------------------
SEMI-ANNUAL REPORT
------------------
September 30, 2000
------------------
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:
The Value Line Asset Allocation Fund posted a total return of 2.83% for the six
months ended September 30, 2000. This compared with a total return of -3.59% for
the unmanaged Standard & Poor's 500 Index and a total return of 4.12% for the
Lehman Government/Credit Bond Index.
This was a turbulent six-month period, and a particularly rough one for
technology-sector stocks, as seen by the 19% drop in the NASDAQ Composite Index.
In that light, we were pleased with the Fund's positive return for the period,
especially given that NASDAQ stocks play a significant role in the portfolio.
Diversification across asset classes and across industries protected the Fund's
assets, as did good individual stock selection. For most of the six months, we
were 50%-60% invested in stocks, 30%-35% in bonds, and 10%-20% in cash
equivalents. The asset allocation is determined by Value Line's proprietary
models, which incorporate variables such as stock prices and interest rates. At
the individual stock level, we invest in issues that have strong earnings
momentum and strong relative price momentum. We are quick to sell stocks that no
longer meet these criteria. The portfolio currently holds about 200 stocks.
In recent weeks, we have raised our stock allocation target to 70%, due mainly
to the decline in stock prices. A further drop in stock prices or interest rates
could cause our model to raise this target again.
Thank you for investing with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
October 26, 2000
--------------------------------------------------------------------------------
2
<PAGE>
Value Line Asset Allocation Fund, Inc.
Allocation Fund Shareholders
================================================================================
Economic Observations
The U.S. economy is now clearly proceeding along a slower growth track as we
move through the final months of the year. Evidence of this deceleration in
business activity can be found in the most recent figures on manufacturing,
retail spending, and employment. Overall, we estimate that GDP growth will
average 3%, or so, over the balance of the year. Thereafter, we would expect the
pace of economic activity to hold at these comparatively restrained levels
through 2001, as the succession of interest-rate hikes voted for by the Federal
Reserve Board over the past year and a half continues to have the hoped-for
effect of stabilizing the economy at comfortably lower growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices continue their
uncontrolled ascent for several months and the aforementioned moderation in
economic growth fails to continue into 2001, two events that we do not currently
expect to take place.
Meanwhile, the Federal Reserve, taking note of the current slower pace of
business activity and the comparatively muted inflation figures, is likely to
maintain a relatively stable monetary stance over the next several quarters.
Indeed, should oil prices reverse course and move back down to the
$25-$30-a-barrel level, as seems logical given the expected moderation in
underlying demand, or the economy slows more then we now expect, it is
conceivable that the central bank's next move could be to lower interest rates
sometime next year.
Performance Data:*
Average
Annual Total
Return
------------
1 year ended 9/30/00..................... 19.58%
5 years ended 9/30/00.................... 21.38%
From 8/24/93 (commencement
of operations) to 9/30/00.............. 20.31%
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns 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)
================================================================================
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS (57.9%)
ADVERTISING (0.7%)
21,000 ADVO, Inc.*......................................... $ 693,000
2,000 Getty Images, Inc.*................................. 60,875
11,400 Omnicom Group, Inc. ................................ 831,488
8,000 TMP Worldwide, Inc.*................................ 644,000
------------
2,229,363
AEROSPACE/DEFENSE
(0.2%)
12,500 General Dynamics Corp............................... 785,156
AIR TRANSPORT (0.0%)
4,000 Atlantic Coast Airlines
Holdings, Inc.*..................................... 128,750
BANK--MIDWEST (0.6%)
16,500 Fifth Third Bancorp................................. 888,937
13,000 Northern Trust Corp................................. 1,155,375
------------
2,044,312
BEVERAGE--
ALCOHOLIC (0.4%)
12,000 Constellation Brands, Inc.
Class "A"*........................................ 651,750
10,000 Coors (Adolph) Co.
Class "B"......................................... 631,875
------------
1,283,625
BUILDING MATERIALS
(0.3%)
25,000 Insituform Technologies,
Inc. Class "A"*................................... 840,625
CABLE TV (0.4%)
27,200 EchoStar Communications
Corp. Class "A"*.................................. 1,434,800
CHEMICAL--
DIVERSIFIED (0.1%)
9,000 Millipore Corp...................................... 435,935
COMPUTER &
PERIPHERALS (3.5%)
27,000 Avocent Corporation*................................ 1,488,375
49,324 Cisco Systems, Inc.*................................ 2,725,151
11,000 EMC Corp.*.......................................... 1,090,375
8,000 Hewlett-Packard Co.................................. 776,000
17,000 In-Focus Corporation................................ 901,000
6,000 International Business
Machines Corp..................................... 675,000
10,000 Network Appliance, Inc.*............................ 1,273,750
21,000 Silicon Storage
Technology, Inc.*................................. 570,937
14,000 Sun Microsystems, Inc.*............................. 1,634,500
6,000 Zebra Technologies Corp.
