc................................... 920,000
18,000 Royal Caribbean
Cruises Ltd........................................ 702,000
-----------
2,596,375
RESTAURANT (1.6%)
18,000 Bob Evans Farms, Inc................................... 360,000
24,000 Brinker International, Inc.*........................... 619,500
24,000 Foodmaker Inc.*........................................ 612,000
13,000 Papa John's International,
Inc.*.............................................. 573,625
20,000 Ruby Tuesday, Inc...................................... 347,500
28,000 Ryan's Family Steak
Houses, Inc.*...................................... 337,750
-----------
2,850,375
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9
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
RETAIL--
SPECIAL LINES (6.1%)
10,320 Abercrombie & Fitch Co.
Class "A"* ........................................ $ 949,440
8,750 American Eagle Outfitters,
Inc. *............................................. 627,266
18,000 AnnTaylor Stores Corp.*................................ 795,375
24,000 Bed Bath & Beyond Inc.*................................ 876,000
20,000 Best Buy Co., Inc.*.................................... 1,040,000
6,400 Circuit City Stores--
Circuit City Group................................. 490,400
10,500 Dollar Tree Stores, Inc.*.............................. 324,844
19,000 Fossil Inc.*........................................... 566,438
10,500 Gap, Inc. (The)........................................ 706,781
17,000 Hollywood Entertainment
Corp.*............................................. 316,625
15,000 Intimate Brands, Inc................................... 721,875
16,000 Linens `N' Things, Inc.*............................... 726,000
17,000 Maxim Group Inc. (The)*................................ 144,500
14,000 Men's Wearhouse,
Inc. (The)*........................................ 404,250
35,000 Musicland Stores Corp.*................................ 308,437
10,000 Ross Stores Inc........................................ 438,125
21,000 TJX Companies, Inc..................................... 714,000
6,000 Tiffany & Co........................................... 448,500
14,500 Trans World Entertainment
Corp............................................... 159,500
11,500 Zale Corp.*............................................ 393,156
-----------
11,151,512
RETAIL BUILDING
SUPPLY (1.5%)
19,000 Eagle Hardware &
Garden, Inc.*...................................... 725,563
20,000 Home Depot, Inc. (The)................................. 1,245,000
12,400 Lowe's Companies, Inc.................................. 750,200
-----------
2,720,763
RETAIL STORE (2.5%)
15,000 Ames Department
Stores, Inc.*...................................... 556,875
11,200 Dayton Hudson Corp..................................... 746,200
8,500 Kohl's Corp.*.......................................... 602,437
13,750 99 Cents Only Stores*.................................. 583,516
3,500 ShopKo Stores, Inc.*................................... 104,563
21,000 Wal-Mart Stores, Inc................................... 1,935,937
-----------
4,529,528
SEMICONDUCTOR (2.2%)
10,000 Linear Technology Corp................................. 512,500
11,000 PMC-Sierra, Inc.*...................................... 783,062
17,000 QLogic Corp*........................................... 1,141,125
25,000 TranSwitch Corp.*...................................... 1,131,250
9,000 Vitesse Semiconductor
Corp.*............................................. 455,625
-----------
4,023,562
SEMICONDUCTOR
CAPITAL
EQUIPMENT (0.3%)
12,000 Xilinx, Inc.*.......................................... 486,750
SHOE (0.0%)
1,000 Timberland Co. (The)
Class "A"*......................................... 63,062
TELECOMMUNICATIONS
EQUIPMENT (1.3%)
22,500 AVT Corp.*............................................. 537,188
56,000 InterVoice, Inc.*...................................... 616,000
30,000 Polycom, Inc.*......................................... 562,500
7,000 Tellabs, Inc. *........................................ 684,250
-----------
2,399,938
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10
<PAGE>
Value Line Asset Allocation Fund, Inc.
March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS
SERVICES (2.9%)
8,300 AirTouch Communications,
Inc.*.............................................. $ 801,988
18,000 Century Telephone
Enterprises, Inc. ................................. 1,264,500
23,400 DyCom Industries, Inc.*................................ 1,017,900
24,000 GeoTel Communications
Corp.*............................................. 1,101,000
20,000 Metromedia Fiber Network
Inc. Class "A"* ................................... 1,036,250
-----------
5,221,638
-----------
TOTAL COMMON STOCKS
(Cost $90,113,814) .................................... 128,763,271
-----------
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Principal
Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (8.6%)
$5,000,000 United States Treasury
Notes 4%, 10/31/00................................. 4,924,000
2,000,000 United States Treasury
Notes 4.75%, 2/15/04............................... 1,970,625
1,750,000 United States Treasury
Notes 5.875%,
11/15/05........................................... 1,799,438
1,750,000 United States Treasury
Notes 5.625%, 2/15/06.............................. 1,776,162
4,500,000 United States Treasury
Bonds 7.25%, 8/15/22**............................. 5,255,550
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $15,528,096) ................................. 15,725,775
-----------
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11
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS (9.9%)
$ 2,000,000 Federal Home Loan Bank
Bonds 5.375%, 3/2/01................... $ 2,005,500
1,500,000 Federal Home Loan Bank
Bonds 5.125%, 2/26/02.................. 1,492,155
4,000,000 Federal National Mortgage
Association Notes,
5.375%, 3/15/02 ....................... 4,006,920
1,500,000 Federal National Mortgage
Association Notes,
4.75%, 11/14/03 ....................... 1,453,380
2,000,000 Federal Home Loan
Mortgage Corp.
