UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-568
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Value Line Fund, Inc.
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(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: December 31, 2006
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Date of reporting period: December 31, 2006
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Item I. Reports to Stockholders.
A copy of the Annual Report to Stockholders for the period ended 12/31/06
is included with this Form.
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ANNUAL REPORT
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December 31, 2006
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The Value Line Fund, Inc.
[LOGO]
----------
VALUE LINE
No-Load
Mutual
Funds
The Value Line Fund, Inc.
To Our Value Line
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To Our Shareholders:
The Value Line Fund (the "Fund") had a total return of 4.00% in 2006, compared
with the 15.79% return of the S&P 500 Index(1).
The equity market had a strong second half in 2006, with the entire year's
returns for the major indices being generated during this period. Several
factors contributed to these gains. First, the Federal Reserve stopped raising
the overnight lending rate during the summer, topping out at 5.25%, bringing to
an end a monetary tightening cycle that began in 2004. The rate pause was a
result of a slowing economic environment in combination with lower inflationary
readings. In addition, energy prices began to retreat from their record levels
of last summer helping to buoy consumer's purchasing power. Lastly, corporate
earnings kept up their healthy growth pace leading to a record for consecutive
double digit gains at 14 quarters in a row. However, given the strong operating
margin improvement and the resulting strong earnings growth that U.S.
corporations have delivered over the last several years, it would appear that
these gains will be more moderate in the year ahead. The large level of
corporate cash holdings, in combination with sizeable war chests held by private
equity investors, should provide decent support to any pullbacks in the market.
The Value Line Fund generally invests in multi-cap stocks that are ranked in the
highest category for relative price performance over the next six to twelve
months by the Value Line TimelinessTM Ranking System. The System favors stocks
with strong price and earnings momentum relative to those of all other companies
in the Value Line Investment Survey of approximately 1,700 stocks. The Fund's
performance last year was hurt by some poorly timed trades in the energy, and
homebuilding sectors, along with an overweighted position for most of the year
in the technology sector, which was one of the worst performing areas. In
addition, the Fund had almost no exposure to the financial sector, which had a
strong showing during the second half of the year. Currently, the Fund has
overweighted the consumer discretionary area while maintaining above average
weightings in the Information Technology (IT) sector. Investors should keep in
mind, however, that this sector is one of the most volatile in the S&P 500
Index.
As always, we appreciate your continued investment.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
January 31, 2007
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(1) The Standard & Poor's 500 Index consists of 500 stocks which are traded on
the New York Stock Exchange, American Stock Exchange and the NASDAQ
National Market System and is representative of the broad stock market.
This is an unmanaged index and does not reflect charges, expenses or
taxes, and it is not possible to directly invest in this index.
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2
The Value Line Fund, Inc.
Fund Shareholders
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Economic Observations
The economy slowed markedly over the final three quarters of 2006, with growth
decelerating from 5.6% in the opening period, to 2.6% in the second three
months, and to just 2.0% and 2.2%, respectively, during the year's closing two
quarters. Further Federal Reserve monetary tightening and soaring oil prices
were initially responsible for the sharp slowdown in the nation's gross domestic
product growth. Later on it was a downward spiral in the housing market that
proved to be the primary culprit.
Now, as we start a new year, we find that the Fed is still on hold: oil prices
seem to be stabilizing in the $55-$65 a barrel range: and there are signs that
the aggregate economy is pressing forward at a modest, but seemingly
sustainable, rate of 2.5%, or so. In our view, such a rate of GDP growth would
allow corporate earnings to move modestly higher, but would be insufficient to
push inflation up sharply.
Helping to sustain this prospective level of economic growth should be solid
levels of activity in the retail sector, comparative stability in oil prices,
and a steady monetary course at the Federal Reserve. The nation's business
expansion is likely to be restrained, however, by weak housing demand, softness
in the auto sector, and sluggish industrial activity.
Gross domestic product growth along these lines and accompanying subdued
inflation probably would have positive ramifications for the stock and bond
markets.
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3
The Value Line Fund, Inc.
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The following graph compares the performance of The Value Line Fund, Inc. to
that of the S&P 500 Stock Index. The Value Line Fund, Inc. is a professionally
managed mutual fund, while the Index is not available for investment and is
unmanaged. The returns for the Index do not reflect charges, expenses or taxes
but do include the reinvestment of dividends. The comparison is shown for
illustrative purposes only.