Class "A"*........................................ 288,375
------------
11,423,463
COMPUTER SOFTWARE
& SERVICES (7.3%)
56,000 Actuate Corp.*...................................... 1,934,625
12,000 Adobe Systems, Inc.................................. 1,863,000
12,000 Advent Software, Inc.*.............................. 838,500
15,000 Aspen Technology, Inc.*............................. 676,875
21,000 CACI International, Inc.
Class "A"*........................................ 450,188
12,000 Cognizant Technology
Solutions Corp.
Class "A"*........................................ 468,000
16,000 Cognos Inc.*........................................ 652,000
13,000 Comverse Technology, Inc.*.......................... 1,404,000
9,000 Documentum, Inc.*................................... 730,687
15,000 Fiserv, Inc.*....................................... 898,125
12,000 Intuit Inc.*........................................ 684,000
10,000 IONA Technologies
PLC (ADR)*........................................ 695,000
25,500 MapInfo Corp.*...................................... 798,469
26,000 Mercury Interactive Corp.*.......................... 4,075,500
3,000 Micromuse, Inc.*.................................... 602,813
33,750 Paychex, Inc. ...................................... 1,771,875
28,000 Peregrine Systems, Inc.*............................ 530,250
--------------------------------------------------------------------------------
4
<PAGE>
Value Line Asset Allocation Fund, Inc.
September 30, 2000
================================================================================
Shares Value
--------------------------------------------------------------------------------
COMPUTER SOFTWARE
& SERVICES (7.3%)
(continued)
20,000 Rational Software Corp.*............................ $ 1,387,500
24,000 Siebel Systems, Inc.*............................... 2,671,500
7,500 TIBCO Software, Inc.*............................... 633,281
------------
23,766,188
DIVERSIFIED
COMPANIES (0.7%)
4,000 SPX Corp.*.......................................... 567,750
8,000 Textron, Inc........................................ 369,000
20,000 Tyco International Ltd.............................. 1,037,500
6,000 United Technologies Corp............................ 415,500
------------
2,389,750
DRUG (5.0%)
20,000 Andrx Group*........................................ 1,867,500
33,000 Corvas International, Inc.*......................... 767,250
16,000 Dura Pharmaceuticals, Inc.*......................... 566,000
11,000 Elan Corporation PLC
(ADR)*............................................ 602,250
9,000 Forest Laboratories, Inc.*.......................... 1,032,188
10,000 Genzyme Corp.--
General Division*................................. 681,875
12,000 Immunex Corp.*...................................... 522,000
8,000 Inhale Therapeutic
Systems*.......................................... 451,000
24,000 Ivax Corp.*......................................... 1,104,000
4,000 Medicis Pharmaceutical
Corp. Class "A"*.................................. 246,000
24,000 Millennium
Pharmaceuticals, Inc.*............................ 3,505,500
4,000 Pharmacopeia, Inc.*................................. 102,000
9,000 QLT Inc.*........................................... 637,875
8,000 Sepracor, Inc.*..................................... 981,500
23,981 Shire Pharmaceuticals
Group PLC (ADR)*.................................. 1,238,019
16,000 Titan Pharmaceuticals, Inc.*........................ 1,040,000
9,000 Vertex Pharmaceuticals
Incorporated*..................................... 760,500
4,000 Watson
Pharmaceuticals, Inc.* 259,500
------------
16,364,957
ELECTRIC UTILITY--
CENTRAL (0.4%)
20,000 AES Corp. (The)*.................................... 1,370,000
ELECTRIC UTILITY--
WEST (1.0%)
32,000 Calpine Corp.*...................................... 3,340,000
ELECTRICAL
EQUIPMENT (1.4%)
14,000 AVX Corp............................................ 364,875
22,000 C&D Technologies, Inc............................... 1,248,500
30,000 Cable Design
Technologies Corp.*............................... 729,375
3,000 Corning Inc......................................... 891,000
24,000 Power-One, Inc.*.................................... 1,452,375
------------
4,686,125
ELECTRONICS (2.9%)
19,000 Adaptive Broadband Corp.*........................... 370,500
13,000 Alpha Industries, Inc.*............................. 442,812
10,000 Avnet, Inc. ........................................ 283,750
7,000 Exar Corp.*......................................... 847,000
11,270 Flextronics
International Ltd.*............................... 925,549
20,000 Gemstar TV Guide
International, Inc.*.............................. 1,743,750
5,000 JDS Uniphase Corp.*................................. 473,437
12,000 KEMET Corp.*........................................ 331,500
21,000 Nu Horizons
Electronics Corp.*................................ 584,063