Debentures 5%, 1/15/04 ................ 1,955,760
1,500,000 Federal National Mortgage
Association Notes,
5.125%, 2/13/04 ....................... 1,474,290
1,000,000 Federal National Mortgage
Association Notes,
5.75%, 6/15/05 ........................ 1,008,200
1,600,000 Federal National Mortgage
Association Medium
Term Notes,
6.50%, 7/16/07 ........................ 1,663,632
1,000,000 Federal Home Loan
Mortgage Corp.
Debentures 5.75%,
4/15/08 ............................... 993,030
2,000,000 Federal National Mortgage
Association Medium
Term Notes, 5.250%,
1/15/09 ............................... 1,912,780
------------
TOTAL U.S.
GOVERNMENT
AGENCY
OBLIGATIONS
(Cost $18,071,226) ............... 17,965,647
------------
CORPORATE BONDS & NOTES (1.1%)
TELECOMMUNICATIONS
SERVICES (1.1%)
1,000,000 AirTouch Communications,
Inc. Notes,
6.650%, 5/1/08 .......................... 1,028,300
$ 1,000,000 MCI WorldCom, Inc.
Sr. Notes, 6.40%,
8/15/05 ................................. 1,014,470
------------
TOTAL CORPORATE
BONDS & NOTES
(Cost $1,998,125) ........................... 2,042,770
------------
TOTAL INVESTMENT
SECURITIES (90.1%)
(Cost $125,711,261) ......................... 164,497,463
------------
REPURCHASE
AGREEMENT (9.9%)
(including accrued interest)
18,100,000 Collateralized by $12,150,000
U.S. Treasury Bonds 11.75%,
due 11/15/14, with a
value of $18,499,361,
(with Morgan Stanley &
Co., Inc. 4.90%, dated
3/31/99, due 4/1/99,
delivery value
$18,102,464) ........................... 18,102,464
EXCESS OF LIABILITIES
OVER CASH AND
OTHER ASSETS (0.0%) ........................................ (68,178)
------------
NET ASSETS (100%) .......................................... $182,531,749
============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE,
PER OUTSTANDING SHARE
($182,531,749 / 10,146,134
shares outstanding) ........................................ $ 17.99
============
* Non-income producing.
** A portion of this security is segregated to cover initial margin
requirements on the following open short financial futures contracts:
Number of Unrealized Contract
Contracts Gain Value
- --------------------------------------------------------------------------------
Russell 2000
Index June/99 21 $31,500 $4,184,250
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
<PAGE>
Value Line Asset Allocation Fund, Inc.
Statement of Assets and Liabilities
at March 31, 1999
- --------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost-$125,711,261) ..................................... $164,497,463
Repurchase agreement
(Cost-$18,102,464) ...................................... 18,102,464
Cash ...................................................... 320,878
Receivable for securities sold ............................ 1,508,324
Dividends and interest receivable ......................... 426,061
Receivable for capital shares sold ........................ 240,559
Variation margin on futures contracts ..................... 46,200
------------
Total Assets .......................................... 185,141,949
------------
Liabilities:
Payable for securities purchased .......................... 2,295,181
Payable for capital shares repurchased .................... 119,212
Accrued expenses:
Advisory fee payable .................................... 99,008
Service and distribution plan
fees payable .......................................... 37,789
Other ................................................... 59,010
------------
Total Liabilities ..................................... 2,610,200
------------
Net Assets ................................................ $182,531,749
============
Net Assets consist of:
Capital stock, at $.001 par value
(authorized 300,000,000,
outstanding 10,146,134 shares) .......................... $ 10,147
Additional paid-in capital ................................ 140,874,703
Undistributed net investment income ....................... 459,366
Undistributed net realized gain
on investments .......................................... 2,369,831
Net unrealized appreciation
of investments .......................................... 38,817,702
------------
Net Assets ................................................ $182,531,749
============
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share
($182,531,749 / 10,146,134
shares outstanding) ..................................... $ 17.99
============
Statement of Operations
for the year ended March 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Interest income .......................................... $ 1,720,058
Dividend income (net of foreign
withholding tax of $1,094) ............................. 384,766
------------
Total Income ....................................... 2,104,824
------------
Expenses:
Advisory fee ............................................. 984,445
Service and distribution plan fee ........................ 378,633
Custodian fees ........................................... 68,955
Auditing and legal fees .................................. 38,676
Transfer agent fees ...................................... 37,005
Registration and filing fees ............................. 34,296
Accounting & bookkeeping expense ......................... 32,400
Printing ................................................. 23,750
Directors' fees and expenses ............................. 23,427
Insurance, dues and other ................................ 21,673
Amortization of deferred organization
costs (note 2) ......................................... 5,238
------------
Total Expenses before
custody credits .................................. 1,648,498
Less: custody credits .............................. (3,867)
------------
Net Expenses ....................................... 1,644,631
------------
Net Investment Income .................................... 460,193
------------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain (includes
$22,491 gain on futures
contracts) ......................................... 2,393,060
Change in Net Unrealized
Appreciation ....................................... 15,396,207
------------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ......................................... 17,789,267
------------
Net Increase in Net Assets
from Operations ........................................ $ 18,249,460
============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
<PAGE>
Value Line Asset Allocation Fund, Inc.