Comparison of a Change in Value of a $10,000 Investment
in The Value Line Fund and the S&P 500 Stock Index*
[THE FOLLOWING WAS DEPICTED BY A LINE CHART IN THE PRINTED MATERIAL]
The Value Line S&P 500
Line Fund, Inc. Stock Index
--------------- -----------
1/1/1996 10,000 10,000
3/31/1996 9,722 10,267
6/30/1996 11,181 12,059
9/30/1996 12,455 12,963
12/31/1996 12,159 13,336
3/31/1997 13,246 15,196
6/30/1997 13,590 15,698
9/30/1997 11,802 14,136
12/31/1997 14,622 17,146
3/31/1998 16,048 18,001
6/30/1998 16,507 19,270
9/30/1998 15,777 18,066
12/31/1998 18,531 20,755
3/31/1999 19,399 21,231
6/30/1999 18,425 20,666
9/30/1999 18,418 20,466
12/31/1999 15,685 18,865
3/31/2000 13,755 16,628
6/30/2000 14,592 17,601
9/30/2000 12,199 15,018
12/31/2000 13,674 16,623
3/31/2001 13,689 16,669
6/30/2001 11,914 14,435
9/30/2001 10,324 11,941
12/31/2001 10,208 12,949
3/31/2002 10,133 12,541
6/30/2002 11,074 14,472
9/30/2002 11,223 14,854
12/31/2002 11,869 16,663
3/31/2003 12,003 16,945
6/30/2003 12,044 17,237
9/30/2003 11,744 16,914
12/31/2003 13,304 18,475
3/31/2004 13,065 18,079
6/30/2004 13,649 18,326
9/30/2004 14,510 18,987
12/31/2004 14,688 19,383
3/31/2005 16,141 20,199
6/30/2005 15,068 19,909
9/30/2005 14,353 21,036
12/31/2005 15,275 22,445
* The Standard and Poor's 500 Index (S&P 500 Index) is an unmanaged index
that is representative of the larger-capitalization stocks traded in the
United States.
The return for the index does not reflect expenses which are deducted from
the Fund's returns.
Performance Data:**
Average Annual Growth of an Assumed
Total Return Investment of $10,000
---------------- ----------------------
1 year ended 12/31/06 .......... 4.00% $ 10,400
5 years ended 12/31/06 ......... 2.24% $ 11,170
10 years ended 12/31/06 ......... 4.33% $ 15,275
--------------------------------------------------------------------------------
** The performance data quoted represent past performance and are no
guarantee of future performance. The average annual total returns and
growth of an assumed investment of $10,000 include dividends reinvested
and capital gains distributions accepted in shares. The investment return
and principal value of an investment will fluctuate so that an investment,
when redeemed, may be worth more or less than its original cost. The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
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4
The Value Line Fund, Inc.
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FUND EXPENSES (unaudited):
Example
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period (July 1, 2006 through December 31,
2006).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example an $8,600
account value divided by $1,000=8.6), then multiply the result by the number in
the first line under the heading "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if transactional
costs were included, your costs would have been higher.
Expenses* paid
Beginning Ending during period
account value account value 7/1/06 thru
7/1/06 12/31/06 12/31/06
--------------- --------------- ---------------
Actual ........................................... $ 1,000.00 $ 1,013.70 $ 4.82
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,020.41 $ 4.84
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* Expenses are equal to the Fund's annualized expense ratio of 0.95%
multiplied by the average account value over the period, multiplied by
184/365 to reflect the one-half period. This expense ratio may differ from
the expense ratio shown in the Financial Highlights.
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5
The Value Line Fund, Inc.
Portfolio Highlights at December 31, 2006 (unaudited)
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Ten Largest Holdings
Percentage of
Issue Shares Value Net Assets
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Akamai Technologies, Inc. ........................ 75,000 $3,984,000 2.02%
Kimball International, Inc. Class B .............. 155,000 $3,766,500 1.91%
Illumina, Inc. ................................... 90,000 $3,537,900 1.79%
TeleTech Holdings, Inc. .......................... 139,000 $3,319,320 1.68%
Kohl's Corp. ..................................... 48,000 $3,284,640 1.66%
Hercules, Inc. ................................... 165,000 $3,186,150 1.61%
Harley-Davidson, Inc. ............................ 44,000 $3,100,680 1.57%
Kelly Services, Inc. Class A ..................... 107,000 $3,096,580 1.57%
Robbins & Myers, Inc. ............................ 63,000 $2,892,960 1.47%
International Flavors & Fragrances, Inc. ......... 55,000 $2,703,800 1.37%
--------------------------------------------------------------------------------
Asset Allocation -- Percentage of Net Assets
[THE FOLLOWING WAS DEPICTED BY A PIE CHART IN THE PRINTED MATERIAL]
Common Stocks 97.6%
Cash & Other 2.4%
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Sector Weightings -- Percentage of Total Investment Securities
[THE FOLLOWING WAS DEPICTED BY A BAR CHART IN THE PRINTED MATERIAL]
Consumer, Cyclical 22.2%
Consumer, Non-cyclical 18.4%
Industrial 15.4%
Technology 15.0%
Communications 14.7%
Basic Materials 9.1%
Financial 4.4%
Energy 0.8%
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6
The Value Line Fund, Inc.