22,000 Plexus Corp.*....................................... 1,551,000
27,300 Symbol Technologies, Inc............................ 981,094
--------------------------------------------------------------------------------
5
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
--------------------------------------------------------------------------------
19,000 Titan Corp.*........................................ $ 313,500
15,000 Vishay Intertechnology, Inc.*....................... 461,250
------------
9,309,205
ENTERTAINMENT (1.1%)
18,234 Clear Channel
Communications, Inc.*............................. 1,030,221
7,600 Cox Radio, Inc. Class "A"*.......................... 132,525
10,400 Time Warner, Inc. .................................. 813,800
22,000 Univision Communications,
Inc. Class "A"*................................... 822,250
10,850 Viacom, Inc. Class "B"*............................. 634,725
------------
3,433,521
FINANCIAL SERVICES--
DIVERSIFIED (1.1%)
10,500 American International
Group, Inc........................................ 1,004,719
24,000 AmeriCredit Corp.*.................................. 691,500
20,000 Citigroup, Inc...................................... 1,081,250
19,500 Metris Companies Inc................................ 770,250
------------
3,547,719
FOOD WHOLESALERS
(0.3%)
18,000 SYSCO Corp.......................................... 833,625
FOREIGN
TELECOMMUNICATIONS (0.4%)
22,000 Nortel Networks Corp................................ 1,310,375
FURNITURE/HOME
FURNISHINGS (0.1%)
15,000 Ethan Allen Interiors, Inc.......................... 424,687
GROCERY (0.2%)
30,000 Kroger Co.*......................................... 676,875
HEALTHCARE
INFORMATION
SYSTEMS (0.1%)
40,000 Hooper Holmes, Inc.................................. 380,400
HOTEL/GAMING (0.4%)
18,000 International Game
Technology*....................................... 605,250
24,000 Mandalay Resort Group*.............................. 615,000
------------
1,220,250
HOUSEHOLD PRODUCTS
(0.4%)
37,500 Salton, Inc.*....................................... 1,211,719
INDUSTRIAL SERVICES (1.3%)
17,000 Administaff, Inc.*.................................. 1,286,900
9,000 Celestica, Inc.*.................................... 623,250
6,000 Professional Detailing, Inc.*....................... 342,000
13,000 Quanta Services, Inc.*.............................. 357,500
38,000 Robert Half
International, Inc.*.............................. 1,318,125
16,000 TeleTech Holdings, Inc.*............................ 396,000
------------
4,323,775
INSURANCE--
LIFE (0.1%)
6,000 AXA Financial, Inc.................................. 305,625
INSURANCE--
PROPERTY &
CASUALTY (1.4%)
25,000 Ace Limited......................................... 981,250
9,000 Chubb Corporation (The)............................. 712,125
29,000 Old Republic International
Corporation....................................... 697,813
16,000 PartnerRe Ltd....................................... 759,000
14,000 St. Paul Companies,
Inc. (The).......................................... 690,375
10,000 XL Capital Ltd...................................... 735,000
------------
4,575,563
--------------------------------------------------------------------------------
6
<PAGE>
Value Line Asset Allocation Fund, Inc.
September 30, 2000
================================================================================
Shares Value
--------------------------------------------------------------------------------
INTERNET (1.3%)
2,600 America Online, Inc.*............................... $ 139,750
32,000 Exodus Communications,
Inc.*............................................. 1,580,000
3,800 Juniper Networks, Inc.*............................. 831,962
15,000 Macromedia, Inc.*................................... 1,212,188
6,000 Portal Software, Inc.*.............................. 240,000
1,720 VeriSign, Inc.*..................................... 348,408
------------
4,352,308
MACHINERY (0.2%)
12,000 Dover Corp.......................................... 563,250
MEDICAL SERVICES (1.9%)
18,000 Advance Paradigm, Inc.*............................. 759,375
5,000 Affymetrix, Inc.*................................... 249,375
35,000 Health Management
Associates, Inc.*................................. 728,438
8,000 Myriad Genetics, Inc.*.............................. 688,000
3,000 Quest Diagnostics, Inc.*............................ 344,250
20,000 Tenet Healthcare Corp.*............................. 727,500
23,000 Triad Hospitals, Inc.*.............................. 675,625
10,000 Universal Health
Services, Inc.*................................... 856,250
11,000 Wellpoint Health
Networks, Inc.*................................... 1,056,000
------------
6,084,813
MEDICAL SUPPLIES (2.8%)
23,000 Allergan, Inc....................................... 1,942,062
17,000 Alpharma Inc. Class "A"............................. 1,039,125
20,000 AmeriSource Health Corp.