Statement of Changes in Net Assets
for the years ended March 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1999 March 31, 1998
------------------------------
<S> <C> <C>
Operations:
Net investment income ..................................... $ 460,193 $ 1,425,457
Net realized gain on investments .......................... 2,393,060 10,804,109
Change in net unrealized appreciation ..................... 15,396,207 18,714,947
------------------------------
Net increase in net assets from operations ................ 18,249,460 30,944,513
------------------------------
Distributions to Shareholders:
Net investment income ..................................... (230,574) (1,575,920)
Net realized gain from investment transactions ............ (2,460,642) (11,263,524)
------------------------------
Total distributions ....................................... (2,691,216) (12,839,444)
------------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 106,486,745 36,166,180
Proceeds from reinvestment of distributions to shareholders 2,407,222 11,956,210
Cost of shares repurchased ................................ (65,408,668) (17,720,083)
------------------------------
Net increase from capital share transactions .............. 43,485,299 30,402,307
------------------------------
Total Increase in Net Assets ................................ 59,043,543 48,507,376
Net Assets:
Beginning of year ......................................... 123,488,206 74,980,830
------------------------------
End of year ............................................... $ 182,531,749 $ 123,488,206
==============================
Undistributed net investment income at end of year .......... $ 459,366 $ 229,747
==============================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
<PAGE>
Value Line Asset Allocation Fund, Inc.
Notes to Financial Statements March 31,1999
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Asset Allocation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company which seeks to achieve a high total investment
return consistent with reasonable risk by investing primarily in a broad range
of common stocks, bonds and money market instruments. The Fund will attempt to
achieve its objective by following an asset allocation strategy, based on data
derived from computer models for the stock and bond markets, that shifts the
assets of the Fund among equity, debt and money market securities as the models
indicate and its investment adviser, Value Line, Inc. (the "Adviser"), deems
appropriate.
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. Such policies are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
(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 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. 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. Interest
income is accrued as earned. 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.
- --------------------------------------------------------------------------------
15
<PAGE>
Value Line Asset Allocation Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
(F) Financial Futures Contracts. A financial futures contract is an agreement
between two parties to buy or sell financial instruments at a set price on a
future date. Upon entering into such a contract the Fund is required to pledge
to the broker cash, or U.S. Government securities, equal to the minimum "initial
margin" requirements of the applicable futures exchange. Pursuant to the
contract, the Fund agrees to receive from or to pay the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
2. Organization Costs
Costs of $66,040 incurred in connection with the Fund's organization and initial
registration were deferred and amortized over sixty months beginning at the
commencement of operations of the Fund. At March 31, 1999, the organization
costs were fully amortized.
3. Capital Share Transactions Transactions in capital stock were as follows:
Year Ended Year Ended
March 31, March 31,
1999 1998
-------------------------------
Shares sold ............................ 6,501,091 2,368,020
Shares issued in
reinvestment of dividends
and distributions .................... 149,517 850,954
-------------------------------
6,650,608 3,218,974
Shares repurchased ..................... 4,073,462 1,148,119
-------------------------------
Net increase ........................... 2,577,146 2,070,855
===============================
4. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
Year Ended
March 31, 1999
-------------
PURCHASES:
U.S. Treasury and
U.S. Government Obligations ......................... $ 39,745,228
Other Investment Securities ........................... 167,972,075
------------
$207,717,303
============
SALES:
U.S. Treasury and
U.S. Government Obligations ......................... $ 28,270,614
Other Investment Securities ........................... 151,353,550
------------
$179,624,164
============
At March 31, 1999, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $144,012,937. The aggregate
appreciation and depreciation of investments at March 31, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $41,205,015 and $2,618,025, respectively, resulting in a net appreciation of
$38,586,990.