Schedule of Investments December 31, 2006
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Shares Value
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COMMON STOCKS (97.6%)
ADVERTISING (0.8%)
15,000 Omnicom Group, Inc. ............................... $ 1,568,100
AEROSPACE/DEFENSE (0.8%)
20,000 Precision Castparts Corp. ......................... 1,565,600
AIR TRANSPORT (2.0%)
47,000 AMR Corp.* ........................................ 1,420,810
61,000 Continental Airlines, Inc. Class B* ............... 2,516,250
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3,937,060
APPAREL (1.9%)
37,000 Guess?, Inc.* ..................................... 2,346,910
30,000 Phillips-Van Heusen Corp. ......................... 1,505,100
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3,852,010
BANK (0.8%)
53,000 Synovus Financial Corp. ........................... 1,633,990
BIOTECHNOLOGY (0.8%)
22,000 Amgen, Inc.* ...................................... 1,502,820
BUILDING MATERIALS (0.8%)
20,000 Genlyte Group, Inc. (The)* ........................ 1,562,200
CABLE TV (2.1%)
51,000 Comcast Corp. Class A* ............................ 2,135,880
82,000 DIRECTV Group, Inc. (The)* ........................ 2,045,080
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4,180,960
CHEMICAL -- BASIC (1.6%)
33,000 E.I. du Pont de Nemours and Co. ................... 1,607,430
11,000 Potash Corporation of
Saskatchewan, Inc. .............................. 1,578,280
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3,185,710
CHEMICAL -- DIVERSIFIED (0.9%)
24,000 Albemarle Corp. ................................... 1,723,200
CHEMICAL -- SPECIALTY (4.4%)
165,000 Hercules, Inc.* ................................... 3,186,150
55,000 International Flavors &
Fragrances, Inc. .................................. 2,703,800
28,000 OM Group, Inc.* ................................... 1,267,840
71,000 Tredegar Corp. .................................... 1,605,310
-------------
8,763,100
COMPUTER & PERIPHERALS (0.7%)
17,000 Apple, Inc.* ...................................... 1,442,280
COMPUTER SOFTWARE &
SERVICES (7.0%)
58,000 BMC Software, Inc.* ............................... 1,867,600
26,000 Cognizant Technology Solutions
Corp. Class A* .................................. 2,006,160
36,000 Infosys Technologies Ltd. ADR ..................... 1,964,160
76,000 Jack Henry & Associates, Inc. ..................... 1,626,400
152,000 Oracle Corp.* ..................................... 2,605,280
46,000 Paychex, Inc. ..................................... 1,818,840
32,000 SEI Investments Co. ............................... 1,905,920
-------------
13,794,360
DIVERSIFIED COMPANIES (2.7%)
37,000 Acuity Brands, Inc. ............................... 1,925,480
39,000 Honeywell International, Inc. ..................... 1,764,360
65,000 Kadant, Inc.* ..................................... 1,584,700
-------------
5,274,540
DRUG (5.1%)
30,000 Biogen Idec, Inc.* ................................ 1,475,700
21,000 Cephalon, Inc.* ................................... 1,478,610
45,000 Forest Laboratories, Inc.* ........................ 2,277,000
65,000 Immucor, Inc.* .................................... 1,899,950
50,000 Schering-Plough Corp. ............................. 1,182,000
29,000 Sepracor, Inc.* ................................... 1,785,820
-------------
10,099,080
E-COMMERCE (2.8%)
75,000 Akamai Technologies, Inc.* ........................ 3,984,000
100,000 Interwoven, Inc.* ................................. 1,467,000
-------------
5,451,000
ELECTRICAL EQUIPMENT (0.7%)
44,000 FLIR Systems, Inc.* ............................... 1,400,520
ELECTRONICS (2.0%)
58,000 Avnet, Inc.* ...................................... 1,480,740
42,000 Rogers Corp.* ..................................... 2,484,300
-------------
3,965,040
ENTERTAINMENT (0.9%)
50,000 Walt Disney Co. (The) ............................. 1,713,500
FINANCIAL SERVICES --
DIVERSIFIED (1.7%)
23,000 American International Group, Inc. ................ 1,648,180
42,000 CNA Financial Corp.* .............................. 1,693,440
-------------
3,341,620
See Notes to Financial Statements.
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7
The Value Line Fund, Inc.
Schedule of Investments
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
FURNITURE/HOME
FURNISHINGS (3.1%)
155,000 Kimball International, Inc. Class B ............... $ 3,766,500
114,000 Tempur-Pedic International, Inc.* ................. 2,332,440
-------------
6,098,940
GROCERY (0.9%)
52,000 Safeway, Inc. ..................................... 1,797,120
HOTEL/GAMING (0.8%)
27,000 MGM MIRAGE* ....................................... 1,548,450
HUMAN RESOURCES (2.9%)
92,000 AMN Healthcare Services, Inc.* .................... 2,533,680
107,000 Kelly Services, Inc. Class A ...................... 3,096,580
-------------
5,630,260
INDUSTRIAL SERVICES (4.3%)
54,000 Amdocs Ltd.* ...................................... 2,092,500
51,000 CB Richard Ellis Group, Inc.