Class "A"*........................................ 940,000
26,000 Aradigm Corp.*...................................... 596,375
4,000 Beckman Coulter, Inc................................ 308,500
28,000 Bindley Western
Industries, Inc................................... 896,000
15,334 Medtronic, Inc...................................... 794,493
24,000 Patterson Dental Co.*............................... 540,000
11,000 PolyMedica Corp.*................................... 471,625
8,000 Techne Corp.*....................................... 896,000
15,000 Varian Medical Systems,
Inc.*............................................. 677,813
------------
9,101,993
METAL FABRICATING
(0.3%)
16,000 Shaw Group, Inc.*................................... 1,128,000
NATURAL GAS--
DIVERSIFIED (0.3%)
10,000 Enron Corp.......................................... 876,250
NEWSPAPER (0.1%)
10,000 Tribune Co.......................................... 436,250
OILFIELD SERVICES/
EQUIPMENT (0.4%)
22,000 Hanover Compressor Co.*............................. 724,625
18,000 National-Oilwell, Inc.*............................. 562,500
------------
1,287,125
PRECISION
INSTRUMENT (2.2%)
12,000 Newport Corp........................................ 1,911,187
22,500 Orbotech Ltd.*...................................... 1,230,469
13,000 PerkinElmer, Inc.................................... 1,356,875
8,000 Tektronix, Inc...................................... 614,500
24,000 Waters Corp.*....................................... 2,136,000
------------
7,249,031
PUBLISHING (0.5%)
12,000 McGraw-Hill
Companies, Inc.................................... 762,750
13,000 Reader's Digest Association,
Inc. Class "A".................................... 459,062
4,500 Reuters Group PLC (ADR)............................. 505,688
------------
1,727,500
RECREATION (0.3%)
18,000 Harley-Davidson, Inc................................ 861,750
--------------------------------------------------------------------------------
7
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Shares Value
--------------------------------------------------------------------------------
RESTAURANT (0.8%)
24,000 Brinker International, Inc.*........................ $ 723,000
19,500 Cheesecake Factory,
Inc. (The)*....................................... 843,375
19,000 Darden Restaurants, Inc............................. 395,438
16,000 Jack In The Box, Inc.*.............................. 343,000
40,000 Ruby Tuesday, Inc................................... 450,000
------------
2,754,813
RETAIL BUILDING
SUPPLY (0.8%)
11,000 Fastenal Co. ....................................... 633,875
27,000 Home Depot, Inc. (The).............................. 1,432,688
14,560 Lowe's Companies, Inc............................... 653,380
------------
2,719,943
RETAIL--SPECIAL
LINES (2.8%)
38,000 Bed Bath & Beyond Inc.*............................. 926,844
62,000 Chico's FAS, Inc.*.................................. 2,108,000
16,500 Cost Plus, Inc.*.................................... 497,063
15,750 Dollar Tree Stores, Inc.*........................... 638,859
18,000 Insight Enterprises, Inc.*.......................... 490,500
31,500 Intimate Brands, Inc.
Class "A"......................................... 588,656
16,000 Linens `N' Things, Inc.*............................ 408,000
17,000 Michaels Stores, Inc.*.............................. 680,000
25,500 Quiksilver, Inc.*................................... 490,875
10,000 RadioShack Corp..................................... 646,250
24,000 Tiffany & Co........................................ 925,500
9,000 ValueVision International,
Inc. Class "A"*................................... 226,125
11,500 Zale Corp.*......................................... 373,031
------------
8,999,703
RETAIL STORE (1.2%)
30,000 Family Dollar Stores, Inc........................... 577,500
17,000 Kohl's Corp.*....................................... 980,688
18,400 Target Corp. ....................................... 471,500
42,000 Wal-Mart Stores, Inc................................ 2,021,250
------------
4,050,938
SEMICONDUCTOR (5.8%)
18,000 Advanced Micro
Devices, Inc.*.................................... 425,250
8,000 Analog Devices, Inc.*............................... 660,500
5,200 Applied Micro
Circuits Corp.*................................... 1,076,725
36,000 Atmel Corp.*........................................ 546,750
7,000 C-Cube Microsystems Inc.*........................... 143,500
15,000 GaSonics
International Corp.*.............................. 183,750
11,000 ICOS Vision Systems
Corporation N.V.*................................. 333,437
15,000 Integrated Device
Technology, Inc.*................................. 1,357,500
15,000 International
Rectifier Corp.*.................................. 758,438
10,000 Lattice Semiconductor
Corp.*............................................ 537,500
7,000 Mattson Technology, Inc.*........................... 104,125
15,000 Nanometrics, Inc.*.................................. 801,562
9,000 PMC-Sierra, Inc.*................................... 1,937,250
16,000 QLogic Corp*........................................ 1,408,000
3,600 SDL, Inc.*.......................................... 1,108,800
60,000 Semtech Corp.*...................................... 2,587,500
8,000 Silicon Image, Inc.*................................ 198,500
23,000 TelCom Semiconductor,
Inc.*............................................. 342,125
43,500 TranSwitch Corp.*................................... 2,773,125
38,000 TriQuint Semiconductor,
Inc.*............................................. 1,384,625
11,000 Varian Semiconductor
Equipment Associates,
Inc.*............................................. 411,813
------------
19,080,775
SHOE (0.2%)
12,000 Timberland Co. Class "A"*........................... 492,000
--------------------------------------------------------------------------------
8
<PAGE>
Value Line Asset Allocation Fund, Inc.