5. Advisory Fees, Service and Distribution Plan Fees and Transactions With
Affiliates
An advisory fee of $984,445 was paid or payable to the Adviser for the year
ended March 31, 1999. The fee was computed at the annual rate of .65 of 1% of
the daily net assets during the year and was 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.
- --------------------------------------------------------------------------------
16
<PAGE>
Value Line Asset Allocation Fund, Inc.
March 31,1999
- --------------------------------------------------------------------------------
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, 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. For the year ended
March 31, 1999, fees amounting to $378,633 were paid or payable to the
Distributor under this 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, 1999, the
Fund paid brokerage commissions totaling $131,914 to the Distributor, a
registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At March 31, 1999, the Adviser, and/or affiliated companies, and the Value Line,
Inc. Profit Sharing and Savings Plan owned 3,787,750 shares of the Fund's
capital stock, representing 37.3% of the outstanding shares. In addition,
certain officers and directors of the Fund owned 344,782 shares of capital
stock, representing 3.4% of the outstanding shares.
6. Financial Instruments with Off-Balance Sheet Risk
During the year, the Fund sold stock index futures contracts to hedge its
portfolio positions against price fluctuations. Futures contracts involve
elements of credit and market risk in excess of the amounts reflected in the
Statement of Assets and Liabilities. The contract amounts of these futures
contracts reflect the extent of the Fund's exposure to off-balance sheet risk.
At March 31, 1999 the Fund held an open short position of 21 Russell 2000 Index
contracts expiring June 1999 with a notional value of $4,184,250.
The Fund purchases or sells futures contracts only on exchanges or a board of
trade. The exchange or board of trade acts as the counterparty to the Fund's
futures transactions; therefore, the Fund's credit risk is limited to the
failure of the exchange or board of trade. The Fund bears the market risk which
arises from any changes in security values.
- --------------------------------------------------------------------------------
17
<PAGE>
Value Line Asset Allocation Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .... $ 16.32 $ 13.64 $ 14.13 $ 11.58 $ 10.37
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ............... .03 .22 .30 .10 .08
Net gains on securities
(both realized and unrealized) .... 1.92 4.54 2.15 3.86 1.30
-------------------------------------------------------------------------------------
Total from investment operations 1.95 4.76 2.45 3.96 1.38
-------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income ............................ (.02) (.26) (.25) (.12) (.06)
Distributions from capital gains .... (.26) (1.82) (2.69) (1.29) (.11)
-------------------------------------------------------------------------------------
Total distributions ............. (.28) (2.08) (2.94) (1.41) (.17)
-------------------------------------------------------------------------------------
Net asset value, end of year .......... $ 17.99 $ 16.32 $ 13.64 $ 14.13 $ 11.58
=====================================================================================
Total return .......................... 12.16% 37.36% 17.49% 35.13% 13.47%
=====================================================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) $ 182,532 $ 123,488 $ 74,981 $ 55,803 $ 26,172
Ratio of expenses to average net assets 1.08%(1) 1.15%(1) 1.23%(1) 1.38%(1) 1.76%
Ratio of net investment income to
average net assets .................. .30% 1.46% 1.95% .99% .85%
Portfolio turnover rate ............... 129% 139% 192% 244% 211%
</TABLE>
(1) Before offset of custody credits. The ratio of expenses to average net
assets would not have changed net of custody credits.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18
<PAGE>
Value Line Asset Allocation Fund, Inc.
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, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with 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, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
May 17, 1999
- --------------------------------------------------------------------------------
Tax Information (unaudited)
For the taxable year ended March 31, 1999, 2.9% of the ordinary income dividends
paid by the Fund qualified for the corporate dividends received deduction
available to corporate shareholders.
- --------------------------------------------------------------------------------
Other Information (unaudited)
Year 2000. Like other mutual funds, the Fund could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser is
taking steps that it believes are reasonably designed to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
- --------------------------------------------------------------------------------
19
<PAGE>
Value Line Asset Allocation 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--The Value Line Income Fund's primary investment objective is income, as
high and dependable as is consistent with reasonable risk. Capital growth to
increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983--Value Line Centurion Fund* seeks long-term growth of capital.
1984--The Value Line Tax Exempt Fund seeks to provide investors with the maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: The Money Market Portfolio
and The 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.
Capital appreciation is a secondary objective.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal.
1987--Value Line Strategic Asset Management Trust* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line 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 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.
- --------------------------------------------------------------------------------
20
<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 419729
Kansas City, MO 64141-6729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Francis C. Oakley
Marion N. Ruth
Frances T. Newton
OFFICERS Jean Bernhard Buttner
Chairman and President
Stephen E. Grant
Vice President
Bruce H. Alston
Vice President
Nancy Bendig
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
This report is issued for information of shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Fund (obtainable from the Distributor).
#506625