Class A* ........................................ 1,693,200
55,000 CSG Systems International, Inc.* .................. 1,470,150
139,000 TeleTech Holdings, Inc.* .......................... 3,319,320
-------------
8,575,170
INFORMATION SERVICES (2.1%)
95,000 Gartner, Inc.* .................................... 1,880,050
55,000 Thomson Corp. (The) ............................... 2,279,200
-------------
4,159,250
INTERNET (0.8%)
37,000 Priceline.com, Inc.* .............................. 1,613,570
MACHINERY (3.7%)
76,000 Lindsay Corp. ..................................... 2,481,400
34,000 Manitowoc Company, Inc. (The) ..................... 2,020,620
63,000 Robbins & Myers, Inc. ............................. 2,892,960
-------------
7,394,980
MEDICAL SUPPLIES (4.7%)
51,000 Digene Corp.* ..................................... 2,443,920
90,000 Illumina, Inc.* ................................... 3,537,900
32,000 Stryker Corp. ..................................... 1,763,520
20,000 Zimmer Holdings, Inc.* ............................ 1,567,600
-------------
9,312,940
METALS & MINING
DIVERSIFIED (1.7%)
19,000 Allegheny Technologies, Inc. ...................... 1,722,920
50,000 Brush Engineered Materials, Inc.* ................. 1,688,500
-------------
3,411,420
NEWSPAPER (0.8%)
32,000 E.W. Scripps Co. (The) Class A .................... $1,598,080
OFFICE EQUIPMENT &
SUPPLIES (2.0%)
51,000 OfficeMax, Inc. ................................... 2,532,150
79,000 Xerox Corp.* ...................................... 1,339,050
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3,871,200
OILFIELD SERVICES/
EQUIPMENT (0.8%)
19,000 Core Laboratories N.V.* ........................... 1,539,000
PACKAGING &
CONTAINER (1.8%)
73,000 Rock-Tenn Co. Class A ............................. 1,979,030
23,000 Sealed Air Corp. .................................. 1,493,160
-------------
3,472,190
PRECISION INSTRUMENT (2.8%)
60,000 II-VI, Inc.* ...................................... 1,676,400
110,000 Newport Corp.* .................................... 2,304,500
31,000 Waters Corp.* ..................................... 1,518,070
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5,498,970
RECREATION (3.1%)
44,000 Harley-Davidson, Inc. ............................. 3,100,680
57,000 Hasbro, Inc. ...................................... 1,553,250
68,000 Mattel, Inc. ...................................... 1,540,880
-------------
6,194,810
RETAIL -- SPECIAL LINES (4.9%)
79,500 American Eagle Outfitters, Inc. ................... 2,481,195
39,000 Coach, Inc.* ...................................... 1,675,440
40,000 Dick's Sporting Goods, Inc.* ...................... 1,959,600
45,000 NBTY, Inc.* ....................................... 1,870,650
110,000 PC Connection, Inc.* .............................. 1,631,300
-------------
9,618,185
RETAIL STORE (4.7%)
70,000 Big Lots, Inc.* ................................... 1,604,400
19,000 J.C. Penney Company, Inc. ......................... 1,469,840
48,000 Kohl's Corp.* ..................................... 3,284,640
30,000 Nordstrom, Inc. ................................... 1,480,200
25,000 Target Corp. ...................................... 1,426,250
-------------
9,265,330
SECURITIES BROKERAGE (0.9%)
22,000 Morgan Stanley .................................... 1,791,460
See Notes to Financial Statements.
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8
The Value Line Fund, Inc.
December 31, 2006
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
SEMICONDUCTOR (1.7%)
120,000 Integrated Device
Technology, Inc.* ............................... $ 1,857,600
42,000 NVIDIA Corp.* ..................................... 1,554,420
-------------
3,412,020
SEMICONDUCTOR --
EQUIPMENT (2.7%)
51,000 ATMI, Inc.* ....................................... 1,557,030
50,000 Novellus Systems, Inc.* ........................... 1,721,000
43,000 Varian Semiconductor Equipment
Associates, Inc.* ............................... 1,957,360
-------------
5,235,390
SHOE (0.8%)
44,000 Steven Madden Ltd. ................................ 1,543,960
TELECOMMUNICATION
SERVICES (2.6%)
53,000 AT&T, Inc. ........................................ 1,894,750
30,000 BT Group PLC ADR .................................. 1,796,700
175,000 Qwest Communications
International, Inc.* ............................ 1,464,750
-------------
5,156,200
TELECOMMUNICATIONS
EQUIPMENT (1.3%)
97,000 Cisco Systems, Inc.* .............................. 2,651,010
WIRELESS NETWORKING (1.2%)
18,000 Research In Motion Ltd.* .......................... 2,300,040
-------------
TOTAL COMMON STOCKS
AND TOTAL INVESTMENT
SECURITIES (97.6%)
(Cost $171,653,509) ............................. $ 192,646,635
-------------
Principal
Amount Value
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (2.4%)
$ 2,500,000 With Morgan Stanley & Co.,
4.60%, dated 12/29/06, due
1/2/07, delivery value
$2,501,278 (collateralized by
$2,585,000 U.S. Treasury
Notes 4.00%, due 4/15/10,
with a value of $2,551,374) ..................... $ 2,500,000
2,300,000 With UBS Securities, LLC,
4.50%, dated 12/29/06, due
1/2/07, delivery value
$2,301,150 (collateralized by
$2,136,000 U.S. Treasury
Notes 5.50%, due 8/15/28,
with a value of $2,352,967) ..................... 2,300,000
-------------
TOTAL REPURCHASE
AGREEMENTS
(Cost $4,800,000) ............................... 4,800,000
-------------
EXCESS OF LIABILITIES OVER CASH
AND OTHER ASSETS (0.0%) (97,549)
-------------
NET ASSETS (100.0%) $ 197,349,086
-------------
NET ASSET VALUE OFFERING AND
REDEMPTION PRICE, PER
OUTSTANDING SHARE
($197,349,086 \ 15,813,214 shares
outstanding) $ 12.48
-------------
* Non-income producing.
ADR American Depositary Receipt
See Notes to Financial Statements.
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9
The Value Line Fund, Inc.