September 30, 2000
================================================================================
Shares Value
--------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT (2.9%)
30,000 ADC Telecommunications,
Inc.*............................................. $ 806,719
10,000 Black Box Corp.*.................................... 466,250
5,000 C-Cor.net Corp.*.................................... 76,562
3,798 Harmonic, Inc.*..................................... 91,152
35,000 Oak Technology, Inc.*............................... 958,125
60,000 Polycom, Inc.*...................................... 4,018,125
10,000 Scientific-Atlanta, Inc............................. 636,250
27,000 SpectraSite Holdings, Inc.*......................... 501,188
17,000 Tekelec*............................................ 558,875
10,000 Tellabs, Inc.*...................................... 477,500
4,000 Tollgrade
Communications, Inc.*............................. 555,250
23,000 Westell Technologies, Inc.
Class "A"*........................................ 296,125
------------
9,442,121
TELECOMMUNICATION
SERVICES (1.1%)
9,000 ADTRAN, Inc.*....................................... 382,922
8,000 Copper Mountain
Networks, Inc.*................................... 300,000
35,100 DyCom Industries, Inc.*............................. 1,461,037
38,000 Metromedia Fiber Network,
Inc. Class "A"*................................... 923,875
10,000 Nextel Communications, Inc.
Class "A"*........................................ 467,500
------------
3,535,334
WIRELESS
NETWORKING (0.2%)
8,000 Puma Technology, Inc.*.............................. 162,500
12,000 RF Micro Devices Inc.*.............................. 376,500
3,000 Sawtek Inc.*........................................ 115,547
------------
654,547
------------
TOTAL
COMMON STOCKS
(Cost $112,989,289)................................... 189,474,832
------------
Principal
Amount Value
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (8.2%)
$ 6,500,000 United States Treasury
Notes 6.500%,
10/15/06.................................... 6,678,750
5,000,000 United States Treasury
Notes 5.500%,
2/15/08..................................... 4,870,315
2,500,000 United States Treasury
Notes 6.000%,
8/15/09..................................... 2,510,157
3,000,000 United States Treasury
Notes 5.750%,
8/15/10..................................... 2,987,814
8,500,000 United States Treasury
Bonds 7.250%,
8/15/22**................................... 9,660,786
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $26,517,533)............................. 26,707,822
--------------------------------------------------------------------------------
9
<PAGE>
Value Line Asset Allocation Fund, Inc.
Schedule of Investments (unaudited)
================================================================================
Principal
Amount Value
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (22.0%)
$ 4,000,000 Federal National Mortgage
Association Notes
6.750%, 8/15/02............................. $ 4,017,956
4,000,000 Federal Home Loan
Mortgage Corp.
Debentures 7%,
2/15/03..................................... 4,042,716
8,000,000 Federal Home Loan
Mortgage Corp.
Debentures 5%,
1/15/04..................................... 7,643,536
8,000,000 Federal National Mortgage
Association Notes
5.625%, 5/14/04............................. 7,769,072
4,000,000 Federal Home Loan
Mortgage Corp.
Debentures 6.25%,
7/15/04..................................... 3,961,912
4,000,000 Federal National Mortgage
Association Notes
6.500%, 8/15/04............................. 3,994,784
5,000,000 Federal National Mortgage
Association Notes
7.125%, 2/15/05............................. 5,107,170
3,000,000 Federal National Mortgage
Association Notes
5.750%, 6/15/05............................. 2,903,256
6,000,000 Federal National Mortgage
Association Notes
7.000%, 7/15/05............................. 6,104,184
2,000,000 Private Export Funding
Corporation Notes
Series "J" 7.650%,
5/15/06..................................... 2,095,748
5,000,000 Federal National Mortgage
Association Notes
7.125%, 3/15/07............................. 5,126,180
2,000,000 Federal National Mortgage
Association Notes
5.250%, 1/15/09............................. 1,806,102
$ 7,500,000 Federal National Mortgage
Association Notes
6.625%, 9/15/09............................. 7,431,630
6,000,000 Federal Home Loan
Mortgage Corp.
Debentures 7.000%,
3/15/10..................................... 6,090,450
2,000,000 Federal National Mortgage
Association Notes
7.125%, 6/15/10............................. 2,046,074
2,000,000 Federal Home Loan
Mortgage Corp.
Debentures 6.750%,
9/15/29..................................... 1,969,994
TOTAL
U.S. GOVERNMENT
AGENCY
OBLIGATIONS
(Cost $71,977,522).......................... 72,110,764
TOTAL INVESTMENT
SECURITIES (88.1%)
(Cost $211,484,344)......................... 288,293,418
SHORT-TERM INVESTMENTS (12.1%)
U.S. TREASURY OBLIGATIONS (2.4%)
$ 4,000,000 United States Treasury
Notes 5.250%,
5/31/01..................................... $ 3,971,252
4,000,000 United States Treasury
Notes 5.750%,
6/30/01..................................... 3,982,500
------------
7,953,752
--------------------------------------------------------------------------------
10
<PAGE>
Value Line Asset Allocation Fund, Inc.
September 30, 2000
================================================================================
Principal
Amount Value
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (9.7%)
(including accrued interest)
$15,700,000 Collateralized by
$15,895,000 U.S.
Treasury Notes 5.500%,
due 5/31/03, (with
Morgan Stanley
Dean Witter & Co.,
6.35%, dated 9/29/00,
due 10/2/00, delivery
value $15,708,308).......................... $ 15,705,539
16,000,000 Collateralized by
$14,285,000 U.S.
Treasury Bonds 7.250%,
due 5/15/16, (with
Warburg Dillon
Read LLC,
6.35%, dated 9/29/00,
due 10/2/00, delivery
value $16,008,467).......................... 16,005,644
------------
31,711,183
------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $39,705,889).......................... 39,664,935
------------
LIABILITIES IN EXCESS OF CASH
AND RECEIVABLES (-0.2%)....................................... (552,831)
------------
NET ASSETS (100%) ............................................ $327,405,522
============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER OUTSTANDING SHARE
($327,405,522/15,249,674
shares outstanding)........................................ $ 21.47
============
* Non-income producing
(ADR) American Depositary Receipts
** 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 (Loss) Value
-------------------------------------------------
Russell 2000 Index
December/00 26 $193,700 $6,856,200
S&P 500 Index
December/00 17 261,587 6,178,225
S&P MidCap 400
Index December/00 17 83,300 4,635,050
See Notes to Financial Statements.
--------------------------------------------------------------------------------
11
<PAGE>
Value Line Asset Allocation Fund, Inc.
Statement of Assets and Liabilities
at September 30, 2000 (unaudited)
================================================================================
Assets:
Investment securities, at value
(Cost--$211,484,344).......................... $288,293,418
Short-term investments
(Cost--$39,705,889)........................... 39,664,935
Cash ........................................... 75,716
Receivable for capital shares sold ............. 2,960,385
Dividends and interest receivable .............. 1,294,824
Receivable for securities sold ................. 872,166
Variation margin on futures contracts .......... 161,025
Prepaid expenses ............................... 6,000
------------
Total Assets ............................. 333,328,469
------------
Liabilities:
Payable for capital shares
repurchased .................................. 5,485,688
Payable for securities purchased ............... 129,950
Accrued expenses:
Advisory fee payable ......................... 174,750
Service and distribution plan
fees payable................................ 66,921
Other ........................................ 65,638
------------
Total Liabilities ........................ 5,922,947
------------
Net Assets ..................................... $327,405,522
============
Net Assets consist of:
Capital stock, at $.001 par value
(authorized 300,000,000,
outstanding 15,249,674 shares)................ $ 15,250
Additional paid-in capital ..................... 240,988,548
Undistributed net investment income ............ 4,272,146
Undistributed net realized gain
on investments................................ 4,822,871
Net unrealized appreciation
of investments................................ 77,306,707
------------
Net Assets ..................................... $327,405,522
============
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share
($327,405,522/15,249,674
shares outstanding) .......................... $ 21.47
============
Statement of Operations
for the six months ended September 30, 2000 (unaudited)
================================================================================
Investment Income:
Interest ....................................... $ 3,629,666
Dividend (net of foreign
withholding tax of $1,157).................... 144,543