Statement of Assets and Liabilities
at December 31, 2006
--------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost - $171,653,509) ................................... $ 192,646,635
Repurchase agreements
(Cost - $4,800,000) ..................................... 4,800,000
Cash ....................................................... 140,175
Receivable for capital shares sold ......................... 495
Interest and dividends receivable .......................... 130,183
-------------
Total Assets .......................................... 197,717,488
-------------
Liabilities:
Payable for capital shares repurchased ..................... 144,281
Accrued expenses:
Advisory fee ............................................ 114,676
Directors' fees and expenses ............................ 4,698
Other ................................................... 104,747
-------------
Total Liabilities ..................................... 368,402
-------------
Net Assets ................................................. $ 197,349,086
=============
Net assets consist of:
Capital stock, at $1.00 par value
(authorized 50,000,000, outstanding
15,813,214 shares) ...................................... $ 15,813,214
Additional paid-in capital ................................. 159,130,415
Accumulated net realized gain on
investments ............................................. 1,412,331
Net unrealized appreciation of
investments ............................................. 20,993,126
-------------
Net Assets ................................................. $ 197,349,086
=============
Net Asset Value, Offering and
Redemption Price Per Outstanding
Share ($197,349,086 \ 15,813,214
shares outstanding) ..................................... $ 12.48
=============
Statement of Operations
for the Year Ended December 31, 2006
--------------------------------------------------------------------------------
Investment Income:
Dividends (Net of foreign withholding tax
of $10,660) ............................................. $ 1,050,804
Interest ................................................... 346,019
-------------
Total Income .......................................... 1,396,823
-------------
Expenses:
Advisory fee ............................................... 1,418,348
Service and distribution plan fees ......................... 526,288
Transfer agent fees ........................................ 117,500
Printing and postage ....................................... 87,800
Registration and filing fees ............................... 51,994
Custodian fees ............................................. 47,885
Auditing and legal fees .................................... 40,376
Insurance .................................................. 32,802
Directors' fees and expenses ............................... 20,225
Telephone .................................................. 6,107
Other ...................................................... 11,395
-------------
Total Expenses Before Custody Credits
and Fees Waived ....................................... 2,360,720
Less: Service and Distribution Plan Fees
Waived ................................................ (167,363)
Less: Custody Credits ................................... (7,909)
-------------
Net Expenses ............................................ 2,185,448
-------------
Net Investment Loss ........................................ (788,625)
-------------
Net Realized and Unrealized Gain/(Loss)
on Investments and Foreign Exchange
Transactions:
Net Realized Gain ...................................... 11,577,224
Change in Net Unrealized Appreciation/
(Depreciation) ....................................... (2,751,158)
-------------
Net Realized Gain and Change in Net
Unrealized Appreciation/(Depreciation)
on Investments and Foreign Exchange
Transactions ........................................... 8,826,066
-------------
Net Increase in Net Assets from
Operations ........................................... $ 8,037,441
=============
See Notes to Financial Statements.
--------------------------------------------------------------------------------
10
The Value Line Fund, Inc.
Statement of Changes in Net Assets
for the Years Ended December 31, 2006 and 2005
--------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 2006 December 31, 2005*
------------------- -------------------
Operations:
Net investment loss ................................................. $ (788,625) $ (1,091,265)
Net realized gain on investments .................................... 11,577,224 30,381,922
Change in net unrealized appreciation/(depreciation) ................ (2,751,158) (8,531,970)
------------- -------------
Net increase in net assets from operations .......................... 8,037,441 20,758,687
------------- -------------
Distributions to Shareholders:
Net realized gain from investment transactions ...................... (17,374,630) (31,360,687)
------------- -------------
Capital Share Transactions:
Proceeds from sale of shares ........................................ 5,750,466 8,141,726
Proceeds from reinvestment of distributions to shareholders ......... 16,373,788 29,592,814
Cost of shares repurchased .......................................... (29,153,331) (28,442,441)
------------- -------------
Increase/(decrease) from capital share transactions ................. (7,029,077) 9,292,099
------------- -------------
Total Decrease in Net Assets .......................................... (16,366,266) (1,309,901)
Net Assets:
Beginning of year ................................................... 213,715,352 215,025,253
------------- -------------
End of year ......................................................... $ 197,349,086 $ 213,715,352
============= =============
* Numbers were previously presented rounded to thousands.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
11
The Value Line Fund, Inc.
Notes to Financial Statements
--------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company whose primary investment objective is long-term growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange are valued
at the closing sales prices on the date as of which the net asset value is
being determined. Securities traded on the NASDAQ Stock Market are valued at
the NASDAQ Official Closing Price. 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. Short-term instruments with maturities of
60 days or less at the date of purchase are valued at amortized cost, which
approximates market value. Short-term instruments with maturities greater than
60 days at the date of purchase are valued at the mid point between the latest
available and representative asked and bid prices, and commencing 60 days prior
to maturity such securities are valued at amortized cost. Securities for which
market quotations are not readily available or that 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. In addition, the Fund may use the fair
value of a security when the closing market price on the primary exchange where
the security is traded no longer accurately reflects the value of a security
due to factors affecting one or more relevant securities markets or the
specific issuer.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in accordance with generally accepted accounting
principles and expands disclosure about fair value measurements. SFAS No. 157
is effective for fiscal years beginning after November 15, 2007. Management is
currently evaluating the impact the adoption of SFAS No. 157 will have on the
Fund's financial statement disclosures.
(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, it is the Fund's policy to mark-to-market
the collateral 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 provision is required.
In July 2006, the Financial Accounting Standards Board issued Interpretation No.