------------
Total Income ............................. 3,774,209
------------
Expenses:
Advisory fee ................................... 993,713
Service and distribution plan fee .............. 382,197
Custodian fees ................................. 35,574
Transfer agent fees ............................ 25,508
Insurance, dues and other ...................... 21,808
Auditing and legal fees ........................ 20,816
Accounting & bookkeeping expense ............... 16,200
Registration and filing fees ................... 14,242
Printing ....................................... 13,179
Directors' fees and expenses ................... 12,413
------------
Total Expenses before
custody credits ........................ 1,535,650
Less: custody credits .................... (2,586)
------------
Net Expenses ............................. 1,533,064
------------
Net Investment Income .......................... 2,241,145
------------
Net Realized and Unrealized Gain
(Loss) on Investments:
Net Realized Loss
(includes $377,678 gain on
futures contracts)........................ (1,254,328)
Change in Net Unrealized
Appreciation.............................. 7,499,328
------------
Net Realized Loss and Change in
Net Unrealized Appreciation
on Investments ............................... 6,245,000
------------
Net Increase in Net Assets
from Operations .............................. $ 8,486,145
============
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12
<PAGE>
Value Line Asset Allocation Fund, Inc.
Statement of Changes in Net Assets
for the six months ended September 30, 2000
(unaudited) and for the year ended March 31, 2000
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
September 30, 2000 Year Ended
(unaudited) March 31,2000
-----------------------------------
<S> <C> <C>
Operations:
Net investment income ............................................ $ 2,241,145 $ 4,654,461
Net realized (loss) gain on investments .......................... (1,254,328) 19,644,832
Change in net unrealized appreciation ............................ 7,499,328 30,989,677
-----------------------------------
Net increase in net assets from operations........................ 8,486,145 55,288,970
-----------------------------------
Distributions to Shareholders:
Net investment income ............................................ -- (3,082,826)
Net realized gain from investment transactions.................... -- (15,937,464)
-----------------------------------
Total distributions .............................................. -- (19,020,290)
-----------------------------------
Capital Share Transactions:
Proceeds from sale of shares ..................................... 109,085,262 253,957,020
Proceeds from reinvestment of distributions to shareholders....... -- 17,807,565
Cost of shares repurchased ....................................... (101,880,723) (178,850,176)
-----------------------------------
Net increase from capital share transactions...................... 7,204,539 92,914,409
-----------------------------------
Total Increase in Net Assets ....................................... 15,690,684 129,183,089
Net Assets:
Beginning of period .............................................. 311,714,838 182,531,749
-----------------------------------
End of period .................................................... $327,405,522 $311,714,838
===================================
Net undistributed investment income, at end of period .............. $ 4,272,146 $ 2,031,001
===================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
13
<PAGE>
Value Line Asset Allocation Fund, Inc.
Notes to Financial Statements (unaudited)
================================================================================
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 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 applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
--------------------------------------------------------------------------------
14
<PAGE>
Value Line Asset Allocation Fund, Inc.
September 30, 2000
================================================================================
(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 pay to 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. Capital Share Transactions
Transactions in capital stock were as follows:
Six Months
Ended Year Ended
Sept. 30, 2000 March 31,
(unaudited) 2000
--------------------------
Shares sold ...................................... 5,422,323 12,960,862
Shares issued in
reinvestment of dividends
and distributions .............................. -- 928,929
--------------------------
5,422,323 13,889,791
Shares repurchased ............................... 5,103,896 9,104,678
--------------------------
Net increase ..................................... 318,427 4,785,113
==========================
3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
Six Months Ended
September 30, 2000
(unaudited)
------------------
PURCHASES:
U.S. Treasury and U.S. Government
Agency Obligations ................................. $ 58,148,987
Other Investment Securities .......................... 53,308,214
------------
$111,457,201
============
SALES:
U.S. Treasury and U.S. Government
Agency Obligations ................................. $ 50,462,011
Other Investment Securities .......................... 78,199,388
------------
$128,661,399
============
At September 30, 2000, the aggregate cost of investment securities and
short-term investments for federal income tax purposes was $251,190,751. The
aggregate appreciation and depreciation of investments at September 30, 2000,
based on a comparison of investment values and their costs for federal income
tax purposes was $88,270,289 and $10,964,100 respectively, resulting in a net
appreciation of $77,306,189.
--------------------------------------------------------------------------------
15
<PAGE>
Value Line Asset Allocation Fund, Inc.
Notes to Financial Statements (unaudited) September 30, 2000
================================================================================
4. Advisory Fees, Service and Distribution Plan Fees and Transactions With
Affiliates:
An advisory fee of $993,713 was paid or payable to the Adviser for the six
months ended September 30, 2000. The fee was computed at an annual 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.
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. For the six months
ended September 30, 2000, fees amounting to $382,197 were paid or payable to the
Distributor under this Plan.
For the six months ended September 30, 2000, the Fund's expenses were reduced by
$2,586 under a custody credit arrangement with the Custodian.
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,
2000, the Fund paid brokerage commissions totaling $32,389 to the Distributor, a
registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At September 30, 2000, the Adviser, and/or affiliated companies, and the Value
Line, Inc. Profit Sharing and Savings Plan, owned 3,489,645 shares of the Fund's
capital stock, representing 22.9% of the outstanding shares. In addition,
certain officers and directors of the Fund owned 340,040 shares of capital
stock, representing 2.2% of the outstanding shares.
5. Financial Instrument with Off-Balance Sheet Risk
During the six months ended September 30, 2000, 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 September 30, 2000 the Fund held an open short
position of 26 Russell 2000 Index contracts, 17 S&P 500 Index contracts, and 17
S&P Mid-Cap 400 Index contracts all expiring in December 2000, with a total
notional value of $17,669,475.
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.
--------------------------------------------------------------------------------
16
<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
Ended Years Ended March 31,
Sept. 30, 2000 ---------------------------------------------------------------
(unaudited) 2000 1999 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .................. $ 20.88 $ 17.99 $ 16.32 $ 13.64 $ 14.13 $ 11.58
----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income................. .14 .33 .03 .22 .30 .10
Net gains on securities
(both realized
and unrealized)..................... .45 4.04 1.92 4.54 2.15 3.86
----------------------------------------------------------------------------------
Total from investment
operations........................ .59 4.37 1.95 4.76 2.45 3.96
----------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income .................. -- (.24) (.02) (.26) (.25) (.12)
Distributions from
realized gains .................... -- (1.24) (.26) (1.82) (2.69) (1.29)
----------------------------------------------------------------------------------
Total distributions ................. -- (1.48) (.28) (2.08) (2.94) (1.41)
----------------------------------------------------------------------------------
Net asset value,
end of period ........................ $ 21.47 $ 20.88 $ 17.99 $ 16.32 $ 13.64 $ 14.13
==================================================================================
Total return .......................... 2.83%+ 25.02% 12.16% 37.36% 17.49% 35.13%
==================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ....................... $327,406 $311,715 $182,532 $123,488 $ 74,981 $ 55,803
Ratio of operating expenses
to average net assets................. .99%(2)* 1.03%(2) 1.08%(1) 1.15%(1) 1.23%(1) 1.38%(1)
Ratio of net investment income
to average net assets................. 1.45%* 1.93% 0.30% 1.46% 1.95% .99%
Portfolio turnover rate ............... 38%+ 72% 129% 139% 192% 244%
</TABLE>
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses net of custody credits would have been 1.02% for the year
ended March 31, 2000, and unchanged for the six month period ended
September 30, 2000 (unaudited).
+ Not annualized
* Annualized
See Notes to Financial Statements.
--------------------------------------------------------------------------------
17
<PAGE>
Value Line Asset Allocation Fund, Inc.
================================================================================
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--------------------------------------------------------------------------------
18
<PAGE>
Value Line Asset Allocation Fund, Inc.
================================================================================
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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--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--Value Line Special Situations Fund seeks long-term growth of capital. No
consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981--Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by 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: a Money Market Portfolio
and the National Bond Portfolio. The fund may be subject to state and local
taxes and the Alternative Minimum Tax (if applicable).
1985--Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--Value Line Aggressive Income Trust seeks to maximize current income.
1987--Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with maximum income exempt from New York State, New York City and federal income
taxes while avoiding undue risk to principal. The Trust may be subject to state
and local taxes and the Alternative Minimum Tax (if applicable).
1987--Value Line Strategic Asset Management Trust* seeks to achieve a high total
investment return consistent with reasonable risk.
1993--Value Line Emerging Opportunities Fund invests primarily in common stocks
or securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
--------------------------------------------------------------------------------
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 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Sound View Drive, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Stephen E. Grant
Vice President
Bruce H. Alston
Vice President
Alan N. Hoffman
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants, and, accordingly, they
do not express an opinion thereon.
This unaduited 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).
#514998