48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB
Statement No. 109" (the "Interpretation"). The Interpretation establishes for
all entities, including pass-through entities such as the Fund, a minimum
threshold for financial statement recognition of the benefit of positions taken
in filing tax returns (including whether an entity is taxable in a particular
jurisdiction), and requires certain expanded tax disclosures. The Interpretation
is effective for fiscal years beginning after December 15, 2006, and is to be
applied to all open tax years as of the date of effectiveness. Management has
recently begun to evaluate the application of the Interpretation to the Fund,
and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
--------------------------------------------------------------------------------
12
The Value Line Fund, Inc.
December 31, 2006
--------------------------------------------------------------------------------
(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) Foreign Currency Translation. The books and records of the Fund are
maintained in U.S. dollars. Assets and liabilities which are denominated in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. The Fund does not isolate changes in the value of investments caused
by foreign exchange rate differences from the changes due to other
circumstances.
Income and expenses are translated to U.S. dollars based upon the rates of
exchange on the respective dates of such transactions.
Net realized foreign exchange gains or losses arise from currency fluctuations
realized between the trade and settlement dates on securities transactions, the
differences between the U.S. dollar amounts of dividends, interest, and foreign
withholding taxes recorded by the Fund, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities, other than
investments, at the end of the fiscal period, resulting from changes in the
exchange rates. The effect of the change in foreign exchange rates on the value
of investments is included in realized gain/loss on investments and change in
net unrealized appreciation/depreciation on investments.
(F) Representations and Indemnifications. In the normal course of business, the
Fund enters into contracts that contain a variety of representations and
warranties which provide general indemnifications. The Fund's maximum exposure
under these arrangements is unknown, as this would involve future claims that
may be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows:
Year Ended Year Ended
December 31, 2006 December 31, 2005
----------------- -----------------
Shares sold .......................... 424,616 572,070
Shares issued to
shareholders in
reinvestment of
dividends and
distributions ..................... 1,309,937 2,235,100
------------ ------------
1,734,553 2,807,170
Shares repurchased ................... (2,180,922) (2,014,267)
------------ ------------
Net increase/
(decrease) ........................ (446,369) 792,903
============ ============
Distributions per
share from net
realized gains .................... $ 1.1869 $ 2.2223
=========== ============
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year Ended
December 31, 2006
-----------------
PURCHASES:
Investment Securities ................................. $ 456,541,876
=============
SALES:
Investment Securities ................................. $ 477,071,847
=============
--------------------------------------------------------------------------------
13
The Value Line Fund, Inc.
Notes to Financial Statements December 31, 2006
--------------------------------------------------------------------------------
4. Income Taxes
At December 31, 2006, information on the tax components of capital is as
follows:
Cost of investments for tax purposes .................. $ 176,453,509
--------------
Gross tax unrealized appreciation ..................... $ 23,096,802
Gross tax unrealized depreciation ..................... (2,103,676)
--------------
Net tax unrealized appreciation on
investments ........................................ $ 20,993,126
==============
Undistributed ordinary income ......................... $ 1,412,331
--------------
Permanent book-tax differences relating to the current year were reclassified
within the composition of the net asset accounts. The Fund decreased
accumulated net investment loss by $789,557 and decreased accumulated net
realized gain by approximately $789,557. Net assets were not affected by this
reclassification. These reclasses were primarily due to differing treatments of
net operating losses for tax purposes.
The tax composition of distributions to shareholders for the years ended
December 31, 2006 and December 31, 2005 were as follows:
2006 2005
------------ ------------
Ordinary income ........................ $ 6,149,470 $ 24,008,033
Long-term capital gain ................. 11,225,160 7,352,654
------------ ------------
$ 17,374,630 $ 31,360,687
------------ ------------
5. Investment Advisory Fee, Service and Distribution Fees and Transactions
With Affiliates
An advisory fee of $1,418,348 was paid or payable to Value Line, Inc., the
Fund's investment adviser, (the "Adviser"), for the year ended December 31,
2006. This was computed at the rate of 0.70% of the first $100 million of the
Fund's average daily net assets plus 0.65% on the excess thereof, and paid
monthly. The Adviser provides research, investment programs, supervision of the
investment portfolio and pays costs of administrative services, office space,
equipment and compensation of administrative, bookkeeping and clerical
personnel necessary for managing the affairs of the Fund. The Adviser also
provides persons, satisfactory to the Fund's Board of Directors, to act as
officers and employees of the Fund and pays their salaries and wages. Direct
expenses of the Fund are charged to the Fund while common expenses of the Value
Line Funds are allocated proportionately based upon the Funds' respective net
assets. 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 year ended
December 31, 2006, fees amounting to $526,288 were paid or payable to the
Distributor under this Plan. Effective August 31, 2006 the Distributor
voluntarily waived this fee. For the year ended December 31, 2006, the fees
waived amounted to $167,363. The Distributor has no right to recoup prior
waivers.
For the year ended December 31, 2006, the Fund's expenses were reduced by
$7,909 under a custody credit arrangement with the custodian.
Certain officers and directors of the Adviser and the Distributor are also
officers and directors of the Fund.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 568,734 shares of the Fund's capital stock, representing
3.60% of the outstanding shares at December 31, 2006. In addition, officers and
directors of the Fund as a group owned 10,836 shares of the Fund, representing
less than 1% of the outstanding shares.
--------------------------------------------------------------------------------
14
The Value Line Fund, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year:
Years Ended December 31,
--------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------------------------------------------------------------
Net asset value, beginning of year ................... $ 13.14 $ 13.90 $ 14.25 $ 13.67 $ 18.49
----------- ----------- ----------- ----------- -----------
Income (loss) from Investment Operations:
Net investment loss ................................. (0.05) (0.07) (0.08) (0.03) (0.05)
Net gains or losses on securities (both realized
and unrealized) ................................... 0.58 1.53 1.80 2.24 (4.64)
----------- ----------- ----------- ----------- -----------
Total from investment operations .................... 0.53 1.46 1.72 2.21 (4.69)
----------- ----------- ----------- ----------- -----------
Less distributions:
Distributions from net realized gains ............... (1.19) (2.22) (2.07) (1.63) (0.13)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ......................... $ 12.48 $ 13.14 $ 13.90 $ 14.25 $ 13.67
=========== =========== =========== =========== ===========
Total return ......................................... 4.00% 10.40% 12.09% 16.28% (25.35)%
=========== =========== =========== =========== ===========
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ............... $ 197,349 $ 213,715 $ 215,025 $ 216,047 $ 206,338
Ratio of expenses to average net assets(1) ........... 1.12%(2) 1.13% 1.13% 1.13% 1.11%
Ratio of net investment loss to average net assets ... (0.37)% (0.52)% (0.58)% (0.19)% (0.31)%
Portfolio turnover rate .............................. 224% 224% 297% 129% 33%
(1) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets net of custody credits would have
been unchanged for the years ended December 31, 2006, 2005, 2004, 2003,
and 2002.
(2) Ratio reflects expenses grossed up for the voluntary waiver of the
service and distribution plan fee by the Distributor. The ratio of
expenses to average net assets net of the voluntary fee waiver, but
exclusive of the custody credit arrangement, would have been 1.04% for
the year ended December 31, 2006.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
15
The Value Line Fund, Inc.
Report of Independent Registered Public Accounting Firm
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders of The Value Line 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 The Value Line Fund, Inc. (the
"Fund") at December 31, 2006, 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 accounting principles generally accepted
in the United States of America. 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
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 December 31, 2006 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 26, 2007
--------------------------------------------------------------------------------
16
The Value Line Fund, Inc.
Federal Tax Notice (unaudited)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
For corporate taxpayers, 100% of the ordinary income distribution paid during
the calendar year 2006 qualify for the corporate dividends received deductions.
During the calendar year 2006, 100% of the ordinary income distribution are
treated as qualified dividends.
During the calendar year 2006, the Fund distributed $11,225,160 of long-term
capital gain to its shareholders.
--------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities, and information regarding
how the Fund voted these proxies during the most recent 12-month period ended
June 30 is available through the Fund's website at http://www.vlfunds.com and
on the SEC's website at http://www.sec.gov. The description of the policies and
procedures is also available without charge, upon request, by calling
1-800-243-2729.
--------------------------------------------------------------------------------
17
The Value Line Fund, Inc.
Management of the Fund
--------------------------------------------------------------------------------
MANAGEMENT INFORMATION
The business and affairs of the Fund are managed by the Fund's Officers under
the direction of the Board of Directors. The following table sets forth
information on each Director and Officer of the Fund. Each Director serves as a
director or trustee of each of the 14 Value Line Funds. Each Director serves
until his or her successor is elected and qualified.
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
-----------------------------------------------------------------------------------------------------------------------
Interested Director*
Jean Bernhard Buttner Chairman of the Since 1983 Chairman, President and Chief Value Line, Inc.
Age 72 Board of Directors Executive Officer of Value Line,
and President Inc. (the "Adviser") and Value
Line Publishing, Inc. Chairman
and President of each of the 14
Value Line Funds and Value Line
Securities, Inc. (the
"Distributor").
-----------------------------------------------------------------------------------------------------------------------
Non-Interested Directors
John W. Chandler Director Since 1991 Consultant, Academic Search None
18 Victoria Lane Consultation Service, Inc.,
Lanesboro, MA 01237 1994-2004; Trustee Emeritus and
Age 83 Chairman (1993-1994) of the
Board of Trustees of Duke
University; President Emeritus,
Williams College.
-----------------------------------------------------------------------------------------------------------------------
Frances T. Newton Director Since 2000 Customer Support Analyst, Duke None
4921 Buckingham Drive Power Company.
Charlotte, NC 28209
Age 65
-----------------------------------------------------------------------------------------------------------------------
Francis C. Oakley Director Since 2000 Professor of History, Berkshire Life
54 Scott Hill Road Williams College, (1961-2002); Insurance
Williamstown, MA 01267 Professor Emeritus since 2002. Company
Age 75 Professor Emeritus since 1994 of America
and President, (1985-1994);
Chairman (1993-1997) and
Interim President (2002-2003) of
the American Council of Learned
Societies. Trustee since 1997 and
Chairman of the Board since
2005, National Humanities Center.
-----------------------------------------------------------------------------------------------------------------------
David H. Porter Director Since 1997 Visiting Professor of Classics, None
5 Birch Run Drive Williams College, since 1999;
Saratoga Springs, NY 12866 President Emeritus, Skidmore
Age 71 College since 1999 and President,
(1987-1998).
--------------------------------------------------------------------------------
18
The Value Line Fund, Inc.
Management of the Fund
--------------------------------------------------------------------------------
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
-----------------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Director Since 1983 Chairman, Institute for A. Schulman Inc.
169 Pompano St. Political Economy. (plastics)
Panama City Beach, FL 32413
Age 68
-----------------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheer Director Since 1996 Senior Financial Adviser, None
1409 Beaumont Drive Veritable L.P. (Investment
Gladwyne, PA 19035 Adviser) since 2004; Senior
Age 58 Financial Adviser Hawthorn,
(2001-2004).
-----------------------------------------------------------------------------------------------------------------------
Officers
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 49 Secretary and Chief Compliance Officer of the
Compliance Officer Adviser. Director and Vice
President of the Distributor. Vice
President, Secretary, and Chief
Compliance Officer of each of the
14 Value Line Funds.
-----------------------------------------------------------------------------------------------------------------------
Stephen R. Anastasio Treasurer Since 2005 Controller of the Adviser until
Age 47 2003; Chief Financial Officer of
the Adviser, (2003-2005);
Treasurer of the Adviser since
2005. Treasurer of each of the 14
Value Line Funds
-----------------------------------------------------------------------------------------------------------------------
Howard A. Brecher Assistant Secretary/ Since 2005 Director, Vice President and
Age 53 Assistant Treasurer Secretary of the Adviser. Director
and Vice President
of the Distributor.
----------------------------------------------------------------------------------------------------------------------------
* Mrs. Buttner is an "interested person" as defined in the Investment
Company Act of 1940 by virtue of her positions with the Adviser and her
indirect ownership of a controlling interest in the Adviser.
Unless otherwise indicated, the address f or each of the above is 220 East 42nd
Street, New York, NY 10017.
--------------------------------------------------------------------------------
The Fund's Statement of Additional Information (SAI) includes additional
information about the Fund's directors and is available, without charge, upon
request by calling 1-800-243-2729.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
19
The Value Line Fund, Inc.
The Value Line Family of Funds
--------------------------------------------------------------------------------
1950 -- The Value Line Fund seeks long-term growth of capital. Current income is
a secondary objective.
1952 -- Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 -- Value Line Premier Growth Fund seeks long-term growth of capital. No
consideration is given to current income in the choice of investments.
1972 -- Value Line Larger Companies Fund's 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 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 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 the 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.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or Value Plus, 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 1-800-243-2729, 9am
- 5pm CST, Monday - Friday, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
--------------------------------------------------------------------------------
20
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 BFDS
P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
REGISTERED PUBLIC 300 Madison Avenue
ACCOUNTING FIRM New York, NY 10017
LEGAL COUNSEL Peter D. Lowenstein, Esq.
496 Valley Road
Cos Cob, CT 06807
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
David T. Henigson
Vice President/Secretary/
Chief Compliance Officer Stephen R. Anastasio
Treasurer
Howard A. Brecher
Assistant Secretary/
Assistant 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).
#537652
Item 2. Code of Ethics
(a) The Registrant has adopted a Code of Ethics that applies to its
principal executive officer, and principal financial officer and principal
accounting officer.
(f) Pursuant to item 12(a), the Registrant is attaching as an exhibit a
copy of its Code of Ethics that applies to its principal executive officer, and
principal financial officer and principal accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1)The Registrant has an Audit Committee Financial Expert serving on
its Audit Committee.
(2) The Registrant's Board has designated John W. Chandler, a member of
the Registrant's Audit Committee, as the Registrant's Audit Committee Financial
Expert. Mr. Chandler is an independent director who is a senior consultant with
Academic Search Consultation Service. He spent most of his professional career
at Williams College, where he served as a faculty member, Dean of the Faculty,
and President (1973-85). He also served as President of Hamilton College
(1968-73), and as President of the Association of American Colleges and
Universities (1985-90). He has also previously served as Trustee Emeritus and
Chairman of the Board of Trustees of Duke University.
A person who is designated as an "audit committee financial expert" shall not
make such person an "expert" for any purpose, including without limitation under
Section 11 of the Securities Act of 1933 or under applicable fiduciary laws, as
a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees 2006 - $26,807
(b) Audit-Related fees - None.
(c) Tax Preparation Fees 2006 -$10,515
(d) All Other Fees - None
(e) (1) Audit Committee Pre-Approval Policy. All services to be
performed for the Registrant by PricewaterhouseCoopers LLP
must be pre-approved by the audit committee. All services
performed were pre-approved by the committee.
(e) (2) Not applicable.
(f) Not applicable.
(g) Aggregate Non-Audit Fees 2006 -$10,515
(h) Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Act (17 CFR
270.30a-2(c)) based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this
report, are appropriately designed to ensure that material
information relating to the registrant is made known to such
officers and are operating effectively.
(b) The registrant's principal executive officer and principal financial
officer have determined that there have been no significant changes
in the registrant's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their
evaluation, including corrective actions with regard to significant
deficiencies and material weaknesses.
Item 12. Exhibits.
(a) Code of Business Conduct and Ethics for Principal Executive and
Senior Financial Officers attached hereto as Exhibit 100.COE
(b) (1) Certification pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2) attached hereto as
Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By: /s/ Jean B. Buttner
--------------------------
Jean B. Buttner, President
Date: March 12, 2007
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Jean B. Buttner
-------------------------------------------------------
Jean B. Buttner, President, Principal Executive Officer
By: /s/ Stephen R. Anastasio
------------------------------------------------------------
Stephen R. Anastasio, Treasurer, Principal Financial Officer
Date: March 12, 2007
--------------